Skip to content
    TTWO
    Earnings call· Jun 2025(Q1 FY26)

    TAKE TWO INTERACTIVE SOFTWARE Q1 FY26 earnings call TTWO

    Aug 7, 2025 Source

    Executive summary

    Take-Two Interactive Software Q1 FY26 — Strong Mobile & Core Franchise Performance Drives Raised Outlook

    Take-Two Interactive Software reported an excellent start to FY26, driven by strong performance in its mobile segment and core franchises like Grand Theft Auto and NBA 2K. The company raised its full-year net bookings outlook, expressing confidence in its long-term pipeline and expecting record levels of net bookings in FY27. Management emphasized a strategy focused on organic growth, selective inorganic opportunities, and returning capital to shareholders through opportunistic buybacks.

    Highlights

    5

    • Net bookings for Q1 FY26 exceeded $1.4 billion, meaningfully above the high end of expectations.

    • Mobile business vastly exceeded expectations, with Toon Blast growing 22% year-over-year and Match Factory! growing 33% year-over-year.

    • Grand Theft Auto V has sold over 215 million units worldwide, and GTA Online new player accounts grew over 50% year-over-year.

    • NBA 2K25 sold over 11.5 million units, with daily active users and MyCAREER daily active users each up 30%, driving 48% growth in recurrent consumer spending.

    • Recurrent consumer spending grew 17% for the period, meaningfully above guidance of 7% growth, and accounted for 83% of net bookings.

    Concerns

    3

    • Operating expenses on a management basis rose 3% year-over-year in Q1, slightly above the forecast of 2% growth, primarily due to higher personnel costs.

    • Grand Theft Auto Online is expected to decline in recurrent consumer spending for the full fiscal year and Q2 FY26.

    • Mobile growth is anticipated to decelerate from low teens in Q1 to low single digits for the full fiscal year due to the maturity of some titles and the life cycle of hyper/hybrid-casual games.

    Guidance & targets

    23
    CategoryTargetConfidence
    Full-year FY26 Net Bookings
    $6.05 billion to $6.15 billion
    high materiality
    High
    Full-year FY26 Recurrent Consumer Spending growth
    approximately 4%
    medium materiality
    High
    Full-year FY26 NBA 2K growth
    mid-teens
    medium materiality
    High
    Full-year FY26 Mobile growth
    low single digits
    medium materiality
    Medium
    Full-year FY26 Grand Theft Auto Online recurrent consumer spending
    decline
    medium materiality
    High
    Full-year FY26 Net Bookings breakdown (Zynga)
    roughly 45%
    low materiality
    High
    Full-year FY26 Net Bookings breakdown (2K)
    39%
    low materiality
    High
    Full-year FY26 Net Bookings breakdown (Rockstar Games)
    16%
    low materiality
    High
    Full-year FY26 Operating Cash Flow
    approximately $130 million
    medium materiality
    High
    Full-year FY26 Capital Expenditures
    approximately $140 million
    medium materiality
    High
    Full-year FY26 GAAP Net Revenue
    $6.1 billion to $6.2 billion
    high materiality
    High
    Full-year FY26 Cost of Revenue
    $2.55 billion to $2.57 billion
    medium materiality
    High
    Full-year FY26 Total Operating Expenses
    $3.84 billion to $3.86 billion
    medium materiality
    High
    Full-year FY26 Management Basis Operating Expense growth
    approximately 5%
    medium materiality
    High
    Q2 FY26 Net Bookings
    $1.7 billion to $1.75 billion
    high materiality
    High
    Q2 FY26 Recurrent Consumer Spending growth
    approximately 1%
    medium materiality
    High
    Q2 FY26 NBA 2K Recurrent Consumer Spending
    low single-digit increase
    medium materiality
    High
    Q2 FY26 Mobile Recurrent Consumer Spending
    slight growth
    medium materiality
    High
    Q2 FY26 Grand Theft Auto Online Recurrent Consumer Spending
    decline
    medium materiality
    High
    Q2 FY26 GAAP Net Revenue
    $1.65 billion to $1.7 billion
    high materiality
    High
    Q2 FY26 Operating Expenses
    $1.02 billion to $1.03 billion
    medium materiality
    High
    Q2 FY26 Management Basis Operating Expense growth
    approximately 7%
    medium materiality
    High
    Record levels of net bookings
    record levels
    high materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Zynga
    Expected to be the largest contributor to full-year FY26 net bookings.
    Expected Net Bookings Contribution: 45%
    		————
    2K
    Expected to be the second largest contributor to full-year FY26 net bookings.
    Expected Net Bookings Contribution: 39%
    		————
    Rockstar Games
    Expected to contribute 16% to full-year FY26 net bookings.
    Expected Net Bookings Contribution: 16%
    		————

    Operational metrics

    29
    Net bookings
    $1.42 billionmeaningfully above guidance
    Q1 FY26

    Exceeded guidance range of $1.25 billion to $1.3 billion.

    Recurrent consumer spending growth
    17%above 7% guidance
    Q1 FY26

    Meaningfully above guidance of 7% growth.

    NBA 2K recurrent consumer spending growth
    nearly 50%
    Q1 FY26

    Contributed to overall recurrent consumer spending growth.

    Mobile recurrent consumer spending growth
    low teens
    Q1 FY26

    Contributed to overall recurrent consumer spending growth.

    Grand Theft Auto Online recurrent consumer spending growth
    low single digits
    Q1 FY26

    Contributed to overall recurrent consumer spending growth.

    GAAP Net Revenue
    $1.5 billionincreased 12%
    Q1 FY26

    Year-over-year increase.

    Cost of Revenue
    $559 milliondeclined 1%
    Q1 FY26

    Year-over-year decline.

    Operating Expenses
    $923 milliondecreased 3%
    Q1 FY26

    Year-over-year decrease.

    Management Basis Operating Expense growth
    3%above 2% forecast
    Q1 FY26

    Slightly above forecast due to higher personnel costs.

    Cash balance
    $2 billion
    current

    Stated in context of capital allocation strategy.

    Net leverage
    1.2 turns
    current

    Stated as approximately 1.2 turns.

    Grand Theft Auto V units sold
    215 million
    lifetime

    Worldwide sales to date.

    Grand Theft Auto Online new player accounts growth
    over 50%YoY
    Q1 FY26

    Benefited from content updates.

    NBA 2K25 units sold
    11.5 million0.5 million more than last year
    to date

    Sales to date, 0.5 million more than last year's title.

    NBA 2K25 daily active users growth
    30%YoY
    Q1 FY26

    Growth in overall daily active users.

    NBA 2K25 MyCAREER daily active users growth
    30%YoY
    Q1 FY26

    Growth in MyCAREER mode daily active users.

    WWE SuperCard lifetime downloads
    37 million
    lifetime

    Most successful mobile game for the label.

    Toon Blast growth
    22%YoY
    Q1 FY26

    Driven by Seasonal Collection feature.

    Match Factory! growth
    33%YoY
    Q1 FY26

    Achieved record net bookings, driven by new features like Treasure Cave event.

    Borderlands 4 wishlists
    more than 2.5 million
    current

    Across all platforms, indicating strong community sentiment.

    Borderlands Fan Fest streams and videos
    over 600,000 hours
    event

    Generated during the first ever Borderlands Fan Fest.

    Borderlands 4 price
    $70
    launch

    Launch price for the game.

    Peer game price
    $80
    launch

    Reference to a peer's full game launch price.

    Buyback success rate
    100%
    lifetime

    Management's stated success rate in purchasing shares at deep value.

    Advertising revenue
    flatYoY
    Q1 FY26

    Also up sequentially, attributed to adjusted approach from hyper-casual to hybrid-casual.

    Unemployment rate forecast
    4.5%up from 4.2%
    year-end

    Management's personal macroeconomic view.

    Fed rate cuts forecast
    50 bps
    by year-end

    Management's personal macroeconomic view.

    GDP growth forecast
    1% to 2%
    Q1 FY26

    Management's personal macroeconomic view, return to positive growth after negative growth last year.

    Consumer spending growth forecast
    3%
    annual

    Management's personal macroeconomic view, accustomed to this level.

    Industry KPIs

    4
    MetricValueDetails
    Paid members subscribers215 million (GTA V); 11.5 million (NBA 2K25); 37 million (WWE SuperCard)units/downloads
    Member quality and retention30% (NBA 2K25 DAU); 30% (NBA 2K25 MyCAREER DAU); >50% (GTA Online new player accounts)%
    Share buyback capital returned—
    Content spend title performance22% (Toon Blast); 33% (Match Factory!); >2.5 million (Borderlands 4); >600,000 hours (Borderlands Fan Fest)%/wishlists/hours

    Product announcements

    6
    ProductTypeDetails
    Mafia: The Old Countrylaunch
    NBA 2K26launch
    Borderlands 4launch
    WWE 2K26roadmap
    Civilization VII for Nintendo Switch 2launch
    WWE 2K25 for Nintendo Switch 2launch

    Deals & partnerships

    1
    NBA, NBA PA, WNBA PA, NBA G League, USA BasketballMultiyear global partnership expansionmultiyear

    2K announced a new multiyear global partnership expansion with the NBA, NBA PA, and WNBA PA, and extended its long-standing relationship with the NBA G League and USA Basketball. This continues highly successful partnerships.

    Risks & headwinds

    4
    Deceleration of Mobile growthFY26

    Expected to slow from low teens in Q1 to low single digits for full FY26

    Mitigation: Focus on enhancing existing portfolio and releasing new mobile titles; hope for continued momentum beyond forecast.

    Grand Theft Auto Online recurrent consumer spending declineFY26 and Q2 FY26

    Expected to decline

    Mitigation: Continued content updates and engagement efforts (e.g., Money Fronts Summer Content Pack).

    Increased operating expensesQ1 FY26, FY26, Q2 FY26

    Management basis operating expenses rose 3% YoY in Q1 (above 2% forecast); full-year expected to grow ~5% YoY (up slightly from prior); Q2 expected to grow ~7% YoY

    Mitigation: Q1 increase due to higher personnel costs; full-year and Q2 increases due to higher personnel costs and increased marketing spend to support mobile portfolio and strong release slate.

    Macroeconomic slowdown and consumer selectivitynear-term to year-end

    Unemployment potentially rising to 4.5%; consumers becoming more careful with spending

    Mitigation: Focus on delivering high-quality entertainment experiences to drive 'flight to quality' among consumers; strategy of putting out the best releases.

    What to watch in Q2 FY26

    5

    Mobile business momentum

    next quarter (Q2 FY26)
    CurrentLow teens growth in Q1 FY26
    TargetDeceleration to low single digits for full FY26

    Why it matters

    Mobile vastly exceeded expectations in Q1, but management guides for deceleration. Verifying if this trend holds or if momentum continues is key to full-year performance.

    Yes, Q1 was fantastic. We've seen so much momentum in a lot of our big titles and some of our titles that have really started take off since Q4 of last year and into this first quarter. But we do see some mature titles that have achieved outstanding results on a multiyear basis. And given the age of these titles, we really still expect moderation even though we haven't really seen it over the course of the fiscal year.

    Q&A highlights

    7

    What specific factors are driving the exceptional 48% RCS growth in NBA 2K25, especially given the 11.5 million units sold?

    Karl Slatoff attributed the strong NBA 2K25 performance to improved management of in-game telemetry and consumer engagement in both MyCAREER and MyTEAM modes. He noted that the development team has become more adept at understanding what players engage with and spend money on, leading to continuous year-over-year improvements.

    “It's really both of our primary RCS generating modes, which is MyCAREER and also -- MyCAREER and our -- MyTEAM, sorry about that. So it's really -- over time, we're getting much, much better about managing and reading our in-game telemetry, knowing what the consumers like to spend money on, what they like to engage with.”

    asked by Eric Handler · answered by Karl Slatoff

    2 min read5 chapters

    Detailed Narrative

    01

    Mobile Business Outperformance and Strategy

    Take-Two's mobile segment significantly exceeded expectations in Q1 FY26, driven by strong performances from titles like Peak's Toon Blast, which grew 22% year-over-year, and Match Factory!, up 33%. Rollic's Color Block Jam became its highest-grossing title, maintaining top app chart positions. The company is focusing on its mobile direct-to-consumer business, achieving better conversion through new offers and personalization, and sees ample growth runway in this area, especially in light of recent court rulings regarding alternative app stores.

    02

    Grand Theft Auto and NBA 2K Momentum

    The Grand Theft Auto series continues its strong momentum, with GTA V having sold over 215 million units worldwide. Engagement for GTA Online benefited from the launch of Trailer Two for Grand Theft Auto VI and the Money Fronts Summer Content Pack, leading to over 50% year-over-year growth in new player accounts. NBA 2K25 also delivered strong results, selling over 11.5 million units and seeing a 30% increase in daily active users, which contributed to a 48% growth in recurrent consumer spending. 2K announced a multiyear partnership expansion with the NBA and related associations.

    03

    Upcoming Release Slate and Platform Expansion

    The company has a robust release slate for the current fiscal year, including Mafia: The Old Country, NBA 2K26, and Borderlands 4, all launching in Q2. NBA 2K26 and Borderlands 4 will also be available on Nintendo Switch 2, with NBA 2K26 being the first in its series to offer the complete Gen 9 experience on the platform. Additionally, WWE 2K26 is slated for release later in the fiscal year, and Civilization VII was released for Nintendo Switch 2 in Q1.

    04

    Capital Allocation and Financial Strength

    Take-Two maintains a conservative financial approach with $2 billion in cash and a net leverage of approximately 1.2 turns. The capital allocation strategy prioritizes organic growth, followed by selective and accretive inorganic opportunities, and finally, returning capital to shareholders through opportunistic share buybacks. Management noted a 100% success rate in purchasing shares at deep value, reinforcing confidence in their approach to capital deployment.

    05

    Distribution Evolution and Pricing Strategy

    Management believes the industry is moving towards more open and fair distribution systems, driven by financial necessity, opportunity, regulation, and litigation. This shift is seen as beneficial for consumers and the company's direct-to-consumer efforts. Regarding game pricing, Take-Two's philosophy is to deliver more value than what is charged, aiming to vastly exceed expectations. While variable pricing is common, the focus remains on quality and consumer value, rather than simply matching higher price points seen elsewhere.

    AI-generated summary of the company’s earnings call. Not investment advice.