Take-Two Interactive Software(TTWO) - 2026 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported net bookings of $1.96 billion for the second quarter, significantly exceeding expectations and marking the best second quarter in the company's history [7][18] - GAAP net revenue increased by 31% to $1.77 billion, while the cost of revenue rose by 27% to $793 million [19] - Operating expenses increased by 5% to $1.1 billion, with management basis operating expenses rising by 13% year over year [19][23] - Recurrent consumer spending rose by 20%, accounting for 73% of net bookings, with expectations for recurrent consumer spending growth now projected at approximately 11% for the fiscal year [19][21] Business Line Data and Key Metrics Changes - The mobile business outperformed expectations, with Toon Blast growing 26% year over year and Match Factory achieving a 20% increase [8][9] - NBA 2K26 sold over 5 million units, representing a double-digit increase over NBA 2K25, with average selling prices reaching an all-time high [11] - The Grand Theft Auto Online community remains highly engaged, with GTA Plus membership growing over 20% year over year [14] Market Data and Key Metrics Changes - The company expects net bookings for fiscal 2026 to range from $6.4 billion to $6.5 billion, reflecting a 14% growth over fiscal 2025 [20] - The breakdown of net bookings is projected to be approximately 46% from Zynga, 39% from 2K, and 15% from Rockstar Games [22] Company Strategy and Development Direction - The company aims to expand core franchises and release groundbreaking new titles, with a strong pipeline including Grand Theft Auto VI and other major titles [17][25] - The focus on mobile direct-to-consumer business is expected to enhance net bookings and margins through new payment mechanisms [10][21] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, citing strong performance and a commitment to delivering high-quality entertainment experiences [15][25] - The company is confident in its ability to sustain momentum and achieve record levels of net bookings in fiscal 2027 [15][20] Other Important Information - The release date for Grand Theft Auto VI has been pushed to November 19, 2026, to ensure a high level of polish [8] - The company has seen a notable increase in ad revenue across its mobile business, particularly from Rollic [68] Q&A Session Summary Question: Insights on RCS performance and GTA content updates - Management noted that there are no expected changes in support for GTA Online despite the release date shift for GTA VI, emphasizing ongoing strong performance [30] Question: Impact of being a standalone publisher - Management acknowledged the competitive position but emphasized a focus on creativity and performance as key to future success [36] Question: Mobile margins and alternate payment mechanisms - Management confirmed that the rollout of direct-to-consumer initiatives has improved margins and net bookings, with expectations for continued growth [41] Question: NBA audience expansion - Management indicated that returning players and international engagement are key to driving recurrent consumer spending in NBA titles [49] Question: Importance of launch period for Borderlands - Management acknowledged a softer launch for Borderlands 4 but expressed confidence in long-term unit sales and economic results [51] Question: Confidence in sustaining mobile outperformance - Management attributed Zynga's success to strong leadership and execution, with a focus on strategic acquisitions and disciplined growth [54] Question: AI implementation in game development - Management discussed the positive role of AI in enhancing efficiency but emphasized that creativity remains the core of game development [60] Question: Update on BioShock franchise - Management expressed excitement about the new leadership for the BioShock franchise and confidence in delivering a product that exceeds consumer expectations [65]