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TT

TAKE TWO INTERACTIVE SOFTWARE INC (TTWO)·Q2 2026 Earnings Summary

Executive Summary

  • Take-Two delivered a strong Q2 FY26: Net Bookings rose 33% YoY to $1.96B (above its $1.70–$1.75B guidance) and GAAP net revenue grew 31% YoY to $1.77B; GAAP diluted EPS was $(0.73) due largely to amortization and continued investment, while recurrent consumer spending (RCS) grew 20% and comprised 73% of bookings .
  • Management raised FY26 outlook again: Net Bookings to $6.4–$6.5B, GAAP net revenue to $6.38–$6.48B, operating cash flow to ~$250M, and capex to ~$180M; initial Q3 guide implies bookings of $1.55–$1.60B and GAAP revenue of $1.57–$1.62B .
  • Highlights/catalysts: NBA 2K26 launch drove elevated ASPs and engagement; mobile outperformed (Toon Blast, Color Block Jam, Match Factory); GTA VI now set for Nov 19, 2026—framing FY27 for record bookings and setting a higher baseline for profitability .
  • Watch items: Borderlands 4 launch softer on PC due to optimization issues (being addressed); opex dollars higher on incremental user acquisition and performance-based comp; GAAP still in loss territory this quarter despite strong bookings .

What Went Well and What Went Wrong

  • What Went Well

    • NBA 2K26: higher premium SKU mix, 7-day early access, strong engagement (DAUs ~+30%, MyCareer DAUs ~+40%), double-digit unit growth vs 2K25, and RCS +45% within NBA; elevated ASPs boosted monetization .
    • Mobile strength and D2C: Toon Blast +26% YoY (≈+90% over two years), Match Factory record bookings (+20% YoY), Color Block Jam highest-grossing at Rollic; broader D2C rollout supports faster bookings growth and margins as alternate payments scale .
    • Outlook raised again: FY26 Net Bookings to $6.4–$6.5B (from $6.05–$6.15B in Q1), GAAP revenue to $6.38–$6.48B, operating cash flow to ~$250M, reflecting momentum in NBA 2K and mobile .
    • Quote (CEO): “We achieved outstanding second quarter results… we are raising our Fiscal Year 2026 Net Bookings forecast… GTA VI will now be released on November 19, 2026… we expect to achieve record levels of Net Bookings in Fiscal 2027” .

  • What Went Wrong

    • Borderlands 4 launch softness on PC: optimization/performance issues at launch weighed on initial results; Gearbox is addressing with updates; management expects solid lifetime units but acknowledged a softer release than desired .
    • GAAP profitability remains negative: GAAP diluted EPS $(0.73) despite strong bookings, reflecting amortization of acquired intangibles and continued investment; operating loss of $(98.0)M .
    • Opex up vs forecast: higher user acquisition for mobile and performance-based compensation lifted opex dollars (though management notes opex leverage vs topline on a “management basis”) .

Financial Results

Quarterly trend (GAAP; oldest → newest)

MetricQ4 FY25Q1 FY26Q2 FY26
GAAP Net Revenue ($B)$1.58 $1.50 $1.77
Gross Profit ($B)$0.80 $0.95 $0.98
Gross Margin (%)50.8% (computed from )62.9% (computed from )55.3% (computed from )
(Loss)/Income from Operations ($B)$(3.78) $0.02 $(0.10)
EBIT Margin (%)(238.7)% (computed from )1.4% (computed from )(5.5)% (computed from )
GAAP Diluted EPS ($)$(21.08) $(0.07) $(0.73)

Net Bookings trend (operational metric; oldest → newest)

MetricQ4 FY25Q1 FY26Q2 FY26
Net Bookings ($B)$1.58 $1.42 $1.96

Q2 FY26: actuals vs company guidance and S&P Global consensus

MetricCompany Guidance (Q2 FY26)S&P ConsensusActual
GAAP Net Revenue ($B)$1.65–$1.70 $1.736*$1.7738
Net Bookings ($B)$1.70–$1.75 n/a$1.9605
EPS – Primary (S&P) ($)n/a$0.934*$1.684*
GAAP Diluted EPS ($)n/an/a$(0.73)
  • Values marked with * retrieved from S&P Global.
  • Notes: S&P “Primary EPS” reflects analyst methodology and may not match GAAP diluted EPS; TTWO reported GAAP diluted loss per share of $(0.73) for Q2 .

Mix KPIs (Q2 FY26 vs Q2 FY25)

KPIQ2 FY26Q2 FY25
RCS Share of Net Bookings73% —
RCS Share of GAAP Revenue72% —
Net Revenue by Platform – Mobile$821.6M (46%) $740.2M (55%)
Net Revenue by Platform – Console$720.0M (41%) $491.1M (36%)
Net Revenue by Platform – PC/Other$232.2M (13%) $121.8M (9%)
Net Bookings by Platform – Mobile$818.1M (42%) $723.0M (49%)
Net Bookings by Platform – Console$907.9M (46%) $622.3M (42%)
Net Bookings by Platform – PC/Other$234.5M (12%) $129.6M (9%)
Net Revenue by Geography – U.S.$1,036.1M (58%) $814.5M (60%)
Net Revenue by Geography – Int’l$737.7M (42%) $538.6M (40%)

Largest contributors to Q2 bookings/revenue: NBA 2K26/2K25, Borderlands 4, GTA Online/GTA V, Toon Blast, Match Factory!, Color Block Jam, Mafia: The Old Country, Empires & Puzzles, Words With Friends, Red Dead Redemption 2/Online, Toy Blast .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Bookings ($B)FY26$6.05–$6.15 $6.40–$6.50 Raised
GAAP Net Revenue ($B)FY26$6.10–$6.20 $6.38–$6.48 Raised
Cost of Revenue ($B)FY26$2.548–$2.570 $2.663–$2.685 Raised
Total Operating Expenses ($B)FY26$3.840–$3.860 $3.984–$4.004 Raised
EBITDA ($M)FY26$554–$613 $579–$637 Raised
Net Cash from Ops ($M)FY26~130 ~250 Raised
Capital Expenditures ($M)FY26~140 ~180 Raised
GAAP Net Revenue ($B)Q3 FY26—$1.57–$1.62 New
Net Bookings ($B)Q3 FY26—$1.55–$1.60 New
Total Operating Expenses ($M)Q3 FY26—$980–$990 New
EBITDA ($M)Q3 FY26—$155–$178 New

Management qualitative revisions: RCS growth now ~11% for FY26 (vs 4% prior), with NBA mid-20% growth and mobile ~10% (unchanged GTA Online decline) .

Earnings Call Themes & Trends

TopicQ4 FY25 (Prior-2)Q1 FY26 (Prior-1)Q2 FY26 (Current)Trend
AI/toolingEfficiency toolset, not a headcount lever; focused on creativity —Reiterated: AI frees talent for creative tasks; no 5% cost cut from AI alone Stable, pragmatic
Mobile/D2CZynga momentum; D2C accretive; expect distribution costs to decline D2C scaling; rulings favor openness D2C available across most portfolio; legislative/litigation tailwinds; margin uplift implied Positive
Macro/tariffsTariffs impact seen manageable; platform installed base sufficient Soft-landing macro; selection to quality Modest industry tailwind; flight-to-quality continues Improving
Product performanceNBA 2K strong; RDR2 outperformed; GTA Online/GTA+ robust NBA 2K25 units +7%; RCS +48% NBA 2K26 premium mix/engagement; Borderlands 4 PC issues; GTA V 220M units; GTA+ +20% Y/Y Mixed: strong sports/mobile; fix BL4
Regulatory/legalApp store openness improving; alternative payments Court rulings expand D2C opportunity Alternate payments rolling out; better margins expected Positive
PipelineGTA VI planned FY27; ~38 titles through FY28 Q2 launches slated (Mafia, NBA 2K26, BL4) GTA VI date set: Nov 19, 2026; WWE 2K26 in Q4 FY26 Clearer timeline

Management Commentary

  • CEO Strauss Zelnick: “We achieved outstanding second quarter results… we are raising our Fiscal Year 2026 Net Bookings forecast… Rockstar Games will now release Grand Theft Auto VI on November 19, 2026… we expect to achieve record levels of Net Bookings in Fiscal 2027” .
  • On Borderlands 4 launch: “The release was a bit softer than we would have liked… Gearbox has been addressing the PC challenges… in the fullness of time, we think the unit sales… will be very solid” .
  • On D2C/alternate payments: “Our direct-to-consumer business is doing really well… Not only will net bookings rise… but margins too will rise with them” .
  • CFO Lainie Goldstein on Q2: “Net bookings of $1.96B were significantly above our $1.7–$1.75B guidance… outperformance from NBA 2K, Mafia: The Old Country, and several mobile titles… offset softness in the initial launch of Borderlands 4” .

Q&A Highlights

  • RCS strength drivers and industry tailwind: management sees modest industry tailwinds but emphasized quality correlates with performance; no change in GTA Online cadence despite GTA VI date shift; GTA+ membership +20% YoY .
  • Mobile monetization/D2C: alternative payments/direct transactions rolled out across most mobile titles, with expected bookings and margin benefits; no precise margin uplift quantified, but guidance raised .
  • NBA 2K26 monetization: higher premium SKU mix and 7-day early access supported higher ASPs; embedded season pass uplift contributed to RCS .
  • Borderlands 4: acknowledged PC optimization issues at launch; updates underway; lifetime outlook intact .
  • Talent/pipeline/independence: strong balance sheet, under-levered, aiming to be net cash; independence can be an advantage; focus on execution .

Estimates Context

  • Quarterly beats vs S&P Global consensus: Q2 FY26 revenue $1.774B vs $1.736B consensus; S&P Primary EPS $1.68 vs $0.93 consensus; Q1 FY26 revenue $1.5038B vs $1.315B; S&P Primary EPS $0.65 vs $0.27; Q4 FY25 revenue $1.5825B vs $1.554B; S&P Primary EPS $1.30 vs $1.09*.
PeriodRevenue Actual ($B)Revenue Consensus ($B)Primary EPS Actual ($)Primary EPS Consensus ($)
Q4 FY251.5825 1.554*1.301*1.095*
Q1 FY261.5038 1.315*0.647*0.266*
Q2 FY261.7738 1.736*1.684*0.934*
  • FY outlook vs S&P consensus: S&P FY26 revenue consensus ~$6.49B and FY27 $9.05B; management FY26 GAAP revenue guide $6.38–$6.48B and bookings $6.4–$6.5B . FY26 EBITDA consensus ($0.98B) exceeds management EBITDA guide ($579–$637M), implying the Street embeds additional normalization/adjustments over GAAP/management basis*.
  • Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Bookings momentum scaled materially in Q2 (NBA 2K26, mobile), driving a second consecutive FY26 guidance raise—this is the primary bull catalyst into holiday/Q3 .
  • Near-term P&L mix still suppresses GAAP EPS (amortization, continued UA/comp), but management is leveraging D2C and expects higher bookings share from RCS (77% FY26) to expand margins over time .
  • GTA VI date clarity (Nov 19, 2026) increases confidence in FY27 record bookings narrative; watch for FY27 Street re-rating as pipeline timing de-risks .
  • Borderlands 4 PC issues are a tactical overhang but being addressed; lifetime economics expected to normalize—monitor patch cadence and player sentiment .
  • Q3 guide implies healthy seasonality with NBA/live services leading; trajectory in mobile D2C and NBA 2K RCS likely drives estimate revisions upward for FY26 bookings and FY27 run-rate*.
  • Tactical trade: focus on estimate revisions and sentiment around NBA 2K26 monetization and mobile tailwinds; structural thesis hinges on FY27 pipeline execution and margin expansion via RCS/D2C .

Supporting detail and disclosures:

  • Q2 FY26 results and guidance: 8-K press release and exhibits .
  • Standalone press release corroboration (same figures): .
  • Prior quarters: Q1 FY26 press release and transcript for trends and prior guidance ; Q4 FY25 press release and call .
  • S&P Global estimates and actuals shown with asterisks (Primary EPS and Revenue consensus/actuals; FY consensus): Values retrieved from S&P Global.