Take-Two Interactive Software, Inc. (TTWO) Earnings & Analysis

Latest quarter

Take-Two reported Q1 FY2027 revenue of $1.5 billion, up 2.00% from $1.5 billion a year earlier. The company’s adjusted EPS, as the consensus counts it, was $0.36 versus the consensus of $0.31, or 16.1% above the consensus. Revenue, as the consensus counts it, was $1.4 billion versus the consensus of $1.4 billion and was 2.30% above the consensus.

The filing says higher revenue from NBA 2K was partly offset by lower revenue from Color Block Jam and the Grand Theft Auto series. Gross margin was 57.5%, compared with 62.8% a year earlier, while operating margin was −2.31%, compared with 1.44%. The filing recorded diluted EPS of −$0.18, compared with diluted EPS of −$0.07 in Q1 FY2026. Free cash flow was −$209.6 million, compared with −$74.2 million a year earlier. Take-Two said Q1 revenue came in above its own guidance.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

On demand, Strauss Zelnick said first-quarter net bookings of approximately $1.39 billion were slightly above the company’s guidance range, led by NBA 2K and the Grand Theft Auto series. Lainie Goldstein said recurrent consumer spending declined 1%, compared with the company’s forecast for a 3% decline, and accounted for 84% of net bookings. She said NBA 2K grew 7%, the Grand Theft Auto series rose 3%, and mobile declined 7% from a year earlier.

Zelnick said NBA 2K26 had sold more than 12 million units to date, while recurrent consumer spending for the Grand Theft Auto series grew 3%. He said Grand Theft Auto V had sold more than 230 million units worldwide and that Grand Theft Auto VI had an exceptional start to pre-orders. Asked about pre-orders, Zelnick said the company was not changing guidance because pre-orders can be cancelled and said Take-Two would wait for the release before drawing conclusions.

On pricing, Zelnick said Rockstar selected standard and deluxe-edition pricing based on the value it aims to offer consumers, including a standard edition at $80. He said Take-Two did not provide detailed color on pricing or additions and leaves those decisions to its labels.

Goldstein said cost of revenue rose 17% to $651 million and included a $43 million impairment charge tied to a decision not to proceed with an unannounced third-party title. She said management-basis operating expenses declined 1% in the quarter because of marketing-expense timing across the labels. Goldstein also said the direct-to-consumer mobile channel was a driver of revenue and margin enhancement.

On investment and competition, Zelnick said Take-Two uses AI and machine learning to support innovation and efficiency, but said the tools would not replace employees or reduce the cost of making bigger projects. He said user-acquisition costs can become less economical when competitors spend heavily, and that the company assesses marketing spending against the lifetime value of each property.

For Q2 FY2027, Goldstein said Take-Two projected net bookings of $1.62 to $1.67 billion and recurrent consumer spending to decline by approximately 5%, assuming growth for NBA 2K and the Grand Theft Auto series while mobile declines.

Guidance

Goldstein said Take-Two lowered its forecast for FY2027 management-basis operating-expense growth to approximately 7.00% from the prior forecast of 8.00%. She also said the company raised planned FY2027 capital expenditures to $290.0 million from $200.0 million because of a planned real-estate purchase.