TTWO Q2 Deep Dive: Mobile Outperformance and Franchise Momentum Offset Guidance Concerns

Video game publisher Take Two (NASDAQ:TTWO) reported Q2 CY2025 results beating Wall Street’s revenue expectations, with sales up 12.4% year on year to $1.50 billion. Revenue guidance for the full year exceeded analysts’ estimates, but next quarter’s guidance of $1.68 billion was less impressive, coming in 1.2% below expectations. Its GAAP loss of $0.07 per share was 90.2% above analysts’ consensus estimates.

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StockStory’s Take

Take-Two’s second quarter was shaped by robust demand for its core gaming franchises and unexpectedly strong results from its mobile portfolio, particularly Toon Blast and Color Block Jam. Despite exceeding Wall Street’s top-line and bottom-line estimates, the market responded negatively, reflecting concerns over near-term growth moderation. Management attributed outperformance to broad engagement across NBA 2K and Grand Theft Auto, as well as new feature rollouts in key mobile titles. President Karl Slatoff described NBA 2K’s engagement as “up significantly year-over-year,” highlighting growth in both MyCAREER and MyTEAM modes.

Looking forward, Take-Two’s raised full-year outlook relies on the upcoming launches of Mafia: The Old Country, NBA 2K26, and Borderlands 4, alongside continued expansion in its mobile and sports franchises. Management sees opportunities from a diversified title slate and open distribution trends, but also flagged potential moderation in mobile growth and cautious consumer spending. CEO Strauss Zelnick commented, “We have great confidence in our long-term pipeline and expect to achieve record levels of net bookings…that will establish a higher baseline for our business.”

Key Insights from Management’s Remarks

Management credited the quarter’s outperformance to new feature adoption in mobile games and increased engagement with flagship console titles, while also noting a shift in advertising and monetization strategies.

• Mobile titles exceeded expectations: Management highlighted Toon Blast’s 22% year-over-year growth and Color Block Jam’s rise to become Rollic’s highest-grossing title. These gains were attributed to new engagement features like Seasonal Collection and Pilot’s Drop, which increased player activity and monetization.
• NBA 2K engagement surge: NBA 2K25 saw unit sales surpassing 11.5 million, with daily active users and MyCAREER participation up 30%. Management emphasized refined in-game analytics and content updates as key drivers, resulting in a 48% increase in recurrent consumer spending.
• Grand Theft Auto franchise resilience: Grand Theft Auto V sales exceeded 215 million units globally, with GTA Online benefiting from new content and the Grand Theft Auto VI trailer launch. Player growth and spending outpaced expectations, signaling ongoing franchise strength.
• Advertising strategy shift: CEO Strauss Zelnick explained the company’s move from hyper-casual to hybrid-casual mobile advertising, stabilizing ad revenue and setting a new baseline for growth in that segment.
• Cost control and margin improvement: CFO Lainie Goldstein pointed to a 1% reduction in cost of revenue and a 3% decrease in operating expenses, achieved despite increased personnel and selective marketing investments. These actions contributed to operating margin expansion compared to last year.

Drivers of Future Performance

Management’s outlook centers on new title launches, ongoing mobile monetization, and operational discipline, while acknowledging risks from mature game cycles and economic uncertainty.

• Major releases to drive growth: The launches of Mafia: The Old Country, NBA 2K26, and Borderlands 4 are expected to be primary contributors to full-year growth, particularly given expanded platform availability and enhanced gameplay features. Management believes these releases will help diversify revenue and offset potential slowdowns in legacy titles.
• Mobile momentum faces headwinds: While mobile titles outperformed this quarter, CFO Lainie Goldstein cautioned that some mature games may see moderated growth due to lifecycle effects. Management is adjusting forecasts to account for typical sales curves and is investing in new features to sustain engagement.
• Consumer caution and platform shifts: CEO Strauss Zelnick acknowledged that cautious consumer spending could impact discretionary gaming purchases, especially in a softening macroeconomic environment. However, he emphasized a "flight to quality" trend and highlighted open app store rulings as opportunities for broader distribution and improved monetization.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will be monitoring (1) the commercial reception and engagement metrics for Mafia: The Old Country, NBA 2K26, and Borderlands 4; (2) whether mobile game monetization maintains momentum or shows signs of slowdown; and (3) how open distribution channels and regulatory changes impact player acquisition and spending. Progress on major title releases and the ability to manage cost structure will also be important markers for future performance.

Take-Two currently trades at $224.97, in line with $226.49 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free).

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