Video game publisher Take Two (NASDAQ:TTWO) reported Q2 CY2026 results beating Wall Street’s revenue expectations, with sales up 7.8% year on year to $1.53 billion. On the other hand, next quarter’s revenue guidance of $1.45 billion was less impressive, coming in 18.3% below analysts’ estimates. Its GAAP loss of $0.18 per share was 13.9% above analysts’ consensus estimates.
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Take-Two (TTWO) Q2 CY2026 Highlights:
- Revenue: $1.53 billion vs analyst estimates of $1.38 billion (7.8% year-on-year growth, 11.5% beat)
- EPS (GAAP): -$0.18 vs analyst estimates of -$0.21 (13.9% beat)
- Adjusted EBITDA: $167 million vs analyst estimates of $123.8 million (10.9% margin, 34.9% beat)
- The company reconfirmed its revenue guidance for the full year of $8 billion at the midpoint
- EPS (GAAP) guidance for the full year is $0.65 at the midpoint, missing analyst estimates by 68.3%
- EBITDA guidance for the full year is $1.02 billion at the midpoint, below analyst estimates of $1.76 billion
- Operating Margin: -2.3%, down from 1.5% in the same quarter last year
- Free Cash Flow was -$193.8 million, down from $198.6 million in the previous quarter
- Market Capitalization: $43.47 billion
Company Overview
Best known for its Grand Theft Auto and NBA 2K franchises, Take Two (NASDAQ:TTWO) is one of the world’s largest video game publishers.
Revenue Growth
A company’s long-term sales performance is one signal of its overall quality. Any business can have short-term success, but a top-tier one grows for years. Over the last three years, Take-Two grew its sales at a tepid 7.6% compounded annual growth rate. This wasn’t a great result compared to the rest of the consumer internet sector, but there are still things to like about Take-Two.
This quarter, Take-Two reported year-on-year revenue growth of 7.8%, and its $1.53 billion of revenue exceeded Wall Street’s estimates by 11.5%. Company management is currently guiding for a 26.3% year-on-year decline in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 34.4% over the next 12 months, an acceleration versus the last three years. This projection is eye-popping and indicates its newer products and services will spur better top-line performance.
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Cash Is King
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
Take-Two has shown mediocre cash profitability relative to peers over the last two years, giving the company fewer opportunities to return capital to shareholders. Its free cash flow margin averaged 2.2%, below what we’d expect for a consumer internet business. The divergence from its good EBITDA margin stems from its capital-intensive business model, which requires Take-Two to make large cash investments in working capital (i.e., stocking inventories) and capital expenditures (i.e., building new facilities).
Taking a step back, an encouraging sign is that Take-Two’s margin expanded by 10.2 percentage points over the last few years. The company’s improvement shows it’s heading in the right direction, and we can see it became a less capital-intensive business because its free cash flow profitability rose more than its operating profitability.
Take-Two burned through $193.8 million of cash in Q2, equivalent to a negative 12.6% margin. The company’s cash burn increased from $69.8 million of lost cash in the same quarter last year. These numbers deviate from its longer-term margin, but we wouldn’t read too much into the short term because investment needs can be seasonal, leading to temporary swings.
Key Takeaways from Take-Two’s Q2 Results
We were impressed by how significantly Take-Two blew past analysts’ EBITDA expectations this quarter. We were also excited its revenue outperformed Wall Street’s estimates by a wide margin. On the other hand, its full-year revenue guidance missed and its full-year EBITDA guidance fell short of Wall Street’s estimates. Overall, this was a mixed quarter. The stock traded up 1.5% to $235.97 immediately after reporting.
Big picture, is Take-Two a buy here and now? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here (it’s free).
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