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Majesco Entertainment Company F2Q10 (Qtr End 04/30/2010) Earnings Call Transcript

Majesco Entertainment Company F2Q10 (Qtr End 04/30/2010) Earnings Call Transcript

Majesco Entertainment Company (COOL)

F2Q10 (Qtr End 04/30/2010) Earnings Call

June 14, 2010 4:30 p.m. ET

Executives

John Gross - EVP and CFO

Jesse Sutton - CEO

Gui Karyo - EVP of Operations

Analysts

Presentation

Operator

Welcome to the Majesco Entertainment Company's fiscal second quarter 2010 earnings conference call. (Operator Instructions)

At this time, I'd like to turn the conference over to John Gross, Majesco's Executive Vice President and Chief Financial Officer.

John Gross

Thank you, operator and good afternoon. I'd like to welcome you to Majesco Entertainment's conference call.

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Before we get started, I'd like to remind you that the call is being recorded, and the audio broadcast and replay of the teleconference will be available in the Investor Relations section on the company's website.

As a reminder, this call may contain forward-looking statements, including statements regarding management's intentions, hopes, expectations, representations, plans or predictions about the future. Such statements are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that could cause actual results or actual future results to differ materially from expectations set forth in the forward-looking statements.

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Factors that could cause actual results to differ materially are specified in the company's annual report on Form 10-K for the year ended October 31, 2009, and other filings with the SEC. The company does not undertake and specifically disclaims any obligation to release publicly the results of any revision that may be made to any forward-looking statements to reflect the occurrences of anticipated or unanticipated events or circumstances after the date of such statements.

To facilitate a comparison between the reported periods, the company has presented both GAAP and non-GAAP financial measures. These non-GAAP measures are provided to enhance investor's overall understanding of the company's current financial performance and the company's prospects for the future. These measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute, or superior to GAAP results. A reconciliation between GAAP and non-GAAP financial measures is included in the press release issued earlier today.

With me on the call are Jesse Sutton, Chief Executive Officer; and Gui Karyo, Executive Vice President of Operations. I'd like to now turn the call over to Jesse. Jesse?

Jesse Sutton

Thanks, John. I'll open the call with some highlights and an overview of our performance in the second quarter. John will follow with the financial review, I'll conclude with an update on our products slate for the rest of the year, and then we would be happy to take your questions.

While revenues were down versus last year for the quarter, they were consistent with internal expectations, and we're still tracking towards our full year guidance of $80 million. Looking at the year, some of our strongest titles are in the second half of the year, including the recently released Tetris Party Deluxe, which is off to a good start. We also have Greg Hastings Paintball 2, Crafting Mama, and Zumba Fitness.

Our holiday line-up includes two Mama titles for the first time ever, and we already have in place some strong holiday distribution deals. We continue to make progress with new properties, announcing Martha Stewart, Zumba Fitness, and My Baby 3. Our efforts to leverage the strength and popularity of our Cooking Mama franchise continue, and for the first time, we would be launching two new Mama brand extensions this holiday, Crafting Mama for the DS, and Babysitting Mama for the Wii.

Babysitting Mama is particularly exciting, given its new and innovative play mechanic that lets girls play with a plush doll as they play the game.

We continue to control our costs to drive profitability. Our operating expenses are down 36% in total, largely due to the closure of our studio and reduction in staff earlier this year. We are committed to achieve and improve and sustain profitability.

We also have a strong team in place, fortified by the recent addition of Chris Gray as Senior Vice President of Production. We are thrilled to have someone with Chris's talents and wealth of experience join the Majesco team. Chris's successful record, designing and developing great games is perfectly aligned with our goals for the future of our product line.

His critical expertise will help ensure we are publishing a world-class portfolio of mass market games. Chris is an industry veteran and brings more than 25 years of experience of our company. Most recently, at Electronic Arts, he served as Vice President and Executive Producer of their Hasbro business unit. There, he worked on a range of high profile franchises, including Littlest Pet Shop, Harry Potter and the Sorcerer's Stone and EA's NASCAR franchise.

Finally, we recently announced the planned departure of our EVP of Operations, Gui Karyo. We are in the process of recruiting a top-tier executive who will complement Chris and expand our executive team with our strategic goals in mind. I want to thank Gui for all his contributions for the company over the past three-plus years, and wish him much luck in his future endeavors.

I would now like to pass the call to John Gross, Majesco's Chief Financial Officer, to provide the financial review of our fiscal second quarter results. John.

John Gross

Thanks, Jesse. I'll first recap our results for the quarter, and close with some comments about our guidance for the year.

Net revenues for the three months ended April 30, 2010, decreased to $10.9 million from $20.5 million in the comparable quarter last year. While performance was consistent with internal expectations, comparisons to last year should be put in context. The decrease was primarily due to the strength of the first Jillian Michaels title, which continued to sell strongly in the second quarter of last year, and also, the second quarter included the introduction of Gardening Mama last year. We had no such strong releases in the second quarter of this year.

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