Take-Two Interactive Software, Inc. Q1 FY2026 earnings call

• Fiscal 2026 started excellently with net bookings exceeding $1.4 billion, led by Mobile titles, NBA 2K, and Grand Theft Auto series. • Mobile business had strong performances: Toon Blast grew 22% y-o-y and nearly 75% 2-year basis; Match Factory! had record net bookings growing 33% y-o-y; Color Block Jam was highest grossing in Rollic's history. • Grand Theft Auto series exceeded expectations with Grand Theft Auto V selling over 215M units worldwide and Grand Theft Auto Online seeing new player accounts grow over 50% y-o-y. • NBA 2K25 sold over 11.5M units, engagement grew significantly with daily active users up 30%, and recurrent consumer spending up 48%. • Upcoming releases include Mafia: The Old Country (2K and Hangar 13), NBA 2K26 (2K and Visual Concepts), Borderlands 4 (2K and Gearbox Software), and WWE 2K26 (2K and Visual Concepts).

First quarter net bookings were $1.42 billion, significantly above the guidance range of $1.25 billion to $1.3 billion. GAAP net revenue increased 12% to $1.5 billion. Cost of revenue declined 1% to $559 million, and operating expenses decreased 3% to $923 million. Net bookings breakdown is roughly 45% Zynga, 39% 2K, and 16% Rockstar Games. Recurrent consumer spending grew 17% for the period, accounting for 83% of net bookings. NBA 2K was up nearly 50%, Mobile grew low teens, and Grand Theft Auto Online increased low single digits.

• Raised net bookings outlook for fiscal 2026 to $6.05 billion to $6.15 billion, representing 8% growth at midpoint. • Recurrent consumer spending expected to grow approximately 4%, revised upward from flat. • Net bookings breakdown by label: ~45% Zynga, 39% 2K, 16% Rockstar Games. • Fiscal second quarter net bookings projected to range from $1.7 billion to $1.75 billion. • Operating expenses for fiscal second quarter planned to range from $1.02 billion to $1.03 billion. • Recurrent consumer spending expected to increase by approximately 1% in fiscal second quarter.

• Macro economic factors such as potential economic slowdown, increase in unemployment, and possible Fed rate cuts could impact consumer spending on entertainment. • Court rulings related to alternative app stores may affect distribution and monetization, though there's seen runway for mobile direct-to-consumer growth but still a risk to business operations.

Q: Eric Handler asked about NBA 2K's RCS growth and what's resonating.

A: Karl Slatoff said it's across MyCAREER and MyTEAM, with better in-game telemetry and positive consumer reaction.

Q: Doug Creutz asked about advertising revenue being flat.

A: Strauss Zelnick said they adjusted approach from hyper-casual to hybrid-casual and expect growth from there.

Q: Chris Schoell asked about Mobile momentum deceleration.

A: Lainie Goldstein said moderation expected due to mature titles' life cycles and sales curves of hyper/hybrid-casual titles.

Q: Andrew Marok asked about Borderlands pricing.

A: Strauss Zelnick said focus is on delivering more value than charged, with variable pricing common in the industry.

Q: Mike Hickey asked about macroeconomic impact on business.

A: Strauss Zelnick said expects modest growth, consumers will be selective, and quality entertainment will be prioritized.

Q: Zhihua Yang asked about balancing quality and addressable players.

A: Strauss Zelnick said aim to be where consumers are, with titles eventually on viable platforms.

Q: Clay Griffin asked about court rulings on app stores.

A: Strauss Zelnick said movement towards open distribution, with cooperation with app stores and fair treatment being key.

Q: Clay Griffin asked about NBA 2K and PlayStation Plus impact.

A: Karl Slatoff said they consider platform partnerships economically and don't discuss future specifics but engagement and income are generated when beneficial.