TTWO Q3 Deep Dive: Mobile Momentum and Franchise Launches Shape Outlook

Video game publisher Take Two (NASDAQ:TTWO) reported revenue ahead of Wall Streets expectations in Q3 CY2025, with sales up 20.3% year on year to $1.77 billion. On top of that, next quarter’s revenue guidance ($1.60 billion at the midpoint) was surprisingly good and 6.7% above what analysts were expecting. Its GAAP loss of $0.72 per share was 15.3% below analysts’ consensus estimates.

Is now the time to buy TTWO? Find out in our full research report (it’s free for active Edge members).

StockStory’s Take

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.

Looking forward, management’s guidance reflects optimism from continued momentum in mobile and core franchise engagement but is tempered by a more cautious approach to operating expenses and potential margin fluctuations. CFO Lainie Goldstein emphasized that Take-Two’s raised outlook is driven by higher expectations for NBA 2K and several mobile titles, while noting incremental marketing investments and performance-based compensation as factors influencing expense planning. As Zelnick explained, “We are extremely optimistic about the future ahead,” with an emphasis on expanding direct-to-consumer offerings and broadening the company’s already diverse game pipeline.

Key Insights from Management’s Remarks

Management identified broad-based mobile growth, strong franchise launches, and improved operating leverage as key drivers of the quarter’s financial performance.

• Mobile outperformance: Management credited the mobile segment, particularly Peak’s Toon Blast and Rollic’s Color Block Jam, for exceeding growth expectations through new gameplay features and effective live service updates. These successes were seen as evidence of the company’s ability to adapt to evolving player preferences and capitalize on direct-to-consumer channels.
• NBA 2K26 launch impact: The launch of NBA 2K26 delivered higher unit sales and in-game engagement compared to prior entries in the series, with premium editions and early access strategies contributing to increased average selling prices and recurrent consumer spending.
• Challenges with Borderlands 4 launch: CEO Strauss Zelnick acknowledged performance issues with Borderlands 4’s PC release, stating that the company has prioritized post-launch updates to address player feedback and expects lifetime sales to align with internal expectations after initial headwinds.
• Direct-to-consumer gains: Take-Two rolled out new direct payment mechanisms across most of its mobile portfolio, following recent legislative changes and litigation outcomes. This shift is expected to improve both net bookings and gross margins by reducing reliance on third-party distribution platforms.
• Operating expense leverage: CFO Lainie Goldstein highlighted that operating expense growth was contained relative to revenue gains, reflecting ongoing discipline in user acquisition spend and a shift in marketing expenses, though higher compensation tied to performance was noted as a partial offset.

Drivers of Future Performance

Take-Two’s outlook is shaped by ongoing investment in its mobile and core franchises, as well as continued direct-to-consumer expansion and active management of operating expenses.

• Mobile and live service focus: Management sees further growth potential in mobile, driven by new features, events, and direct-to-consumer monetization, particularly for titles like Toon Blast and Match Factory!. The company also expects recurrent consumer spending to remain a key driver as more players engage with live services across franchises.
• Franchise content pipeline: The upcoming release of WWE 2K26 and ongoing updates for NBA 2K26, Borderlands 4, and Mafia: The Old Country are expected to sustain player engagement. Management is also prioritizing development of major future titles, including Grand Theft Auto VI, with a strong emphasis on quality and post-launch support.
• Expense management and margin risks: While Take-Two aims to leverage operating expenses against top-line growth, incremental marketing and user acquisition investments—especially in mobile—may introduce pressure on margins. Management is closely monitoring these costs as the company pursues revenue scale and margin expansion opportunities.

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 $237.66, down from $253.02 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free for active Edge members).

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