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Take-Two Interactive Software, Inc. beats earnings expectations. Reported EPS is $0.61, expectations were $0.2825.

Operator: Thank you for standing by. My name is Tina, and I will be your conference operator today. At this time, I would like to welcome everyone to the First Quarter Fiscal Year ’26 Take-Two Interactive Software Earnings Call. [Operator Instructions] It is now my pleasure to turn the call over to Nicole Shevins, Senior Vice President of Investor Relations and Corporate Communications. You may begin.

Nicole B. Shevins: Good afternoon. Thank you for joining our conference call to discuss our results for the first quarter of fiscal year 2026 ended June 30, 2025. Today’s call will be led by Strauss Zelnick, Take-Two’s Chairman and Chief Executive Officer; Karl Slatoff, our President; and Lainie 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 risks 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 a 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 the SEC may be obtained from our website at take2games.com. And now I’ll turn the call over to Strauss.

Strauss H. Zelnick: Thanks, Nicole. Good afternoon, and thank you for joining us today. Fiscal 2026 is off to an excellent start, reflecting ongoing demand for our core franchises and the increasingly diversified successful nature of our business. Net bookings for the first quarter exceeded $1.4 billion, which was meaningfully above the high end of our expectations, led by the outperformance of several Mobile titles as well as the continued success of NBA 2K and the Grand Theft Auto series. We’re optimistic about the year ahead, and we’re raising our net bookings outlook for fiscal 2026 to $6.05 billion to $6.15 billion. We have great confidence in our long-term pipeline and expect to achieve record levels of net bookings in fiscal ’27 that we believe will establish a higher baseline for our business and set us on a path of enhanced profitability.

I’d like to express my gratitude to all of our teams across our worldwide organization for their deep passion and intense commitment to our collective vision. We strive daily to do our best work and to exemplify our core pillars of creativity, innovation and efficiency, all in service of our goal to make the biggest and best hits in the entertainment business. Turning to highlights from the period. Our Mobile business vastly exceeded expectations. Peak’s successful forever franchise, Toon Blast, grew 22% over last year and nearly 75% on a 2-year basis, driven by the Seasonal Collection feature that provided a new avenue of engagement for the game’s millions of active players. Match Factory!, another hit title from Peak, achieved record net bookings as the title grew 33% over last year.

Players experienced new features such as the Treasure Cave event as well as new levels. Rollic’s newest hit, Color Block Jam, maintained its positive momentum and has become the highest grossing title in the studio’s history. Throughout the quarter, Color Block Jam remained at the top of the app charts, demonstrating its strong market position and mass appeal. Rollic supported the title with its first bold beat, Pilot’s Drop, where players receive progressively larger rewards with each consecutive win, amplifying engagement and monetization. 2K’s mobile offerings also had a great quarter, including WWE SuperCard, which remains the label’s most successful mobile game with over 37 million lifetime downloads. NBA 2K Mobile has been steadily growing its audience with new content and challenges, while NBA 2K25 Arcade Edition continues to top the Apple Arcade charts, and NBA 2K All-Star in China has been posting strong and profitable results since its launch in March.

We continue to focus on our mobile direct-to-consumer business, and we’re achieving better conversion driven by new offers, events and enhanced personalization. In the context of recent court rulings, we see ample runway for further growth in this area. The Grand Theft Auto series once again exceeded our expectations. Momentum remains exceptionally strong, and to date, Grand Theft Auto V has sold over 215 million units worldwide. During the quarter, engagement for Grand Theft Auto Online benefited from the record setting launch of Grand Theft Auto VI Trailer Two and the successful release of the Money Fronts Summer Content Pack, which culminated in higher-than-expected recurrent consumer spending growth. We’re pleased that new player accounts for GTA Online grew over 50% year-over-year.

NBA 2K25 delivered another quarter of fantastic results. To date, the title has sold over 11.5 million units, and engagement grew significantly year-over-year, with daily active users and MyCAREER daily active users each up 30%, which helped drive 48% growth in recurrent consumer spending. We’re thrilled that 2K announced a new multiyear global partnership expansion with the NBA, NBA PA and WNBA PA and extended its long-standing relationship with the NBA G League and USA Basketball. We’re excited to continue our highly successful partnerships and look forward to building upon the record-setting achievements that we’ve accomplished together. Engagement with our other sports titles has been healthy, including WWE 2K25. The title launched on Nintendo Switch 2 in July, which expanded its audience and featured same game modes that are available to players on PS5 and Xbox Series X and S.

Firaxis Games continues to introduce monthly updates for Sid Meier’s Civilization VII. In addition, the studio released the title for Nintendo Switch 2, our first offering for the platform, featuring new mouse controls that offer a more intuitive gameplay experience. We’re very pleased to continue supporting Nintendo with additional titles launching throughout the year. In closing, we’re thrilled with our company’s positive momentum and have enormous anticipation for this quarter’s launches of Mafia: The Old Country, NBA 2K26 and Borderlands 4. We remain deeply committed to excellence, to delivering the highest quality entertainment experiences for all of our audiences and to driving meaningful returns for our shareholders. I’ll now turn the call over to Karl.

Karl Slatoff: Thanks, Strauss. I’d like to thank our teams for delivering a fantastic start to the year and for setting the stage for what promises to be an exciting chapter in our history. I’ll now discuss our upcoming releases. Tomorrow, 2K and Hangar 13 will once again immerse players in the detailed, rich and storied world of organized crime with Mafia: The Old Country. With more than 2.5 million wishlists across all platforms, community sentiment for this linear, narrative-driven action game is very strong. 2K unveiled a new story trailer during the Annual Summer Game Fest show and provided the press with early play time, which resulted in glowing impressions and previews. We are very excited to expand our beloved franchise and help the players feel the passion and pride that our team brought to this exciting release.

On September 5, 2K and Visual Concepts will release NBA 2K26, which promises to once again raise the bar for our top-selling basketball experience. The title will be available on Early Access on August 29 and will be the first game from our series to launch on Nintendo Switch 2, offering the complete Gen 9 experience for the platform. With all new Pro Play features, players on Gen 9 will experience our immersive technology like never before, including revamped size ups and fast-paced dynamic movements. Fans can build a transcendent MyPLAYER as they strive to reach the pinnacle of NBA stardom and a reimagined MyCAREER journey and team up with friends to battle rival squads in a fresh and more optimized city. NBA 2K26’s MyTEAM will put past and present legends to test in new single and multiplayer modes while also offering 30 unique storylines to win a championship.

More details on NBA 2K26 will be shared in the coming weeks. On September 12, 2K and Gearbox Software will launch Borderlands 4, the eagerly anticipated next entry in our iconic looter-shooter franchise. Recently, global press and content creators played the game for the first time, and response was extremely positive, with some calling it the best in the series. In June, our team hosted the first ever Borderlands Fan Fest, where attendees played a demo of Borderlands 4 and generated over 600,000 hours of streams and videos. With the title launching on Nintendo Switch 2 in October, we are excited to harness the power of the new console and allow players to enjoy our mayhem fueled looter shooter at home or on the go. Later this fiscal year, 2K and Visual Concepts will once again challenge players to step into the squared circle with WWE 2K26, the forthcoming installment in our popular wrestling franchise that continues to set new standards for excellence with each release.

2K will have more to share about this game in the coming months. This is one of the strongest lineups of 2K’s history, positioning us to deliver best-in-class game play for our players and outstanding financial results. Zynga will remain focused on continuing to enhance its existing portfolio and releasing new Mobile titles. In closing, we are deeply excited about this year’s release slate and our ability to deliver entertainment experiences that captivate and engage audiences throughout the world. As we continue to execute our proven strategy and capitalize on emerging markets and opportunities, we believe that we will achieve a period of meaningful long-term growth and shareholder returns. I’ll now turn the call over to Lainie.

Lainie Goldstein: Thanks, Karl, and good afternoon, everyone. We achieved outstanding first quarter results, driven by our strong franchises, talented teams and unwavering commitment to our strategic vision. Our performance was broad-based across our labels, as we engage players with exciting new game features and content updates while also advancing development of our highly anticipated pipeline. I’d like to thank our incredible teams worldwide for their hard work and passion for our business. Turning to our results. We delivered first quarter net bookings of $1.42 billion, which was significantly above our guidance range of $1.25 billion to $1.3 billion. This reflected better-than-expected performance from several Mobile titles, including Toon Blast, Match Factory!, NBA 2K All-Star and Color Block Jam, as well as NBA 2K and the Grand Theft Auto series.

Recurrent consumer spending grew 17% for the period, which was meaningfully above our guidance of 7% growth and accounted for 83% of net bookings. Several of our businesses outperformed, including NBA 2K, which is up nearly 50%, Mobile, which grew low teens, and Grand Theft Auto Online, which increased low single digits. During the quarter, we released Civilization VII for Meta Quest VR and Nintendo Switch 2. GAAP net revenue increased 12% to $1.5 billion, while cost of revenue declined 1% to $559 million and operating expenses decreased 3% to $923 million. On a management basis, operating expenses rose 3% year-over-year, which was slightly above our forecast of 2% growth, primarily due to higher personnel costs. Total marketing expenses were within our forecast range for the quarter.

Zynga made incremental user acquisition investments to support its robust performance, which was offset by 2K shifting some marketing out of Q1 into later this fiscal year. Turning to our guidance. I’ll begin with our full fiscal year expectations. We are raising our net bookings outlook range to $6.05 billion to $6.15 billion, which represents 8% growth over fiscal 2025 at the midpoint. The increase predominantly reflects our strong first quarter performance and to a lesser degree, updates to our forecast, including FX. The largest contributor to net bookings are expected to be NBA 2K, the Grand Theft Auto series, Toon Blast, Borderlands 4, Match Factory!, the Red Dead Redemption series, Color Block Jam, Empires & Puzzles and Words With Friends.

We now expect recurrent consumer spending to grow approximately 4%, which is revised upward from our prior forecast of flat, representing 76% of net bookings. We expect NBA 2K to grow mid-teens, Mobile to grow low single digits and Grand Theft Auto Online to decline. We expect the net bookings breakdown from our label to be roughly 45% Zynga, 39% 2K and 16% Rockstar Games. We continue to expect operating cash flow of approximately $130 million and capital expenditures of approximately $140 million. We now expect GAAP net revenue to range from $6.1 billion to $6.2 billion and cost of revenue to range from $2.55 billion to $2.57 billion. Our total operating expenses are now expected to range from $3.84 billion to $3.86 billion compared to $7.45 billion last year.

On a management basis, we expect operating expense growth of approximately 5% year-over-year. This is up slightly from our prior forecast due to higher personnel costs as well as increased marketing spend to support our Mobile portfolio and [ netbacks ]. I’d like to point out that our earnings per share calculations reflect our higher share count following our recent equity issuance. Now moving on to our guidance for the fiscal second quarter. We project net bookings to range from $1.7 billion to $1.75 billion compared to $1.47 billion in the second quarter last year. Our release slate for the quarter includes Mafia: The Old Country and NBA 2K26 and Borderlands 4. The largest contributors to net bookings are expected to be NBA 2K, Borderlands 4, the Grand Theft Auto series, Toon Blast, Match Factory!, Empires & Puzzles, Color Block Jam, the Red Dead Redemption series, Words With Friends and Mafia: The Old Country.

Operating expenses are planned to range from $1.02 billion to $1.03 billion. On a management basis, operating expenses are expected We project recurrent consumer spending to increase by approximately 1%, which assumes a low single-digit increase for NBA 2K, billion. to grow by approximately 7% year-over-year, which is primarily driven by marketing to support our strong release slate during the period. Looking ahead, our confidence in our outlook is exceptionally strong. Our company is set to deliver the most ambitious pipeline in our history, which we believe will unlock a new record level of scale as well as enhanced profitability. As we release exciting new hits and explore additional growth opportunities, both organic and inorganic, we expect to achieve meaningful returns for our shareholders.

Thank you. I’ll now turn the call back to Strauss.

Strauss H. Zelnick: Thanks, Lainie and Karl. On behalf of our entire management team, I’d like to thank our colleagues for delivering a stellar start to what is poised to be an outstanding year for Take-Two. To our shareholders, I want to express our appreciation for your continued support. We’ll now take your questions. Operator?

Operator: [Operator Instructions] Our first question comes from the line of Eric Handler with MKM Partners.

Eric Owen Handler: Strauss, I wonder if you could talk a little bit about NBA 2K? You’ve sold about 0.5 million more units than last year overall. RCS in the quarter, up 48%. That’s — you said an acceleration of growth from not just last quarter, but 2 quarters ago as well. Is there something within the RCS that’s particularly resonating this year that you can point out to?

Karl Slatoff: Eric, it’s Karl. Look, I mean, we’re obviously very thrilled with the performance of NBA 2K. We’ve sold in over 11.5 million units. And engagement is just across the board, up significantly year-over-year. And it’s really not necessarily any of our single mode. It’s really both of our primary RCS generating modes, which is MyCAREER and also — MyCAREER and our — MyTEAM, sorry about that. So it’s really — over time, we’re getting much, much better about managing and reading our in-game telemetry, knowing what the consumers like to spend money on, what they like to engage with. And 2K and the folks at VC have done an amazing job managing that process. So we continue to get better and better every year. And this is a really great title.

So there’s nothing really specific that one can point to other than the fact that folks have really reacted positively to the efforts that we’ve made in the development process, and we still think there’s a lot of greenfield in front of us.

Operator: Our next question comes from the line of Doug Creutz with TD Cowen.

Douglas Lippl Creutz: I couldn’t help noticing that your advertising revenue was flat year-over-year and up sequentially, which I think is the first time we’ve seen that in a long time. Can you talk about whether we’re seeing finally a bottoming in that market? Or is this maybe due to some game specific things that impacted the quarter?

Strauss H. Zelnick: Yes. I think for us, it’s really that we adjusted our approach to advertising by moving from hyper-casual to hybrid-casual and that hybrid-casual too. And at this point, I think we feel very good about sort of where we’re at, and we would certainly hope to grow from here.

Operator: Your next question comes from the line of Chris Schoell with UBS Financial.

Christopher Joseph Schoell: Great. Thank you. So Mobile did come in much stronger than we expected for fiscal 1Q with the low teens growth, but your guide does imply deceleration from here. Can you just kind of walk us through the drivers there and why you anticipate that the momentum you saw in fiscal 1Q might not repeat?

Lainie Goldstein: Yes, Q1 was fantastic. We’ve seen so much momentum in a lot of our big titles and some of our titles that have really started take off since Q4 of last year and into this first quarter. But we do see some mature titles that have achieved outstanding results on a multiyear basis. And given the age of these titles, we really still expect moderation even though we haven’t really seen it over the course of the fiscal year. And we also have some hyper and hybrid-casual titles that have performed really well. And when we forecast those titles, we’re looking at the life cycle and the sales curve of prior hyper and hybrid-casual titles. So we have to build that into our forecast. So that’s what we’re seeing right now. But hopefully, it will continue to go in the same momentum, and we’ll see some great surprises towards the end of the year.

Christopher Joseph Schoell: Great. And if I can just fit in one more. Just as the free cash flow generation of the business scales here in the coming years and leverage is now coming down following the equity raise, can you just remind us how you’re thinking about capital allocation going forward and where potential shareholder returns might fall into your list of priorities?

Strauss H. Zelnick: Yes, great question. And just to put it in context, right now, we’ve had $2 billion in cash, and our net leverage is about 1.2 turns. So we feel like we’re pretty conservatively geared, which is our goal. You’re right that our expectations obviously, would be over the next few years, that we’ll build up our cash balance to strengthen our balance sheet further, which is a position we like to be in. And our approach to capital allocation is unchanged. There are really 3 uses of our capital, first to support organic growth. That’s been our story out here. We are largely an organic growth story. Secondly, selectively and on an accretive basis only, to support inorganic opportunities that are strategically sound, and we’re really proud of the fact that pretty much everything we’ve done in that area has worked out.

You see in this quarter that we’re now reporting just how well our Mobile approach is working out just how wonderful in addition it is to this enterprise. And it’s always our goal to make sure that inorganic growth is sound. It’s atypical for industry. But typical for us. And our most recent deal, the acquisition of Gearbox has also been stellar for the company. And third is returning capital to the shareholders, which we’ve done regularly over the years, typically in the form of buybacks, which are opportunistic, and we do aim to purchase shares at deep value. So far, we’ve found that right 100% of the time, which is kind of amazing. So that remains unchanged, and we feel good about being able to actually execute against all 3 approaches in the coming years.

Operator: Our next question comes from the line of Andrew Marok with Raymond James.

Andrew Jordan Marok: I guess thinking about what went into the decision to price Borderlands for $70, I guess more broadly, when a peer came out with full games at $80, it seemed like a foregone conclusion that the rest of the industry would follow, but now we’ve seen that not necessarily be the case. So I guess from your seat, what is the pricing environment? How do you feel about the ability to take price? And when do you think the player is ready for that to be born?

Strauss H. Zelnick: Well, I think our approach may be a little bit different. We believe that any consumer experience is the intersection of the thing itself and what you paid for the thing. So our goal is to vastly exceed expectations. We want to put out the best entertainment on earth, and we want to deliver more value than what we charge for. And we think we’ve generally speaking, gotten that right. Variable pricing has been the nature of this industry forever. Most frontline releases, we’ll go out at a higher price, so sometimes with special additions. And then over time, usually, the price is discounted to optimize for the largest possible market. And I don’t think that’s going to change anytime soon. But the rubric that informs us is really that of delivering more value than what we charge.

Operator: Our next question comes from the line of Mike Hickey with The Benchmark Company.

Michael Joseph Hickey: Yes, thanks, Strauss, Lainie, Karl, Nicole. Great quarter, guys, and nice to see the raise in your ’25, fiscal ’26 numbers. Just in that sort of area, the raise in your guidance here, just given the macro backdrop trials, just July jobs report, which is obviously weak, and then we saw the revision down pretty meaningfully, obviously, in May and June job numbers. Are you concerned that this all signals a broader economic slowdown? And how you think that could impact your business. Obviously, entertainment has been somewhat defensive historically, but also vulnerable.

Strauss H. Zelnick: Thanks, Mike. I’m not sure anyone really wants to listen to my macroeconomic guidance, but I’ll share it anyhow. And after negative GDP growth at the end of last year, we’ve seen a return to positive GDP growth in the first quarter of 1% to 2%. And I think we’re going to see positive GDP growth. There’s headwinds in tariffs, there are tailwinds in stimulus. I think they’re probably going to balance out in favor of modest growth. I think you’re probably going to see a 3% increase in consumer spending, which is about what we’ve been accustomed to. I agree with you that unemployment probably goes up a bit, it’s 4.2% and it probably goes up to 4.5%. That’s my own view. And I think you’ll see 50 more bps of Fed rate cuts between now and year-end.

You can ignore all of that or do with it as you please. What that implies is much more soft landing than anything else. It’s unbalance, acceptable, it’s not booming, it’s not — certainly not busting. And I do think that there is some risk, which you, I think, alluded to in your question, that consumers are going to be a little more careful with their spending. And what happens when they’re more careful? Well, it’s not true that entertainment is countercyclical. It’s not even true that entertainment is recession-resistant. It is true that people still consume entertainment even in tough times. They’re just going to be much more selective. So where are they going to go? They’re going to go to quality. And that’s a trend that’s already been occurring in our business because our business is maturing.

And as entertainment businesses mature, there’s a flight to quality thankfully, we think a head around here. And 18 years ago, when we came here, we made sure that the strategy of the company was not to put out the biggest number of releases, but rather to put out the best releases and only to put out the best releases. And then, of course, over time, when we established an ability to come out with the highest quality titles reflected in our leading Metacritic scores in our revenues, we were able to build up our pipeline further and to diversify further. And now we actually have an incredibly robust pipeline going forward and one that we believe is identified by the hallmark of great quality. If we’re right about that, then even in more challenging macro times, our micro behavior should be industry-leading.

Operator: Your next question comes from the line of Martin Yang with Oppenheimer.

Zhihua Yang: I want to ask about your view on the size of your addressable players versus the absolute quality you can deliver. So when it comes to new game releases, would you, at most times, sacrifice the potential addressable player base to prioritize on the quality of the game in the sense that sometimes you will want to maybe sacrifice your target a narrower console or PC player base in order to deliver the quality. So that’s — yes, so just general sense on how do you think about new games and the player base they will support.

Strauss H. Zelnick: Look, in general, we aim to be wherever the consumer is, and most of our releases end up on all platforms that have any kind of consumer attention. And we’ve announced, for example, 4 titles for Switch 2 and have supported Nintendo with new platform releases we’ve supported Sony and Microsoft, we’re on Steam and numerous other digital platforms within the PC format. So I don’t really think there’s a trade-off between our focus on quality and how ubiquitous we are in terms of release platforms. And I don’t see it that way. It is possible that our labels might stage a release so that they can focus on, for example, core console platforms. But generally speaking, in the fullness of time, our titles find their way to all the viable platforms.

Zhihua Yang: Got it. A quick follow-up. So you talked about meeting players where they are. I think in the past, you have expressed or you view platforms like Roblox as a very low priority platform where you would put your content on. Is there any change to that view? Do you feel that there are players that you are currently not accessing by not putting content on Roblox? Or do you think that you’re pretty well covered in terms of all the players and where they are?

Strauss H. Zelnick: Well, I mean, I didn’t realize you’re referring to Roblox as a platform. But for the sake of argument, let me accept it as one for the purpose of your question. Roblox is aimed at kids largely. And not all of our games are rated E. So we’re a highly compliant company. We market to appropriate audiences we work with the ESRB here and with IARC outside of the U.S. and other local ratings agencies to make sure that our titles are properly labeled and properly marketed. So even if a platform like Roblox, as you put it, were viable for some of our releases, not all of them would be appropriate for Roblox. But Roblox is not a platform in the way, say, Steam is a platform. Roblox is a certain type of environment.

not all of our games would work on Roblox, whether that’s work technically, work artistically or work commercially. But in terms of platforms that don’t have their own creative offering, so for example, Steam. Steam doesn’t opine as to who it serves. It has all different kinds of releases. So we’re going to be on Steam or other similar digital platforms most of the time, just as an example.

Operator: [Operator Instructions] Our next question comes from the line of Clay Griffin with MoffettNathanson.

Clayton Keever Griffin: Strauss, you mentioned it in the open, but just maybe if we could get your thoughts on the court rulings, specifically related to alternative app stores on Android. How do you see that progressing from here? Does it make sense to build your own app store within that environment? And then as a follow-on, what do you think it will do to sort of the user acquisition channels that had existed prior to this development?

Strauss H. Zelnick: It’s less about user acquisition and more about user monetization, just to be clear. I think that we’re going to continue to cooperate with all of the app stores. They are really important partners. And at the same time, the sort of the momentum of court rulings is in service of making sure the market is open and fair to all as it ought to be. I’ve been saying for years that I believe that systems — distribution systems in our business would move from closed to open and the cost of distribution would decline. And we are seeing those 2 things happen, whether that’s driven by financial necessity, whether that’s driven by opportunity, whether that’s driven by regulation or whether that’s driven by litigation, it’s kind of unimportant to us that the movement is all in the same direction, and that direction is what’s good for the consumer. What’s good for the consumer is open distribution.

Clayton Keever Griffin: And is that something that you see an opportunity to do yourselves? Or does it make sense to partner with others?

Strauss H. Zelnick: So all of the above, for example, you can buy currency on our own web stores now for most of — not all, but most of our mobile games. I see that continuing. We have a launcher inside the Rockstar Social Club, for example. So we don’t intend to integrate forward into retail distribution, and we certainly don’t intend to eat retails’ lunch because they’re valued distribution partners for us. We want to be wherever the consumer is. Where they want to go to Best Buy, they want to go to Steam, they want to go to Microsoft or Amazon. We want to be there as long as we’re treated fairly. But the emphasis is on being treated fairly. And there’s a distribution cost that’s fair and there’s a distribution cost that is less fair. And the world seems to be moving in the direction of more fair and the courts are helping.

Clayton Keever Griffin: Sure. And then I’ve got a quick follow-up on NBA 2K, if I can. Just exceptional growth there. I’m curious, I know that you had 2K24 in PlayStation Plus last year around this time. I don’t know if there’s any special differentiation in terms of the tiers that were available in June. But I mean — but Karl, maybe if you could speak to just if there was any impact from PlayStation Plus year-over-year that would have contributed to growth numbers like this.

Karl Slatoff: So we do put our titles occasionally into some of the subscription services. They’re great partners for us. And in many cases, they’re great. We wouldn’t do it unless it was a good economic deal and the platforms wouldn’t do it either. So we do take advantage of that, and it’s been compelling from us from an economic standpoint. As it relates to NBA, we have done it in the past, and we don’t really talk about whether we’re going to do anything in the future. But when you do put something into a channel like that, it generates obviously, engagement, it generates income for us, and it’s something that we consider and we do if the time is right and if the math makes sense.

Clayton Keever Griffin: And just to be clear, year-over-year, was there a meaningful delta in the way that it came to that service?

Karl Slatoff: A meaningful delta over what?

Clayton Keever Griffin: Just how it was presented last year.

Karl Slatoff: Yes. I’m not sure I’m understanding the question. I apologize. Just could you restate it one more time?

Clayton Keever Griffin: Yes. Just trying to understand if there was any change in the economics, the contribution from that relationship with Sony year-over- year that would have contributed to the exceptional growth at…

Karl Slatoff: No, I understand that. Okay. I’m sorry. You were asking a very straightforward question, and I thought it was more complicated. The answer is no.

Operator: And with no further questions in queue, I will now turn the call back over to Strauss Zelnick for closing remarks.

Strauss H. Zelnick: Thank you so much, everyone, for joining us today. Obviously, we’re thrilled with our first quarter results, and we have great confidence for the outlook for the rest of the year. All of this is tribute to the superb work that is done by our teams all over the world, our development teams who are the most creative and talented in the business, our marketing and distribution teams who are innovative in the extreme, don’t take no for answer, of course, our business teams who work hard every day to make sure that we’re highly compliant, highly organized and highly effective. Thanks to everyone, and we wish you all a great summer.

Operator: This concludes today’s conference call. You may now disconnect.