Why Is Take-Two (TTWO) Up 7.5% Since Last Earnings Report?

A month has gone by since the last earnings report for Take-Two Interactive (TTWO). Shares have added about 7.5% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Take-Two due for a pullback? Well, first let's take a quick look at its most recent earnings report in order to get a better handle on the recent catalysts for Take-Two Interactive Software, Inc. before we dive into how investors and analysts have reacted as of late.

Take-Two Misses Q3 Earnings Estimates, Raises FY26 Sales View

Take-Two Interactive Software posted a third-quarter fiscal 2026 GAAP net loss of 50 cents per share, narrower than a loss of 71 cents reported in the year-ago quarter. The Zacks Consensus Estimate for earnings was pegged at 83 cents per share.

GAAP net revenues increased 24.9% year over year to $1.7 billion. The Zacks Consensus Estimate for revenues was pegged at $1.58 billion.

Revenues from the United States increased 22.6% year over year to $1.01 billion and accounted for 59.6% of GAAP net revenues. The rest came from international revenues, which increased 28.6% year over year to $686.8 million.

Game revenues (92.4% of total revenues) rose 26.3% year over year to $1.57 billion. Advertising revenues (7.6% of total revenues) increased 10.3% year over year to $128.7 million.

Net Bookings improved 27.9% year over year to $1.76 billion. Bookings from the United States increased 24.4% year over year to $1.05 billion and accounted for 59.6% of Net Bookings. The rest came from international bookings, which rose 33.6% year over year to $710.1 million.

TTWO's Q3 Details

Recurrent consumer spending rose 23% for the period and accounted for 76% of Net Bookings.

In terms of distribution channels, Digital online revenues grew 26.2% year over year to $1.65 billion and accounted for 97.4% of GAAP net revenues. Physical retail and other revenues decreased 9.4% year over year to $44.5 million and accounted for 2.6% of GAAP net revenues. Digital online bookings increased 29.3% year over year to $1.71 billion and accounted for 97.4% of bookings. Physical retail and other bookings decreased 8.1% from the year-ago quarter to $45.4 million and contributed 2.6% of bookings.

In terms of platform, revenues from mobile, console, and PC and other accounted for 51%, 38.4% and 10.7% of GAAP net revenues, respectively. Mobile revenues increased 18.3% year over year to $865.8 million. Console revenues grew 28.4% year over year to $652.1 million. PC and other revenues jumped 50.5% year over year to $181.1 million.

Bookings from mobile, console, and PC and other accounted for 49%, 40% and 11% of bookings, respectively. Mobile bookings increased 21.3% year over year to $860.9 million. Console bookings grew 30.6% year over year to $702.6 million. PC and other bookings increased 53.8% year over year to $193.6 million.

Gaming Metric Details

The largest contributors to Net Bookings were NBA2K26, Grand Theft Auto Online, Grand Theft Auto V, Toon Blast, Match Factory!, Empires & Puzzles, Color Block Jam, Red Dead Redemption 2, Red Dead Online, Red Dead Redemption and Undead Nightmare, Words With Friends, WWE 2K25 and Toy Blast.

Take-Two’s announced future release pipeline highlights a strong multi-year content slate. Key confirmed titles include Sid Meier's Civilization VII for Apple Arcade, targeted for release on Feb. 5, 2026, and PGA TOUR 2K25, scheduled for launch on Feb. 6. The company also plans to release major franchises and new IPs such as WWE 2K26, Grand Theft Auto VI, CSR 3, Top Goal, Judas, Project ETHOS and the next iteration of BioShock, with specific release dates yet to be disclosed.

Operating Details of TTWO

Take-Two's GAAP gross profit rose 24.4% year over year to $945.5 million. Gross margin shrinks to 55.7% on a year-over-year basis from 55.9% in the year-ago quarter.

Operating expenses rose 10.3% year over year to $984.2 million.

Selling expenses increased 11.4% year over year to $433.2 million. General and administrative expenses rose 15.3% year over year to $218.6 million. Research & development expenses grew 17.4% year over year to $282.7 million. Business reorganization expenses decreased significantly to $0.6 million from $23.1 million in the year-ago quarter.

Operating loss was $38.7 million compared with the year-ago quarter's operating loss of $132.1 million, representing a significant improvement.

Balance Sheet

As of Dec. 31, 2025, Take-Two had $2.16 billion in cash and cash equivalents compared with $1.87 billion as of Sept. 30, 2025. The company also had short-term investments of $199 million. It had total debt of $3.07 billion as of Dec. 31, 2025 (consisting of $582.2 million in short-term debt and $2.49 billion in long-term debt).

For the nine months ended Dec. 31, 2025, net cash provided by operating activities was $388.9 million compared to net cash used in operating activities of $324.2 million in the prior-year period. Capital expenditures were $126.0 million for the nine-month period.

TTWO's Q4 & FY26 Guidance

For the fourth quarter of fiscal 2026, Take-Two expects GAAP net revenues between $1.57 billion and $1.62 billion. Operating expenses are expected to be between $973 million and $983 million. It expects a loss per share between 70 cents and 54 cents.

Net Bookings are expected to be in the range of $1.51-$1.56 billion.

For fiscal 2026, Take-Two has raised its expectations and now expects GAAP net revenues between $6.55 billion and $6.60 billion, up from $6.38-$6.48 billion previously expected. The company expects net bookings in the range of $6.65-$6.70 billion, up from the prior range of $6.40-$6.50 billion.

Total operating expenses are expected in the range of $3.96-$3.97 billion. It expects a loss per share between $2.00 and $184.

For fiscal 2026, net cash provided by operating activities is expected to be approximately $450 million. Capital expenditures are expected to be approximately $180 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a upward trend in fresh estimates.

The consensus estimate has shifted 1328.57% due to these changes.

VGM Scores

Currently, Take-Two has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Take-Two has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.