Take-Two Interactive Software(TTWO) - 2026 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported first quarter net bookings of $1,420,000,000, significantly above the guidance range of $1,250,000,000 to $1,300,000,000 [22] - GAAP net revenue increased by 12% to $1,500,000,000, while cost of revenue declined by 1% to $559,000,000 [22] - Recurrent consumer spending grew by 17%, accounting for 83% of net bookings, which was above the guidance of 7% growth [22] Business Line Data and Key Metrics Changes - The mobile business outperformed expectations, with titles like TuneBlast growing by 22% year over year and Match Factory achieving a 33% increase [9][10] - NBA 2K25 sold over 11,500,000 units, with engagement metrics such as daily active users increasing by 30% [12] - The Grand Theft Auto series continued to perform well, with Grand Theft Auto V selling over 215 million units worldwide [12] Market Data and Key Metrics Changes - The company expects net bookings for fiscal year 2026 to range from $6,050,000,000 to $6,150,000, reflecting an 8% growth at midpoint compared to fiscal year 2025 [23] - The breakdown of net bookings is projected to be approximately 45% from Zynga, 39% from 2K, and 16% from Rockstar Games [25] Company Strategy and Development Direction - The company is focused on organic growth while also considering selective inorganic opportunities that are strategically sound [42] - There is a strong emphasis on delivering high-quality titles, with a robust pipeline expected to enhance profitability [57][28] - The company is committed to supporting Nintendo with additional titles and expanding its offerings across various platforms [14][19] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the year ahead, raising the net bookings outlook due to strong first-quarter performance [8] - There are concerns about potential economic slowdowns affecting consumer spending, but the company believes its focus on quality will help maintain engagement [55][56] - The management is confident in the upcoming release slate, which includes titles like The Old Country and NBA 2K26, to drive future growth [20][26] Other Important Information - The company announced a multi-year global partnership expansion with the NBA, NBA PA, and WNBA PA, indicating strong relationships in the sports gaming sector [13] - The company is exploring opportunities for open distribution in light of recent court rulings regarding alternative app stores [67] Q&A Session Summary Question: Insights on NBA 2K's performance - Management noted that NBA 2K's performance is driven by improved engagement across key modes, with significant year-over-year growth [30][32] Question: Advertising revenue trends - Management indicated a shift in advertising strategy from hyper casual to hybrid casual, which has led to a stabilization in advertising revenue [36] Question: Mobile growth expectations - Management acknowledged strong mobile performance in Q1 but anticipates moderation due to the maturity of some titles [38][39] Question: Capital allocation strategy - The company plans to focus on organic growth, selective inorganic opportunities, and returning capital to shareholders through buybacks [40][42] Question: Pricing strategy for Borderlands 4 - Management explained that pricing decisions are based on delivering value to consumers, with a focus on quality over simply following industry trends [46][48] Question: Economic outlook and its impact - Management expressed a cautious but optimistic view on the macroeconomic environment, suggesting a potential soft landing with modest growth [52][56] Question: Addressable player base versus quality - Management emphasized the importance of quality in game releases while ensuring availability across multiple platforms [61][62] Question: Court rulings on app stores - Management sees opportunities for open distribution and plans to continue cooperating with app stores while focusing on fair treatment [67][70]