A $168.8 million operating cash outflow is roughly one dollar for every nine dollars of revenue. That is the tangible part of Take-Two’s latest three-month report: the company brought in $1.5 billion, up 2% from the comparable period, while cash generation moved sharply in the other direction.
The income statement followed the same uneasy split. Gross profit fell 6.6% to $882.5 million, pushing gross margin down to 57.5% from 62.8%. Operating income swung from $21.6 million to a $35.5 million loss, and net loss widened to $34.1 million.
Some of that margin comparison comes with an accounting asterisk. Take-Two said the prior-year period benefited from a reversal tied to forfeited stock awards, making last year’s gross profit a higher comparison point.
"The decrease in gross profit as a percentage of net revenue was primarily driven by the reversal of expense related to the forfeiture of awards in the prior year."
Take-Two, 10-Q filed August 7, 2026
That explains why the gross-margin decline is larger than the modest revenue change. It does not erase the cash issue, which the company tied to spending on the game pipeline.
"The decrease during the three months ended June 30, 2026 was primarily due to Net cash used in operating activities, which was primarily due to investments in software development and licenses, partially offset by sales of our products."
Take-Two, 10-Q filed August 7, 2026
In plain English, Take-Two sold about as much as it did a year earlier, but more cash was used for investments in software development and licenses, partially offset by sales of its products. Research and development expense also rose $17.4 million, mainly because of higher personnel costs.
Management said demand was uneven inside that headline number. Net Bookings declined for Grand Theft Auto and Color Block Jam, partly offset by higher Net Bookings from NBA 2K. The company also notes that mobile sales generally carry lower gross margins than console or PC sales because of platform fees.
The annual backdrop makes the current filing more interesting, not simpler. Take-Two’s latest fiscal-year revenue reached $6.7 billion, up 18.2%, while operating margin improved to negative 1.6% from the prior year’s much deeper loss. The business has been recovering at the annual level, but this period shows the cost of funding that recovery in real time.
The balance sheet shows the cash effect too. Cash fell from $2.0 billion to $1.4 billion year over year, while capex was essentially unchanged at $25.0 million. The company’s disclosed cash use was therefore tied primarily to operating investment in software and licenses rather than capex, with the accompanying question of when those investments convert into sales and cash.
Take-Two’s next quarterly report will add the useful comparison: whether operating cash flow remains tied to software and license investment, alongside the gross margin and Net Bookings figures. For now, the trade-off is simple enough: the games sold, and the cash went into making more of them.
Source: Take-Two Interactive Software, Inc. Form 10-Q filed August 7, 2026.