Take-Two Interactive Software Inc. 10-Q Summary
Business Context and Reporting Period
This report covers the quarterly period ended June 30, 2026. Take-Two Interactive Software, Inc. is a leading developer and publisher of interactive entertainment, operating through Rockstar Games, 2K, and Zynga. The company reported a net loss for the quarter, driven by high development costs and amortization, despite revenue growth in console segments.
Key Financial Metrics
| Metric | Q1 FY2027 (Ended June 30, 2026) | Q1 FY2026 (Ended June 30, 2025) |
|---|---|---|
| Total Net Revenue | $1,533.9 million | $1,503.8 million |
| Gross Profit | $882.5 million (57.5% margin) | $945.0 million (62.9% margin) |
| Operating Loss | $(35.5) million | $21.6 million income |
| Net Loss | $(34.1) million | $(11.9) million |
| Diluted Loss Per Share | $(0.18) | $(0.07) |
| Cash and Cash Equivalents | $1,364.9 million | $1,545.5 million (prior quarter) |
| Total Debt (Short + Long Term) | $2,519.7 million | $2,518.0 million (prior quarter) |
| Operating Cash Flow | $(168.8) million used | $(44.7) million used |
Material Changes vs. Prior Period
- Revenue Mix: Total revenue increased 2.0% year-over-year. Console revenue grew 16.3% to $640.5 million, driven by NBA 2K and Borderlands 4. Mobile revenue declined 4.9% to $762.3 million, primarily due to lower performance from Color Block Jam.
- Profitability: Gross margin contracted from 62.9% to 57.5%. This was largely due to the reversal of expense related to forfeited awards in the prior year and increased software development costs and royalties.
- Operating Expenses: Selling and marketing expenses decreased 9.7% due to reduced marketing for mobile titles. However, Research and Development (R&D) increased 6.8% and General and Administrative (G&A) expenses increased 9.1% due to higher personnel and IT costs.
- Debt Structure: The company repaid $550.0 million in 2026 Notes in March 2026. Short-term debt increased to $629.9 million (primarily the remaining 2027 Notes reclassified as current), while long-term debt decreased to $1,889.8 million.
- Impairment: The company recorded $43.4 million in impairment charges related to the decision not to proceed with certain software products.
Outlook, Risks, and Management Commentary
- Upcoming Releases: Management highlighted the upcoming release of Grand Theft Auto VI on November 19, 2026. Pre-orders commenced in June 2026. 2K plans to release NBA 2K27, PGA 2K27, and WWE 2K27 in the remainder of fiscal 2027.
- Capital Expenditures: Anticipated capital expenditures for fiscal year 2027 are approximately $290.0 million.
- Tax Legislation: The company is evaluating the impact of the "One Big Beautiful Bill Act" (OBBB) signed in July 2025, which includes permanent extensions of TCJA provisions and modifications to international tax rules. The effective tax rate for the quarter was 30.8%.
- Liquidity: The company maintains $997.5 million in available borrowings under its 2022 Credit Agreement. Cash balances held outside the U.S. were $1,232.0 million.
- Risks: Key risks include the timing and market acceptance of new titles, dependence on third-party hardware platforms (console revenue is 41.8% of total), and foreign currency exchange rate fluctuations (40% of revenue is international).
Investor Verification Checklist
- GTA VI Performance: Verify pre-order volumes and initial sales data for Grand Theft Auto VI upon its November 2026 release to assess revenue impact in Q4 FY2027.
- Mobile Portfolio Health: Monitor the trajectory of Color Block Jam and other Zynga titles to determine if the revenue decline is a temporary fluctuation or a structural shift.
- Debt Maturities: Confirm the repayment schedule for the $600.0 million 2027 Notes due in April 2027 and the $29.4 million 2026 Convertible Notes due in December 2026.
- Development Pipeline: Review future capitalization of software development costs to ensure impairment charges do not become a recurring quarterly issue.
- Tax Rate Volatility: Track the final impact of the OBBB legislation on the company's effective tax rate in subsequent filings.