GameStop Corp. (GME) Q2 2015 Earnings Report, Transcript and Summary

Good day, everyone, and welcome to GameStop Corporation's Second Quarter 2015 Earnings Conference Call. A supplemental slide presentation is available at investor.gamestop.com. At the conclusion of the announcement, a question-and-answer session will be conducted electronically. I would like to remind you that this call is covered by the Safe Harbor disclosure contained in GameStop publication documents and is the property of GameStop. It is not for rebroadcast or use by any parties without prior written consent of GameStop. At this time, I would like would like to turn the call over to Paul Raines, CEO of GameStop. Please go ahead. Julian Paul Raines - Chief Executive Officer & Director: Thank you, operator, and welcome to the second quarter earnings call for GameStop. As always, we are grateful to our associates around the world for their performance and dedication to customers this quarter. They are the secret to GameStop's success. Joining me today on our call are Rob Lloyd, Chief Financial Officer; Tony Bartel, Chief Operating Officer; Mike Mauler, President of International; Mike Hogan, Executive Vice President of Strategic Business; Mike Buskey, President of U.S. Stores; and Matt Hodges, Our Vice President of Public and Investor Relations. We had a great quarter. Earnings per share growth was well ahead of consensus, growing 41% year-over-year. Our earnings per share grew 41% on top of 144% growth in the last year's second quarter. So comps are strong in the video game business, delivering 8.1% on top of last year's 22% comp. Digital growth without FX was 17.5% and pre-owned growth without FX was over 5%. Technology Brands grew their store count by an impressive 182 stores now standing at 731 stores. Spring Mobile is now AT&T's largest dealer and our acquisition pipeline is full. Rob and Tony will provide color on the video game business and the Tech Brands' metrics. During the quarter, we closed on our acquisition of Geeknet and the ThinkGeek.com brand. We are very excited about this opportunity and have spent significant time with the Geeknet team on the integration plan. Mike Hogan will share some early color on our progress. Our collectibles or Loot business had a very good quarter. What was once an experiment in Australia a little over two years ago has turned into a global business that is feeding rapid growth. As we see opportunities, we will continue to remodel GameStop stores to give more linear footage to Loot merchandise and less to video games, providing us a great competitive lever for the video game publishers. Integration with ThinkGeek will only help this business. Mike Mauler will update you on our global progress. Last quarter's capital allocation was again disciplined as we paid our dividend of $0.36 per share and bought back $60.7 million worth of our stock. Taking a moment to step back and look at the business, you have to recognize that we have a knack for identifying and developing opportunities in transformational technology and business acquisitions that are paying off for shareholders. Our early and rapid investments in refurbishing mobile devices has turned into our Technology Brands' unit, the fastest growing AT&T and Apple dealer in America. Our ability to adapt a great idea from Australia, adjust it to American consumers and roll it quickly has turned into our strong lineup of Loot and collectibles products. And our strong balance sheet allows us to capitalize on this success by rolling up great assets like Geeknet. Our GameStop Technology Institute, announced in March of 2014, has developed an in-store tablet that is already rolling out nationally. And we have developed Beacon solutions that will soon be implemented as well. Our digital solutions of DLC, Steam, full-game download, Kongregate and Digital Game Informer, among others, are continuing to grow and will provide a nice $1 billion business this year. Underpinning all of these great ideas is great execution and the PowerUp Rewards program. It is clear to us now that we are finding new uses for our brick-and-mortar stores as well as our websites. And behind them is probably our biggest asset, the customer data behind all our transactions. Our ability to diversify our business has been the correct strategy, building on our leadership in video games, while exploiting our core to grow rapidly in digital, mobile and collectibles. In the most recent quarter alone, those new businesses accounted for almost 23% of our gross profit and we expect to see that grow. You should note that our 32.9% gross margin rate for the second quarter was among the highest in our history. And gross profit dollars were a company record for the second quarter. Other categories like pre-owned may fluctuate, depending on mix and promotions. But our ability to diversify into richer lines of business and products is allowing us to increase profitability. We provided guidance for Q3 that is slightly down to modestly up, and increased our full year guidance by the share count bought back in the quarter. We learned in our investor survey that setting achievable targets is important to you and expect to continue doing so. We continue to spend a lot of time internally and with our board on our strategic plan, assessing the size of markets and their adjacency to our core customer base. We seek more opportunities to leverage our core competencies of real estate, human talent, capital, buy-sell-trade, and PowerUp Rewards into attractive new segments. A high rate of change will continue to define us and will protect our family. I will now turn the call over to Rob. Robert Alan Lloyd - Chief Financial Officer & Executive Vice President: Thanks, Paul. Good afternoon, everyone. I'll start today by covering the highlights of our successful second quarter. And then I'll dive into some color on the quarter. Overall results exceeded our expectations again this quarter in terms of revenue growth, same-store sales, operating margin, net income and EPS. Sales increased 1.8% in the quarter, or 7.4% excluding FX. Comparable store sales increased 8.1%, exceeding the high end of our guidance range by over 500 basis points. Gross margins exceeded 110 basis points on the strength of growth and margin expansion in mobile and growth in collectibles, leading to record second quarter gross profit of $580.5 million. Adjusted operating earnings increased over 65% for the quarter, driven by our sales growth in collectibles and margin expansion in mobile. During the quarter, we incurred one-time charges of $9.1 million primarily relating to the Geeknet acquisition and Tech Brands' expansion, which included RadioShack store acquisition costs. SG&A adjusted to exclude charges as a percentage of sales was 27.3%, down slightly from 27.5% in the prior-year quarter despite investments supporting Tech Brands' expansion. Interest expense increased $4.5 million due to the $350 million in debt outstanding. Adjusted net income increased 34.6% and adjusted EPS increased over 40%. Foreign currency moves reduced sales nearly $100 million, but had minimal impact on EPS. Now let's look at sales and margin during the quarter for some of the categories. Hardware sales decreased 2.2% but increased 3.7% excluding FX because of strong demand for the PlayStation 4 and Xbox One. In the U.S., we sold 42% more next-gen consoles than in the second quarter of 2014, leading to the outperformance in the comp results. Software sales declined 6.0% but increased 0.7% excluding FX as we overcame the comparison to Watch Dogs and Mario Kart 8 from last year with strong performance on Witcher 3 and Batman: Arkham Knight. Pre-owned revenue grew 0.5% or plus 5.1% excluding FX as we saw continued growth in next-gen pre-owned hardware and software. Pre-owned margin rates were 46.0%, down 100 basis points from the prior year due to higher refurbishment costs on an increased mix of hardware and accessories trades which were driven by the successful trade-up campaigns we ran during the quarter. Digital receipts on a non-GAAP basis grew 11.1% or 17.5% excluding FX to $199 million for the quarter. As we said in the release, growth was led by sales of DLC for Witcher 3 and Batman: Arkham Knight. GAAP digital revenues declined 20.5% year-over-year due to FX impact and because of accounting for Kongregate on a net commission basis as we discussed in the first quarter call. Mobile revenues increased 26.9%, driven by a 62.3% growth in our Technology Brands revenues, and gross margins increased from 36.1% in Q2 last year to 45.4%. As we stated on the last call, as we continue to rapidly expand our Tech Brands' footprint, there will be upfront investment costs in order to ensure successful openings. This will impact short-term operating results but will ultimately provide sustainable profits for the company. During the second quarter we invested over $5 million for the 89 stores we opened and for the 90 to 100 stores to be opened during the third quarter. Q2's Tech Brands' store growth also included the acquisition of three AT&T resellers totaling 93 stores, most of which were acquired at the end of July. Revenues in the Other category increased 37.7% to $99.4 million, or 48.5% growth excluding FX as we continued to expand our collectables business. Some other data points are as follows. We closed a net of 33 video game stores around the world. As Paul mentioned, we closed the acquisition of Geeknet including the ThinkGeek brands and e-commerce site. The acquisition cost was $126 million net of cash acquired. ThinkGeek will be accretive in the second half of the year. In the quarter we repurchased $60.7 million in stock or 1.41 million shares at an average price of $43.04. We surpassed the $1.8 billion mark in cumulative buybacks with over 71 million shares acquired at an average price of $25.28. We remain committed to our buyback program and are on track to meet our 2015 objective of repurchasing at least $200 million of stock. We also paid the second quarter dividend at $0.36 per share. In the last twelve months we've generated approximately $500 million in free cash flow and have returned $466 million in dividends and buybacks and have used an additional $247 million on acquisitions. Now let's move on to third quarter guidance. As stated in our earnings release, we expect same-store sales to range from plus 1% to plus 4% and revenue growth to range from flat to positive 4%. Changes in foreign currency rates are expected to again negatively impact revenues by approximately $100 million when compared to the third quarter of last year. Again, this quarter, we expect monthly software results from NPD to vary dramatically. The August title lineup is lighter than last year, with Madden being the only comparison. In September, we will be comping Jetsons (13:33), which is a very tough overlap as this year's version is only an expansion pack. Assassin's Creed and Halo should give us a favorable comp in October. Due to our over-indexing in market share on Destiny from last year, we are expecting new software revenue to be down in the third quarter. According to NPD in the U.S. nearly 3 million units of Destiny were sold across four platforms in the third quarter of last year. This quarter's most anticipated title is expected to be Halo 5, which launches very late in the quarter, and will only be available on One platform. We also expect a slight decline in the pre-owned margin range as the mix shifts to next-gen from prior gen, and as we continue to invest in refurbishment of pre-owned consoles to support sales growth. Our repair costs remain comparable while pre-owned hardware prices decline over time. Also, as a reminder, sales of next-gen pre-owned units have a lower overall margin than prior-gen units due to higher trade-in prices, which is typical in a new console cycle. We are forecasting pre-owned margin to be between 44% and 46% for the balance of the year. Overall, we expect to expand gross margins compared to the prior-year quarter, as other areas of our business, such as Mobile and collectibles positively contribute to our profits. Despite the upfront investment to support store openings, which I described earlier, operating earnings for Tech Brands in the third quarter, our forecast would be comparable to the prior year quarter, and are expected to grow significantly in the fourth quarter. We are guiding earnings per share for our third quarter to range from $0.53 to $0.60 per share. We are expecting a 37% tax rate for the quarter, which is higher than we had in the third quarter of last year and we will have approximately $0.02 per share in additional interest expense. You should model 106.7 million shares outstanding for the third quarter and 107 million for the full year based on buybacks through the end of the second quarter. For the full year, total revenues are now expected to range from flat to positive 5%, and same-store sales are now expected to range from positive 2% to positive 7%. After considering buybacks we've completed thus far we're raising our full-year guidance from a range of $3.63 to $3.83 per share to a higher range of $3.66 to $3.86 per share. I will now turn it over to Tony for his comments.

Thanks, Rob. Our retail operations had another strong quarter as we continue to capitalize on our unique specialty service model and grow our new, pre-owned, and digital video game business as well as our Technology Brands business. We believe that service matters and that our businesses are expanding because we meet the needs of our customers better than any of our competitors. In new video games, we again increased share as our U.S. software grew 1.2% versus a decline in the overall market. Our software share increased by 1 point and we continue to sell over one half of all Xbox One and PS4 software. Our U.S. new hardware dollar sales grew 13.6% during the quarter versus a decline in the overall market, resulting in 4 points of hardware market share gain during the quarter. The console launch remained strong in its 22nd month as we have tripled the number of PS4 units that were sold versus the PS3 launch and have nearly doubled the Xbox One units versus the 360 launch. Our pre-owned business outpaced the new business and grew during the quarter as we logged 0.5% growth after FX and 5% growth prior to the impact of FX. As is normal during this part of the launch cycle, our increasing mix of next-gen sales is driving this growth. We are also in a good inventory position as our pre-owned inventory dollars are up 6% over the same period last year, driven entirely by next-gen hardware and software growth, so we are well poised to achieve mid single-digit global pre-owned growth for the full year. Looking at digital, we again drove double-digit growth in non-GAAP digital receipts which increased 17.5% before FX and 11.1% after FX. This growth was driven mainly by the increase in downloadable content that was sold with new game launches. Kongregate will launch seven new mobile games this quarter and is on track to grow mobile gaming revenues by approximately 50% for the full year. It is important to note that during the recent release of EA's Madden 16, we worked with our partners to offer a free physical game with the purchase of either a PS4 and Xbox One and did not carry the Xbox One digital bundle. We expect that if a game is provided as a promotional item in a hardware bundle, GameStop will see more of these physical offers than digital pack-ins on upcoming third-party releases. In our Tech Brands' segment, we continued to extend our sales leadership of AT&T and Apple's brands in a high service manner as our Technology Brands division is experiencing explosive growth. We continue to execute our strategy of rolling out smaller dealers to improve productivity, and leveraging our real estate expertise in adding new locations. Our Technology Brands division has had a very productive summer opening or acquiring 182 stores since the end of Q1. Our store count as of the end of Q2 stands at 731 stores. This represents a 129% increase in store count versus the end of Q2 2014. While we still plan on adding between 450 to 550 Technology Brands stores this year, the bulk of our investment spending is behind us. And we anticipate seeing strong growth in the back half of the year, culminating in our Technology Brands profits, growing between 40% and 50% for the full year without infrastructure investment costs, and 10% to 20% after such investment costs. This also sets us up for strong growth in 2016 and beyond. Our Spring Mobile division is now not only the largest and fastest growing AT&T dealer, but they continue to be the most productive dealer as well. Jason Ellis, our Senior Vice President of Technology Brands and his team have done a great job of growing their business while maintaining a high service standard. We're also the largest and fastest growing Apple authorized reseller and a top five Cricket dealer. In early August, we also began selling DIRECTV in all of our Spring Mobile stores, so we are now offering a full line of AT&T products and services in all of these stores. We are confident in our specialty retail expertise across all of our brands and optimistic about continued growth in the back half of the year and in 2016. Finally, we leave this weekend for our annual store managers conference in Las Vegas, which will boast approximately 6,000 leaders from all of our companies and from around the world. We will have top leaders from all of our partners talking directly with our field leaders about their newest innovations and their plans for growth. The managers will also get hands-on experience on the latest innovations, most of which have never been seen by the public. This investment ensures that we will have the most knowledgeable sales team in our industries, and allows us to continue to provide better service than our competition. With that, I'll turn it over to Mike Mauler.

Thanks, Tony. Good afternoon, everyone. GameStop's international businesses had a strong second quarter, exceeding expectations with record market share and a significant improvement in operating earnings over Q2 2014, led by our Australian business with a 10.2% same-store sales increase. Driving our increase in international earnings was digital receipt growth of 20% excluding FX, 30% e-commerce growth excluding FX driven by expanding web-in-store sales and the continued expansion of licensed merchandise and collectibles, or what our customers like to call Loot. In the second quarter, Loot was our fastest growing sales category with global sales growing by more than 200% versus prior year, increasing customer basket size and expanding our gross margin rates. This rapid growth was driven by our continued expansion of the category in GameStop stores and proved merchandising and marketing expertise in the category. Developing exclusive products, leveraging recent fan events such as Comic-Con, and exciting new product IP such as Minions, Inside Out, The Avengers: Age of Ultron and Batman: Arkham Knight. As mentioned on the last earnings call, as sales have continued to climb on these new products, we are increasing the space devoted to the category in all markets. Our second wave of in-store expansion was completed in the second quarter generating strong increases in Loot sales as well as expanding our customer base and driving increased traffic in our stores. Finally, due to the success of our new standalone retail concept dedicated to Loot, we have continued to expand a Zing Pop Culture pilot in Australia and other markets. We ended the second quarter with 14 stores in Australia and 1 store in Dublin. We will continue to expand this new concept in the second half of 2015 in other markets, including the United States where we'll be opening our first location this fall under the brand name of ThinkGeek, leveraging the powerful brand of our recent acquisition of Geeknet. Mike Hogan will provide more details on this new business. The expansion of this category continues to be met with very enthusiastic demand from our store associates and customers and we expect continued strong sales growth in the second half of 2015, driven by many outstanding entertainment launches such as Fallout 4, Hunger Games: Mockingjay and Disney's upcoming blockbuster, Star Wars: Episode VII – The Force Awakens, where we are seeing very strong pre-orders on our exclusive Loot offerings. For the year we are targeting sales of $200 million to $250 million not including ThinkGeek. We are excited by this opportunity to drive continued same-store sales and margin growth and increasing relevance with our customers, and we expect this category to grow to an over $500 million business globally over the next three years. And now, I will turn it over to Mike Hogan.

Thanks, Mike and good afternoon, everyone. Paul asked me to comment briefly on our recent acquisition of ThinkGeek, our progress to date and our plans. As discussed previously, GameStop initiated a robust business development process a number of years ago to facilitate our diversification efforts. We are constantly exploring new opportunities that can apply core GameStop capabilities to drive future growth and value. Geeknet or ThinkGeek is a great example. We are expanding into a growing $20 billion worldwide category where we can leverage our core strengths to drive non-gaming revenue growth and profitability. ThinkGeek provides a significant expansion of our global multichannel platform. We will utilize their product development and licensing expertise to broaden our collectibles product offerings and deepen our existing customer relationships while adding new ones. It is worth noting that GameStop's global multichannel business posted 28% growth for the second quarter. Multichannel is a key growth driver and we expect ThinkGeek to be a big part of continuing that growth. Although the transaction closed a mere six weeks ago, I'm happy to report the integration is off to a great start. We continue to see great value in this acquisition. I want to begin by sharing a few key facts regarding the GameStop and ThinkGeek customer base, where we see significant opportunity. GameStop customers are a great fit for collectibles. In a recent survey, 67% of GameStop customers indicated they plan to purchase collectibles in the next 12 months. This is a huge opportunity for us to tap into. Our PowerUp base aligns well with the category. 45% of PowerUp members have purchased collectibles in the past six months as compared to only 22% for all U.S. consumers. And we see upside for these current buyers. While PowerUp members are spending twice as much on collectibles as the average category buyer, ThinkGeek customers actually spend four times the average. We see significant upside for PowerUp member spending and for the category overall. ThinkGeek is a powerful brand. 46% of PowerUp members are already familiar with the brand, double the awareness for all consumers. And finally, consumers are extremely satisfied with ThinkGeek, giving the brand a very impressive 68% Net Promoter Score. Now a few thoughts on synergy and the growth opportunity. On the cost side, we are already seeing supply chain and purchasing synergies, some of which will positively impact the business in the current fiscal year. Geeknet posted an $8 million loss in fiscal 2014. We expect the business to already be profitable for the back half of this current year. There are a number of specific growth opportunities we are very excited about. Web traffic, we recently began highlighting a few ThinkGeek products on GameStop.com to refer traffic. GameStop is already driving greater than 10% of total ThinkGeek traffic. Profitable customers, GameStop provides a high-value customer for ThinkGeek, similar to what we have done successfully for Kongregate with mobile game purchasers. As with Kongregate, we expect traffic from GameStop to convert at well above the average. Web-in-store, we have added a number of top-selling ThinkGeek products to our GameStop web-in-store program. This allows customers in GameStop stores to order products for home delivery. We just opened this up last week and we have already sold out of several key products. Profitable promotions, GameStop and ThinkGeek collaborated to execute a 16th anniversary sale last week, which resulted in ThinkGeek's second highest gross margin day this year. Pipeline, we expect significant growth in the back half of the year. We are excited about many exclusive new products, including a full lineup in support of the new Star Wars movie. International expansion, we are also excited about the potential for offering ThinkGeek products in our European stores. We have already begun shipping a limited selection for the fall. ThinkGeek products are currently available in our Australian stores as well. As Mike Mauler mentioned, we will have several ThinkGeek stores opening in the U.S. this fall, and we will feature ThinkGeek heavily at our managers show in Las Vegas next week. We are very pleased with the progress to-date, and we anticipate meeting or beating our initial synergy and growth expectations. And finally, for those of you making up your holiday gifts lists early, I wanted to highlight a few unique products that ThinkGeek will be featuring over the next few months. Don't miss out on the Star Wars R2-D2 Bento Box. The Death Star Waffle Maker is sure to be a hit, or maybe a Tesla vacuum tube wristwatch or the ever-popular Knight Rider KITT Car Charger. You can all look forward to seeing one of these in your Christmas stocking. I will now turn it back over to Paul. Julian Paul Raines - Chief Executive Officer & Director: Thank you, Mike. We will now open it up for Q&A. Operator, please proceed.

We'll take our first question from Colin Sebastian from Robert Baird. Colin A. Sebastian - Robert W. Baird & Co., Inc. (Broker): Great. Thanks. Good afternoon and congratulations on a very nice quarter. Julian Paul Raines - Chief Executive Officer & Director: Thank you, Colin. Colin A. Sebastian - Robert W. Baird & Co., Inc. (Broker): Thanks. Paul, first I wonder if you can add some color on the plan to reconfigure the stores, reduce the size of the video game category, and how you manage that change including timing? And then, secondly, looking back at the Q2 numbers, I mean clearly you saw strength in the Mobile and Consumer Electronic segments. Video game products declined a little bit. I wonder if you're seeing any impact there from full game downloads? And then, lastly, in terms of the outlook for the remainder of the year, if you could maybe talk about some of the titles where you're perhaps seeing some particular strength in pre-orders that would be helpful. Thank you. Julian Paul Raines - Chief Executive Officer & Director: Thanks, Colin. Let me start and handle the first and maybe, maybe Tony and Rob, you two guys think about two and three on what you think. I think, Colin, the way we see it this Loot thing, we've been researching it. Mauler and the team in Australia has been researching it for a couple years. It hasn't been a sudden event. What we see though is that there's a tremendous adjacency between popular culture and video games. And if you remember back to our franchise marketing efforts that we did a few years ago we know that when the consumer is at a launch, they want to get every kind of item they can related to that particular title. If you're in line for Batman, you want the Batman t-shirt, the game, the everything that there is. And of course there's always been a lack of that merchandise. So we believe that the Loot has a significant place in our stores. Even if I was here today, Mike Buskey's here, our store leader. Mike, I think, what are you at? 20% overall Loot space, probably growing?

Yeah. Yeah. Julian Paul Raines - Chief Executive Officer & Director: It's going to be a bigger part of our business. We believe it's a good investment in space and candidly, it gives us good leverage with publishers who haven't had that kind of competition before. So I think that's a good use of our space and as long as it's productive I think we should continue to do so. What about Mobile, Consumer, full-game downloads? Who wants to take that one? Robert Alan Lloyd - Chief Financial Officer & Executive Vice President: Yeah. So, Colin, it sounded like you said video game products were down. I want to correct that and say that before the impact of FX hardware was up, software was up, pre-owned was up, accessories were up and digital was up. So we're very pleased with what we saw in the quarter in the core video game business. I think I'll turn it over to Tony for any specifics on what we saw on the digital side.

Sure. And we continue to attach at a very high rate. For instance, in Madden that just launched, we had a 42% attach rate of digital to that title. So we have a very strong attach rate and we continue to be... Julian Paul Raines - Chief Executive Officer & Director: It's very high.

It's very high and we continue to be very good at letting people understand exactly what they can buy from a digital standpoint. I remember that digital always suffers from two things, discoverability and affordability, and we do a great job on both of those fronts. In terms of the games that we've very excited about it's really some of the new IP or at least IP that hasn't been out for a little while. Halo 5 is launching. As Rob talked about, it's going to be stronger in the fourth quarter than it is in the third quarter because it launches so late in our third quarter. Call of Duty: Black Ops 3, we're excited to see the three-year development cycle and so very excited about that game coming out. And Fallout 4, which was announced, is also a game that we're looking forward to. And then Star Wars Battlefront, which is a whole new IP. So we're really excited about these new titles and that's why Rob I think shared his enthusiasm around the fourth quarter growth. Julian Paul Raines - Chief Executive Officer & Director: Thanks, Colin. Colin A. Sebastian - Robert W. Baird & Co., Inc. (Broker): Thanks. See you next week.

We'll see you then. Julian Paul Raines - Chief Executive Officer & Director: See you there.

We'll go next to Brian Nagel with Oppenheimer. Brian W. Nagel - Oppenheimer & Co., Inc. (Broker): Good afternoon. Congrats on a nice quarter. Julian Paul Raines - Chief Executive Officer & Director: Thanks, Brian. Brian W. Nagel - Oppenheimer & Co., Inc. (Broker): Couple of questions. First off, maybe somewhat of a follow-up to the prior quarter but on software, there was noise there. As we look at that year-on-year given the currency fluctuations and then some of the comparisons with last year's launches but as we step back from that and you look at the underlying trends there, how would you characterize the underlying software sales trend particularly with respect to new generation sales versus current and prior generation sales? And then I'll have a follow-up question. Julian Paul Raines - Chief Executive Officer & Director: Tony, do you want to take that?

Sure. Given that the launch has been incredibly strong, we see them as definitely participating in that. Clearly, we talked about attach rates are a bit lower and when you take a look at our attach rates on this incredible launch cycle that we have, when you look at our physical and our digital attach rates together, we're very consistent with the prior launch. So when you think about the fact that we've tripled the amount of units that we've sold on the PS4 and almost doubled the Xbox One, you see that we have a very strong – we feel very good about the growth that we're seeing. Julian Paul Raines - Chief Executive Officer & Director: Mike, anything you want to say on international unit growth pre-FX versus...?

Yeah. I think what we're seeing is pretty strong software growth on new releases, especially new IP. We talked about that a little bit on the call. And so when we look at reservations for the big titles this fall, we're continuing to see that trend where some of the new IP that's coming onto the new gens, there's really a lot of customer excitement around it. Brian W. Nagel - Oppenheimer & Co., Inc. (Broker): I thought you'd given us in the past the actual – the year-over-year growth on new generation software titles. Is that something – and if you had, what was that number here in Q2?

The number in Q2 was 64%. This is U.S. numbers. So 64% for the PS4 and Xbox One and down 56% on the PS3 and Xbox 360. So clearly the one thing that is different in this launch cycle versus the other is the fact that PS3 and Xbox 360 have fallen off faster and we've said that multiple times. So what we're seeing is very robust sales of PS4 and Xbox One offset by accelerated decline in PS3 and Xbox 360 on the new side. Now, the pre-owned side is obviously outperforming that, which is why we actually grew faster than new this quarter. Brian W. Nagel - Oppenheimer & Co., Inc. (Broker): Then the other question with respect to guidance, and Paul, I heard your comments earlier. You've made those comments before about wanting to put numbers out there that are achievable. But EPS beat the midpoint of your guidance here by $0.08. And you're lifting the range, both the top and bottom by $0.03. So there's $0.05 that goes away there. Is that simply GameStop wanting to be conservative or should we read something else into that? Julian Paul Raines - Chief Executive Officer & Director: I wouldn't read anything else into it. I'll let Rob answer the meat of the question. I mean, here's a couple things. There's what 75% of the year is left. A lot can happen in the rest of the year, we don't know. And number two, you told us, investors told us in the survey that we'd done that you want us to set targets we can achieve. So we're trying to set those targets. Rob, what else would you say about it? Robert Alan Lloyd - Chief Financial Officer & Executive Vice President: You know the point I was going to make is that we're only a quarter of the way through the earnings for the year and there is a lot to be learned from the titles as they come out this fall. And so we're a little cautious there. Julian Paul Raines - Chief Executive Officer & Director: Yeah. I think if what you're worried about is is there a looming digital scenario out there, I would say not one that we know about. That's for sure. But we're just trying to be cautious and trying to manage expectations and serve our shareholders, you know? Brian W. Nagel - Oppenheimer & Co., Inc. (Broker): Well, thank you. And congrats again. Robert Alan Lloyd - Chief Financial Officer & Executive Vice President: Thank you. Julian Paul Raines - Chief Executive Officer & Director: Thank you.

We'll go next to Arvind Bhatia from Sterne, Agee. Julian Paul Raines - Chief Executive Officer & Director: Hi, Arvind.

Let's go to Mike Olson with Piper Jaffray. Julian Paul Raines - Chief Executive Officer & Director: Okay. Hi, Mike. Mike J. Olson - Piper Jaffray & Co (Broker): Hey. Hey, guys. Good afternoon. Julian Paul Raines - Chief Executive Officer & Director: Thank you. Mike J. Olson - Piper Jaffray & Co (Broker): I just had a couple questions. If you look at the collectibles, which is obviously doing well, growing fast. If you look at that in isolation, is the gross margin for collectibles higher than your broader video game business including software and new hardware and pre-owned? In other words, if collectibles continues to grow, is that a favorable long-term trend for gross margin or not? And then my other question was last quarter you mentioned that pre-owned growth would accelerate throughout the year and end up outpacing new software growth by the end of the year. It sounds like that's still the case but just wanted to check back on that. Robert Alan Lloyd - Chief Financial Officer & Executive Vice President: Mike, this is Rob. The collectibles category is margin accretive for us on the overall business. So we're very pleased with that. And expanding that obviously will be beneficial to margin as we go forward. In terms of the pre-owned growth guidance relative to new, I think we said both would be mid single-digit growth for the year. Mike J. Olson - Piper Jaffray & Co (Broker): Okay. Thanks very much. Julian Paul Raines - Chief Executive Officer & Director: Thank you, Mike.

And now we'll go to Arvind Bhatia from Sterne, Agee.

Okay. Sorry about that, guys. Congratulations from my side as well. Julian Paul Raines - Chief Executive Officer & Director: Thank you, Arvind.

Okay. So, I guess, everybody is trying to figure out the back half. Looks like you guys are talking about acceleration. You've got a great lineup. Just wondering if you would maybe quantify a little bit more on the new software side. I think I remember previously you guys had talked about mid single-digit growth in new software as well. I think you confirmed used, but I just want to be sure you're still comfortable with the mid single-digit growth number ex-FX of course. That's my first question. And then on the used category, I heard you talk about the extra refurbishment costs related to the hardware side and also how the next-gen category had slightly lower margins. And so just your back half guidance on gross margins, I got that, but how should we think about used margins, say, for 2016 on sort of go-forward basis? Julian Paul Raines - Chief Executive Officer & Director: Rob, do you want to take the software question? Robert Alan Lloyd - Chief Financial Officer & Executive Vice President: Sure. With respect to new software for the year, we're saying mid single-digits. I will clarify that with continued FX movement, we're saying mid single-digits growth for software, new software and pre-owned before considering currency. The refurb costs looking forward and the next-gen versus prior-gen, I think the point that I would make there is we're not yet ready to give guidance for 2016, but what you can directionally expect as we move through a cycle is the titles within the next-gen age and that gives us greater flexibility with respect to the buy price as well as the retail prices.

Okay. And then I missed the part, I think, Tony, you mentioned on the Madden bundle, something about the physical bundle was there but not the digital bundle. Can you clarify that again, please?

Sure. We worked with our partners. Clearly, what took place last year was there were a lot of hardware promotional offers that were given where they were the packed-in digital game and it was packed-in for free. I think we articulated in the first quarter that we have made it clear with our publishing partners that our preference is that we sell – obviously GameStop's preference is to sell things at full price and provide great value for our trade program and that we have physical disks. And so we worked with our partners that there was a channel right offer that had, again, a digital pack-in in it of Madden and we worked with both Sony, Microsoft and EA, with all three of them, and we offered a free physical disk when you bought either a PS4 or an Xbox One. That's the clarification I was making. And then I said that if in fact we do continue – the platform holders do continue to put in free games as promotional items, we anticipate that at GameStop you'll see more physical bundles from third parties as opposed to digital bundles. Julian Paul Raines - Chief Executive Officer & Director: And you know, Arvind, this digital – of course, we've had lots of conversations on these digital bundles and so forth, right, Tony? But...

Yeah. Julian Paul Raines - Chief Executive Officer & Director: I think what's interesting to us is that consumers have a pretty strong preference in this and I think we've seen this play out in a variety of ways over the past few years. Consumers prefer those physical bundles because they know that that disk has value in the trading program at GameStop. So we choose not to participate in the digital bundles and Tony creates these promotions with Bob Puzon that are very effective.

Right. And it did not hurt our market share. We actually increased market share on the launch. Julian Paul Raines - Chief Executive Officer & Director: Yeah.

Sorry. Just one last one. The margins on Mobile, Consumer Electronics is up significantly. I think 900 basis points. Did you talk about kind of what was that this quarter? Julian Paul Raines - Chief Executive Officer & Director: I don't think we did. Did we, Rob? Robert Alan Lloyd - Chief Financial Officer & Executive Vice President: Well, the driver for that is within the Tech Brands businesses. As we continue to grow the AT&T-branded store counts and those businesses mature, we're continuing to see rich margins in there that stem from the consumers' shift to the next program from AT&T. So we're very pleased with the margin rates and the impact that that's having on the Mobile category as well as the business as a whole.

Okay, great. Thank you, guys, and good luck for the rest of the year. Julian Paul Raines - Chief Executive Officer & Director: Thank you, Arvind. Are we going to see you this weekend, Arvind, or no?

Absolutely. Yes. Julian Paul Raines - Chief Executive Officer & Director: All right, good. Robert Alan Lloyd - Chief Financial Officer & Executive Vice President: See you then.

We'll go to Curtis Nagle with Bank of America. Curtis Nagle - Bank of America/Merrill Lynch: Great. Thanks very much for taking the call, and good afternoon. I guess, just the first question in terms of looking at the software guidance for 3Q. Are you guys factoring Metal Gear Solid in any way in there? Just given that it's getting pretty phenomenal reviews and it's a pretty established franchise, I'd imagine it's going to be a pretty good game for you. And then just a quick follow-up.

Yes. We are factoring that in and excited about it. It should be noted also, Rainbow Six did move out of the quarter as well, so we're excited about both of those titles. And so you had – we see that as a trade-off. Curtis Nagle - Bank of America/Merrill Lynch: Okay. And then just a quick follow-up. Just going back to the used. So I understand that it was driven by next-gen, but could any of it also have been driven by the fact that the title line-up for this quarter was a little light and maybe you had some people, I guess, value-based gamers shifting into used as a consequence?

Yeah. I think as Rob shared, a lot of that, I think where you saw that, Curtis, was in our strong hardware performance and accessory performance. That's exactly what you saw, is you saw more people skewing our pre-owned business towards the hardware side. And as Rob talked about, we have refurb costs which are typically the same year-over-year at a slightly lower retail. Curtis Nagle - Bank of America/Merrill Lynch: Okay. Thanks very much. And good luck for the rest of the year. Julian Paul Raines - Chief Executive Officer & Director: Thank you, Curtis.

We'll go to David Magee with SunTrust.

Yeah. Hey, guys. Good afternoon. Julian Paul Raines - Chief Executive Officer & Director: Hey, David.

Hey, just a couple of questions. One is, given the strength in the hardware cycle thus far, what's your current thinking with regard to the duration of the cycle, how it sort of plays out the next couple of years? And also any color about the tie ratios as well would be helpful. Thank you. Julian Paul Raines - Chief Executive Officer & Director: That's a great question. Hardware strength and how long – I mean, it's an interesting question, right, because we obviously accelerated, brought forward a bunch of demand. The question he's got is how long will this last?

Well, we see it continuing. I mean, this continues to grow in strength. And I shared earlier about tie ratio that when you combine our physical tie ratio and our digital tie ratio that we're fairly comparable to the prior launch. And we have tremendous strength as we talked about. What's happening is now we're selling the 1 terabyte hardware, which is creating an additional demand. So we see continued demand. Mike, you might want to share some of PowerUp Reward numbers on continued demand.

Sure.

It's probably the best indicator we have.

Sure. Yeah. I would say number one, we're still pretty early in the cycle. The last one has gone, what, seven years in most cases. And we're barely two years into it. I think we're seeing an acceleration on the software side in terms of the installed base is growing. You're seeing more and more new IP coming out. And then on the PowerUp side, one of the things we continue to track is PowerUp numbers interest in purchasing new hardware. And those numbers are still very strong and similar to what we reported in the past. So all of our indicators are positive. The consumers are still very excited about these products. And there's a ton of consumers out there who still want these new consoles who haven't bought them or haven't been able to afford them yet.

And remember that some of the strongest multiplayer games are ahead of us. So Black Ops III, when you look at Battlefront, Star Wars, those are incredible multiplayer games. And that is going to drive whole guilds to go and migrate to a new platform. So we see that – that really has not started to take place in earnest yet. And we think this fall that will start to take place in earnest.

Thank you. And then secondly, can you talk about the breakdown in the pre-owned business between what we consider a traditional pre-owned product versus the newer value product?

We had $41 million worth of value product this quarter, which was an increase over last year that we had. So it continues to drive – that's what our purchases were for the quarter. And so we continue to increase value offerings as well, so that contributed to some of our growth as well. Julian Paul Raines - Chief Executive Officer & Director: I haven't checked the – the goal, David, of the value, if you remember, the value introduction I think it was in the March call last year, right? The goal of the value product was to increase our market share in titles below $20. That's our traditional weakness on the new software side. I think we did that in the first quarter. Second quarter, I'm ashamed to say I haven't checked, but I suspect we probably increased that. It has not been as fast as we had hoped and that's partly because we're just struggling to get to some of those publishers. On the other hand, there's a lot of activity in that space by us intent on purchasing more value product. So I think you'll see more on that.

Okay. Great. Thanks, Paul, and good luck. Julian Paul Raines - Chief Executive Officer & Director: Yeah, thank you.

We have time for two more questions. We'll go next to Seth Sigman from Credit Suisse. Seth I. Sigman - Credit Suisse Securities (USA) LLC (Broker): Great. Thanks very much. Nice quarter, guys. Julian Paul Raines - Chief Executive Officer & Director: Thank you, Seth. Seth I. Sigman - Credit Suisse Securities (USA) LLC (Broker): Couple of quick follow-up questions here. First on the Tech Brands business, just wondering if you could talk about how those stores are comping, those that have been opened for 12 months or however you disclose it. And then also the operating earnings performance of that business this quarter, I think you gave us revenue, but I'm not sure if I heard the actual operating earnings. Julian Paul Raines - Chief Executive Officer & Director: Guys, what can we disclose on that? You got to be careful here.

In terms of the revenue performance on a per-store basis, Seth, it is not included in our comp number. And the reason for that is because historically the wireless retail business is subject to a lot of volatility that's driven by changes in the commission and compensation structures that the carriers put in. We did a little bit of research as we said before in terms of what companies were public in this space. I think there aren't any left. They've been acquired. And the practice is to not disclose those comps, rather to talk in terms of – for us, the growth in profitability and growth in the store base, I think is a significant thing. Not sure we disclosed the operating earnings number for the quarter. And I don't have that immediately in front of me, so we'll have to get back to you on that one. Julian Paul Raines - Chief Executive Officer & Director: I mean, I think the thing you've got to understand is we've got partners there who have rules about what they want to disclose. The Mobile segment, though, I think is a good proxy for – of course, we don't have operating earnings right now in the Mobile. Robert Alan Lloyd - Chief Financial Officer & Executive Vice President: That will be in our 10-Q, Seth, I apologize for not having that (52:04). Seth I. Sigman - Credit Suisse Securities (USA) LLC (Broker): Okay. No. Fair enough. I mean, clearly, that part of the business is in investment mode. We saw that last quarter and again this quarter. How do you think about the normalized operating margins for that business and when that will actually start to inflect positively following this investment period? Julian Paul Raines - Chief Executive Officer & Director: Well, as Tony and I both mentioned in slightly different ways in our scripts, we expect the third quarter profit to be comparable to last year's operating earnings for Tech Brands. We will continue, as we're opening 90 stores to 100 stores this quarter, to incur some of those infrastructure costs to prepare for those openings. But in the fourth quarter, we think we're going to be largely past that. And we expect that the profit will grow significantly from last year. I think Tony said ex those infrastructure investments, we would expect the Tech Brands' profit for the year to be 40% to 50% up from last year in terms of operating profit margins. Rob, you might want to give them the long-term forecast that we've provided investors before for Tech Brands. Robert Alan Lloyd - Chief Financial Officer & Executive Vice President: Yeah. That is – I don't have that slide in front of me. But if I remember correctly, it was approximately $170 million in operating earnings against a revenue base of about $1.5 billion. So, in excess of 10% operating margin in that space. Julian Paul Raines - Chief Executive Officer & Director: Which would be accretive to us. Robert Alan Lloyd - Chief Financial Officer & Executive Vice President: Obvious, yes... Julian Paul Raines - Chief Executive Officer & Director: Traditional operating margins. Seth I. Sigman - Credit Suisse Securities (USA) LLC (Broker): Okay. Got it. And then just a follow-up question on the used game business, I think earlier you disclosed kind of a breakdown between current and last gen performance for the new software business. Last quarter you talked about that for the pre-owned business. I'm just wondering if you could give us some color on that this quarter. Julian Paul Raines - Chief Executive Officer & Director: Sure. There's a slide on this one, by the way, Seth. Seth I. Sigman - Credit Suisse Securities (USA) LLC (Broker): Actually... Julian Paul Raines - Chief Executive Officer & Director: Did we take it down? Oh, sorry. Seth I. Sigman - Credit Suisse Securities (USA) LLC (Broker): Took it down last quarter. Seth I. Sigman - Credit Suisse Securities (USA) LLC (Broker): Took down the slide? Robert Alan Lloyd - Chief Financial Officer & Executive Vice President: Yeah, 64% new software growth in PS4 and Xbox One, 117% pre-owned software growth, so significantly increase there. And then, on Xbox 360 and PS3, as I shared earlier, new software was down 56%. Pre-owned software was only down 25%. So we continue to see outpacing and a less decline in the pre-owned section than we do in the new. Seth I. Sigman - Credit Suisse Securities (USA) LLC (Broker): Okay. And just, one follow-up, if I may on the pre-owned business, GameStop put out a survey this quarter in a press release discussing how consumers were leaving some money on the table by not trading more games in. What's the company doing to stimulate that trade-in? Is increasing the trade-in values one option to sweeten the deal and drive that trade? Julian Paul Raines - Chief Executive Officer & Director: Sure it is. I mean, I think Tony had in his script our inventory level. And trade has gone up, right?

Yeah. So, our inventory levels very strong up 6%. And we've done that without having to pay more for the games. So that's been – obviously that's been a good opportunity for us. It is a constant awareness game. Julian Paul Raines - Chief Executive Officer & Director: And that's a debate.

And that's where PowerUp Rewards is helpful and so forth. And part of the survey, to be candid, was to allow people to understand that if you go into our stores today you will find that we've just kicked off another Trade More, Save More campaign where each store will have the top trader of the week listed, where there'll be top trade values listed. So I think this is a blocking and tackling issue in our stores where will we constantly be working to educate the customer on the great trade values that we have. Seth I. Sigman - Credit Suisse Securities (USA) LLC (Broker): Okay Julian Paul Raines - Chief Executive Officer & Director: The issue is, the debate here around here – if you Seth, if you're in our offices every day the constant debate is trade values versus new launches that drive trades versus marketing. Seth I. Sigman - Credit Suisse Securities (USA) LLC (Broker): Right. Julian Paul Raines - Chief Executive Officer & Director: It's kind of the big three. And what we found and we can get proven wrong, what we found is big launches and in-store execution drives trades more than trade values. Mike, you want to?

Yeah, I would just add to that from a consumer standpoint to Paul's point, it's value and awareness. We made a huge step last year with our simplified trade pricing and what we found is that consumers responded extremely well to that. And with a lesser mix of promotion and a greater mix of everyday value, people really responded well to that. And then the other thing that we find is that trade awareness is still always an opportunity. And every time we have an opportunity we want to communicate that and every time we communicate that we bring new people in. And all the evidence we have suggests that when we make people aware of the trade values and what they can get, they respond very positively to it. So we'll continue to work on awareness. Seth I. Sigman - Credit Suisse Securities (USA) LLC (Broker): Yeah. Okay. Thank you for all the color. I appreciate it.

Thank you. Julian Paul Raines - Chief Executive Officer & Director: Absolutely.

We'll go next to Scott Tilghman from B. Riley. Scott Tilghman - B. Riley & Co. LLC: Thanks. Good afternoon. Julian Paul Raines - Chief Executive Officer & Director: Hey, Scott. Scott Tilghman - B. Riley & Co. LLC: I just have a few, I hope relatively quick, questions. First off on the collectible side, as you gear up in that category and have a little bit of history with it, do you expect it to ultimately be lumpier than new content sales or do you think you have an opportunity to provide some smoothing of the revenue with merchandising within the category?

Yeah. This is Mike Mauler. I think that what we'll see, because it's a broader range of IP, we will see it to be smoother. So you're consistently having new movies, new television shows and video game launches throughout the year. And so, for example, the movie launches in the summer, there's frequently not a lot of new releases on video games, but there's a lot of Loot you can sell with that new IP. So it seems like it'll be more consistently strong. Julian Paul Raines - Chief Executive Officer & Director: I think the fact that you're seeing us outperform in the second quarter indicates how the Loot is really contributing to balancing our demand flow. And as Mike said, there's a lot of IP that's not video games, so... Scott Tilghman - B. Riley & Co. LLC: Right. Julian Paul Raines - Chief Executive Officer & Director: ...it should. Scott Tilghman - B. Riley & Co. LLC: And I assume that you will be following up with marketing support behind that as the collection grows?

Absolutely. Julian Paul Raines - Chief Executive Officer & Director: We hope so. I'm looking at Hogan. He's shaking his head.

I'm nodding. I'm nodding. Julian Paul Raines - Chief Executive Officer & Director: You don't have a big checkbook but he's nodding. Scott Tilghman - B. Riley & Co. LLC: Second on international. I missed a couple of the comments. I know Australia was up over 10% on a comparable basis. And if I heard that correctly, that means the other markets, Europe and Canada, were down. I was wondering if you could compare and contrast a little bit what you're seeing across the international geographies. Julian Paul Raines - Chief Executive Officer & Director: Want to take that, Mike?

Sure. Just a second. Robert Alan Lloyd - Chief Financial Officer & Executive Vice President: Yeah, I'll go ahead and give the comps. The Canadian comp was 8.5% and we were down in comp in Europe 3.8%. As far as color, I'll turn it over to Mike.

Yeah, I think the color would be our two strongest markets have been Australia and Canada. In Europe last year we had very good hardware allocations and Europe really exceeded the rest of the international markets in terms of hardware sales. This year we're back closer to our normal market size on hardware and so that was a little bit of headwind for them. Julian Paul Raines - Chief Executive Officer & Director: One thing to add, Mike, maybe might be that the concept of Loot appears to be more of an Anglo, maybe Northern European concept. Southern Europe, we haven't seen the kind of results that we've seen maybe in some of the Northern European markets.

Yeah, that's true. The growth of Loot in Australia, Canada, United States, Northern Europe, the Nordics, and Ireland have been consistently ahead of what we've seen in Southern Europe. And so that's something we continue to have to explore. Julian Paul Raines - Chief Executive Officer & Director: Yeah. We may not have the right assortment yet.

Yeah. Julian Paul Raines - Chief Executive Officer & Director: That's one possibility, but we certainly have work to do. Scott Tilghman - B. Riley & Co. LLC: That's helpful. The last question I have, just in terms of the competitive environment, you've had some smaller regional players pull out of the category. It seems like some of the big boxes even have diminished the importance of CE as a leading category or a traffic driver, but I'm curious what your take is on the competitive environment both domestically and abroad. Julian Paul Raines - Chief Executive Officer & Director: For video games or Loot or? Scott Tilghman - B. Riley & Co. LLC: For the broader product mix. Julian Paul Raines - Chief Executive Officer & Director: Yeah, I'll let these guys add their comments. We've been watching all of these players around the world for a long time and I can't say I've seen much diminishing of anything they're doing. I mean, they're all running their play. That's why I did have a good number yesterday. It appears I haven't seen the video game comps. Have you seen them, Tony?

No. Julian Paul Raines - Chief Executive Officer & Director: I'd be surprised if they really gained a ton of share, but we don't see a huge amount of activity. Our competitor base is so broad now too. It used to be we'd get on a call and we'd talk about Walmart and Best Buy and Media Markt and Saturn and JB Hi-Fi, Amazon. Today we talked about lots and lots of other people, digital players, publishers who are trying to going direct versus through retail. So I have not seen a ton of activity here that's new other than the (01:01:30) players. Tony?

Yeah. I don't see a lot of change and actually I think that there is a – we continue to gain market share and so like we say quarter-in and quarter-out, we're selling over one-half of the games. We have made a very distinct effort to try and win this console launch. We've been very clear about that for the last two years and I think we've been effective in that. So I'm sure that there are people at some of those other locations that Paul mentioned that are seeing a significant reduction. I mean, the whole category has not tripled the sales of PS3s and the whole category has not nearly doubled Xbox One. So clearly it's taken a lot of share from a lot of those other people. So I don't think that they're trying less. I just think that we're running on play and it seems to be working. Julian Paul Raines - Chief Executive Officer & Director: On the – guys, we should talk about on the Mobile Loot side. There's a whole new cast. We are a committed AT&T partner, so we are in partnership with them. We compete directly with Verizon, Sprint and T-Mobile and we sort of live and die by those fortunes. On the Loot side, there's probably a lot of players on the Loot side. I don't have share data on Loot unfortunately, but I suspect we're growing very fast on share data on Loot. Scott Tilghman - B. Riley & Co. LLC: Paul, to your point, I assume installment billing is actually a benefit to you given that some of the others out there competing can offer it. Julian Paul Raines - Chief Executive Officer & Director: Yeah. I think that's accurate. That's accurate. And there's just a lot going on under one roof. Don't forget, we also offer Cricket in 2,000 stores or so. So 2,000 GameStop stores we will sell you a Cricket prepaid, owned and a contract. So when you can do prepaid phone in a store, you can probably do some other prepaid thing, so we're exploring that very aggressively. It's just a lot – as I said in my notes, I mean, there's just a lot going on here and we don't have the luxury of slowing down. Maybe today it feels less scary, but there was a time here where we were coming in everyday figuring out how we're going to get through the day and so forth. Today fortunately I think we're past that, but we can't slow it down. Scott Tilghman - B. Riley & Co. LLC: Okay. Well, thank you for taking the questions. Julian Paul Raines - Chief Executive Officer & Director: Thank you.

Thanks, Scott. Julian Paul Raines - Chief Executive Officer & Director: All right. Well, thank you for your support of GameStop and we look forward to talking to everyone. If you're coming to our show next week, we'll see you there. If not, we'll talk to you during the quarter. Thank you.

This does conclude today's conference. We thank you for your participation.