Greetings. Full Year 2015 Earnings Call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded.
It is now my pleasure to introduce your host, Hank Diamond, Senior Vice President of Investor Relations And Corporate Communications for Take 2 Interactive. You, Mr. Diamond. You may begin.
Good afternoon. Welcome and thank you for joining Take Two's conference call to discuss its results for the third quarter of fiscal year 2015 ended December 31, 2014. Today's call will be led by Drav Zelnick, Take 2's Chairman and Chief Executive Officer, Carl Sladoff, our President and Lainie Goldstein, our Chief Financial Officer. We will be available to answer your questions during 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 annual report on Form 10 K for the fiscal year ended March 31, 2014, including the risks summarized in the section entitled Risk Factor and the company's quarterly report on Form Ten q for the fiscal quarter ended September 30, 2014. I'd also like to note that unless otherwise stated, all numbers we will be discussing today are non GAAP. Please refer to our earnings release for a GAAP to non GAAP reconciliation and further explanation. Our earnings release and filings with the SEC may be obtained from our website at www.take2games.com.
And now, I'll turn the call over to Strauss.
Thanks, Hank. Good afternoon, and thank you for joining us today. I'm pleased for report that Take 2 built on its positive momentum in the third quarter, delivering exceptional results that exceeded non GAAP expectations for the 10th period in a row. As a result of our strong earnings at quarter's end, we had nearly $1,000,000,000 in cash and short term investments. This outstanding performance was driven by one of the most diverse holiday lineups in the company's history, led by Grand Theft Auto V for PlayStation 4 and Xbox 1, NDA 2k15, WWE 2k15, Borderlands the pre sequel, and Sid Meier's civilization beyond Earth.
The stellar debut of Grand Theft Auto 50 next gen consoles, it illustrates why this series is our industry's most iconic brand. The title is the highest rated game to be one of the greatest interactive entertainment experiences ever created. Grand Theft Auto5 already has sold the nearly 10 million units on PlayStation 4 and Xbox 1, bringing total sell in of the title current quarter. NBA 2K15 enriched our franchise's legacy as the number one basketball simulation that sets new benchmarks for realism with each consoles and PC and already has sold in approximately 5,500,000 units to date, continuing the franchise's trend of year over year growth. With the NBA season approaching its midpoint, demand for NBA 2K15 remains high, reflecting the game's position as a perennial favorite among sports fans.
The WWE 2K franchise has quickly proven to be a highly successful addition to our annual offerings, This year's launch of WWE 2K15 outperformed our forecast with sell in to date up more than 40% compared to last year's release. We believe the substantial opportunity remains to grow our wrestling series meaningfully over time. Finally, the launches of Borderlands the pre sequel and Sid Meier's civilization beyond her added successful new titles to 2 of our most popular series. We're gratified that consumers remain dedicated to these brands many years after their initial release, and our teams are deeply committed to taking these beloved experiences to exciting new heights in the future. Our strategy is to create permanent franchises and it appears we're achieving that goal.
During the third quarter, digitally delivered revenue grew 64% year over year and accounted for 23 percent of including virtual currency, add on content and online games. The single largest contributor to recurrent consumer spending was Grand Theft Auto Online, continued 1, as well as Rockstar Games release of 2 updates, the last team standing update and the holiday themed festive surprise. Consumers on all platforms can look forward to the release of more Grand Theft Auto Online content, including Hyatts. Recurring consumer spending has been a growing enhancement to the success of our NBA 2K series, including NBA 2K15. During the third quarter, it increased nearly the my MBA 2K15 companion app.
A variety of other offerings also contributed recurrent consumer spending in the quarter, including downloadable add on content, WWE SuperCard, which has been downloaded nearly 6,000,000 its release last August and NBA 2K online in China, which now has nearly 24,000,000 registered users. Creating opportunities for consumers to engage with our titles after their initial purchase is an important high margin growth opportunity and therefore, a key strategic focus for our teams. We plan to support virtually all of our new releases with innovative offerings designed to drive meaningful revenue and profits from a current consumer spending. From an industry perspective, we're very pleased with the performance of the new hardware to date, which has exceeded our expectations. Consumer demand for the PlayStation 4 and Xbox 1 appears to have been strong throughout the holiday season with the combined installed base of these platforms exceeding $29,000,000 worldwide at the end of December according to IDG estimates.
The ongoing success next gen consoles underscores the vibrancy of the core gaming market and represents a significant growth opportunity for Take 2. I'd like to congratulate our teams around the world for delivering a great quarter and successfully launching 5 outstanding titles during one of the busiest periods for our industry. As a result of our better than expected third quarter non GAAP results, we once again have raised our outlook for fiscal 2015 which is poised to be one of our best years ever. Our 4th quarter Next week's eagerly anticipated launch of Evolve coupled with the March release of Grand Theft Auto V for PC and an array of other offerings should continue to set standards for creative excellence and delight audiences worldwide. With our world class creative teams robust development pipeline, leading edge technology and ample cash resources take to a superbly position to deliver growth, profits and returns for our shareholders over the long term.
I'll now turn the call over to Carl.
Thanks, Strauss. I'd like to begin by congratulating our worldwide team for delivering an outstanding third quarter from development to marketing to distribution, every facet of our company worked in lockstep to achieve these results which have enhanced our outlook for the 4th quarter with the release of downloadable content offerings for WWE 2K15, including the new moves back and the showcase 1 more match. As well as the Lady Hammer Lock Pack for Borderlands, the pre sequel. Each of these expansions will enable fans to deepen their engagement with these beloved franchises. Next Tuesday, February 10th will mark the launch of Evolve, the only game in history to win game of shell honors at both E3 and Gamescom in the same year.
Last month, 2K launched an open beta and the feedback was enthusiastically positive and well received by the press. During the 5 day beta test, YouTube content creators and Twitch streamers generated an enormous amount of content resulting in over 3,700,000 unpaid YouTube view and 1,700,000 unique viewers on Twitch. In keeping with our focus on driving recurrent consumer spending, evolve will be supported with a robust array of additional content, including a value pack season pass that features 4 new playable hunter characters available this spring, and 3 exclusive Monster skin available at launch. In addition, 2K recently released the Evolve Hunter's Quest companion app, which links directly into the main among present consumers and look forward to a strong global launch for Evolve. I'd like to thank Trailrock in 2K for their tireless dedication and bringing to market this important new intellectual property for our company.
On March 24th, Rockstar Games will launch the record shattering hit Grant Theft Auto V on PC. Purchases of the title will also have access to Grand Theft Auto online at launch, which will support up to 30 players. We look forward to bringing this even further enhanced version of the Grand Theft Auto5 experience to PC gamers next month. Also on March 24th, 2 cable with these Borderlands to hand them collection, bringing the critically acclaimed series, which has sold in nearly 23,000,000 units worldwide, to next gen consoles for the first time. The handsome collection includes Borderlands 2 and Borderlands the pre sequel, along with all of the downloadable content for both titles.
This represents
both for $59.99.
The title also features the ability for players to transfer their saved data across console generations, along with 4 player split screen call up play, a franchise first. We think the collection will appeal to loyal Borderlands fans who want to experience the series on their new systems as well as to those joining its universe for the first time. In spring driven strategy game set in the civilization beyond Earth Universe. Stars lets players command a fleet as they embark on a series of missions to explore the galaxy, protect planets and the civilizations and build a federation to usher in a new age of peace. The game will be available for PC, Mac, and iPad and will be sold only through digital download.
Civilization beyond Earth bands who purchased starships will uncover cross connectivity with the two games that will enhance and expand the depth of both experiences. During the fourth quarter, 2K also will continue to support its titles with additional downloadable content, including the WWE 2K15 Showcase, Hall of Pain Pack, and an exciting new pack for Borderlands to pre sequel, which 2K will unveil in the coming weeks. In fiscal 2016, consumers can look forward to the launch of Battle Born, an all new intellectual property developed for next gen and PC by Borderlands Creators, Gearbox Software. Title is a blended genre game that combines first person shooting, cooperative combat, and an expansive collection of care to deliver an series as well as exciting yet to be announced titles from other popular franchises. We will also continue to invest prudently in online gaming experiences for Asian markets.
During fiscal 2016, we expect to launch civilization online, a mass multiplayer online game being developed in partnership with XL Games. The title is planned for initial launch in Korea, and we are exploring potential in other Asian territories as well. Looking further ahead, we have a robust long term pipeline of titles in development, including groundbreaking, new intellectual properties and new releases software will develop an all new Borderlands game built specifically for next gen consoles. In addition, we have numerous unannounced titles in development, as well as innovative offerings designed to maximize player engagement and drive recurrent consumer spending. We'll have more to announce about our future lineup in coming months.
I'll now turn the call over to Lenny.
Thanks, Carl, and good afternoon, everyone. Today, I'll review our results for the 3rd and then discuss our outlook for the fourth quarter fiscal year 2015. All of the numbers I'll be providing today are non GAAP and all comparisons or year over year unless otherwise stated. Our press release provides a reconciliation of our GAAP to non GAAP measurements. Starting with our results for the third quarter, Non GAAP net revenue increased 24 percent to $954,000,000 versus $767,700,000 in last year's third quarter.
This result exceeded our outlook range of 745 to $760,000,000 due primarily to the outstanding loss of Grand Theft Auto Five for the PlayStation 4 and Xbox 1, as well as continued strong engagement with Grand Theft Auto Online and robust holiday sales of WWE 2K 15. Digital delivered revenue grew 64 percent to $217,200,000, up from a $132,800,000 last year. Revenue from recurrent consumer spending, including virtual currency, downloadable add on content and online gains, grew 23 percent and accounted for 36 percent of digitally delivered revenue. The largest contributors to digitally delivered revenue were offerings for the Grand Theft Auto Series MBA 2k15, the Borderlands franchise, and Sid Meier's civilization beyond Earth. Catalog sales accounted for 100 and point $7,000,000 of net revenue, led by the Grand Theft Auto Series and offerings for Borderlands 2.
Gross margin increased slightly to 45.7%. Operating expenses were $167,200,000, up by $40,200,000 due to higher marketing expense for our third quarter releases. And non GAAP net income increased to $211,600,000 or $1.87 per share, up from $210,700,000 or $1.70 per share in fiscal third quarter 2014. This result exceeded our outlook range of $1.35 to $1.45 per share. On a GAAP basis, we reported net revenue of $531,100,000 and net income of $40,100,000 or $0.42 per share.
Turning to some key items from our balance sheet, at December 31st, 2014 as compared to September 30 2014. Our cash and short term investments balance increased to $976,600,000, This equates to net cash of approximately $8.57 per share, which includes the potential dilution from our convertible notes. Our accounts receivable balance increased to $435,700,000, reflecting holiday sales. Inventories decreased to $24,600,000 due primarily to shipments of our 3rd quarter titles, and software development costs and licenses decreased to $194,800,000, reflecting the amortization of capitalized costs for our recent releases. Now I will review our financial outlook for the fourth quarter and year 2015, which was provided on a non GAAP basis.
Starting with the full fiscal year as a result of our better than expected non GAAP third quarter performance, strong current business trends, and positive sales outlook for upcoming releases, we are increasing our outlook for both revenue and net income per share. We now expect net revenue to range from $1,650,000,000 to $1,700,000,000, up from the prior range of $1,400,000,000 to $1,500,000,000. And net income to range from $1.65 per share to $1.75 per share, up from the prior range $1.05 to $1.30 per share. Turning to the details of our full year outlook. We expect the revenue breakdown from to be roughly 50 2% United States and 40% international.
We expect gross margins in the mid to upper 40. Total operating expenses expected to increase by approximately 11%, driven primarily by personnel expense on a higher headcount, higher professional fees, and higher depreciation expense. Selling and marketing expense is expected to be about 14% of net revenue based on the midpoint of our outlook range. And we project interest and other expense of approximately $10,000,000, tax expense of about $70,000,000 and weighted average fully diluted share of approximately 114,000,000. This reflects weighted average basic shares of approximately 80,000,000, 8,000,000 participating shares, 26,000,000 shares, representing the potential dilution from our convertible notes.
Interest on the convertible notes, notes tax is approximately 6,800,000 which should be added back to net income to calculate net income per share. Turning to the fiscal 4th quarter, we expect net revenue to range from 4 10 $460,000,000 and net income to range from $0.15 to $0.25 per share. The majority of our revenue is expected to come from Grand Theft Auto5 Trans Theft Auto Online Evolve and NBA 2K15. We expect gross margins in the low to mid-40s. Total operating expenses are expected to increase by approximately 64% from the prior year's 4th quarter due primarily to higher marketing expense for technological feasibility.
Selling and marketing expense is expected to be about 15% of net revenue based on the midpoint of our outlook range. Our 4th quarter outlook also reflects interest and other expense of approximately $2,000,000, tax expense of $13,000,000 and weighted average fully diluted shares of approximately 115,000,000. This reflects weighted average basic shares of approximately 81,000,000 8,000,000 participating shares and 26,000,000 shares, representing the potential dilution from our convertible notes. Interest on the convertible notes net of tax is approximately $1,700,000, which should be added back to net income to calculate net income per share. We expect our operations to be approximately cash flow neutral during the fourth quarter, and we continue to expect to generate cash from operations in fiscal 2016.
As a result of the creative excellence of our development teams have reduced an extraordinary holiday lineup, fiscal 2015 is poised to be one of the most successful years in the history of 82. Looking ahead, our industry leading creative assets and strong balance sheet provide a solid foundation for our company to continue to deliver long term growth profits and returns for our shareholders. Thank you. Now, I'll turn the call back to Strauss.
Thanks, Carlo, Lainie. On behalf of the entire management team, I'd like to again thank for your continued support.
Session. For questions. Thank you. Our first question comes from line of Eric Handler with MKM Partners. Please proceed.
Yes. Thanks for taking my question. So at the beginning of the year, you guys sound a little bit cautious with what you were going to do with your cash because you're at the start of a new cycle and you thought at that time you were going to be using a modest amount of cash. Now that it looks like you're going to be nicely cash flow positive this year. You should be cash flow positive next year.
Your unencumbered cash is about $1,000,000,000, obviously a lot more than you really need. Maybe can you talk about some updated thoughts about the potential returns of capital to investors? And then secondly, how do we think about GTA online going forward in terms of content updates on a long term basis?
Yes. Thanks for your question. In terms of use of cash, obviously, it's good to be in the position that we're in as a reflection of the team's great work and the results that we've had. So now we have as said nearly $1,000,000,000 on the balance sheet. We've said over and over again, the cash here is used for potentially 3 purposes, supporting organic growth.
And the company story has largely been an organic growth and one of which we're very proud, supporting return of capital to shareholders. And we've done that in a big way as well, relatively recent times we purchased almost $280,000,000 worth of stock back. And we have the opportunity also to support our growth. Inorganic acquisitions. We have a very tight funnel.
We're very disciplined folks. We're focused on building our core business. And if we were to do any kind of acquisition, it would have to be strategically powerful and accretive. And that's, I think, the appropriate lens to look at any potentially an organic opportunity. And that remains unchanged.
So this is, it's a high class problem, one that we seriously, but those options certainly remain sort of remain our landscape. In terms of GTA Online, that GTN line continues to exceed our expectations and delight us. And that's because it delights consumers. And We're thrilled with what the team of Rockstar has done and continues to do. There's more content coming, the heist are coming.
I'll let Rockstar talk more about that. It's not for this call. But I do think it is for this call just to acknowledge the extraordinary work that the team has done and the result that it's delivered. Now this is a living, breathing entity that continues to delight consumers day after day, week after week, month after month. Thank you.
Thank you. Our next question comes from the line of Mike Olson with Piper Jaffray. Please proceed.
Hey, good afternoon. How would you describe the trends for legacy gen software in the December quarter and so far in the March quarter specifically is the decline in legacy gen easing to some degree as we push farther into the next gen cycle. So that's one question. And then the second one would be for Sid Meier's starships, is that included or not included in the March quarter guidance? In other words, by a spring launch, do you mean after Thanks.
Hi, Mike. It's Carl. In terms of legacy or old gen product. We're still seeing very robust demand for our current gen or legacy gen product. We have heard of lots of rumors, I'm not rumors of anecdotes of people having very difficulty selling through.
We're not experiencing that. Ticket speaks to the quality of our products. That being said, without a doubt, as we go forward and the next generation continues to grow and we expect it very excited about it, it's inevitable that sales of legacy gen are going to decline over time. How quickly that happens remains to be seen I can tell you right now, we still see robust market for legacy gen products and we'll continue to put them out as for as long as we make it as it makes sense. Can you repeat your question on starships again?
I didn't quite pick up the whole thing.
Yeah. I mean, it's basically by, by, I think you said spring launch in the press release. Does that mean in the March quarter or after the March quarter? In other words, is it factored into the March quarter guidance or not?
Yes. We adjust that spring at this point.
Okay. Alright. Thanks very much.
Thank you. Our next question comes from the line of Drew Crum with Stifel. Please proceed.
Okay. Thanks. Good afternoon, everyone. Could you comment on your channel in the Tory, given you sold in, nearly 10,000,000 units of Grand Theft Auto V for NextGen as well as the NBA 2k15 update you provided, nearly 5 and a half million units sold in to date. That's my first question.
And then A second question for Carl, you mentioned Borderlands, with with gearbox. Is that a fiscal 16 launch or is that date yet to be determined? Thanks.
It's Carl. In terms of the channel inventory, right now, I think you specifically asked about GTA and MBA. We're very pleased obviously with our sell in and also sell through. So we don't see any real channel inventory issues at all on any of our products. So that's not a concern of ours.
And I think our retailers are very happy with our sell through in general. And again, speaks to the quality of our titles and the strong season we had. Over the holidays. And in terms of the new Borderlands title, we have not announced the date for that.
Thank you. Our next question comes from the line of Justin Post with Merrill Lynch. Please proceed.
Thank you. Congrats on a good holiday versus expectations. Can you talk about next year? You obviously have a really tough holiday comp you need a big blockbuster title in the second half of next year to kind of, to grow?
How do you how are you thinking about that?
Or can you make it up with a lot of small titles? And then Can you talk a little bit about digital download percentage of games for the full game? Is that growing for you? And how will that affect your margins over Thank you. Yes, I
mean, mathematically, as you said, it's comp. We had a very big holiday lineup, 5 titles, and we're thrilled that they did so well. So math is math and this year is penciling out very well. And naturally, if you look at it as a comp, as a comp problem, challenge, but it's not really how we look at it. We have a desire to bring consumers the best in interactive entertainment.
We have 10 franchises have each sold more than 5,000,000 units in an individual release 40, multimillion unit franchises. And we have labels with 2000 creative folks who are actively working on a number of projects. So we believe Canon will be the highest quality projects in the So we don't tend to measure ourselves based on annual growth, although it'd be very nice to deliver that year in year out we measure ourselves on doing the very best work that we can over the long term. And that's worked out really well for us over the past 7 years. So you're right, it is a tough comp a lot of woods chop, we feel very, very confident.
We're confident enough to say that we expect the company to be profitable net year and for the foreseeable future. We've certainly talked about some titles already. So we feel great about it, we don't see our mission as necessarily delivering quarter over quarter year over year top line and or bottom line that isn't the mission. The mission is to delight audiences and then good things, including good economic things will flow from that. In terms of regression about digital downloads, so as a percent revenue, Lainie, you'll take that.
Yes.
For the digital business, we do continue to see it growing, quarter over quarter. It depends on what the mix of the overall businesses, but we do see the digital business in general growing. And as we focus more on recurrent consumer spending, we're seeing higher margins from that business. So as that continues to grow, we expect our digital margins as a whole to continue to grow as well.
But generally speaking, consumers are migrating to digital distribution of Enerkema products and we're part of that.
Thank you. Our next question comes from the line of Daniel Ernst with Hudson Square. Please proceed.
Yes, good afternoon. Thanks for taking my questions. 2 quick ones, if I might. First, maybe reask the digital question. Could you give us a general sense of the mix of your digital revenues of full game downloads, micro transactions and DLC kind of what's the rank order bucket or some general size of the mix?
And then, secondly more broadly trials, it used to be one of the fund take 2 was you had an over concentration of revenues and profits in one franchise and that being GTA. And we've been arguing and you have been delivering a broadening of that portfolio with things like portal lands and the relaunch of Red Dead And BioShock. And so you've done that. But the problem is GTA has grown much, much faster. It has actually continued to, as you say, delight and surprise.
And so you still have this problem. Is that the a high quality problem and you don't deal with it or do you almost just want to double down on that franchise and sort of tell me how you think about allocating resources to your portfolio? Thanks.
The digital, so we talked about in this quarter that 23% of the quarter was digital business, 36% of it was for recurrent consumer spending. And we don't break out the pieces of the recurrent consumer spending. But the majority of it came from the GTA online was our biggest component. And then the remainder of, the digital, the full game downloads is approximately 50% of overall total sales for the quarter. Thank you.
As a reminder Sorry.
Sorry. I had a second question to your question, Daniel. In terms of the over concentration of Grand Theft Auto as a contributor to our revenues and profits, you know, as you pointed out, that's a high class problem. It's up to use the phrase for the second time in the call. And remember, our goal is to make every one of our releases as big as it can possibly be.
That would be everything from 10thf.0 all the other hits that we have around here and, the fact that Rockstar keeps making Grand Theft Auto more and more relevant that it attracts more and more consumers that Grand Theft Auto5 has sold in roughly 45,000,000 units for this for legacy and next gen consoles is nothing short of extraordinary. We have a great story to tell our other intellectual properties here as well, and they continue to grow. So if someone's looking at the company in saying you have this massive industry hit and then you have an array of, simply huge industry hits, it's very difficult me to see bad news in there as long as we keep delivering more and more successful franchises. And every year since 'seven, this company has successfully launched at least one new mega million unit selling franchise. It's our goal to keep doing that.
Guarantee will always do it, but our goal to keep doing it if we do that, I think we're doing our jobs well and it's reflected in our revenues and profits. And if we're fortunate enough that Grant Theft Auto can also grow simultaneously, that would only be a good thing. I can't find anything bad about it.
Thank Thank you. Our next question comes from Ben Shafter with Macquarie. Please proceed.
Hey, guys. Congratulations, Leon, on on a couple of years of just excellent execution. I know you're not going to announce a specific title on the earnings call, but for holiday 15, should we expect a significant new title from Rockstar? And then, literally, when by when should we know the holiday lineup? Do do we have to wait for the next earnings call, or or should we expect that before then?
Lamy, if you could just let us know the FX impact on the quarter and FY 'fifteen guidance. And finally, just to clarify what you said on the previous about 50% of total sales digital download. I wasn't sure what that was. Thanks.
Yeah. Ben, we're not going to talk about rock Star's upcoming releases in the call. And I know everyone would like us to, but it's just not the way that we tend to do. We like to leave those announcements to our labels. And certainly when we provide our initial guidance for the year, you could expect some more color on what the release schedule looks like for the company as a whole.
To just clarify on the digital, so what I said was the full game download represents 15, 15% of our in the quarter. For the FX impact on the quarter, it was immaterial. And in terms of looking forward with the FX changes, we're pretty much naturally hedged everywhere. So we do have a hedging program to cover our balance sheet items. But in terms of our overall operations, we have a natural hedge that we feel very comfortable with.
Thank
you. Our next question comes from the line of Arvin Batya with Stern H. Please proceed.
Thank you. And I'd like
to add my congratulations on a fantastic quarter.
I wanted to actually just continue on this
discussion of digital downloads. We're getting some questions on that. So I think you just clarified that it was 15% of the quarter. I'm just wondering, this quarter you had civilization as well and how that impacted that percentage DC, obviously, tends to be, you know, higher mix, digitally. And maybe if you can talk about GTA 5 on NextGen specifically, and what trends you saw in terms of, full game downloads on that one.
And, and lastly on GTA online, you had that for the fourth quarter last year and this year. Wondering if you would give us some color on the year on year growth. I know it's been growing every quarter, but just kind of where that ended up this year. In Q4 in December versus last year.
Thank you.
So for the full game downloads, we don't break that out on a title by title basis, but you are correctly the SIB title during the quarter, being a PC title, it is heavily weighted towards digital and that would drive that full game download percentage higher. Specifically in this quarter. And when we talk about, the GTA Online, this quarter, it's sequentially been rising each quarter and it has been up from last year. We also introduced it on to the next gen this quarter. So that also drove more, online revenue and virtual currency revenue as well as updates during this quarter.
Okay. I know you're not giving specifics by title, but could you kind of generally talk about where you see full game downloads going, just on consoles alone, say, over the next 12 months?
We continue to see it rise on a quarter by quarter basis, so we would expect it to continue to do so.
Thank you. Our next question comes from the line of Brian Fitzgerald with Jeff Please proceed.
Thanks guys. Curious around what type of interest or engagement you've seen around the new set top boxes like the Kindle Fire. Have you seen anything noticeable regarding platform uptake from, say, MBA to GTA to most recently involved hunters? And then does it impact digital downloads or purchases via Amazon versus other channels? Thanks.
So on your first question, I mean, you asked if we see any uptake Look, I think that those platforms are still a little bit they're early, but we actually think that they might be very interesting for us. And obviously, support them with titles to the extent they become relevant, in terms of specific, our specific experiences, you know, we're not seeing a huge amount of activity because we don't have a huge amount out there now for people to, for people to actually engage with. So I don't I'm not really the best person to give you any real color on the market there. I'm sorry, the second question,
It was just related to those boxes Carl and whether or not it drives purchasers to Amazon to purchase there. Kind of right out of the, right out of the Kindle Fire?
Yes. I mean, I imagine it does, but I really don't have any real clear perspective to give you there, but it certainly makes intuitive sense that it would.
Great. Thanks guys. Thank you.
Our next question comes from the line of Mike with Benchmark Company. Please proceed.
Hey guys, great quarter. Thank you for taking my questions. Appreciate it. So Ralph, I was just hopeful you could remind us on how you and maybe your rock star team think about the appropriate pacing between mega franchise titles like GTA and Red Dead and so forth into this sort of cycle. That's, I guess, meeting multiple expectations at this point.
I don't think we think about pacing in a traditional way. We have said that we think big tentpole releases should not be annualized except for sports titles because we think it's valuable to build anticipation. And because it takes some time, to make the at it.
Okay. Thank you. And then on Evolve, I'm just sort of curious how that title is shaping up in released August 5th next week and a fair amount of buzz. But
I'm curious if there's any sort of there's a
bit of negative feedback, I guess, on the DLC strategy. I'm wondering if that's had any sort of impact on the game and the launch here.
Yeah, you're right. Mike, there was some controversy stirred up by an online post. And I guess Controversy, generally speaking, is a good thing. People can argue about the business model. Well, I think we're delivering a fantastic title that's well worth what consumers will pay for and, all signs are extraordinarily positive.
I never liked to claim success before it's occurred. This looks to a good news event. I'm going to leave it at that. Hopefully, in our next call, we'll have great news to report. But certainly, the title 1 best of show in both E3 and Gamescom.
That's never been done as far as we know in the same year. And the buzz is is massive. So we'll wait till consumers tell us what they think. And all our body parts are crossed around here.
All right. Fair enough. Best of luck guys.
Thank you. Our next question comes from the line of Sam Pham with BMO Capital Markets. Please proceed.
Hi. This is Hassane in Fredwood Williams. I was curious if you could share what your thoughts are. You know, what what what you're seeing as the overlap between, granite theft auto sales on NextGen, if they're how many of them are net new buyers versus maybe no overlap on a legacy console. People who buy it on legacy consoles.
It's a good question. It's, it's difficult to say. I think it's a mix and very hard for us to determine which it is. We do we think there 45,000,000 units sold, but there are billions of people on the face of the earth, so we've got plenty of room.
And then I was wondering, or or do you see any trends as to, you know, how, the next gen players are spending versus maybe like players. So maybe in the month of December versus last year.
It is early. They're both fully engaged and I wouldn't say that at this early point, we have a perspective on a difference.
Okay. And then just one final question for Lenny. Lenny, can you just tell me, remind me of the the the percent percentage of, cash you have offshore?
Sure. It's approximately 25% of our cash used held internationally.
I'm sorry. Can you say that one more time?
25% is held offshore and 75% is the 6.
Okay. Great. Thank you.
Thank you. Our next question comes from the line of Stephen Ju with Credit Suisse. Please proceed.
Quarter. So Strauss, I wanted to make sure I heard you correctly. I think you just mentioned that the PC version of GTA5 will have the online version. Packaged in there with it. And is this a simultaneous global release that you are planning for the title?
And secondarily, how will the version of GTL9 be different from the console version, if at all? Thanks.
Hi, Stephen, it's Carl. Yes, the ETA online will be with will be available with the release of PC. I think the last component was what are the differences between the 2? Yes. With the PC and the online version, you can play 30 players at the same time, so that's the difference, but other than there's not really much to say in that regard.
And what was the middle question?
All territories. Yes.
Thank you. Our next question comes from the line of Larry Hapiti with Cameco. Please proceed.
Hi, two quick questions. 1, do you folks have any strategy for the convertible? I would just assume it left the balance sheet, but that's essentially your colleague. Just going to let it run, or can you force it at some point? And I have a follow-up question.
Our $250,000,000 convert matures in 2016. It doesn't make sense economically right now for us to take it out. Until that time. But we continue to evaluate options to see if there's an opportunity to make any changes to our capital structure and want to make sense to go through so.
And second question, which is pretty far away from the first. In the last few weeks, take 2 or not take 2, 10¢, has announced significant more involvement with the NBA. Could you update us on what's going on with your online game and whether this increased involvement with, take 2 or with Pinson and the NBA, means that, that product perhaps as much more potential than you might have imagined?
Well, we've always been optimistic about the opportunity with DA 2K online in China. We now have 24,000,000 registered users that continues to generate revenues and profits for us. We're very, very happy about it. In terms of, $0.10 and the MBA, 2 very big important organizations that we have with both. I'm going to let them comment on their own activities probably better not for me to do so.
Thank you. We have no further questions in queue at this time. I would like turn the floor back over to Mr. Zenick for closing remarks.
I just want to thank everyone for joining us today. We're very gratified by the results. Once again, how we do around here is generated 1st and foremost by 2000 highly creative people who dedicate their lives to working here under our auspices and partnership with us. And we couldn't be more grateful for their activities. And of course, they're supported by an equally dedicated group people who market and distribute those products and then people who make sure that the trains run on time around here, including people sitting with me today.
We're phenomenally proud of what our team collectively has built here at Take 2. We're all grateful have an opportunity to work here. And we're happy to be able to deliver these results for ourselves, for our colleagues and for our shareholders. So thanks so much for joining us today.
Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.