Take-Two Q1 FY2027 Earnings: Revenue Rose but a Pipeline Impairment Weighed on Profit

Take-Two Interactive (NASDAQ: TTWO) reported fiscal Q1 2027 net revenue of $1.534 billion, up 2% from $1.504 billion, while GAAP loss per share widened to $0.18 from $0.07. Net bookings declined 3% to $1.386 billion, and a $43.4 million impairment related to a canceled unannounced title contributed to lower gross profit and a wider net loss.

Core financial results

For the quarter ended June 30, 2026, reported revenue moved higher even as current-period net bookings declined. Recurrent consumer spending generated 84% of both revenue and bookings, with recurrent revenue rising 3% but recurrent bookings falling 1%.

Profitability weakened more materially. Cost of revenue increased 17% to $651.4 million, outpacing revenue growth and reducing gross margin by approximately 5.3 percentage points.

Business and platform performance

Console was the principal source of platform growth, while mobile and PC declined under both revenue and bookings measures. The shift increased console’s share of revenue to 42% from 37%, while mobile’s share fell to 50% from 53%.

NBA 2K and the Grand Theft Auto series were the largest named contributors, alongside mobile properties including Toon Blast, Match Factory, Empires & Puzzles, and Words With Friends. Digital distribution remained dominant, representing 98% of revenue and 99% of bookings.

Revenue growth did not translate into profit

The divergence between reported revenue and bookings partly reflects revenue-recognition timing. Take-Two’s reconciliation included a $148.0 million deferred-revenue adjustment to GAAP net revenue; subtracting that effect from $1.534 billion produces approximately $1.386 billion, consistent with reported net bookings.

The larger issue for profitability was cost growth. Software development costs and royalties increased to $135.1 million from $30.1 million, while license costs rose to $99.5 million from $70.9 million. Cost of revenue included a $43.4 million impairment after Take-Two decided not to continue developing an unannounced title from a third-party developer.

Operating expenses were comparatively stable at $918.0 million versus $923.4 million. Lower selling and marketing expense was offset by higher research and development and general and administrative costs. Consequently, the decline in operating profit was primarily associated with lower gross profit rather than a broad increase in operating expenses.

Cash flow and balance sheet

Operating cash outflow increased to $168.8 million despite substantial noncash expenses, including stock-based compensation and amortization and impairment charges. The cash flow statement also showed uses of cash from a $174.9 million reduction in deferred revenue, a $265.9 million reduction in accounts payable and other liabilities, and $173.0 million of software development and license investment.

At June 30, Take-Two held $1.365 billion of cash and equivalents and $461.7 million of short-term investments. Combined cash and short-term investments were approximately $1.827 billion, down from approximately $1.989 billion at March 31. Total short- and long-term debt was approximately $2.520 billion and was essentially unchanged, although a substantial amount moved into the short-term classification.

Guidance

Take-Two updated its fiscal 2027 outlook while explicitly reiterating net bookings guidance of $8.0 billion to $8.2 billion. The company also issued its initial fiscal Q2 forecast, which calls for a GAAP net loss even as bookings are expected to exceed reported revenue.

The outlook assumes timely delivery of the included titles, stable foreign exchange rates, continued expansion of the current-generation console installed base, and manageable mobile player-acquisition costs.

Management’s view

Chairman and CEO Strauss Zelnick attributed the quarter to portfolio performance and execution across Take-Two’s labels. Management maintained its bookings outlook ahead of the planned November 19, 2026 launch of Grand Theft Auto VI and said it expects the company’s larger scale to support stronger future cash flow.

The timing and commercial reception of Grand Theft Auto VI are central to that outlook. Other announced releases include NBA 2K27 on September 4, 2026, while several projects—including the next BioShock title and Judas—did not have release dates in the announcement.

Recent insider transactions

The supplied insider dataset recorded 388,628 shares across nine purchases or awards and 432,556 shares across 22 sales during the past six months. That represented net selling of 43,928 shares, equal to 1.3% of the approximately 3.3 million insider shares held; stock awards should be distinguished from open-market purchases.

The ten most recent reported entries before the earnings release consisted of three stock awards and seven sales. These disclosures describe completed transactions but do not, by themselves, establish insiders’ views of Take-Two’s prospects.

Risks investors need to watch

• Release timing and acceptance: Fiscal 2027 guidance assumes timely delivery of included games, with Grand Theft Auto VI scheduled for November 19. A delay or weaker market reception would affect bookings, revenue, and cash flow.
• Margin pressure: The canceled-title impairment and higher software development costs reduced gross margin this quarter. Further cancellations, impairments, or rising development expenses could continue to limit profitability.
• Mobile and PC weakness: Mobile bookings fell 7% and PC and other bookings declined 22%. Continued weakness would increase reliance on console growth and major franchises.
• Cash-flow execution: First-quarter operating cash flow was negative even though Take-Two expects more than $1 billion for the full year. Achieving that target requires a substantial improvement over the remaining quarters.
• Portfolio concentration: NBA 2K and Grand Theft Auto remain leading contributors, while recurrent consumer spending accounts for 84% of the business. Changes in engagement or monetization within these franchises could materially affect results.

Summary

Take-Two’s fiscal Q1 2027 produced modest revenue growth but lower bookings, weaker gross margin, and a wider loss, with the canceled-title impairment adding to higher development-related costs. Console growth offset declines in mobile and PC, while cash use increased. The next major tests are execution against the fiscal 2027 cash-flow target, stabilization of weaker platforms, and the timely launch of Grand Theft Auto VI within the reiterated $8.0 billion to $8.2 billion bookings outlook.