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Fri, August 14, 2026 at 6:14 PM GMT+5 46 min read
TTWO
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DATE
Friday, Aug. 7, 2026 at 8:00 a.m. ET
CALL PARTICIPANTS
Chairman and Chief Executive Officer - Strauss Zelnick
President - Karl Slatoff
Chief Financial Officer - Lainie Goldstein
SVP, Investor Relations and Corporate Communications - Nicole Shevins
Full Conference Call Transcript
Operator: Hello, everyone. Thank you for joining us, and welcome to the Take-Two Interactive Software First Quarter Fiscal Year 2027 Results Conference Call. [Operator Instructions] I will now hand the conference over to Nicole Shevins, SVP, Investor Relations and Corporate Communications. Nicole, please go ahead.
Nicole Shevins: Good morning. Thank you for joining our conference call to discuss our results for the first quarter of fiscal year 2027 ended June 30, 2026. Today's call will be led by Strauss Zelnick, Take-Two's Chairman and Chief Executive Officer; Karl Slatoff, our President; and Lainie Goldstein, our Chief Financial Officer. We will be available to answer your questions during the Q&A session following our prepared remarks. Before we begin, I'd like to remind everyone that statements made during this call that are not historical facts are considered forward-looking statements under federal securities laws. These forward-looking statements are based on the beliefs of our management as well as assumptions made by and information currently available to us.
We have no obligation to update these forward-looking statements. Actual operating results may vary significantly from these forward-looking statements based on a variety of factors. These important factors are described in our filings with the SEC, including the company's most recent annual report on Form 10-K and quarterly report on Form 10-Q, including the risks summarized in the section entitled Risk Factors. I'd also like to note that unless otherwise stated, all numbers we will be discussing today are GAAP and all comparisons are year-over-year. Additional details regarding our actual results and outlook are contained in our press release, including the items that our management uses internally to adjust our GAAP financial results in order to evaluate our operating performance.
Our press release also contains a reconciliation of any non-GAAP financial measure to the most comparable GAAP measure. In addition, we have posted to our website a slide deck that visually presents our results and financial outlook. Our press release and filings with the SEC may be obtained from our website at take2games.com. And now I'll turn the call over to Strauss.
Strauss Zelnick: Thanks, Nicole. Good morning, and thank you for joining us today. Fiscal 2027 is off to an excellent start, led by the power of our diverse portfolio and the strong consistent execution of our strategy at all of our labels. We delivered first quarter net bookings of approximately $1.39 billion, which was slightly above the high end of our guidance range, primarily due to the outperformance of NBA 2K and the Grand Theft Auto series. We're reiterating our fiscal 2027 outlook for net bookings of $8 billion to $8.2 billion, which reflects both ongoing positive trends in our business and our high degree of confidence around the November 19 release of Grand Theft Auto VI.
We expect to sustain this new level of scale and generate strong cash flows for the next several years as we release our robust development pipeline, capitalize on incremental opportunities within our highly established hit franchises and continue to apply our proven long-term approach to managing the company. Now turning to highlights for the period. NBA 2K26's performance was outstanding and concluded a record year for the franchise. To date, the title has sold in over 12 million units, reflecting 9% growth compared to NBA 2K25.
Engagement was up meaningfully during the quarter with recurrent consumer spending growing 7%, driven by a 15% increase in average daily active users, a 25% increase in MyCAREER daily active users and a 35% increase in average games played per user. The achievements of this year's iteration of the series are a testament to Visual Concepts ability continually to deliver new innovative ways for fans to stay engaged, and our live service execution remains a cornerstone of NBA 2K's sustained success. During the quarter, 2K also supported Borderlands 4, Sid Meier's Civilization VII and WWE 2K26 with an array of new offerings, which enhanced player engagement and sentiment. The Grand Theft Auto series once again exceeded expectations.
And to date, Grand Theft Auto V has sold in over 230 million units worldwide. Recurrent consumer spending for the series grew 3% and GTA+ continues to thrive, all led by a series of content offerings, including the addition of the Rockstar Mission Creator, an all-new suite of innovative and in-depth tools empowering the player community to bring missions to life. Global excitement for the launch of Grand Theft Auto VI continues to build with the title having an exceptional start to preorders.
With Rockstar Games' recent announcement of Grand Theft Auto VI, an extended look coming on August 27, we believe that consumers' passion and anticipation for the next evolution of this iconic series will grow further, leading up to the title's November 19 release. Turning to our mobile business. Zynga performed in line with our expectations, and we're pleased that many of our forever franchises continue to resonate with players. Net bookings for Toon Blast grew 8% over last year. The title was supported by a new marketing campaign featuring Emmy nominated actor Giancarlo Esposito. Empires & Puzzles maintained steady momentum, anchored by a successful ninth anniversary campaign and the introduction of new heroes and character abilities.
Words With Friends exceeded our forecast with net bookings growing 8% year-over-year, led by strong ad performance and higher player engagement with several features, including Dice Challenge, the title's latest permanent one-on-one game mode. Top Eleven surpassed our expectations with net bookings increasing 15% year-over-year as fans enjoyed a special in-game event featuring player versus environment matches in 10 international locations. 2K's mobile offerings continue to perform well with strong downloads and engagement across key titles. NBA 2K All-Star, our mobile title in China in partnership with Tencent, surpassed 10 million registered users since launching last year and is yielding strong profit margins.
Our mobile direct-to-consumer channel remains a significant driver of revenue and margin enhancement with many of Zynga's titles offering this feature and further growth anticipated. Guided by our core pillars to be the most creative, innovative and efficient entertainment company in the world, our 13,000 colleagues share a singular vision for excellence and hit creation. Each day, we strive to bring joy to our player communities and value to our shareholders. I'd like to express my gratitude to our teams for their immense passion and unwavering commitment to our mission to make the most captivating and engaging experiences in the entertainment business.
We believe that fiscal 2027 will be an inflection point for Take-Two, one that will write an exciting new chapter in our history and provide the foundation for new levels of success and the creation of groundbreaking entertainment experiences. I'll now turn the call over to Karl.
Karl Slatoff: Thanks, Strauss. I'd like to thank our teams for delivering a great start to the year and setting the stage for the most exciting pipeline in our company's history. I'll now discuss our recent and upcoming releases. On July 8, 2K and HB Studios launched Season 7 for PGA TOUR 2K25, a free update, which added the 154th Open Championship at Royal Birkdale Golf Club. The team is planning to launch Season 8 in late September and is hard at work on this year's release of PGA TOUR 2K27. 2K will share more details in the coming months.
On July 14, Rockstar Games launched the Kortz Center Heist for GTA Online, which introduced an all-new blockbuster Heist targeting Los Santos' premier cultural institution with an array of artwork for the taking. On July 30, 2K and Gearbox launched Bounty Pack 4: Mergers and Acquisitions for Borderlands 4, which includes a new story mission and cosmetic items. Fans can look forward to even more action in September when Gearbox releases additional content, including the title's Next Story Pack. On August 14, 2K and Hangar 13 will release the Man of Honor story expansion for Mafia: The Old Country.
With Hangar 13 industry-leading capabilities and narrative-driven action titles, players will enjoy 2 new story chapters and all new content for the game's free ride mode. 2K and Visual Concepts will launch the WrestleMania 42 Pack for WWE 2K26 on August 19, followed by new seasons as part of the Ringside Pass during the fall. WWE 2K27 is currently in development, and 2K will provide updates later this year. On September 4, 2K and Visual Concepts will launch NBA 2K27, the next installment of our industry-leading basketball simulation that provides the most realistic and authentic NBA experience in interactive entertainment. This year, Victor Wembanyama of the San Antonio Spurs will be on the cover of the Standard Edition.
Caitlin Clark of the Indiana Fever will be on the cover of the Deluxe Edition and Chicago Bulls legend, Derrick Rose, will be on the cover of the Ultra Edition with early access available as part of the Deluxe and Ultra Editions. Last week, a first-look trailer of NBA 2K27's gameplay was revealed and the response has been positive with fans and the media expressing excitement over the titles improved graphics and enhanced player movement and presentation. 2K will share more about the game soon, including the NBA 2K27 preseason breakdown full game review on August 18.
Zynga will continue to focus on enhancing its existing mobile portfolio with bold beats and updates as well as releasing new titles, including Top Goal, which is currently in soft launch. The title recently introduced real-world soccer stars as well as enhanced 3D match simulation and player versus player gameplay. In closing, we are deeply excited about this year, highlighted by the November 19 launch of Grand Theft Auto VI, which will usher in a new era of growth for our company and returns for our shareholders. We remain steadfast in our mission and commitment to delivering the highest quality entertainment experiences that captivate and engage audiences throughout the world. I'll now turn the call over to Lainie.
Lainie Goldstein: Thanks, Karl, and good morning, everyone. We achieved excellent first quarter results driven by our powerful franchises, industry-leading talent and unwavering commitment to our strategic vision. I'd like to thank our teams for their hard work, which has enabled us to reach this exciting point within our company's history. Turning to our results. We delivered first quarter net bookings of $1.39 billion, which was slightly above our guidance range of $1.32 billion to $1.37 billion. This primarily reflected better-than-expected performance from NBA 2K and The Grand Theft Auto series. Recurrent consumer spending declined 1% for the period, which was favorable to our guidance of a 3% decline and accounted for 84% of net bookings. NBA 2K grew 7%.
The Grand Theft Auto series rose 3%. And as expected, mobile declined 7% over last year. GAAP net revenue increased 2% to $1.5 billion, while cost of revenue rose 17% to $651 million and included a $43 million impairment charge related to the decision not to proceed with an unannounced title from a third-party developer. Operating expenses were flat at $918 million. On a management basis, operating expenses declined 1% year-over-year, which was favorable to our forecast of 3% growth due to timing of marketing expenses across our labels.
With the ongoing positive trends in our business and excitement around the November 19 release of Grand Theft Auto VI, we are reiterating our fiscal 2027 net bookings outlook range of $8 billion to $8.2 billion, which represents approximately 20% growth over fiscal 2026 at the midpoint. The largest contributors to net bookings are expected to be The Grand Theft Auto series, NBA 2K, Toon Blast, Match Factory!, Empires & Puzzles, Words With Friends, the Red Dead Redemption Series, WWE 2K, Color Block Jam and Zynga Poker. We continue to expect recurrent consumer spending to be in line with fiscal 2026 and to represent 64% of net bookings. The underlying drivers remain unchanged.
NBA 2K projected to grow high single digits. The Grand Theft Auto series is expected to be up and Mobile expected to be down due to last year's success of Color Block Jam and our assumption that trends will moderate for several of Zynga's mature mobile titles. We now expect the net bookings breakdown from our labels to be roughly 37% Rockstar Games, 34% Zynga and 29% 2K. We continue to forecast operating cash flow in excess of $1 billion, and we remain on track to be in a net cash position by the end of the fiscal year.
We now plan to deploy approximately $290 million of capital expenditures, which is up from our prior forecast due to a planned real estate purchase. We continue to expect GAAP net revenue to range from $7.9 billion to $8.1 billion, while we now expect cost of revenue to range from $3.54 billion to $3.66 billion. Our total operating expenses are now expected to range from $4.15 billion to $4.17 billion. On a management basis, we expect operating expense growth of approximately 7% year-over-year, which is down slightly from our prior forecast. Now moving on to our guidance for the fiscal second quarter.
We project net bookings to range from $1.62 billion to $1.67 billion compared to $1.96 billion in the second quarter last year. Our release slate for the quarter includes NBA 2K27, as well as new content updates for various titles. The largest contributors to net bookings are expected to be NBA 2K, The Grand Theft Auto series, Toon Blast, Match Factory, Empires & Puzzles, Words with Friends, Color Block Jam, the Borderlands franchise, the Red Dead Redemption series and Zynga Poker. We project recurrent consumer spending to decline by approximately 5%, which assumes growth for NBA 2K and the Grand Theft Auto series, while mobile is expected to be down.
We expect GAAP net revenue to range from $1.42 billion to $1.47 billion. Operating expenses are planned to range from $1.01 billion to $1.02 -- on a management basis, operating expenses are expected to decline by approximately 5% year-over-year as last year included significant marketing expenses for the launch of Borderlands 4. Looking ahead, fiscal 2027 is on track to be a milestone year for our company, led by the release of Grand Theft Auto VI. We have great ambitions as our teams have carefully curated new opportunities that we believe will sustain this new level of scale for the foreseeable future, including live service enhancements, franchise extensions, the launch of new IP and international expansion.
In addition, we will continue to evaluate accretive M&A. As we bring these opportunities to fruition, we are confident in our ability to enhance our financial profile further and generate strong cash flows, setting us on a path to deliver continued growth and long-term shareholder returns. Thank you. I'll now turn the call back to Strauss.
Strauss Zelnick: Thanks, Lainie and Karl. On behalf of our entire management team, I'd like to thank our colleagues for an excellent start to what is poised to be an outstanding year for Take-Two. And to our shareholders, I want to express our appreciation for your continued support. We'll now take your questions. Operator?
Operator: [Operator Instructions] Your first question comes from the line of Doug Creutz with TD Cowen.
Douglas Creutz: One of your peers that reported previously suggested that there have been some slowdown in the Mobile market in Q2, which they attributed to macro uncertainty. Just wondered if you saw the same thing, if you saw different things. Any commentary you could offer would be helpful.
Strauss Zelnick: No, it's really not what we're seeing. Our results have been affected by how Color Block Jam is doing versus last year in terms of comping because it was a new title last year. But apart from that, we have delivered some really good news in Mobile. There's no doubt there's a bit of pressure on user acquisition at the moment. And I think that, that comes and goes in the marketplace. But no, we don't feel like the consumer is pulling back at all.
Operator: Your next question comes from the line of Andrew Marok with Raymond James.
Andrew Marok: Maybe one on the GTA VI extended look. I guess if you could give us a little bit more color on the thinking that went into the decision to go with Netflix for the time exclusivity rather than just the traditional route of releasing it on a free platform like YouTube or through Rockstar Socials.
Strauss Zelnick: This is a first-of-its-kind partnership with Netflix. They're a great marketing partner for us and distribution partner, as you know. We also work with virtually every social media outlet on Earth. This is part of Rockstar Games marketing strategy. We're excited for everyone to see an extended look of Grand Theft Auto VI. I'm not prepared to tell you how it's going to go, but I feel really good about it. And of course, 6 hours after the initial launch on Netflix, it will be available on Rockstar Games Channel on YouTube and I think ultimately, many other outlets.
Andrew Marok: Great. Maybe one more, if I could. Not that you needed any other tailwinds into GTA VI launch excitement, but can you talk a little bit about the Kortz Center update for GTA Online and maybe how that's been in terms of bringing in some lapsed players ahead of the GTA VI launch?
Karl Slatoff: We're actually very pleased how things are going right now. We typically don't give specific details about how releases are doing. But I can tell you that right now, we're very pleased with how things are going. And like all the Rockstar releases, they're exciting. They're well received by players, and they always bring in -- they always reactivate folks. So, so far, so good.
Operator: Your next question comes from the line of Brian Pitz with BMO Capital Markets.
Brian Pitz: You recently announced the $80 base game for GTA VI, but ultimately decided to leave NBA 2K27 base pricing at $70. As you think about go-forward base pricing, help us understand how you're thinking about being able to price games at a more premium price with more traditional AAA game prices around the $70 price point.
Strauss Zelnick: Look, we've said this many, many, many times. Our goal is to deliver way more value to consumers than what we charge them. And the truth is that the real cost of a AAA video game is a whole lot lower today than it was 20 years ago. Pricing has not kept pace with inflation. And our goal is to continue to overdeliver for our consumers because how you feel about any experience is the intersection of the experience itself and what you pay for it. So -- to say that we expect that Grand Theft Auto VI will be an incredible bargain as experiences go is a gross understatement because Rockstar Games is known for overdelivering.
And when people engage with our titles, and Karl just answered a question about GTA Online, remember, we're 13 years after GTA Online was launched and people are still highly engaged and we have record-setting engagement at times. So that's our goal. Our goal is not to maximize price.