Take-Two Interactive Software Inc. - 10-Q Summary
Business Context and Reporting Period
This report covers the quarterly period ended December 31, 2025 (Fiscal Q3 2026) and the nine months ended December 31, 2025. Take-Two Interactive is a leading developer and publisher of interactive entertainment through its Rockstar Games, 2K, and Zynga labels. The company operates globally, delivering products via digital download, physical retail, and cloud streaming across console, mobile, and PC platforms.
Key Financial Metrics
| Metric (in millions) | Q3 2025 | Q3 2024 | 9M 2025 | 9M 2024 |
|---|---|---|---|---|
| Total Net Revenue | $1,699.0 | $1,359.8 | $4,976.6 | $4,051.1 |
| Gross Profit | $945.5 | $759.9 | $2,871.0 | $2,258.9 |
| Gross Margin | 55.6% | 55.9% | 57.7% | 55.7% |
| Operating Loss | $(38.7) | $(132.1) | $(115.1) | $(614.2) |
| Net Loss | $(92.9) | $(125.2) | $(238.7) | $(752.7) |
| Diluted Loss Per Share | $(0.50) | $(0.71) | $(1.30) | $(4.31) |
| Cash & Equivalents | $2,160.0 | N/A | N/A | N/A |
| Short-Term Debt | $582.2 | N/A | N/A | N/A |
| Long-Term Debt | $2,487.0 | N/A | N/A | N/A |
| Operating Cash Flow (9M) | $388.9 | $(324.2) | N/A | N/A |
Material Changes vs. Prior Period
- Revenue Growth: Net revenue increased 24.9% in Q3 and 22.8% over the nine-month period compared to the prior year. Growth was driven by the NBA 2K franchise, Color Block Jam, Borderlands 4, and Grand Theft Auto.
- Profitability Improvement: Operating loss narrowed significantly from $(132.1) million in Q3 2024 to $(38.7) million in Q3 2025. Over nine months, the operating loss improved from $(614.2) million to $(115.1) million.
- Expense Management: Business reorganization expenses dropped from $23.1 million in Q3 2024 to $0.6 million in Q3 2025, reflecting the completion of the 2024 cost reduction plan. Selling and marketing expenses increased due to higher marketing spend for new titles and performance-based compensation.
- Debt Reduction: The company repaid $600.0 million in 2025 Notes in April 2025. Total debt decreased, with short-term debt falling from $1,148.5 million (March 2025) to $582.2 million (December 2025).
- Liquidity: Cash and cash equivalents increased to $2,160.0 million as of December 31, 2025, up from $1,456.1 million at the start of the fiscal year. Operating cash flow turned positive at $388.9 million for the nine months ended December 31, 2025.
Guidance, Outlook, and Risks
- Product Pipeline: Grand Theft Auto VI is planned for release on November 19, 2026. 2K plans to release WWE 2K26 in the remainder of fiscal 2026.
- Capital Allocation: The company issued 5.5 million shares of common stock in May 2025, raising approximately $1,192.8 million for general corporate purposes, including debt repayment and acquisitions. A share repurchase program remains active with 10.0 million shares available.
- Tax Environment: The "One Big Beautiful Bill Act" (OBBB) signed in July 2025 includes provisions affecting tax credits and depreciation. The company maintains a full valuation allowance against U.S. net deferred tax assets, resulting in a negative effective tax rate for the period.
- Risks: Key risks include the timing and market acceptance of new game releases, dependence on key franchises (e.g., NBA 2K, Grand Theft Auto), foreign currency exchange rate fluctuations, and reliance on third-party platform holders (Apple, Google, Sony, Microsoft).
Investor Verification Checklist
- Deferred Revenue: Verify the $1,312.8 million deferred revenue balance and the expectation to recognize $1,351.9 million over the next 12 months.
- Software Development Costs: Review the $2,244.7 million in non-current software development costs and licenses for potential future impairment risks.
- Customer Concentration: Note that the five largest customers accounted for 81.0% of net revenue in the nine months ended December 31, 2025.
- Convertible Notes: Confirm the status of the remaining $29.4 million principal of 2026 Convertible Notes maturing in December 2026.
- Valuation Allowance: Assess the impact of the full valuation allowance on U.S. deferred tax assets on future effective tax rates.