What Take-Two Interactive Software (TTWO) Said on Its Q2 Earnings Call

Key Points

• Take-Two held its fiscal 2027 net bookings forecast at $8 billion to $8.2 billion despite second-quarter bookings missing guidance, citing GTA VI preorders that are far above initial expectations. The game is scheduled to launch November 19.
• Second-quarter net bookings were $1.6 billion, below the $1.62 billion to $1.67 billion forecast, while revenue fell 16% year over year to $1.5 billion. Recurrent consumer spending declined 9%, with NBA 2K contributing to the shortfall.
• Take-Two forecast third-quarter net bookings of $3.35 billion to $3.5 billion, driven in part by GTA VI-related activity, and maintained its outlook for more than $1 billion in full-year operating cash flow.

Take-Two Interactive Software NASDAQ: TTWO reiterated its fiscal 2027 net bookings forecast even after second-quarter bookings fell short of guidance, as executives pointed to stronger-than-expected preorders for the coming release of Grand Theft Auto VI.

The video game publisher reported $1.6 billion in net bookings for the quarter ended September 30, below its forecast range of $1.62 billion to $1.67 billion. Chairman and CEO Strauss Zelnick said NBA 2K27 delivered the second-highest launch-period net bookings in the franchise’s history but came in below the company’s expectations.

Take-Two maintained its full-year net bookings outlook of $8 billion to $8.2 billion. Grand Theft Auto VI is scheduled to launch on November 19, and Zelnick said preorders were tracking “far in excess” of initial expectations. He declined to raise the company’s forecast ahead of the release.

“We tend to avoid claiming success before it occurs,” Zelnick told analysts. He said Take-Two would discuss the game’s performance after it has post-launch results to assess.

Quarterly Results and NBA Outlook

Second-quarter GAAP net revenue fell 16% year over year to $1.5 billion. Recurrent consumer spending declined 9%, compared with management’s forecast for a 5% drop, and accounted for 81% of net bookings. Chief Financial Officer Lainie Goldstein attributed the shortfall in recurrent spending to NBA 2K.

Cost of revenue declined 20% to $637 million, while operating expenses fell 9% to $978 million. Goldstein said operating expenses on a management basis were better than forecast because of lower personnel and user acquisition costs.

NBA 2K27 has sold more than 4 million units, Zelnick said. Take-Two expects bookings and engagement to accelerate in the second half of the fiscal year as the game receives themed seasons, college basketball experiences and additions to its MyTEAM mode.

President Karl Slatoff said it was difficult to identify precisely what caused the launch to fall short of expectations, noting competition for players’ attention from entertainment both inside and outside gaming. He said the company was confident in a rebound as new content arrives.

Grand Theft Auto Drives Guidance

For the fiscal third quarter, Take-Two projected net bookings of $3.35 billion to $3.5 billion, compared with $1.76 billion a year earlier. It forecast recurrent consumer spending growth of approximately 12%, including a significant increase for the Grand Theft Auto series and a decline in mobile.

Goldstein said the Grand Theft Auto forecast is driven in part by sales of the GTA VI Ultimate Edition, which includes add-on content. She confirmed that the add-on content is allocated to recurrent consumer spending because it can also be purchased separately. She said the assumptions behind the company’s outlook had not changed from the prior quarter.

For the full fiscal year, Take-Two expects recurrent consumer spending to be roughly in line with fiscal 2026 and represent 65% of net bookings. That outlook includes high-single-digit growth for NBA 2K and a mobile decline, partly reflecting the prior-year success of Color Block Jam.

The company continues to forecast more than $1 billion in operating cash flow and a net cash position by fiscal year-end. It also maintained its expectation for approximately $290 million in capital expenditures.

Asked about the year following GTA VI’s launch, Zelnick declined to provide fiscal 2028 guidance. He said Take-Two expects to establish a new baseline for performance and sees opportunities for growth across its franchises, new intellectual property and selective acquisitions.

Existing Franchises and Mobile Business

Grand Theft Auto V has sold nearly 235 million units worldwide, Zelnick said. During the quarter, the series posted double-digit growth in recurrent consumer spending and average monthly GTA+ members. Rockstar Games also introduced NoPixel V, an overhaul of the Grand Theft Auto V role-playing experience.

Zelnick said Take-Two sees further opportunity in role-playing and user-created content. He described FiveM, the business acquired by Take-Two that supports Grand Theft Auto role-playing, as profitable.

Mobile results were in line with expectations. Toon Blast net bookings rose 4% from the prior-year quarter, while Words With Friends grew 6%. Color Block Jam bookings declined by a double-digit percentage from their peak in the year-earlier period, as the company had expected.

Zelnick said Take-Two’s mobile direct-to-consumer business was significant and growing, with a meaningful effect on margins, though the company has not disclosed its share of mobile business. He also identified an opportunity to expand mobile advertising, including by attracting more brands.

Technology and Release Strategy

During the question-and-answer session, Zelnick said Take-Two is strengthening technical defenses and legal activity as advances in AI-assisted reverse engineering potentially make piracy more challenging. He said he believed the issue would be manageable.

Zelnick said GTA VI would be available on two consoles at launch. Asked whether higher hardware costs might accelerate a release on other platforms, he said announcements about additional versions would come from the company’s labels.

He also declined to disclose the game’s development budget. Responding to an analyst’s question about a previously reported upper limit, Zelnick cautioned against inferring that actual spending was close to that figure.

About Take-Two Interactive Software (NASDAQ:TTWO)

Take-Two Interactive Software is a global publisher and developer of interactive entertainment for console, PC, and mobile platforms. Its business includes creating and distributing games, downloadable content, and related services through its wholly owned labels, including Rockstar Games, 2K, and Zynga.

The company's portfolio includes franchises such as Grand Theft Auto, Red Dead Redemption, NBA 2K, Borderlands, and Civilization, along with a range of mobile games. Its titles are sold and played in markets around the world.

Founded in 1993 and headquartered in New York City, Take-Two acquired mobile-game publisher Zynga in 2022.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.