Take-Two Interactive Software Inc (NASDAQ:TTWO) reported stronger-than-expected fiscal first quarter results, driven by robust performances in mobile gaming and live services, prompting Wedbush to raise its price target and reaffirm its bullish outlook.
The company reported revenue of $1.5 billion, above Wall Street estimates of $1.35 billion and Take-Two’s guidance of $1.35 billion to $1.4 billion.
Net bookings were $1.42 billion, ahead of guidance of $1.25 billion to $1.3 billion and above analysts' expectations of $1.31 billion.
Earnings per share of $0.61 marked a significant improvement from $0.05 in the year-ago period and topped estimates of $0.28, boosted by improved gross margins of 79.8%.
The company also raised its fiscal year 2026 net bookings outlook to $6.05 to $6.15 billion following the strong Q1 report.
“Our outstanding first quarter results reflect ongoing demand for our core franchises and the increasingly diversified, successful nature of our business,” Take-Two CEO Strauss Zelnick said in a statement.
“As we approach the release of the most ambitious pipeline in our company’s history, we have exceptional confidence in our multi-year outlook and our ability to deliver meaningful shareholder returns.”
Wedbush attributed the Q1 beat to a strong performance in mobile and live services.
The analysts reiterated their 'Outperform' rating on the stock and raised its price target to $275 from $269, citing the company's expanding profitability potential and diverse portfolio of high-quality IP.
“Take-Two’s Q1 results convey that, despite its heavy reliance on GTA, its business is well-diversified with compelling, high-quality IP across its categories,” Wedbush analysts wrote, highlighting the company's strong positioning ahead of the highly anticipated launch of Grand Theft Auto VI.
In net bookings, mobile bookings led the outperformance, totaling $793 million versus the firm’s estimate of $740 million. The analysts noted that Zynga benefited from improved advertising tech and ramped-up user acquisition.
NBA 2K also performed strongly, with daily active users up 30% year-over-year, momentum Wedbush expects to carry through the launch of NBA 2K26 later this year.
Looking further ahead, Wedbush sees meaningful upside to fiscal 2027 and 2028 earnings, with the firm forecasting $8.77 in EPS for 2027 and $10.82 for 2028. These estimates factor in contributions from GTA VI, expanded monetization of GTA Online, and expected benefits from policy changes to Apple’s App Store.
“We believe the premium multiple is warranted because the company has many levers to pull to drive profits well above our estimates, including the higher price point for GTA VI, integration of the game into GTA Online, and significant margin expansion from its first-party web store,” the analysts wrote.
Despite Take-Two’s strong earnings, shares pulled back 3.8% amid post-earnings volatility to about $218.