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Take-Two Q2 Earnings Beat on Lower Costs Despite Bookings Miss
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Key Takeaways
Take-Two's fiscal Q2 adjusted EPS reached $1, beating estimates by 11.1%, as Net Bookings fell 18.3%.
NBA 2K27 sold more than 4 million units but missed projections, while Grand Theft Auto outpaced forecasts.
Take-Two held fiscal 2027 Net Bookings guidance at $8.00-$8.20B and sees operating cash flow above $1B.
Take-Two Interactive Software, Inc. (TTWO - Free Report) reported second-quarter fiscal 2027 adjusted earnings of $1 per share, beating the Zacks Consensus Estimate of 90 cents by 11.1%. GAAP loss per share narrowed 60.3% to 29 cents from 73 cents a year ago.
Net Bookings, the measure underpinning the revenue comparison, declined 18.3% year over year to $1.6 billion, missing the $1.66 billion consensus by 3.6%. NBA 2K27 came in below management's forecast, while the Grand Theft Auto series outperformed expectations. Recurrent consumer spending accounted for 81% of Net Bookings.
Take-Two's GAAP Revenues Fall Across Platforms
GAAP net revenues fell 15.6% year over year to $1.50 billion from $1.77 billion. Game revenues decreased 16.1% to $1.38 billion, while advertising revenues declined 9% to $121 million. Year-ago launches of Borderlands 4 and Mafia: The Old Country contributed to the tough comparison.
Mobile revenues dropped 11% to $731.1 million, console revenues decreased 14.5% to $615.4 million, and PC and other revenues fell 35.2% to $150.5 million. Digital online sales contributed $1.46 billion, or 97.4% of GAAP revenues. U.S. revenues totaled $888.9 million, while international revenues stood at $608.1 million.
Take-Two Interactive Software, Inc. Price, Consensus and EPS Surprise
NBA 2K27 sold more than 4 million units following its Sept. 4 launch. It delivered the second-highest Net Bookings performance in series history but fell short of internal projections. Take-Two plans themed seasons, college basketball experiences and MyTEAM updates to support player spending during the second half.
Grand Theft Auto V has sold nearly 235 million units worldwide. The series recorded double-digit growth in recurrent consumer spending and average monthly GTA+ members. Grand Theft Auto VI is scheduled for Nov. 19, with preorders far exceeding initial expectations.
Take-Two's Mobile Titles Deliver Mixed Results
Mobile Net Bookings declined 13.5% to $707.6 million from $818.1 million a year earlier, though the business performed in line with management's plan. Color Block Jam recorded a double-digit decline against its peak year-ago quarter. Across Take-Two, Net Bookings from recurrent consumer spending dropped 8.8%.
Toon Blast Net Bookings rose 4% over a record prior-year quarter, helped by the new BEAM feature. Words With Friends bookings increased 6% following a Wheel of Fortune collaboration. NBA 2K All-Star surpassed 11 million registered users in China, while Zynga continued testing Top Goal.
TTWO's Gross Margin Improves Despite Lower Sales
GAAP gross profit decreased 12.2% to $860.4 million, but gross margin expanded to 57.5% from 55.3%. Cost of revenues fell 19.8% to $636.6 million, with lower amortization of capitalized software development costs supporting the margin improvement.
Operating expenses decreased 9.3% to $977.9 million, below management's guidance of $1.01-$1.02 billion. Lower personnel and user acquisition costs contributed to the favorable expense performance. Selling and marketing expenses fell 17.1% to $444.9 million as lower Borderlands promotion outweighed increased Grand Theft Auto spending. Research and development declined 5.1% to $254.4 million, while general and administrative expenses rose 2.4% to $230.5 million.
Operating loss widened to $117.5 million from $98.0 million. However, a $57.9 million income tax benefit, versus an $18.4 million tax provision last year, helped narrow the net loss to $54 million from $133.9 million.
Take-Two's Balance Sheet & Cash Flow Details
Cash and cash equivalents stood at $1.15 billion as of Sept. 30, down from $1.55 billion at March 31. Short-term investments increased to $524.2 million from $443.8 million. Deferred revenues, including noncurrent balances, declined to $1.04 billion from $1.19 billion.
Net cash used in operating activities was $173.5 million during the first half of fiscal 2027, compared with $83.7 million provided a year earlier. Capital expenditures increased to $163.3 million from $57 million, including a property purchase. Development spending also contributed to the cash outflow.
TTWO's Q3 & FY27 Outlook
For the third quarter of fiscal 2027, Take-Two expects Net Bookings of $3.35-$3.50 billion, versus $1.76 billion a year earlier. GAAP net revenues are projected at $3.27-$3.42 billion, with earnings of $1.30-$1.44 per share. Recurrent consumer spending is expected to grow approximately 12%, driven by the Grand Theft Auto series and NBA 2K.
Take-Two maintained its fiscal 2027 Net Bookings outlook of $8-$8.20 billion and its expectation for flat recurrent consumer spending. GAAP net revenue guidance increased to $7.98-$8.18 billion from $7.90-$8.10 billion. GAAP earnings guidance is now 57-75 cents per share, compared with the previous 55-75 cents.
Operating cash flow is still projected to exceed $1 billion, with capital expenditures of approximately $290 million. Management also expects to reach a net cash position by fiscal year-end.
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Take-Two Q2 Earnings Beat on Lower Costs Despite Bookings Miss
Key Takeaways
Take-Two Interactive Software, Inc. (TTWO - Free Report) reported second-quarter fiscal 2027 adjusted earnings of $1 per share, beating the Zacks Consensus Estimate of 90 cents by 11.1%. GAAP loss per share narrowed 60.3% to 29 cents from 73 cents a year ago.
Net Bookings, the measure underpinning the revenue comparison, declined 18.3% year over year to $1.6 billion, missing the $1.66 billion consensus by 3.6%. NBA 2K27 came in below management's forecast, while the Grand Theft Auto series outperformed expectations. Recurrent consumer spending accounted for 81% of Net Bookings.
Take-Two's GAAP Revenues Fall Across Platforms
GAAP net revenues fell 15.6% year over year to $1.50 billion from $1.77 billion. Game revenues decreased 16.1% to $1.38 billion, while advertising revenues declined 9% to $121 million. Year-ago launches of Borderlands 4 and Mafia: The Old Country contributed to the tough comparison.
Mobile revenues dropped 11% to $731.1 million, console revenues decreased 14.5% to $615.4 million, and PC and other revenues fell 35.2% to $150.5 million. Digital online sales contributed $1.46 billion, or 97.4% of GAAP revenues. U.S. revenues totaled $888.9 million, while international revenues stood at $608.1 million.
Take-Two Interactive Software, Inc. Price, Consensus and EPS Surprise
Take-Two Interactive Software, Inc. price-consensus-eps-surprise-chart | Take-Two Interactive Software, Inc. Quote
TTWO's NBA 2K27 Launch Trails Forecast
NBA 2K27 sold more than 4 million units following its Sept. 4 launch. It delivered the second-highest Net Bookings performance in series history but fell short of internal projections. Take-Two plans themed seasons, college basketball experiences and MyTEAM updates to support player spending during the second half.
Grand Theft Auto V has sold nearly 235 million units worldwide. The series recorded double-digit growth in recurrent consumer spending and average monthly GTA+ members. Grand Theft Auto VI is scheduled for Nov. 19, with preorders far exceeding initial expectations.
Take-Two's Mobile Titles Deliver Mixed Results
Mobile Net Bookings declined 13.5% to $707.6 million from $818.1 million a year earlier, though the business performed in line with management's plan. Color Block Jam recorded a double-digit decline against its peak year-ago quarter. Across Take-Two, Net Bookings from recurrent consumer spending dropped 8.8%.
Toon Blast Net Bookings rose 4% over a record prior-year quarter, helped by the new BEAM feature. Words With Friends bookings increased 6% following a Wheel of Fortune collaboration. NBA 2K All-Star surpassed 11 million registered users in China, while Zynga continued testing Top Goal.
TTWO's Gross Margin Improves Despite Lower Sales
GAAP gross profit decreased 12.2% to $860.4 million, but gross margin expanded to 57.5% from 55.3%. Cost of revenues fell 19.8% to $636.6 million, with lower amortization of capitalized software development costs supporting the margin improvement.
Operating expenses decreased 9.3% to $977.9 million, below management's guidance of $1.01-$1.02 billion. Lower personnel and user acquisition costs contributed to the favorable expense performance. Selling and marketing expenses fell 17.1% to $444.9 million as lower Borderlands promotion outweighed increased Grand Theft Auto spending. Research and development declined 5.1% to $254.4 million, while general and administrative expenses rose 2.4% to $230.5 million.
Operating loss widened to $117.5 million from $98.0 million. However, a $57.9 million income tax benefit, versus an $18.4 million tax provision last year, helped narrow the net loss to $54 million from $133.9 million.
Take-Two's Balance Sheet & Cash Flow Details
Cash and cash equivalents stood at $1.15 billion as of Sept. 30, down from $1.55 billion at March 31. Short-term investments increased to $524.2 million from $443.8 million. Deferred revenues, including noncurrent balances, declined to $1.04 billion from $1.19 billion.
Net cash used in operating activities was $173.5 million during the first half of fiscal 2027, compared with $83.7 million provided a year earlier. Capital expenditures increased to $163.3 million from $57 million, including a property purchase. Development spending also contributed to the cash outflow.
TTWO's Q3 & FY27 Outlook
For the third quarter of fiscal 2027, Take-Two expects Net Bookings of $3.35-$3.50 billion, versus $1.76 billion a year earlier. GAAP net revenues are projected at $3.27-$3.42 billion, with earnings of $1.30-$1.44 per share. Recurrent consumer spending is expected to grow approximately 12%, driven by the Grand Theft Auto series and NBA 2K.
Take-Two maintained its fiscal 2027 Net Bookings outlook of $8-$8.20 billion and its expectation for flat recurrent consumer spending. GAAP net revenue guidance increased to $7.98-$8.18 billion from $7.90-$8.10 billion. GAAP earnings guidance is now 57-75 cents per share, compared with the previous 55-75 cents.
Operating cash flow is still projected to exceed $1 billion, with capital expenditures of approximately $290 million. Management also 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).
Angel Studios, Inc. (ANGX - Free Report) , Amer Sports, Inc. (AS - Free Report) and fuboTV (FUBO - Free Report) are some similar-ranked stocks that investors can consider in the broader Consumer Discretionary sector. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Angel Studios’ shares have declined 20.8% year to date. ANGX is set to report its third-quarter 2026 results on Nov. 10.
Amer Sports’ shares have fallen 13.1% year to date. AS is set to report its third-quarter 2026 results on Nov. 17.
fuboTV’s shares have plunged 73.4% year to date. FUBO is set to report its fourth-quarter fiscal 2026 results on Nov. 17.