Exchange: LSE | Sector: Technology | Industry: Media Entertainment
Q1 2026
Published: Aug 7, 2025
Earnings Highlights
Revenue of $1.50B up 12.4% year-over-year
EPS of $-0.07 increased by 95.7% from previous year
Gross margin of 62.8%
Net income of -11.90M
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Take-Two Interactive Software Inc (0LCX.L) QQ1 2026 Results – Revenue Up, Net Loss Narrow, Fortified Balance Sheet Supports Ongoing Investment
Executive Summary
Take-Two Interactive’s QQ1 2026 results show a revenue uptick driven by the company’s durable IP and live-service monetization, underscored by a gross margin of approximately 62.8% and an EBITDA of $280.4 million. Revenue of $1.5038 billion reflects a 12.4% year-over-year increase, while the quarter’s net income of -$11.9 million and EPS of -$0.0658 indicate near-term profitability being pressured by ongoing investments, SG&A intensity, and other one-time or non-operating factors. Importantly, liquidity remains robust with cash and equivalents of about $2.03 billion and total liquidity including short-term investments around $2.04 billion, helping To fund continued IP development and live-service enhancements while the company navigates a negative quarterly operating cash flow and a heavier balance sheet burden from debt and intangible assets.
In the near term, Take-Two appears to be prioritizing pipeline development and monetization upgrades over short-cycle profitability. The company’s operating margin sits at roughly 1.44% for the period, with an EBITA-positive, cash-generative profile on an annual basis implied by its large IP library and ongoing digital adoption. Management commentary—where available in the earnings call—likely emphasized the cadence of title releases, live-service revenue ramp, and cost discipline as key drivers of mid-to-long-term growth. Investors should monitor the pace of new game launches, the mix shift toward digital and microtransaction-driven revenues, and the company’s ability to convert pipeline investments into sustainable earnings growth while balancing leverage and liquidity metrics.
Net Income: -$11.9M, YoY improvement in losses vs prior periods but still negative, Net Margin -0.79%
Financial Highlights
Revenue and profitability snapshot:
- Revenue: $1.5038B, YoY +12.37%, QoQ -4.97%
- Gross Profit: $0.945B, YoY +22.55%, QoQ +17.64%, Gross Margin 62.84%
- Operating Income: $21.6M, YoY +111.68%, QoQ +100.57%, Operating Margin 1.44%
- EBITDA: $280.4M, Margin 18.65%
- Net Income: -$11.9M, YoY improvement in losses vs prior periods but still negative, Net Margin -0.79%
- EPS: -$0.0658, YoY +95.67%, QoQ +99.69%
Liquidity and cash flow:
- Cash and cash equivalents: $2.025B; Total cash and investments: $2.035B
- Net cash provided by operating activities: -$44.7M; Free cash flow: -$69.8M
- Net cash provided by (used in) financing activities: +$618.3M (notably from stock issuance of $1.216B)
- Net change in cash: +$557M; End-of-period cash: $2.116B
Balance sheet and leverage:
- Total assets: $9.684B; Total liabilities: $6.203B; Total stockholders’ equity: $3.481B
- Long-term debt: $2.8966B; Short-term debt: $610.3M; Total debt: $3.5069B; Net debt: $1.4819B
- Intangibles and goodwill: Intangibles $4.2517B; Goodwill $1.0656B; High overall intangible asset base indicating IP-centric valuation
- Retained earnings: -$7.071B (reflecting accumulated losses and capital allocation history)
Commentary context:
- The top-line strength is underpinned by core franchises and digital monetization potential, but profitability remains constrained by reinvestment and a negative quarterly operating cash flow. The company’s strong liquidity provides flexibility to fund development, marketing, and monetization improvements while pursuing growth opportunities in live services and new title development. A full-year view would depend on upcoming title cadence and the execution of live-service monetization strategies.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
1.50B
12.37%
-4.97%
Gross Profit
945.00M
22.55%
17.64%
Operating Income
21.60M
111.68%
100.57%
Net Income
-11.90M
95.46%
99.68%
EPS
-0.07
95.67%
99.69%
Key Financial Ratios
Net Income vs. Revenue
Expense Breakdown
Management Commentary
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Forward Guidance
No formal full-year guidance was provided in the prompt. Based on the QQ1 2026 data and typical industry dynamics, Take-Two’s forward outlook will hinge on: (1) cadence and quality of upcoming releases (new IP and major franchises), (2) monetization mix shift toward live services, microtransactions, and digital distribution, and (3) cost discipline alongside balance sheet management. Given the substantial cash position and equity financing capability, management can fund pipeline investments while de-risking near-term profitability. Investors should monitor: title release timelines, post-launch monetization velocity, working capital dynamics, and the trajectory of operating cash flow as live-service revenue ramps and annualized profitability improve.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
0LCX.L Focus
62.84%
N/A
N/A
N/A
0K7U.L
43.00%
8.23%
1.44%
31.77%
0OAL.L
1.00%
14.20%
1.68%
22.38%
0IR9.L
81.00%
29.50%
22.10%
42.66%
0IC9.L
50.50%
30.00%
2.36%
18.49%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Medium-to-long-term investment thesis remains constructive given Take-Two’s durable IP and monetization opportunities in live services. Near-term profitability is pressured by reinvestment and one-time/non-operating factors, but the balance sheet provides flexibility for continued product development and strategic initiatives. The key catalysts are the cadence of new releases, the monetization rate of live services, and the company’s ability to convert IP investments into sustainable revenue growth and stronger cash generation. Investors should monitor title launch timing, digital adoption metrics, cost discipline progress, and debt/ equity financing dynamics to gauge the trajectory toward improved margins and free cash flow generation.
Key Investment Factors
Growth Potential
Durable IP portfolio (GTA, NBA 2K) supports ongoing franchise launches and live-service monetization. Digital and mobile monetization, cross-platform distribution, and expanded online services offer multiple revenue accelerators. A robust balance sheet enables continued investment in development, marketing, and potential strategic acquisitions or partnerships to extend IP reach.
Profitability Risk
Dependency on blockbuster releases poses release risk; quarterly profitability can be volatile around title launches. High intangible assets and leverage create impairment exposure and refinancing risk. Competitive pressure from peers and platform shifts, macro consumer spending sensitivity, and regulatory considerations could impact monetization.
Financial Position
Liquidity remains strong with ~$2.12B cash and equivalents. Total debt stands at ~$3.51B with net debt ~$1.48B, supported by a sizable equity base ($3.48B). Operating cash flow was negative in QQ1, but financing activities offset via stock issuances, underscoring reliance on equity markets to fund growth. The sizable intangible asset base warrants ongoing impairment risk assessments and monitoring of amortization and impairment charges.
SWOT Analysis
Strengths
Leading IP portfolio cited across GTA, NBA 2K, and a broad slate of franchises, enabling durable revenue streams.
Gross margin of approximately 62.8% supports high-margin potential in monetized digital channels.
Strong liquidity with ~$2.1B cash and equivalents; flexible financing options to fund development and distribution.
Diverse revenue streams spanning console, PC, and mobile, with potential upside from live-service monetization.
Weaknesses
Reported net loss for QQ1 2026 and negative operating cash flow, indicating near-term profitability challenges.
Significant reliance on blockbuster titles introduces release risk and revenue volatility.
Substantial intangible assets and goodwill increase impairment risk and balance sheet sensitivity.
Opportunities
Increased monetization from live services, microtransactions, and post-launch content across existing franchises.
Expansion of mobile and cross-platform experiences; potential for new IP and partnerships.
Pipeline cadence could translate into sustained revenue growth and improved profitability as digital mix expands.
Threats
Intense competition from major publishers (EA, Activision) and evolving platform economics.
Title delays or underperformance could materially impact near-term results.
Macroeconomic headwinds, currency fluctuations, and regulatory changes affecting monetization models.