Take-Two Interactive Software, Inc. Q3 FY2026 earnings call

• Delivered outstanding Q3 results with net bookings of $1.76 billion, surpassing guidance.
• All labels outperformed expectations.
• Mobile business had strong growth, with titles like TuneBlast, Match Factory, etc., performing well.
• NBA 2K26 had significant sales and recurrent spending growth.
• GTA series saw strong recurrent spending growth, with GTA Online's update driving engagement.
• Launched WWE 2K's Mobile for Netflix and Red Dead Redemption/Undead Nightmare on new platforms.
• Expect ongoing momentum and robust forward release schedule, including GTA VI in November 2026.

The company's segments showed strong performance. Zynga contributed approximately 46% to net bookings, 2K around 38%, and Rockstar Games about 16%. In the third quarter, net bookings were $1.76 billion, surpassing the high end of guidance. The mobile business was a highlight: Peak's TuneBlast grew 43% Y/Y and surpassed $3 billion in lifetime net bookings; Match Factory grew ~17%; Empires and Puzzles grew 116%. NBA 2K had stellar performance with ~8 million units sold of NBA 2K26, 30% Y/Y growth in recurrent consumer spending, daily active users, etc. The GTA series had 27% growth in recurrent consumer spending, with GTA Online's A Safe House in The Hills update driving engagement. Red Dead Redemption and Undead Nightmare were launched on new platforms.

• Raised full fiscal year net bookings outlook to $6.65 billion to $7 billion, representing 18% growth at midpoint over fiscal 2025.
• Recurrent consumer spending expected to grow ~17% and represent 78% of net bookings.
• Operating cash flow forecast raised to $450 million.
• Projected GAAP net revenue to range from $6.55 billion to $6.6 billion, cost of revenue from $2.78 billion to $2.8 billion, and total operating expenses from $3.96 billion to $3.97 billion.
• For fiscal fourth quarter, net bookings projected to range from $1.51 billion to $1.56 billion, recurrent consumer spending expected to increase ~7%.

• Forward-looking statements are subject to factors that could cause actual results to differ, as detailed in SEC filings including risk factors.
• Regulatory environment changes could impact business operations.
• Market competition in the interactive entertainment space could affect performance.
• Shifts in consumer preferences or technological advancements could pose challenges.

Q: The equity markets punished your stock due to fears about AI. How do you view AI's threats and opportunities?

A: The video game business has always been built on machine learning and AI. We're actively embracing generative AI with hundreds of pilots, seeing opportunities to drive efficiencies, reduce costs, and free creators to focus on innovation. AI falls within our strategy of being the most creative, innovative, and efficient company.

Q: What percentage of mobile recurring spending is from direct-to-consumer?

A: It's meaningful, with the regulatory environment becoming more favorable, and we expect third-party take rates to decline, enhancing margins.

Q: How do you think about capital allocation priorities with growing cash balance?

A: Capital allocation priorities include supporting organic growth, pursuing selective accretive inorganic growth opportunities, and returning capital to shareholders through buybacks, done opportunistically at favorable times.