Take-Two Interactive Software(TTWO) - 2021 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Zynga reported Q3 2021 revenue of $705 million, a 40% increase year-over-year, and bookings of $668 million, up 6% year-over-year [4][12][13] - The company raised its full-year revenue guidance to $2.78 billion, reflecting a 41% year-over-year increase [17][18] - Adjusted EBITDA for Q3 was $197 million, significantly exceeding guidance by $47 million, and up 159 million year-over-year [16][18] Business Line Data and Key Metrics Changes - Live services were the primary driver of Q3 results, with user-pay revenue reaching $571 million, up 31% year-over-year [13][15] - Advertising revenue and bookings reached a record $134 million, up 99% year-over-year, largely due to Rollic's hyper-casual portfolio [13][14][9] - The deferred revenue balance at the end of Q3 was $734 million, compared to $655 million a year ago [14] Market Data and Key Metrics Changes - Average mobile daily active users (DAUs) increased to 38 million, up 21% year-over-year, while average mobile monthly active users (MAUs) surged to 183 million, up 120% year-over-year [6][4] - The advertising business is expected to continue growing, driven by live services and new game releases, particularly from Rollic's portfolio [9][10] Company Strategy and Development Direction - Zynga is focused on executing a multi-year growth strategy, with expectations for continued expansion in 2022 and beyond [24][23] - The company is investing in emerging opportunities such as direct-to-consumer billing, NFTs, and blockchain technology [24] - Zynga anticipates that its progress in hyper-casual games, cross-platform play, and building an ad platform will be significant growth contributors [24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in Zynga's position within the interactive entertainment industry, expecting to finish 2021 with the largest mobile audience in the company's history [23][24] - The company is optimistic about the long-term growth potential of interactive entertainment, driven by innovations and new technologies [23] - Management noted that while they expect to expand operating margins, marketing investments for new game launches will influence margins in 2022 [22] Other Important Information - Zynga's integration with Chartboost is progressing, which is expected to enhance its mobile advertising capabilities [10] - The company has approximately $1.3 billion in cash and investments, which will primarily be used for future acquisitions [16] Q&A Session Summary Question: Marketing strategy for cross-platform title Star Wars: Hunters - Zynga plans to use a mix of user acquisition, PR, and channel marketing, with potential differences in marketing strategies for mobile and console platforms [27] Question: Blockchain gaming initiatives - Zynga is focusing on wholly-owned IP for blockchain gaming, particularly in builder and RPG genres, with early-stage development ongoing [30] Question: Contributions from recent acquisitions - Chartboost is expected to contribute around $10 million in bookings for the quarter, while Golf Rival is anticipated to contribute approximately $20 million [33] Question: User acquisition yields and IDFA changes - The user acquisition market has improved, allowing Zynga to launch new games like FarmVille 3 with confidence, and they are comfortable navigating the IDFA changes [52] Question: Cost synergies from Chartboost acquisition - Zynga expects to achieve $20 to $30 million in cost synergies from the Chartboost acquisition, with potential for more as new games are launched [62] Question: Marketing spend for new titles - Zynga anticipates a significant increase in marketing spend for new titles in 2022 compared to 2021, which may pressure margins [42] Question: Growth in Rollic's ad revenue - Growth in Rollic's ad revenue is expected from both additional game installs and improved ad productivity per game [75]