Take-Two Interactive Software Reports Revenue Down 23.6%
Take-Two Interactive missed Wall Street revenue estimates in its latest quarter, with sales down 23.6% to $1.5 billion. CEO Strauss Zelnick says Grand Theft Auto VI pre-orders are at unprecedented levels, and the company reiterated its full-year outlook.
Take-Two Interactive (NASDAQ:TTWO) missed Wall Street revenue expectations in its latest quarter, and Take-Two Interactive software reports show sales falling 23.6% from a year earlier to $1.5 billion. The publisher is counting on Grand Theft Auto VI, which Chairman and CEO Strauss Zelnick says is ten days from launch.
Analysts had expected $1.65 billion, so the result was a 9.5% miss. The quarter is the calendar third quarter of 2026 and the company's fiscal second quarter of 2027.
What the numbers show
Take-Two posted a GAAP loss of $0.29 per share. Analysts had forecast a loss of $0.86 per share, so the loss was narrower than expected.
Adjusted EBITDA, a measure of operating profit before interest, taxes and certain other costs, came in at $92.2 million. Analysts had expected $257.8 million. Operating margin was negative 7.8%, down from negative 5% in the same quarter last year.
Free cash flow was negative $143 million, compared with negative $193.8 million in the previous quarter.
Separate coverage of the results put net bookings, the company's measure of sales from games and in-game purchases, down 18% at $1.6 billion. That coverage said NBA 2K27 fell short of the company's forecast.
Guidance and the GTA VI factor
Take-Two nudged its full-year revenue guidance up to $8.08 billion at the midpoint, from $8 billion. Its guidance for next quarter's revenue is $3.35 billion, which is 3.7% below analyst consensus. Management is guiding for a 90.4% year-on-year increase in revenue for that quarter.
Full-year GAAP earnings guidance is $0.66 per share at the midpoint, 61.6% below analyst estimates. EBITDA guidance is $1.05 billion at the midpoint, against analyst estimates of $1.75 billion.
Zelnick said the company is reiterating its outlook for fiscal 2027 net bookings of $8 billion to $8.2 billion. "The launch of Grand Theft Auto VI is ten days away and, with pre-orders continuing to reach unprecedented levels, we expect to deliver an historic year for our company," he said.
He added that the company is "confident in our ability to build on this incredible year" as it releases new games, explores emerging business opportunities, expands geographically and pursues acquisitions.
Longer-term picture
Take-Two's revenue has grown at a 4.7% compound annual rate over the last three years. Its free cash flow margin has averaged 2.4% over the last two years, which is below what analysts expect from a consumer internet business.
Sell-side analysts expect revenue to grow 59.3% over the next 12 months, according to S&P. That would be a faster pace than the past three years.
