Take-Two Q1 Earnings Beat Estimates on NBA 2K and GTA Strength

GAAP net revenues increased 2.0% year over year to $1.53 billion. Game revenues rose 2.9% to $1.42 billion, while advertising revenues fell 8.4% to $111.1 million.

By platform, mobile revenues decreased 4.9% to $762.3 million and PC and other revenues dropped 13.5% to $131.1 million. Console revenues climbed 16.3% to $640.5 million, partly offsetting weakness elsewhere. U.S. revenues rose 2.2% to $920.0 million, while international revenues increased 1.7% to $613.9 million.

Take-Two's Q1 Results Show Franchise Strength

NBA 2K26 sold in more than 12 million units, up 9% from NBA 2K25. Recurrent consumer spending for NBA 2K grew 7%, supported by a 15% increase in average daily active users, a 25% rise in MyCAREER daily active users and a 35% increase in average games played per user.

The Grand Theft Auto series also exceeded the company's expectations. Grand Theft Auto V has sold in more than 230 million units worldwide, while recurrent consumer spending for the series grew 3%. Management said Grand Theft Auto VI had an exceptional start to preorders ahead of its Nov. 19 release.

TTWO's Mobile Business Remains Uneven

Zynga performed in line with management's expectations, though mobile Net Bookings declined 7% year over year. Toon Blast Net Bookings rose 8%, Words With Friends grew 8% and Top Eleven increased 15%.

NBA 2K All-Star in China surpassed 10 million registered users since launch and is generating strong profit margins. Management also noted some pressure on user acquisition but said it was not seeing a broader consumer pullback in mobile.

Take-Two's Costs Weigh on Quarterly Profitability

GAAP gross profit declined 6.6% year over year to $882.5 million, while gross margin contracted to 57.5% from 62.8%. Cost of revenues rose to $651.4 million and included a $43.4 million impairment charge tied to an unannounced third-party title that the company decided not to pursue.

Operating expenses edged down 0.6% to $918.0 million. Selling and marketing expenses fell 9.6% to $369.7 million, while research and development expenses increased 6.8% to $273.8 million and general and administrative expenses rose 9.1% to $226.3 million.

Take-Two's Balance Sheet & Cash Flow Details

Cash and cash equivalents were $1.36 billion as of June 30, 2026, down from $1.55 billion at March 31. Short-term investments increased to $461.7 million from $443.8 million.

Operating cash outflow was $168.8 million compared with $44.7 million a year earlier.

TTWO's Q2 & FY27 Outlook

For the fiscal second quarter, management expects Net Bookings of $1.62-$1.67 billion and GAAP net revenues of $1.42-$1.47 billion. GAAP loss is forecast at 84-75 cents per share, with recurrent consumer spending expected to decline about 5%.

Take-Two reiterated fiscal 2027 Net Bookings guidance of $8.0-$8.2 billion, representing roughly 20% growth at the midpoint. GAAP net revenues are still expected at $7.9-$8.1 billion, while GAAP earnings are projected at 55-75 cents per share. Recurrent consumer spending is expected to be flat year over year and represent 64% of Net Bookings.

For fiscal 2027, TTWO continues to expect operating cash flow above $1 billion. Capital expenditures are now projected at approximately $290 million, up from the prior forecast because of a planned real estate purchase, while management expects to reach a net cash position by fiscal year-end.

Take-Two’s Zacks Rank & Other Stocks to Consider

Currently, TTWO carries a Zacks Rank #2 (Buy).

Kontoor Brands KTB, Newsmax Inc. NMAX and Viking Holdings VIK are some similar-ranked stocks that investors can consider in the broader Consumer Discretionary sector.

Kontoor Brands, Newsmax and Viking Holdings carry a Zacks Rank #2 each at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Kontoor Brands is slated to announce second-quarter 2026 results on Aug. 12. Meanwhile, Newsmax will report on Aug. 13, and Viking Holdings is scheduled to release results on Aug. 19.

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