TTWO · 8-K · 20260807PR054580
Gross Margin Drivers
TAKE TWO INTERACTIVE SOFTWARE INC · 2026-08-07 · Importance 49 · Surprise 32 · No source text
Gross profit decreased 6.6% to $882.5 million from $945.0 million, reducing gross margin to approximately 57.5% from 62.8%. Cost of revenue increased 16.6% to $651.4 million despite the 2.0% revenue increase. Software development costs and royalties increased to $135.1 million from $30.1 million, licenses rose to $99.5 million from $70.9 million, and product costs declined to $187.8 million from $210.4 million. Cost of revenue included a $43.4 million impairment charge related to the decision not to continue development of an unannounced third-party developer title.
Key facts
- Cost of revenue included a $43.4 million impairment charge related to the Company's decision not to proceed with further development of an unannounced title from a third-party developer. source
- EBITDA for the three months ended June 30, 2026 was $167.0 million. source
- Total cost of revenue for the three months ended June 30, 2026 was $651.4 million. source
- Gross profit for the three months ended June 30, 2026 was $882.5 million. source
- Game intangibles cost of revenue for the three months ended June 30, 2026 were $154.3 million. source
- Product costs for the three months ended June 30, 2026 were $187.8 million. source
- Software development costs and royalties in cost of revenue for the three months ended June 30, 2026 were $135.1 million. source
- Licenses in cost of revenue for the three months ended June 30, 2026 were $99.5 million. source
Impact estimates
| metric | direction | stage | expected | basis |
|---|---|---|---|---|
| operating_income | negative | realized | -42.5% | Total cost of revenue for the three months ended June 30, 2026 was $651.4 million. |
| operating_income | negative | realized | -10.1% | Game intangibles cost of revenue for the three months ended June 30, 2026 were $154.3 million. |
| operating_income | negative | realized | -2.8% | Cost of revenue included a $43.4 million impairment charge related to the Company's decision not to proceed with further development of an… |
| operating_income | unclear | realized | — | EBITDA for the three months ended June 30, 2026 was $167.0 million. |
| operating_income | unclear | realized | — | Gross profit for the three months ended June 30, 2026 was $882.5 million. |
| operating_income | negative | realized | — | Product costs for the three months ended June 30, 2026 were $187.8 million. |
| operating_income | negative | realized | — | Software development costs and royalties in cost of revenue for the three months ended June 30, 2026 were $135.1 million. |
| operating_income | negative | realized | — | Licenses in cost of revenue for the three months ended June 30, 2026 were $99.5 million. |
| operating_income | negative | realized | — | Internal royalties in cost of revenue for the three months ended June 30, 2026 were $74.7 million. |