TTWO · 10-Q · 2026Q3 · Full report

Gross Margin Drivers

TAKE TWO INTERACTIVE SOFTWARE INC · 2026-11-09 · Importance 40 · Surprise 40

Quarterly gross margin increased to 57.5% for the three months ended September 30, 2026, from 55.3% a year earlier, as gross profit declined $120.1 million to $860.4 million on lower revenue. The quarterly margin improvement primarily reflected lower amortization of capitalized software and development costs due to release timing. For the six-month period, gross margin fell to 57.6% from 58.7%, and gross profit decreased $182.6 million to $1,742.9 million. The six-month margin decline reflected impairment charges for products no longer in development, the prior-year reversal of forfeited-award expense, and higher license costs, partly offset by lower product costs.

Key facts

• Foreign exchange rate changes decreased quarterly net revenue by $0.6 million and gross profit by $3.8 million year over year. source
• Quarterly gross profit margin was 57.5%, compared with 55.3% in the prior-year period; the increase was primarily driven by lower amortization of capitalized software and development costs due mainly to release timing. source
• Six-month gross profit margin was 57.6%, compared with 58.7% in the prior-year period; the decrease was primarily driven by impairment charges on products no longer being developed, prior-year reversal of forfeited-award expense, and higher license costs, partly offset by lower product costs. source