Take-Two’s first quarter results were well received by the market, reflecting strong execution across its core franchises and robust growth in mobile gaming. Management credited the outperformance to enduring engagement with titles like Grand Theft Auto V and NBA 2K, as well as the continued success of Zynga’s mobile portfolio. CEO Strauss Zelnick highlighted, “These titles have proven to be vastly more resilient than anyone expected,” emphasizing the company’s strength in live services. The direct-to-consumer channel also played a significant role in driving margin improvements and customer loyalty.
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Take-Two (TTWO) Q1 CY2026 Highlights:
- Revenue: $1.58 billion vs analyst estimates of $1.56 billion (flat year on year, 1.5% beat)
- EPS (GAAP): -$0.32 vs analyst estimates of -$0.52 (38.4% beat)
- Adjusted EBITDA: $240.2 million vs analyst estimates of $188.7 million (15.2% margin, 27.3% beat)
- Revenue Guidance for Q2 CY2026 is $1.48 billion at the midpoint, below analyst estimates of $1.54 billion
- EPS (GAAP) guidance for the upcoming financial year 2027 is $0.65 at the midpoint, missing analyst estimates by 82.7%
- EBITDA guidance for the upcoming financial year 2027 is $1.04 billion at the midpoint, below analyst estimates of $1.95 billion
- Market Capitalization: $40.56 billion
While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Take-Two’s Q1 Earnings Call
- Eric Handler (ROTH Capital Partners) asked about the $300 million operating expense increase, specifically the split between marketing and other costs. CFO Lainie Goldstein clarified that about half is for company-wide marketing, with the rest tied to personnel and R&D, and expects expense leverage as revenue grows.
- Colin Sebastian (Baird) questioned whether lower current-gen console installs would affect pricing or preorders for GTA VI. CEO Strauss Zelnick explained pricing is based on perceived entertainment value, not hardware base, and cited the success of appropriately priced legacy titles.
- Doug Creutz (TD Cowen) pressed on the cautious mobile outlook, asking if guidance factored in recent performance or general prudence. Zelnick responded the outlook reflects both maturity of older titles and a prudent approach, emphasizing the unpredictability of mobile hits.
- Cory Carpenter (JPMorgan) inquired about NBA 2K’s engagement trends and the franchise’s college basketball rollout. Goldstein noted engagement moderated after a strong Q2 and Q3, while President Karl Slatoff said the college-themed content validated future expansion opportunities.
- Eric Sheridan (Goldman Sachs) probed how AI and machine learning are influencing mobile user acquisition and advertising efficiency. Zelnick detailed efforts to optimize return on ad spend with partners like AppLovin, highlighting ongoing model adjustments and conservative spending strategies.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will watch (1) the initial sales and user engagement levels for Grand Theft Auto VI, (2) trends in mobile title performance, particularly the resilience of Zynga’s mature games and the impact of new launches, and (3) progress in operating margin improvements as Take-Two deploys new technologies and cost controls. Execution on direct-to-consumer expansion and successful marketing of core franchises will also be key signposts.
Take-Two currently trades at $220.50, down from $238.08 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it’s free).
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