TTWO Stock | Take Two Interactive Software Inc Q1 2022 Earnings Call

Greetings and welcome to the Take Two Q1 fiscal year 2022 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Nicole Chevins, Senior Vice President of Investor Relations and Corporate Communications. Please go ahead.

Good afternoon. Thank you for joining our conference call to discuss our results for the first quarter of fiscal year 2022, ending June 30th, 2021. Today's call will be led by Strauss Zelnick, Take Two's Chairman and Chief Executive Officer; Carl Sladoff, our President; and Lainey Goldstein, our Chief Financial Officer. We will be available to answer your questions during the Q&A session following our prepared remarks. Before we begin, I'd like to remind everyone that statements made during this call that are not historical facts are considered forward-looking statements under federal securities laws. These forward-looking statements are based on the beliefs of our management as well as assumptions made by and information currently available to us. We have no obligation to update these forward-looking statements. Actual operating results may vary significantly from these forward-looking statements based on a variety of factors. These important factors are described in our filings with the SEC, including the company's most recent annual report on Form 10-K and quarterly report on Form 10-Q, including the risk summarized in the section entitled "Risk Factors." I'd also like to note that unless otherwise stated, all numbers we will be discussing today are GAAP, and all comparisons are year over year. Additional details regarding our actual results and outlook are contained in our press release, including the items that our management uses internally to adjust our GAAP financial results in order to evaluate our operating performance. Our press release also contains the reconciliation of any non-GAAP financial measure to the most comparable GAAP measure. In addition, we have posted to our website a slide deck that visually presents our results and financial outlook. Our press release and filings with SEC may be obtained from our website at take2games.com. And now, I'll turn the call over to Strauss.

Thanks, Strauss. I'd like to thank our team for a strong start to the year and their continued dedication to our business. We continue to believe that fiscal year 2022 will be a year of investments, as marked by our recent acquisitions of Nordeus and Dynamics. We are thrilled to have both teams join our family, and we will continue to evaluate organic and inorganic opportunities to enhance our organization. I'll now discuss our recent releases. Rockstar Games continue to provide an array of free content for their vast and growing online communities. In June, Rockstar released seven new arenas for the fan favorite Deadline mode for Grand Theft Auto Online. This was followed by the Los Santos Tuners update, the game's major summer launch in July, which delivered an action-packed street racing themed update into Grand Theft Auto Online. The update introduced elements of the tuner car culture to the game world, including the LS Car Meet, a new heavily requested shared social space for players to get together to modify their personal vehicles, watch others modify their tuner vehicles in real time, race and test various vehicles on an underground test track, and much more. In addition, the Los Santos Tuners update features six epic new robbery contracts, six new race types, 10 new highly customizable vehicles, collectible USB sticks offering a new way to hear music from Moodymann and Seth Troxler, and a host of quality of life updates including a new customizable radio station wheel. The launch of the Los Santos Tuners set new records for Grand Theft Auto Online, including the largest number of players and the highest level of net bookings for both day one and during the opening week for any update in Grand Theft Auto Online's history. Looking ahead, the upcoming launch of the expanded and enhanced versions of Grand Theft Auto Online for PlayStation 5 and Xbox Series X and S systems this November will allow for higher top speeds for select vehicles across these more powerful systems. In July, Rockstar Games released the Blood Money update for Red Dead Online. The update introduced a series of criminal themed opportunities, complex new missions including the game's first train robbery, and the Quick Draw Club, a series of four distinct rapid fire passes featuring criminal themed unlockable rewards, bonuses, and more. Blood Money's success, along with the additional influx of new players thanks to the launch of the standalone version of Red Dead Online, led to the highest number of players on day one for any update in Red Dead Online's history. Fiscal 2022 is an exciting year for Take Two as we embark on our multi-year strategy to deliver a slate of releases more robust than any other time in our company's history. While there has been some movement in our pipeline, including two of our immersive core titles shifting to later this fiscal year, we remain highly optimistic about our plans, including the introduction of several new franchises. I'll discuss details on our upcoming announced offerings for this year. On August 13th, Private Division will launch Hades on physical disks for PlayStation and Xbox consoles. Developed by Supergiant Games, Hades is a roguelike dungeon crawler in which players seek freedom by battling their way through the treacherous underworld of Greek myth. The physical retail edition will come with additional items for collectors, including a compendium booklet featuring the art of the game and a code to download its soundtrack. We are excited to launch Hades, which previously won over 50 Game of the Year awards and earned impressive aggregate scores of 93 and 94 on Metacritic and OpenCritic, respectively. In addition, during the second quarter, Private Division will launch Murder on Eridanos, the second add-on content offering for The Outer Worlds for the Nintendo Switch. On September 10th, 2K and Visual Concepts will once again set the standard for basketball simulations as they have done for the past 20 years with the launch of NBA 2K22 for PlayStation and Xbox consoles, Switch, and PC. Featuring best-in-class visual presentation and player AI, historic teams, and a wide variety of hoops experiences, NBA 2K22 will place the entire basketball universe in the player's hands. Global phenomenon and two-time NBA All-Star Luka Dončić will grace the cover of the standard edition and cross-gen digital bundle, while NBA legends Kareem Abdul-Jabbar, Dirk Nowitzki, and Kevin Durant will be featured on the premium NBA 75th Anniversary Edition. In North America, players can purchase a special version of the standard edition featuring six-time WNBA All-Star and WNBA champion Candace Parker on the cover, available exclusively through GameStop and EB Games. Parker's appearance is a milestone for the NBA 2K series, marking the first female cover athlete in the history of the franchise. In Japan, players can also purchase a special version of the standard edition that will feature Washington Wizards player Rui Hachimura, a rising star who was the first Japanese player to not only be drafted in the first round in 2019 but also to reach the NBA playoffs. The NBA 75th Anniversary Edition and cross-gen digital bundle will feature cover artwork painted by renowned Atlanta-based artist Charlie Palmer, whose civil rights series appeared on the cover of Time magazine in July 2020. This fall, Private Division will introduce Kerbal Space Program Enhanced Edition for PlayStation 5 and Xbox Series X and S. The title will benefit from multiple hardware advancements, which will provide upgraded resolution, increased frame rate, advanced shaders, better textures, and additional performance improvements. Players who already own Kerbal Space Program Enhanced Edition for current generation consoles will be eligible for a free upgrade to the new version of the game upon its release. On November 11th, Rockstar Games will launch the expanded and enhanced version of Grand Theft Auto 5 and Grand Theft Auto Online standalone for gen 9 consoles. Rockstar Games will have more details to share about these eagerly anticipated launches in the coming months. This winter, Private Division will release Roll7's OlliOlli World digitally for PlayStation and Xbox consoles, Nintendo Switch, and PC. The title has received outstanding initial feedback from early media impressions, including praise for its bold new direction, unique art style, standout soundtrack, and improved gameplay mechanics. During the fourth quarter, 2K and Gearbox Software will launch an exciting new franchise. Tiny Tina's Wonderlands is an epic adventure full of whimsy, wonder, and high-powered weaponry, set in an unpredictable fantasy world where magic, broadswords, and bullets collide. It is an entirely new game and a full standalone experience, with a rich story-driven co-op campaign for up to four players as well as repeatable end-game content. In addition, later this month, 2K will unveil details of another exciting new franchise planned for launch during this fiscal year. During fiscal 2022, WWE 2K22 will mark the rebirth of our popular wrestling series. We are very excited about the team's fresh approach to the franchise, including an array of enhancements and new features. 2K and Visual Concepts have shared a series of behind-the-scenes videos of their work on WWE 2K22, including entrance and move animations as well as motion capture and facial scanning, with much more to come. Turning to mobile, we are pleased to expand our offerings, especially given the strong momentum in this market segment. Players can look forward to new releases this year, which our teams will have more to share about in the coming months. In addition, our labels continue to invest in technology and new games that they plan to deliver during the next few years. Turning to esports, the NBA 2K League kicked off its fourth season on May 19th, which will conclude on September 4th with the league's finals delivered by DoorDash. This season, games have been airing live on the league's Twitch and YouTube channels, and are also available on HGG Network in Southeast Asia, Esports Revolution Loco in India, Sport 1 in Europe, and Dash Radio. The league continues to grow its audience, with more than 2 million followers on its social media platforms and nearly 470 million video views. We are excited about the league's recent announcement that its 2021 playoffs will take place at the Mavs Gaming Hub in Dallas, marking the first time that in-person games will be offered since the 2019 NBA 2K League Finals in New York City. Looking ahead, we believe that the NBA 2K League has long-term potential to enhance engagement and to be a driver of profits for our company. In closing, we are optimistic about the multi-year growth trajectory ahead of us. We are positioning our business for growth and enhancing our enterprise by investing in talent and infrastructure. With our robust pipeline of titles and content updates, we are confident that we can establish new record levels of operating performance over the next several years. I'll now turn the call over to Laney.

Thanks, Carl, and good afternoon everyone. Today, I'll discuss our first quarter results and then review our financial outlook for the second quarter and fiscal year 2022. Please note that additional details regarding our actual results and outlook are contained in our press release. As Strauss mentioned, fiscal 2022 is off to a strong start with our first quarter operating results exceeding our expectations. Net bookings were $711 million, which was above our guidance of $625 to $675 million and marked our second highest Q1 on record. Our outperformance was primarily driven by Grand Theft Auto Online and Grand Theft Auto 5, Red Dead Redemption 2 and Red Dead Online, and Borderlands 3. During the period, overall engagement exceeded our expectations. Recurrent consumer spending declined 25% as compared to our outlook of a 30% decline and accounted for 69% of total net bookings. Our outperformance was primarily driven by Grand Theft Auto Online as well as the addition of Nordeus. Digitally delivered net bookings declined 26% as compared to our outlook of a 30% decline and accounted for 96% of the total. This result is better than our outlook primarily due to the outperformance of recurrent consumer spending during the quarter. 73% of console game sales were delivered digitally, up from 71% last year. GAAP net revenue declined 2% to $813 million, while cost of goods sold decreased 31% to $330 million. Operating expenses increased by 15% to $313 million, primarily driven by higher personnel and stock compensation expenses as well as the addition of Playdots and Nordeus. GAAP net income was $152 million, or $1.30 per share, as compared to $89 million, or $0.77 per share, in the first quarter last year. We ended the quarter with over $2.5 billion of cash and short-term investments. Turning to our guidance, I'll begin with our full fiscal year expectations. As Strauss mentioned, we are reiterating our net bookings outlook range of $3.2 to $3.3 billion. While our first quarter results outperformed our expectations and our acquisition of Nordeus will benefit the year, this is being offset by some changes to our release schedule, including moving two of our immersive core titles to later in fiscal 2022 than our prior guidance had contemplated. We continue to be very excited about our pipeline and the next phase of growth that it presents for our company. The largest contributors to net bookings are expected to be NBA 2K, Grand Theft Auto Online and Grand Theft Auto 5, Red Dead Redemption 2 and Red Dead Online, as well as some of our new releases that are yet to be announced. We expect the net bookings breakdown from our labels to be roughly 55% 2K, 35% Rockstar Games, and 10% Private Division and T2 Mobile Games. We forecast our geographic net bookings split to be about 60% United States and 40% international. As a result of our outperformance in Q1, as well as the addition of Nordeus, we now expect recurrent consumer spending to decline by 9% compared to a prior outlook of a 15% decline versus fiscal 2021. As a percentage of net bookings, recurrent consumer spending is expected to be relatively flat versus last year and represent 65% of total net bookings. We now project digitally delivered net bookings to decrease by approximately 6% as compared to our prior outlook of an 8% decline. As a percentage of our business, digital is projected to represent 90%, slightly above 89% last year. Our forecast assumes that 74% of console game sales will be delivered digitally, up from 64% last year. We expect to generate more than $400 million in non-GAAP adjusted unrestricted operating cash flow, and we plan to deploy approximately $170 million for capital expenditures. The increase over our prior guidance relates to the acquisition of two office buildings in the UK to support our business in the region. We continue to expect GAAP net revenue to range from $3.14 to $3.24 billion, while we now expect cost of goods sold to range from $1.4 to $1.44 billion. Total operating expenses are expected to range from $1.48 to $1.5 billion, representing at the midpoint a 23% increase over the prior year. This increase reflects significant investments in marketing, personnel, stock compensation, and IT expenses to bring our expansive multi-year pipeline to market, as well as incremental expenses due to the addition of Nordeus and a full year of Playdots. And we expect GAAP net income to range from $229 to $259 million, or $1.95 to $2.20 per share. For management reporting purposes, we expect our tax rate to be 16% throughout fiscal 2022. Now moving to our guidance for the fiscal second quarter, we project net bookings to range from $815 to $865 million, compared to $958 million in the second quarter last year. Our guidance reflects the continued challenging comparisons from last year due to COVID-19. The largest contributors to net bookings are expected to be NBA 2K, Grand Theft Auto Online and Grand Theft Auto 5, Red Dead Redemption 2 and Red Dead Online, Dragon City, Top Eleven, and Two Dots. We project recurrent consumer spending to decline by approximately 11% and digitally delivered net bookings to decline by approximately 5%. Our forecast assumes that 64% of console game sales will be delivered digitally, up from 57% last year. We expect GAAP net revenue to range from $740 to $790 million, and cost of goods sold to range from $323 to $349 million. Operating expenses are expected to range from $368 to $378 million; at the midpoint, this represents a 27% increase over last year, driven primarily by higher marketing, personnel, stock compensation, and research and development costs, as well as the inclusion of Playdots and Nordeus. And GAAP net income is expected to range from $41 to $53 million, or $0.35 to $0.45 per share. In closing, our first quarter results demonstrate the health of our business and the incredible execution from our talented colleagues across the world. As we capitalize on our industry's strong tailwinds combined with our unique business drivers, we believe that our company will deliver significant long-term growth and margin expansion for our shareholders. Thank you. I'll now turn the call back to Strauss.

Thank you. At this time, we'll be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions.

Your first question comes from the line of Mario Lou with Barclays. Please proceed with your question.

Great, thanks for taking the questions. So, being the first of the major game publishers to report earnings this quarter, wanted to hear your thoughts regarding the recent developments within the industry on gender inequality. If you could share Take Two's stance on this issue and if there's anything you can share in terms of impact or change that is expected to be within the company, it would be greatly appreciated.

Great, thanks. That's glad to hear it. And just one question for Laney on the COVID impact and on recurring consumer spending in the quarter. Recurring consumer spending declined 25% versus your guide was down 30%, which is a smaller beat than usual. So, given that fiscal 1Q was the first full quarter of comping...

Sheltering in place last year, can you give us a little bit more color in terms of how user engagement trended throughout the quarter? Things get better or worse, and any additional color would be helpful. Thanks.

Sure, Mario. It's definitely in line with what our expectations were, a little bit better. We saw better performance of GTA Online than we expected. We also had the addition of Nordeus, which also helped our current consumer spending in the quarter. We definitely are seeing engagement in line with what we had expected, so there really isn't any change from what we had guided to from the beginning of the year.

Okay, thanks.

Your next question comes from the line of Mike Ng with Goldman Sachs. Please proceed with your question.

Great, thanks for the question. I also just have two. First, could you talk a little bit about how the success of GTA 5 and GTA Online informs your interest or sorry, the interest levels for GTA Enhanced Edition and how that could perform? And then second, just as a housekeeping item, I was just wondering if you're willing to provide the actual growth numbers for GTA Online and Red Dead Online in the quarter, and also your assumptions, at least directionally, for those businesses in the September quarter guidance. RCS, thank you.

So for GTA Online in Q2, our expectations are for it to be up in the quarter due to the update that has just released. We didn't have an update last year; it was a difficult comp because of COVID, but since we had this update, we expect it to be up versus last year. And for Red Dead Online, since it's a difficult comp, we expect it to be slightly up due to the update, but not as up as GTA Online versus last year.

Great, thanks Strauss. Thanks Lainey.

Your next question comes from the line of Matthew Thornton with Truist Securities. Please proceed with your question.

Hey, good afternoon Strauss, Carl, and Laney. Maybe two quick ones. First, just on the delays you called out, the two immersive core titles. It sounded like maybe there might be some other stuff as well. I'm just curious if there's any slippage without getting into specifics around some of the other new mobile titles or extensions planned for the year. Any color there? And then just secondly, I think you just talked a little bit about engagement trends given the pandemic normalization. It sounds like things are trending as you thought three months ago. I don't want to put words in your mouth, but I think that's the interpretation there. The other change in the quarter was obviously around Apple's ATT, IDFA changes, and the impact on the mobile side of business. So I'm just curious on the mobile side if you saw any impact there, or how that tracked relative to your expectations when we all sat here three months ago. Thanks. Any color would be great. Thanks, guys.

Your next question comes from the line of Andrew Urkowitz with Jefferies. Please proceed with your question.

Hey, thank you. I just have two quick ones. First one, I think, is for Laney. Could you on the increased marketing spend, does the delay affect the way you're going to go to market with these titles? And then secondly, has the return on marketing spend changed over the last several years? Has it gotten better or worse? Any color there on how marketing has affected game sales would be useful. Thank you.

So the increase on the marketing hasn't really changed. There's a little bit of timing change from Q1 into the rest of the year, and there's a little bit of shift out of the year into next year, but that's being offset by some additional costs due to the acquisition of Nordeus into the year. So there is a little bit of an increase of the overall operating expense in the year versus previous guidance, so it's a reduction of a little bit of marketing offset by the Nordeus expense. In terms of the return on marketing spend, I wouldn't say there's better or worse. I would say that we're a little bit more targeted on how we're spending our marketing, so I'd say we're getting a better return because we're able to really see how we're spending the marketing in a better way with better analytics over the last few years. But the spend continues to be a strong spend in order to do the best marketing for our titles, especially also in the mobile titles as well.

Got it, thank you. And then Strauss, I just want to go back to the first question a bit. I mean, has some of the issues that popped up at other competitors made you guys kind of rethink how you handle some of your policies or procedures? And then kind of along those lines, I believe employee turnover is low as you guys have a history of low turnover because people enjoy working at Take-Two. Is that still the case? Is turnover still pretty low?

Got it, thank you so much for that clarity.

Your next question comes from the line of Martin Yang with Oppenheimer and Company. Please proceed with your question.

Good afternoon, thank you for taking my question. My first one is about how you account for the shifts in business models and player taste for games that have a much longer development cycle than typical annual releases, and how much input does your central organization have in those directional changes on the market?

Oh no, I think you answered it. I have a follow-up for Laney in terms of the marketing plan for the year, particularly around the expanded enhanced versions for GTA. Do you treat that game release as a brand new game around the marketing and campaigns around it, or how do you see this enhanced version and marketing leading to the release?

It wouldn't be marketed as a brand new game. There certainly is marketing around the game, but it wouldn't be as if it's a brand new release of a GTA property.

Got it, thank you.

Your next question comes from the line of Brian Nowak with Morgan Stanley. Please proceed with your question.

Hi guys, it's Matt on for Brian. Thanks for taking the questions. I have two. So Strauss, you made a comment about seeing signs of stabilization in media consumption patterns. Obviously, it's understood your comments about how you expected to come to a lower rate post-pandemic than you saw during the pandemic. But what are the things that you're seeing right now that are giving you confidence that you're seeing stabilization, as opposed to being midway through the normalization process with a floor at some lower level? And then the second question is just on the organization of the mobile studios. Are there any new capabilities or new goals for that organization now that you're centralizing all the studios under one umbrella? Is there anything new that's possible on the mobile side of the business because of that? Thanks.

Ladies and gentlemen, as a reminder, please press star one to ask a question. We ask that you limit to one question to allow time for others to also ask questions. The next question comes from the line of Garrick Johnson with Capital Markets. Please proceed with your question.

Great, thank you very much. First, I'm just wondering why these titles were delayed.

Okay, so no COVID-related delay then?

Oh okay, great. And is Nordeus as secretive?

Your next question comes from the line of Clay Griffin with MoffettNathanson. Please proceed with your question.

Hey, good afternoon. Strauss, I noted Sony's Jim Ryan specifically calling out Chinese demand for PlayStation 5. You've been bullish on the long-term opportunity in China in the sense that it opens up to Western content. At the same time, there's obviously been a lot of concern on a regulatory shift in China's space. I'd love to just get your current thoughts on the Chinese market and how you think Take-Two is positioned to participate in that market over time. Thanks.

Your next question comes from the line of Brian Fitzgerald with Wells Fargo. Please proceed with your question.

Thanks guys. From Social Point to Playdots to Nordeus, you guys have always been really highly disciplined in terms of M&A activity. We wanted to ask what you're seeing in terms of valuations on the mobile side of things. Or are platform changes like Apple's with ATT making it increasingly harder? Strauss, to your point, for small publishers and studios to compete, is that making it more frothy in terms of the general environment for acquisitions?

Your next question comes from the line of Drew Crum with Stifel. Please proceed with your question.

Okay, thanks. Hey guys, good afternoon. So just going back to GTA Online, can you talk about your expectations for the fiscal year? I mean, Laney, I know you said you're expecting growth in fiscal Q2. You have the standalone version coming in November, so with that in place, can GTA Online grow this year? And then separately, I know you guys don't like to guide on specific titles, but on Hades, it looks like it had a limited release previously but managed to shift a million-plus copies, very high metacritic score. Can you talk about maybe at a high level what your expectations are for that game and prospects for commercial success? Thanks.

For GTA Online, our expectations for the full year is for it to moderate. For the full year, we expect moderation of the trends that benefited us from the industry last year due to COVID and sheltering at home. Q1 was down versus last year even though it beat our expectations, and Q2 is going to be up because of this update which is doing really well. So we do expect Q3 and Q4 right now to be down, but GTA Online always surprises us. It's still early in the year, so we'll see what happens, but right now we have expectations as moderating for the year.

Your next question comes from the line of Benjamin Soff with Deutsche Bank. Please proceed with your question.

Hey guys, thanks for the question. Just one if I could. I'm just wondering how you guys think about the subscription model in gaming, and where and if you see an opportunity there for you guys. Thanks.

Your next question comes from the line of Eric Handler with MKM Partners. Please proceed with your question.

Evening and thanks for the question. Two questions. First, with regards to the untethering of Red Dead Redemption Online, now that you've had this for a little while, I'm just curious what you're finding with the game in terms of widening the funnel. Is it bringing new people in? Is it helping to sell more units of Red Dead Redemption 2? Any color you can give us would be great.

Great. And then just as a follow-up, I'm curious with COVID ebbs and flows, are your developers still completely working at home, or have you brought them back in-house at all? Where you stand there?

Your next question comes from the line of Mike Hickey with The Benchmark Company. Please proceed with your question.

Hey Strauss, Carl, Laney, Nicole. Congrats on the quarter, guys. Thanks for taking my questions. Two from me. First one, it looks like subsequent to quarter end, you started using some DMCA takedown requests to remove old Grand Theft Auto mods. Sort of curious the catalyst for doing that and the feedback from the player community. The second question is on the collegiate opportunity. It seems like you have a new frontier here for college sports and athletes. Sort of your thoughts there and any consideration in your pipeline. Thanks guys.

The second question was just on the collegiate opportunity for sports and athletes for games.

NBA, obviously college basketball would be pretty sweet, I think too. Just sort of expansion opportunities for your game portfolio or working with athletes maybe for marketing or games. I'm not sure.

Your next question is a follow-up from Matthew Thornton with Truist Securities. Please proceed with your question.

Your next follow-up comes from Garrick Johnson with Capital Markets. Please proceed with your question.

Great, thank you. You're wearing a special time here with next-gen consoles rolling out, and you have GTA and NBA both have new titles coming out that will take advantage of those consoles. Are you finding more deferral of those titles in general waiting for those next versions and the rollout of those consoles?

Thank you.

Your next question is a follow-up from Matthew Thornton with Truist Securities. Please proceed with your question.

Hey guys, just two quick follow-ups. Staying on new consoles for a second, I'm just curious how you're thinking about supply as we head into the holiday season. Obviously we've got Grand Theft Auto releasing, so I'm just kind of curious the latest thoughts around console supply and demand. And then just secondly, you guys have talked a lot about the pipeline numbers of releases for fiscal '23 and fiscal '24. You've talked about expecting sequential growth in fiscal '23, and you've talked about getting to new record operating results in the out years as well. I'm just curious if that last comment pertains to that window, fiscal '23 to fiscal '24, or if I'm reading too much into that. Thanks again, guys.

Ladies and gentlemen, we have reached the end of the question and answer session, and I would like to turn the call back to Strauss Zelnick for closing remarks.

Ladies and gentlemen, this does conclude today's conference. You may disconnect your lines at this time. Thank you all for your participation.