Take-Two’s third quarter results were met with a negative market reaction, despite surpassing Wall Street’s revenue expectations. Management attributed the quarter’s top-line growth to strong performance across its mobile portfolio—particularly titles like Toon Blast and Color Block Jam—as well as the launch of NBA 2K26, which saw record in-game spending. CEO Strauss Zelnick highlighted that the company’s focus on engaging players and optimizing live services drove a 20% increase in recurrent consumer spending, further supported by new content for core franchises. Management acknowledged challenges with the initial launch of Borderlands 4 on PC but cited ongoing efforts to improve performance and player experience.
Is now the time to buy TTWO? Find out in our full research report (it’s free for active Edge members).
Take-Two (TTWO) Q3 CY2025 Highlights:
- Revenue: $1.77 billion vs analyst estimates of $1.71 billion (20.3% year-on-year growth, 3.8% beat)
- EPS (GAAP): -$0.73 vs analyst expectations of -$0.62 (17.1% miss)
- Adjusted EBITDA: $387.6 million vs analyst estimates of $288 million (21.9% margin, 34.6% beat)
- The company lifted its revenue guidance for the full year to $6.43 billion at the midpoint from $6.15 billion, a 4.6% increase
- EPS (GAAP) guidance for the full year is -$2.08 at the midpoint, missing analyst estimates by 1.4%
- EBITDA guidance for the full year is $608 million at the midpoint, below analyst estimates of $910.2 million
- Operating Margin: -5.5%, up from -20.1% in the same quarter last year
- Market Capitalization: $44.41 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Take-Two’s Q3 Earnings Call
- Colin Sebastian (Baird) asked about sustaining high recurrent consumer spending (RCS) and whether new mechanics could be applied to other franchises. CEO Strauss Zelnick responded that strong creative execution and player engagement strategies are driving RCS growth across the portfolio.
- Douglas Creutz (TD Cowen) questioned if being one of the last large, stand-alone publishers affects competitive positioning. Zelnick noted the company’s independence and underleveraged balance sheet provide advantages but emphasized the need for continued creative and operational excellence.
- Christopher Schoell (UBS) inquired about the impact of alternate mobile payment mechanisms and margin outlook. Zelnick reported that direct-to-consumer initiatives are broadly rolled out, improving both net bookings and margins, though specific margin gains were not quantified.
- Andrew Marok (Raymond James) probed NBA 2K26’s audience growth and retention efforts. President Karl Slatoff highlighted improved player re-engagement and international expansion, with significant opportunity remaining to grow annual returning user cohorts.
- Matthew Cost (Morgan Stanley) explored Zynga’s mobile momentum and the potential for further acquisitions. Zelnick credited disciplined project selection and leadership for Zynga’s outperformance, stating that future M&A would remain highly selective and strategically aligned.
Catalysts in Upcoming Quarters
Looking ahead, key areas to monitor include: (1) the effectiveness of new content and live service updates for core franchises like NBA 2K and Borderlands, (2) the expansion and monetization of direct-to-consumer payment mechanisms across mobile, and (3) progress on upcoming major releases, particularly WWE 2K26 and further updates on Grand Theft Auto VI’s development timeline. Execution against these markers will clarify Take-Two’s ability to sustain growth and margin improvements.
Take-Two currently trades at $238.25, down from $253.02 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free for active Edge members).
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