Take-Two Interactive ((TTWO)) has held its Q1 earnings call. Read on for the main highlights of the call.

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Take-Two Interactive’s latest earnings call struck a cautiously optimistic tone, combining a clean beat on quarterly bookings with confidence in the multiyear outlook. Executives highlighted the strength of flagship franchises like Grand Theft Auto and NBA 2K, while acknowledging pressure in mobile, higher costs, and a softer Q2 guide that could test investor patience in the near term.

Q1 Bookings Beat and Revenue Growth

Take-Two opened the call by underscoring a solid top-line performance in the first quarter, with net bookings of $1.39 billion coming in slightly above guidance of $1.32 billion to $1.37 billion. GAAP net revenue rose 2% year over year to $1.5 billion, reinforcing the message that the core console and PC franchises continue to generate dependable growth.

Ambitious Fiscal 2027 Growth Targets

Management reiterated its bullish fiscal 2027 outlook, projecting net bookings of $8.0 billion to $8.2 billion, which implies roughly 20% growth at the midpoint versus fiscal 2026. This long-term trajectory is central to the investment story and is tied to a slate of major releases, disciplined cost control, and an expectation that recurrent spending will remain a powerful earnings driver.

Grand Theft Auto Franchise and GTA VI Anticipation

The Grand Theft Auto franchise remains a towering pillar of Take-Two’s results, with GTA V lifetime sales now exceeding 230 million units and recurrent consumer spending across the series rising 3% in the quarter. Management described GTA VI preorders as “exceptional,” citing strong anticipation around the November 19 release date and an extended marketing partnership that should keep the brand highly visible.

NBA 2K Delivers Strong Growth and Engagement

The NBA 2K franchise posted another robust quarter, with NBA 2K26 selling more than 12 million units, up 9% year over year versus NBA 2K25. Recurrent consumer spending for the series grew 7%, supported by rising engagement metrics including a 15% increase in average daily active users and a 35% gain in average games played per user.

Mobile Standouts Amid Broader Weakness

While mobile net bookings fell 7% year over year overall, several Zynga titles were bright spots, including Toon Blast and Words With Friends, each posting 8% bookings growth. Top Eleven net bookings jumped 15%, and NBA 2K All-Star in China surpassed 10 million registered users, delivering strong margins in a segment where scale is critical to profitability.

Cash Flow Strength and Balance Sheet Goals

Beyond the quarter, Take-Two emphasized its improving cash flow and balance sheet trajectory as a key pillar of shareholder value. The company continues to expect operating cash flow in excess of $1 billion in fiscal 2027 and anticipates ending the year in a net cash position, giving it more flexibility for investment, potential M&A, and shareholder-focused capital allocation.

Expense Discipline and Operating Leverage

Operating expenses were tightly managed during the quarter, coming in flat at $918 million on a GAAP basis and declining 1% year over year on a management basis, which was favorable to prior forecasts. Management now expects full-year management operating expense growth of about 7%, slightly lower than previously guided, supporting the narrative of improving operating leverage as revenues scale.

Improved Transparency in Label Mix

To give investors better visibility into revenue drivers, Take-Two detailed its label net bookings mix guidance, with Rockstar Games expected to contribute roughly 37%, Zynga 34%, and 2K about 29%. The company also listed its largest expected contributors, signaling that blockbuster console and PC titles will remain central even as mobile and live services play a growing role.

Recurrent Spending Resilience Versus Mobile Headwinds

Recurrent consumer spending across the portfolio declined 1% in the quarter, which was better than the guided 3% drop and suggests underlying resilience in live services. However, management reiterated that mobile net bookings fell 7% year over year and are likely to be down for the full year, as tough comparisons and maturing Zynga titles weigh on growth.

Soft Q2 Bookings Guide Raises Near-Term Questions

Investors were reminded that the near-term path will be bumpy, with Q2 net bookings guided to $1.62 billion to $1.67 billion versus $1.96 billion in the same quarter last year. The guidance implies a significant year-over-year decline in Q2 bookings, reflecting timing shifts in releases and mobile softness, even as management stays confident in the longer-term ramp.

Higher Cost of Revenue and Impairment Impact

Cost of revenue rose 17% in the quarter to $651 million, putting pressure on gross margins and reminding investors that content investments are not risk-free. The figure included a $43 million impairment charge tied to the cancellation of an unannounced third-party title, underscoring management’s willingness to cut projects that no longer meet its return thresholds.

GTA VI Preorders and Sales Uncertainty

Despite describing GTA VI preorders as unprecedented, management urged caution in interpreting early demand figures, noting that preorders can pull forward sales and may not be fully incremental. As a result, the company declined to build additional upside into its guidance from preorders alone, preferring to wait for clearer evidence of how demand converts post-launch.

User Acquisition Pressure in Mobile

Take-Two flagged rising user acquisition costs and aggressive spending by competitors as a key challenge in the mobile segment, squeezing economics and tempering growth. These dynamics are contributing to moderating performance in mature Zynga titles and reinforce management’s focus on disciplined UA rather than chasing volume at unattractive returns.

Higher Capital Expenditure Plans

Planned capital expenditures for the year were raised to about $290 million, up from prior forecasts and driven largely by a real estate purchase. While this modestly increases cash outlays, the company framed the investment as part of a long-term infrastructure strategy that should support its expanding development pipeline and workforce.

Guidance and Forward-Looking Outlook

Looking ahead, Take-Two reaffirmed fiscal 2027 net bookings of $8.0 billion to $8.2 billion, GAAP revenue of $7.9 billion to $8.1 billion, and cost of revenue of $3.54 billion to $3.66 billion, with operating expenses of $4.15 billion to $4.17 billion. For Q2, it guided net bookings of $1.62 billion to $1.67 billion, recurrent spending down about 5%, GAAP revenue of $1.42 billion to $1.47 billion, and management operating expenses down roughly 5%.

In closing, Take-Two’s earnings call painted a picture of a publisher balancing short-term growing pains with a powerful long-term growth story anchored by GTA VI and NBA 2K. While mobile headwinds, higher costs, and a softer Q2 outlook create near-term uncertainty, the company’s strong IP, disciplined expense management, and cash flow ambitions remain compelling for investors focused on the multiyear horizon.