TTWO — Full Year 2026 Financial Report Analysis

Bookings up 19% to $6.72 billion in the last full year before Grand Theft Auto VI

Take-Two's fiscal year 2026 covers the twelve months from April 1, 2025 to March 31, 2026. It was a year of growth from existing games: net bookings rose 19.0% to $6.72 billion and GAAP net revenue rose 18.2% to $6.66 billion, with no new Grand Theft Auto release. The 10-K attributes the $1.02 billion revenue increase mainly to NBA 2K (+$416.9 million), the Borderlands franchise (+$210.3 million, with Borderlands 4 released in September 2025), the mobile puzzle game Color Block Jam (+$206.6 million), Toon Blast (+$121.9 million) and Grand Theft Auto (+$115.1 million).

Two terms matter for reading Take-Two:

• Net bookings is the company's main operating yardstick: the value of games and in-game content sold in the period. It differs from GAAP revenue because accounting rules spread part of a game's sale over the time players are expected to play it, so revenue lags bookings.
• Recurrent consumer spending is money from players who already own a game: virtual currency, add-on content, in-game purchases and in-game ads. It was $5.20 billion, or 78.1% of revenue, up 16.1%.

The company still lost money on a GAAP basis: a net loss of $298.2 million ($1.62 per share). But that is a very different result from last year's $4.48 billion loss ($25.58 per share), which was almost entirely a $3.55 billion goodwill impairment. Goodwill impairment is a non-cash write-down admitting that businesses Take-Two acquired are worth less than it paid for them. There was no such charge this year.

Key metrics

Gross margin is revenue minus the direct costs of the games (including write-offs of acquired game rights and development costs), as a share of revenue. Operating margin is what's left after marketing, R&D and overhead as well.

What actually improved underneath the impairment swing

Without the goodwill charge, the year still shows real operating improvement. Operating loss narrowed to $104.2 million from $4,391.1 million; strip out last year's $3,545.2 million impairment and last year's operating loss would have been roughly $846 million, so the underlying improvement is about $740 million.

• Gross margin rose 2.9 points to 57.2%. The 10-K credits "lower amortization of intangible assets primarily due to higher impairments in the prior year" and lower product costs relative to revenue, "partially offset by higher amortization of capitalized software and development costs primarily due to the timing of releases." Amortization of acquired game intangibles fell $148.8 million to $662.2 million: last year's write-downs left less value to expense this year, which flatters the margin. Software development costs and royalties rose 161.6% to $439.8 million as Borderlands 4 and Mafia: The Old Country launched and began expensing their development cost.
• Operating costs grew far slower than revenue. Selling and marketing rose 5.2%, R&D 6.9%, and general and administrative expense fell 1.0%, helped by "lower legal fees and contingencies related to the IBM case against Zynga." Restructuring ("business reorganization") went from a $106.5 million charge to a $4.4 million credit.
• Mobile grew but slower than console. Mobile revenue rose $391.0 million (Color Block Jam, Toon Blast) to $3.33 billion, but console revenue rose $498.2 million (NBA 2K, Borderlands) to $2.60 billion, so console's share rose to 39.0%. This matters because mobile carries lower gross margins: Apple and Google platform fees are booked as a cost.

The bottom line was hurt by tax. Take-Two recorded a $100.4 million tax expense on a $197.8 million pre-tax loss (an effective rate of -50.8%), driven mainly by a $113.4 million increase in the U.S. valuation allowance: the company is not recognizing tax benefits from its U.S. losses because it cannot yet show it will earn enough to use them.

The fourth quarter alone (January–March 2026) was flat: net bookings of $1.58 billion were unchanged from a year earlier, though above guidance, and GAAP revenue was $1.68 billion versus $1.58 billion.

Balance sheet and cash

Operating cash flow turned positive at $624.3 million after a $45.2 million outflow in fiscal 2025. Cash rose to $1.64 billion from $1.56 billion, helped by a roughly $1.2 billion stock offering in May 2025 (which increased the share count and diluted existing holders) and offset by repaying the 2025 and 2026 notes. $2.5 billion of senior notes remained outstanding at year-end, and no shares were repurchased during the year.

Takeaway: Fiscal 2026 proves Take-Two's existing catalogue can grow on its own — bookings up 19% without a new Grand Theft Auto game, gross margin up 2.9 points and operating cash flow of $624 million — but the company still posted a GAAP loss. Management's fiscal 2027 plan calls for about $1.4 billion more bookings (at the midpoint) with GTA VI launching November 19, 2026, and GAAP profit of only $0.55–$0.75 per share. Almost all of the investment case rests on that one release arriving on time.

Outlook

For fiscal 2027 (April 2026 – March 2027), management guided in May to net bookings of $8.0–$8.2 billion, GAAP revenue of $7.9–$8.1 billion, GAAP diluted EPS of $0.55–$0.75, and operating cash flow of over $1.0 billion, driven by the launch of Grand Theft Auto VI on November 19, 2026 for PS5 and Xbox Series X|S. NBA 2K27 was slated for September 2026. Management's key assumptions include "the timely delivery of the titles included in this financial outlook." Grand Theft Auto products produced 12.4% of fiscal 2026 revenue, mostly from GTA V and GTA Online, a game first released in 2013.

Since the 10-K: Take-Two's first-quarter fiscal 2027 results (April–June 2026, released August 7, 2026) showed net bookings down 3% to $1.39 billion, slightly above guidance, and a GAAP net loss of $34.1 million that included a $43.4 million impairment for cancelling an unannounced third-party title. Management kept the $8.0–$8.2 billion bookings outlook and the November 19 GTA VI date, and raised expected capital spending to about $290 million from about $200 million.

Our read: the guidance implies a sharp back-half ramp — the first quarter delivered just 17% of the full-year bookings midpoint, so most of the growth has to come from the November–March window. Even at the top of the range, GAAP EPS of $0.75 is small relative to $8 billion of revenue, because acquired-intangible amortization (about $618 million in the August outlook) and stock-based compensation (about $432 million) keep weighing on GAAP profit. The two things to watch are whether GTA VI's date holds (Rockstar has delayed it before) and whether recurrent spending in the older catalogue holds up; first-quarter recurrent bookings were down 1%.