What changed in this filing

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Item 1. Financial Statements

2024-08-09 compared with 2024-02-09 · 174 added, 299 removed, 484 unchanged (49% of the section changed)

3 unchanged sentences

(in millions, except per share amounts)

December 31, 2023 March 31, 2023

June 30, 2024 March 31, 2024

Current assets:

2 unchanged sentences

Restricted cash and cash equivalents 306.1 252.1

Accounts receivable, net of allowances of $ 1.2 and $ 1.3 at December 31, 2023 and March 31, 2023, respectively

Accounts receivable, net of allowances of $ 1.2 and $ 1.2 at June 30, 2024 and March 31, 2024, respectively

Software development costs and licenses 62.7 88.3

7 unchanged sentences

Other intangibles, net 3,005.9 3,060.6

Deferred tax assets 7.1 44.8

Long-term restricted cash and cash equivalents 84.7 95.9

19 unchanged sentences

Preferred stock, $ 0.01 par value, 5.0 shares authorized;

no shares issued and outstanding at December 31, 2023 and March 31, 2023

no shares issued and outstanding at June 30, 2024 and March 31, 2024

Common stock, $ 0.01 par value, 300.0 and 300.0 shares authorized;

194.2 and 192.6 shares issued and 170.5 and 168.9 outstanding at December 31, 2023 and March 31, 2023, respectively

198.8 and 194.5 shares issued and 175.2 and 170.8 outstanding at June 30, 2024 and March 31, 2024, respectively

Additional paid-in capital 9,962.5 9,371.6

Treasury stock, at cost;

23.7 and 23.7 common shares at December 31, 2023 and March 31, 2023, respectively

23.7 and 23.7 common shares at June 30, 2024 and March 31, 2024, respectively

( 1,020.6 ) ( 1,020.6 )

Retained earnings 323.1 1,164.3

Accumulated deficit ( 2,841.9 ) ( 2,579.9 )

Accumulated other comprehensive loss ( 110.5 ) ( 105.1 )

5 unchanged sentences

(in millions, except per share amounts)

Three Months Ended December 31, Nine Months Ended December 31,

2023 2022 2023 2022

Three Months Ended June 30,

Game $ 1,216.7 $ 1,096.1

7 unchanged sentences

Depreciation and amortization 44.8 40.4

Goodwill impairment — — 165.4 —

Business reorganization 49.5 7.2

Total operating expenses 956.0 883.5

3 unchanged sentences

Loss before income taxes ( 212.2 ) ( 228.9 )

Benefit from income taxes 60.7 46.7 117.0 93.1

Provision for (benefit from) income taxes 49.8 ( 22.9 )

Net loss $ ( 262.0 ) $ ( 206.0 )

3 unchanged sentences

TAKE-TWO INTERACTIVE SOFTWARE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited)

(in millions)

Three Months Ended

December 31, Nine Months Ended December 31,

2023 2022 2023 2022

Net loss $ ( 262.0 ) $ ( 206.0 )

Other comprehensive income (loss)

Other comprehensive (loss) income:

Foreign currency translation adjustment ( 5.4 ) 26.0

Change in fair value of available for sale securities — 0.9

Other comprehensive income (loss) 66.4 102.1 $ 30.6 ( 76.9 )

Comprehensive income (loss) $ ( 25.2 ) $ ( 51.3 ) $ ( 810.6 ) $ ( 591.3 )

Other comprehensive (loss) income ( 5.4 ) 26.9

Comprehensive loss $ ( 267.4 ) $ ( 179.1 )

See accompanying Notes.

2 unchanged sentences

(in millions)

Nine Months Ended December 31,

Three Months Ended June 30,

Operating activities:

6 unchanged sentences

Depreciation 35.9 31.5

Goodwill impairment 165.4 —

Interest expense 37.1 36.8

Gain on debt extinguishment ( 7.7 ) —

Fair value adjustments 1.7 37.1

Other, net 5.5 7.9

10 unchanged sentences

Purchases of fixed assets ( 35.1 ) ( 31.5 )

Proceeds from sale of long-term investment — 20.6

Purchases of long-term investments ( 11.1 ) ( 5.0 )

1 unchanged sentence

Other ( 4.7 ) ( 2.6 )

Net cash provided by (used in) investing activities 26.5 ( 2,814.8 )

Net cash (used in) provided by investing activities ( 34.7 ) 38.1

Financing activities:

4 unchanged sentences

Cost of debt ( 5.4 ) ( 7.5 )

Settlement of capped calls — 140.1

Repayment of debt — ( 989.6 )

Payment of contingent earn-out consideration ( 12.0 ) ( 0.5 )

Net cash (used in) provided by financing activities ( 72.0 ) 1,904.6

Net cash provided by (used in) financing activities 596.5 ( 20.8 )

Effects of foreign currency exchange rates on cash, cash equivalents, and restricted cash and cash equivalents ( 0.9 ) 3.8

9 unchanged sentences

(in millions)

Three Months Ended December 31, 2023

Three Months Ended June 30, 2024

Common Stock Additional

Capital Treasury Stock Retained

Earnings Accumulated

Earnings/(Accumulated Deficit) Accumulated

Comprehensive Loss Total Stockholder's Equity

Shares Amount Shares Amount

Balance, September 30, 2023 193.7 $ 1.9 $ 9,183.2 ( 23.7 ) $ ( 1,020.6 ) $ 414.7 $ ( 149.1 ) $ 8,430.1

Net loss — — — — — ( 91.6 ) — ( 91.6 )

Change in cumulative foreign currency translation adjustment — — — — — — 66.3 66.3

Net unrealized gain on available-for-sale securities, net of tax — — — — — — 0.1 0.1

Stock-based compensation — — 103.8 — — — — 103.8

Issuance of restricted stock, net of forfeitures and cancellations 0.4 — — — — — — —

Net share settlement of restricted stock awards ( 0.1 ) — ( 19.5 ) — — — — ( 19.5 )

Employee share purchase plan settlement 0.2 — 19.4 — — — — 19.4

Balance, December 31, 2023 194.2 $ 1.9 $ 9,286.9 ( 23.7 ) $ ( 1,020.6 ) $ 323.1 $ ( 82.7 ) $ 8,508.6

Three Months Ended December 31, 2022

Common Stock Additional

Capital Treasury Stock Retained

Earnings Accumulated

Comprehensive

Loss Total Stockholder's Equity

Shares Amount Shares Amount

Balance, September 30, 2022 191.2 $ 1.9 $ 8,760.5 ( 23.7 ) $ ( 1,020.6 ) $ 1,928.0 $ ( 236.3 ) $ 9,433.5

Net loss — — — — — ( 153.4 ) — ( 153.4 )

Change in cumulative foreign currency translation adjustment — — — — — — 100.7 100.7

Net unrealized gain on available-for-sale securities, net of taxes — — — — — — 1.4 1.4

Stock-based compensation — — 104.2 — — — — 104.2

Issuance of restricted stock, net of forfeitures and cancellations 0.4 — — — — — — —

Net share settlement of restricted stock awards ( 0.1 ) — ( 12.9 ) — — — — ( 12.9 )

Exercise of stock options — — 0.1 — — — — 0.1

Issuance of shares related to Popcore acquisition 0.6 — 57.8 — — — — 57.8

Stock-based compensation assumed in Zynga Acquisition — — 8.1 — — — — 8.1

Employee share purchase plan settlement 0.1 — 10.9 — — — — 10.9

Balance, December 31, 2022 192.2 $ 1.9 $ 8,928.7 ( 23.7 ) $ ( 1,020.6 ) $ 1,774.6 $ ( 134.2 ) $ 9,550.4

See accompanying Notes.

Nine Months Ended December 31, 2023

Common Stock Additional

Capital Treasury Stock Retained

Earnings Accumulated

Comprehensive

Stockholders'

Shares Amount Shares Amount

Balance, March 31, 2024 194.5 $ 1.9 $ 9,371.6 ( 23.7 ) $ ( 1,020.6 ) $ ( 2,579.9 ) $ ( 105.1 ) $ 5,667.9

1 unchanged sentence

Change in cumulative foreign currency translation adjustment — — — — — — ( 5.4 ) ( 5.4 )

Net unrealized gain on available-for-sale securities, net of taxes — — — — — — 1.4 1.4

Stock-based compensation — — 97.2 — — — — 97.2

1 unchanged sentence

Exercise of stock options — — 0.3 — — — — 0.3

Net share settlement of restricted stock awards ( 0.5 ) — ( 76.6 ) — — — — ( 76.6 )

Issuance of shares related to Zynga convertible notes 0.1 — 16.0 — — — — 16.0

Issuance of shares related to Gearbox acquisition 2.8 — 454.3 — — — — 454.3

Employee share purchase plan settlement 0.2 — 23.0 — — — — 23.0

Balance, December 31, 2023 194.2 $ 1.9 $ 9,286.9 ( 23.7 ) $ ( 1,020.6 ) $ 323.1 $ ( 82.7 ) $ 8,508.6

Nine Months Ended December 31, 2022

Other changes, net — 0.1 0.1 — — — — 0.2

Balance, June 30, 2024 198.8 $ 2.0 $ 9,962.5 ( 23.7 ) $ ( 1,020.6 ) $ ( 2,841.9 ) $ ( 110.5 ) $ 5,991.5

Three Months Ended June 30, 2023

Common Stock Additional

Capital Treasury Stock Retained

Earnings Accumulated

Earnings/Accumulated Deficit) Accumulated

Comprehensive

Stockholders'

Loss Total Stockholder's Equity

Shares Amount Shares Amount

2 unchanged sentences

Change in cumulative foreign currency translation adjustment — — — — — — 26.0 26.0

Net unrealized gain on available-for-sale securities, net of taxes — — — — — — 1.5 1.5

Net unrealized loss on available-for-sale securities, net of taxes — — — — — — 0.9 0.9

Stock-based compensation — — 99.4 — — — — 99.4

3 unchanged sentences

Exercise of stock options — — 0.2 — — — — 0.2

Issuance of shares related to Zynga Acquisition 46.3 0.5 5,377.2 — — — — 5,377.7

Stock-based compensation assumed in Zynga Acquisition — — 151.7 — — — — 151.7

Issuance of shares related to Popcore acquisition 0.6 — 57.8 — — — — 57.8

Issuance of shares for conversion of Convertible Notes 3.7 — 479.7 — — — — 479.7

Balance, December 31, 2022 192.2 $ 1.9 $ 8,928.7 ( 23.7 ) $ ( 1,020.6 ) $ 1,774.6 $ ( 134.2 ) $ 9,550.4

Balance, June 30, 2023 193.5 $ 1.9 $ 9,087.0 ( 23.7 ) $ ( 1,020.6 ) $ 958.3 $ ( 86.4 ) $ 8,940.2

See accompanying Notes.

6 unchanged sentences

We are a leading developer, publisher, and marketer of interactive entertainment for consumers around the globe.

We develop and publish products principally through Rockstar Games, 2K, Private Division, and Zynga.

We develop, operate, and publish products principally through Rockstar Games, 2K, Private Division, and Zynga.

Our products are designed for console gaming systems, PC, and mobile, including smartphones and tablets.

We deliver our products through physical retail, digital download, online platforms, and cloud streaming services.

Acquisition of Zynga

On May 23, 2022, we completed our acquisition of 100 % of the issued and outstanding shares of Zynga Inc.

("Zynga"), a leading developer of mobile games (the "Zynga Acquisition").

Refer to Note 13 - Acquisitions for additional information.

Basis of Presentation

12 unchanged sentences

Recent Accounting Pronouncements

Accounting for Income Taxes

Income Tax Disclosures

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

4 unchanged sentences

We are currently evaluating the potential impact of adopting this guidance on our Consolidated Financial Statements and related disclosures.

Accounting for Segment Reporting

Segment Reporting Disclosures

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, which updates reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses.

ASU 2023-07 is effective for fiscal years beginning after December 15, 2023 (April 1, 2024 for the Company).

ASU 2023-07 is effective for fiscal years beginning after December 15, 2023 (April 1, 2024 for the Company) and interim periods within fiscal years beginning after December 15, 2024 (April 1, 2025 for the Company).

The amendments in this ASU must be applied on a retrospective basis to all prior periods presented in the financial statements.

8 unchanged sentences

Net revenue by timing of recognition was as follows:

Three Months Ended December 31, Nine Months Ended December 31,

2023 2022 2023 2022

Three Months Ended June 30,

Net revenue recognized:

5 unchanged sentences

Net revenue by content was as follows:

Three Months Ended December 31, Nine Months Ended December 31,

2023 2022 2023 2022

Three Months Ended June 30,

Net revenue recognized:

4 unchanged sentences

Net revenue by geographic region was as follows:

Three Months Ended December 31, Nine Months Ended December 31,

2023 2022 2023 2022

Three Months Ended June 30,

Net revenue recognized:

3 unchanged sentences

Net revenue by platform was as follows:

Three Months Ended December 31, Nine Months Ended December 31,

2023 2022 2023 2022

Three Months Ended June 30,

Net revenue recognized:

6 unchanged sentences

Net revenue by distribution channel was as follows:

Three Months Ended December 31, Nine Months Ended December 31,

2023 2022 2023 2022

Three Months Ended June 30,

Net revenue recognized:

4 unchanged sentences

We record deferred revenue when payments are due or received in advance of the fulfillment of our associated performance obligations.

The balance of deferred revenue, including current and non-current balances as of December 31, 2023 and March 31, 2023 were $ 1,142.5 and $ 1,114.3 , respectively.

For the nine months ended December 31, 2023, the additions to our deferred revenue balance were due primarily to cash payments received or due in advance of satisfying our performance obligations, while the reductions to our deferred revenue balance were due primarily to the recognition of revenue upon fulfillment of our performance obligations, both of which were in the ordinary course of business.

During the three months ended December 31, 2023 and 2022, $ 153.7 and $ 115.6 , respectively, of revenue was recognized that was included in the deferred revenue balance at the beginning of the respective period.

During the nine months ended December 31, 2023 and 2022, $ 991.8 and $ 814.5 , respectively, of revenue was recognized that was included in the deferred revenue balance at the beginning of the respective period.

As of December 31, 2023, the aggregate amount of contract revenue allocated to unsatisfied performance obligations is $ 1,248.5 , which includes our deferred revenue balances and amounts to be invoiced and recognized as revenue in future periods.

The balance of deferred revenue, including current and non-current balances as of June 30, 2024 and March 31, 2024 were $ 983.5 and $ 1,102.4 , respectively.

For the three months ended June 30, 2024, the additions to our deferred revenue balance were due primarily to cash payments received or due in advance of satisfying our performance obligations, while the reductions to our deferred revenue balance were due primarily to the recognition of revenue upon fulfillment of our performance obligations, both of which were in the ordinary course of business.

During the three months ended June 30, 2024 and 2023, $ 523.9 and $ 523.9 , respectively, of revenue was recognized that was included in the deferred revenue balance at the beginning of the respective period.

As of June 30, 2024, the aggregate amount of contract revenue allocated to unsatisfied performance obligations is $ 1,089.4 , which includes our deferred revenue balances and amounts to be invoiced and recognized as revenue in future periods.

We expect to recognize approximately $ 1,010.8 of this balance as revenue over the next 12 months, and the remainder thereafter.

This balance does not include an estimate for variable consideration arising from sales-based royalty license revenue in excess of the contractual minimum guarantee.

As of December 31, 2023 and March 31, 2023, our contract asset balances were $ 88.7 and $ 79.9 , respectively.

As of June 30, 2024 and March 31, 2024, our contract asset balances were $ 80.7 and $ 85.0 , respectively.

MANAGEMENT AGREEMENT

In November 2017, we entered into a management agreement (the "2017 Management Agreement") with ZelnickMedia Corporation ("ZelnickMedia") that replaced our previous agreement with ZelnickMedia and pursuant to which ZelnickMedia was to provide financial and management consulting services to the Company through March 31, 2024.

The 2017 Management Agreement became effective January 1, 2018.

As part of the 2017 Management Agreement, Strauss Zelnick, the President of ZelnickMedia, continued to serve as Executive Chairman and Chief Executive Officer of the Company, and Karl Slatoff, a partner of ZelnickMedia, continued to serve as President of the Company.

The 2017 Management Agreement provided for an annual management fee of $ 3.1 over the term of the agreement and a maximum annual bonus opportunity of $ 7.4 over the term of the agreement, based on the Company achieving certain performance thresholds.

In May 2022, we entered into a new management agreement (the "2022 Management Agreement") with ZelnickMedia that replaced the 2017 Management Agreement and pursuant to which ZelnickMedia will continue to provide financial and management consulting services to the Company through March 31, 2029.

The 2022 Management Agreement became effective on May 23, 2022, when our acquisition of Zynga closed (refer to Note 13 - Acquisitions ).

On May 21, 2022, ZelnickMedia

assigned substantially all of its rights and obligations and other liabilities under the 2022 Management Agreement to ZMC Advisors, L.P.

In May 2022, we entered into a management agreement (the "2022 Management Agreement") with ZelnickMedia Corporation ("ZelnickMedia") that replaced our previous agreement with ZelnickMedia and pursuant to which ZelnickMedia will continue to provide financial and management consulting services to the Company through March 31, 2029.

The 2022 Management Agreement became effective May 23, 2022.

On May 21, 2022, ZelnickMedia assigned substantially all of its rights and obligations and other liabilities under the 2022 Management Agreement to ZMC Advisors, L.P.

("ZMC Advisors").

2 unchanged sentences

The 2022 Management Agreement provides for an annual management fee of $ 3.3 over the term of the agreement and a maximum annual bonus opportunity of $ 13.2 over the term of the agreement, based on the Company achieving certain performance thresholds.

In connection with the 2022 Management Agreement, we have and expect to grant time-based and performance-based restricted units to ZMC.

In consideration for ZMC's services, we recorded consulting expense in General and administrative expenses on our Condensed Consolidated Statements of Operations of $( 0.7 ) and $( 0.6 ) during the three months ended December 31, 2023 and 2022, respectively, and $ 4.5 and $ 3.3 during the nine months ended December 31, 2023 and 2022, respectively.

We recorded stock-based compensation expense for restricted stock units granted to ZMC, which is also included in General and administrative expenses, of $ 14.0 and $ 12.9 during the three months ended December 31, 2023 and 2022, respectively, and $ 39.1 and $ 34.4 during the nine months ended December 31, 2023 and 2022, respectively.

In connection with the 2022 Management Agreement and 2017 Management Agreement, we have granted restricted stock units (in thousands) to ZMC as follows:

Nine Months Ended December 31,

In connection with the 2022 Management Agreement, we have granted and expect to grant time-based and performance-based restricted units to ZMC.

In consideration for ZMC's services, we recorded consulting expense in General and administrative expenses on our Condensed Consolidated Statements of Operations of $ 2.6 and $ 2.8 during the three months ended June 30, 2024 and 2023,

respectively.

We recorded stock-based compensation expense for restricted stock units granted to ZMC, which is also included in General and administrative expenses, of $ 12.4 and $ 11.2 during the three months ended June 30, 2024 and 2023, respectively.

In connection with the 2022 Management Agreement, we granted restricted stock units (in thousands) to ZMC as follows:

Three Months Ended June 30,

Time-based 102 97

1 unchanged sentence

Performance-based (1)

Total Performance-based 98 171

Total Restricted Stock Units 517 490

1 unchanged sentence

Time-based restricted stock units granted pursuant to the 2022 Management Agreement in fiscal year 2025 will vest on June 1, 2025, June 1, 2026, and June 1, 2027, and those granted in fiscal year 2024, partially vested on June 1, 2024 and will also vest June 1, 2025 and June 1, 2026.

Time-based restricted stock units granted in fiscal year 2023 pursuant to the 2017 Management Agreement will vest on April 13, 2024.

Market-based restricted stock units granted pursuant to the 2022 Management Agreement in fiscal year 2024 are eligible to vest on June 1, 2026, and those granted in fiscal year 2023 are eligible to vest on June 1, 2024 and June 1, 2025.

Market-based restricted stock units granted in fiscal year 2023 pursuant to the 2017 Management Agreement are eligible to vest on April 13, 2024.

Market-based restricted stock units are eligible to vest based on the Company's Total Shareholder Return (as defined in the relevant grant agreement) relative to the Total Shareholder Return (as defined in the relevant grant agreement) of the companies that constitute either the NASDAQ Composite Index under the 2017 Management Agreement or the NASDAQ 100 index under the 2022 Management Agreement (as defined in the relevant grant agreement) as of the grant date measured over a two-year period or three-year period, as applicable.

Time-based restricted stock units granted in fiscal year 2023, partially vested on June 1, 2023 and June 1, 2024 and will also vest June 1, 2025.

Market-based restricted stock units granted pursuant to the 2022 Management Agreement in fiscal year 2025 are eligible to vest on June 1, 2027, those granted in fiscal year 2024 are eligible to vest on June 1, 2026, and those granted in fiscal year 2023 are eligible to vest on June 1, 2025.

Market-based restricted stock units are eligible to vest based on the Company's Total Shareholder Return (as defined in the relevant grant agreement) relative to the Total Shareholder Return (as defined in the relevant grant agreement) of the companies that constitute the NASDAQ 100 index under the 2022 Management Agreement (as defined in the relevant grant agreement) as of the grant date measured over a three-year period, as applicable.

To earn the target number of market-based restricted stock units (which represents 50 % of the number of the market-based restricted stock units set forth in the table above), the Company must perform at the 50 th percentile, with the maximum number of market-based restricted stock units earned if the Company performs at the 75 th percentile.

Performance-based restricted stock units granted pursuant to the 2022 Management Agreement in fiscal year 2024 are eligible to vest on June 1, 2026, and those granted in fiscal year 2023 are eligible to vest on June 1, 2024 and June 1, 2025.

Performance-based restricted stock units granted in fiscal year 2023 pursuant to the 2017 Management Agreement are eligible to vest on April 13, 2024.

The performance-based restricted stock units, of which certain are tied to "IP" and "RCS" (as defined in the relevant grant agreement), are eligible to vest based on the Company's achievement of certain performance metrics (as defined in the relevant grant agreement) of either individual product releases of "IP" measured over a two-year period or "RCS" measured over a two-year or three-year period.

Performance-based restricted stock units granted pursuant to the 2022 Management Agreement in fiscal year 2025 are eligible to vest on June 1, 2027, those granted in fiscal year 2024 are eligible to vest on June 1, 2026, and those granted in fiscal year 2023 are eligible to vest on June 1, 2025.

The performance-based restricted stock units are tied to "RCS" (as defined in the relevant grant agreement) and are eligible to vest based on the Company's achievement of certain performance metrics (as defined in the relevant grant agreement) of "RCS" measured over a three-year period.

The target number of performance-based restricted stock units that may be earned pursuant to these grants is equal to 50 % of the grant amounts set forth in the above table (the numbers in the table represent the maximum number of performance-based restricted stock units that may be earned).

At the end of each reporting period, we assess the probability of each performance metric and upon determination that certain thresholds are probable, we record expense for the unvested portion of the shares of performance-based restricted stock units.

The unvested portions of time-based, market-based and performance-based restricted stock units held by ZMC were 1.3 and 1.1 as of December 31, 2023 and March 31, 2023, respectively.

During the nine months ended December 31, 2023, 0.2 restricted stock units previously granted to ZMC vested, and 0.0 restricted stock units were forfeited by ZMC.

The unvested portions of time-based, market-based and performance-based restricted stock units held by ZMC were 1.4 and 1.3 as of June 30, 2024 and March 31, 2024, respectively.

During the three months ended June 30, 2024, 0.4 restricted stock units previously granted to ZMC vested, and 0.1 restricted stock units were forfeited by ZMC.

FAIR VALUE MEASUREMENTS

8 unchanged sentences

The table below segregates all assets and liabilities that are measured at fair value on a recurring basis (which is measured at least annually) into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date.

December 31, 2023

June 30, 2024

Quoted prices

6 unchanged sentences

Short-term investments:

Corporate bonds — 2.9 — 2.9

Bank-time deposits 15.4 — — 15.4

6 unchanged sentences

Private equity — — 25.6 25.6

Equity securities 7.9 — — 7.9

Foreign currency forward contracts — 0.1 — 0.1

Total financial assets $ 1,136.6 $ 0.1 $ 25.6 $ 1,162.3

Accrued expenses and other current liabilities:

Foreign currency forward contracts $ — $ 0.1 $ — $ 0.1

Contingent earn-out consideration $ — $ — $ 0.4 $ 0.4

1 unchanged sentence

Contingent earn-out consideration — — 0.7 0.7

Short-term debt, net:

Convertible notes — 23.2 — 23.2

Long-term debt, net:

7 unchanged sentences

Short-term investments:

Corporate bonds — 145.2 — 145.2

Bank-time deposits 22.0 — — 22.0

8 unchanged sentences

Accrued expenses and other current liabilities:

Foreign currency forward contracts $ — $ 2.5 $ — $ 2.5

Contingent earn-out consideration $ — $ — $ 12.4 $ 12.4

1 unchanged sentence

Contingent earn-out consideration — — 0.7 0.7

Short-term debt, net:

Convertible notes — 24.6 — 24.6

Long-term debt, net:

1 unchanged sentence

Total financial liabilities $ — $ 50.5 $ 13.1 $ 63.6

We did not have any transfers between Level 1 and Level 2 fair value measurements, nor did we have any transfers into or out of Level 3 during the nine months ended December 31, 2023.

In connection with the Nordeus acquisition we completed on June 1, 2021, our consideration included a contingent earn-out consideration arrangement that requires us to pay an aggregate of $ 153.0 in cash if Nordeus achieves certain performance measures over the 12 - and 24 -month periods following the closing.

We recorded $ 61.1 as the initial fair value of contingent earn-out consideration.

The fair value was estimated using a Monte-Carlo simulation model, which included significant unobservable Level 3 inputs, such as projected financial performance over the earn-out period along with estimates for market volatility and the discount rate applicable to potential cash payouts.

During the nine months ended December 31, 2023, we recognized General and administrative expense of $ 4.5 within our Condensed Consolidated Statements of Operations for the increase in fair value of the contingent earn-out consideration liability associated with the Nordeus acquisition, which increased the fair value of the contingent consideration liability related to the second earn-out period to $ 69.5 .

During the nine months ended December 31, 2023, we paid $ 69.5 related to the second earn-out period.

In connection with our acquisition of Popcore GmbH ("Popcore") we completed on November 16, 2022, our consideration included a contingent earn-out consideration arrangement that requires us to pay an aggregate of $ 105.0 in cash if Popcore achieves certain performance measures over each of the three calendar years following the closing.

We recorded $ 23.3 as the initial fair value of contingent earn-out consideration.

During the three and nine months ended December 31, 2023 we recognized General and administrative expense of $( 13.1 ) and $( 6.3 ), respectively, within our Condensed Consolidated Statements of Operations for the change in fair value of the contingent earn-out consideration liability associated with the Popcore acquisition.

The fair value of the contingent consideration liability related to the earn-out period is $ 19.3 , with $ 12.0 and $ 7.3 being recorded within Accrued expenses and other current liabilities and Other long-term liabilities, respectively, in our Condensed Consolidated Balance Sheet as of December 31, 2023.

The change resulted from a lower probability of Popcore achieving certain performance measures in all three 12 -month periods.

The remaining contingent earn-out consideration liability of $ 0.4 and $ 0.2 recorded within Accrued expenses and other current liabilities and Other long-term liabilities, respectively, in our Condensed Consolidated Balance Sheet as of December 31, 2023 relates to immaterial earn-out arrangements from Zynga's historical acquisitions.

For these acquisitions, we estimated the acquisition date fair value of the contingent consideration obligations using a discounted cash flow model.

We did not have any transfers between Level 1 and Level 2 fair value measurements, nor did we have any transfers into or out of Level 3 during the three months ended June 30, 2024.

Nonrecurring fair value measurements

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Based on these considerations, we estimate that the carrying value of the acquired shares represents the fair value of the investment.

At December 31, 2023, and March 31, 2023, we held $ 8.0 and $ 8.0 , respectively, of such investments in Other assets within our Condensed Consolidated Balance Sheet.

See Note 9 - Goodwill and Intangible Assets, Net for intangible related fair value measurements.

At June 30, 2024, and March 31, 2024, we held $ 8.0 and $ 8.0 , respectively, of such investments in Other assets within our Condensed Consolidated Balance Sheet.

SHORT-TERM INVESTMENTS

Our Short-term investments consisted of the following:

December 31, 2023

June 30, 2024

Amortized Cost Gains Losses Fair Value

1 unchanged sentence

Bank time deposits $ 15.4 $ — $ — $ 15.4

Available-for-sale securities:

Corporate bonds 2.9 — — 2.9

Total Short-term investments $ 15.4 $ — $ — $ 15.4

3 unchanged sentences

Bank time deposits $ 22.0 $ — $ — $ 22.0

Available-for-sale securities:

Corporate bonds 147.2 — ( 2.0 ) 145.2

Total Short-term investments $ 22.0 $ — $ — $ 22.0

The following table summarizes the contracted maturities of our short-term investments at December 31, 2023:

December 31, 2023

The following table summarizes the contracted maturities of our short-term investments at June 30, 2024:

June 30, 2024

Short-term investments

8 unchanged sentences

The following table shows the gross notional amounts of foreign currency forward contracts:

December 31, 2023 March 31, 2023

June 30, 2024 March 31, 2024

Forward contracts to sell foreign currencies $ 247.2 $ 243.0

Forward contracts to purchase foreign currencies 124.8 72.2

For the three months ended December 31, 2023 and 2022, we recorded a loss of $ 8.0 and a loss of $ 14.1 , respectively, and for the nine months ended December 31, 2023 and 2022 we recorded a loss of $ 0.6 and a loss of $ 16.7 , respectively, related to foreign currency forward contracts in Interest and other, net on our Condensed Consolidated Statements of Operations.

For the three months ended June 30, 2024 and 2023, we recorded a gain of $ 3.5 and a gain of $ 3.8 , respectively, related to foreign currency forward contracts in Interest and other, net on our Condensed Consolidated Statements of Operations.

Our foreign currency exchange forward contracts are not designated as hedging instruments under hedge accounting and are used to reduce the impact of foreign currency on certain balance sheet exposures.

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Details of our capitalized software development costs and licenses were as follows:

December 31, 2023 March 31, 2023

June 30, 2024 March 31, 2024

Current Non-current Current Non-current

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Software development costs and licenses $ 62.7 $ 1,606.0 $ 88.3 $ 1,446.5

During the three months ended December 31, 2023 and 2022, we recorded $ 0.0 and $ 1.7 , respectively, of software development impairment charges (a component of Cost of revenue).

The impairment charges recorded during the three months ended December 31, 2022 related to decisions not to proceed with further development of certain interactive entertainment software.

During the nine months ended December 31, 2023 and 2022, we recorded $ 21.7 and $ 25.0 , respectively, of software development impairment charges (a component of Cost of revenue).

The impairment charges recorded during the nine months ended December 31, 2023 related to unamortized capitalized costs for the development of certain titles that were anticipated to exceed the net realizable value of the respective assets at the time they were impaired.

The impairment charges recorded during the nine months ended December 31, 2022 related to (i) a decision not to proceed with further development of certain interactive entertainment software and (ii) recognizing unamortized capitalized costs for the development of a title, which were anticipated to exceed the net realizable value of the asset at the time they were impaired.

During the three months ended June 30, 2024 and 2023, we recorded $ 23.3 and $ 18.2 , respectively, of software development impairment charges (a component of Cost of revenue).

During the three months ended June 30, 2024, the impairment charges related to our cost reduction program (refer to Note 15 - Business Reorganization ).

During the three months ended June 30, 2023, the impairment charges related to recognizing unamortized capitalized costs for the development of titles, which were anticipated to exceed the net realizable value of the asset at the time they were impaired.

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consisted of the following:

December 31, 2023 March 31, 2023

June 30, 2024 March 31, 2024

Software development royalties $ 430.8 $ 413.1

Compensation and benefits 164.9 227.3

Tax payable 89.8 32.4

Marketing and promotions 84.8 94.5

Licenses 53.2 64.4

Tax payable 51.7 33.0

Refund liability 50.1 52.4

Interest payable 31.8 29.4

Refund liability 28.5 34.5

Sales tax liability 19.5 19.3

Professional fees 17.5 16.7

Deferred acquisition payments 8.4 17.6

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The components of Long-term debt, net on our Condensed Consolidated Balance Sheet were as follows:

Annual Interest Rate Maturity Date December 31, 2023 Fair Value (Level 2)

2025 Notes 3.55 % April 14, 2025 $ 600.0 $ 587.7

Annual Interest Rate Maturity Date June 30, 2024 Fair Value (Level 2)

2026 Notes 5.00 % March 28, 2026 $ 550.0 $ 546.3

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2028 Notes 4.95 % March 28, 2028 800.0 792.3

2029 Notes 5.40 % June 12, 2029 300.0 302.1

2032 Notes 4.00 % April 14, 2032 500.0 455.4

2034 Notes 5.60 % June 12, 2034 300.0 300.2

2026 Convertible Notes 0.00 % December 15, 2026 25.9 25.9

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2025 Notes 3.55 % April 14, 2025 $ 600.0 $ 588.9

2026 Notes 5.00 % March 28, 2026 550.0 547.6

2027 Notes 3.70 % April 14, 2027 600.0 576.5

2028 Notes 4.95 % March 28, 2028 800.0 797.8

2032 Notes 4.00 % April 14, 2032 500.0 462.9

2024 Convertible Notes 0.25 % June 1, 2024 20.8 20.8

2026 Convertible Notes 0.00 % December 15, 2026 25.9 25.9

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The components of Short-term debt, net on our Condensed Consolidated Balance Sheet were as follows:

Annual Interest Rate Maturity Date December 31, 2023 Fair Value (Level 2)

2024 Notes 3.30 % March 28, 2024 $ 350.0 $ 347.9

2024 Convertible Notes 0.25 % June 1, 2024 23.2 23.2

Annual Interest Rate Maturity Date June 30, 2024 Fair Value (Level 2)

2025 Notes 3.55 % April 14, 2025 $ 600.0 $ 590.5

Total $ 600.0 $ 590.5

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Annual Interest Rate Maturity Date March 31, 2024 Fair Value (Level 2)

2024 Notes 3.30 % March 28, 2024 $ 1,000.0 $ 978.2

Term Loan 3.60 % June 21, 2023 350.0 350.0

2024 Convertible Notes 0.25 % June 1, 2024 $ 24.6 $ 24.6

Total $ 24.6 $ 24.6

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Short-term debt, net $ 24.6

Interest expense as it relates to our debt is recorded within Interest and other, net in our Condensed Consolidated Statements of Operations for the three and nine months ended December 31, 2023, and 2022, respectively, and was as follows:

Three Months Ended December 31, Nine Months Ended December 31,

2023 2022 2023 2022

The interest expense as it relates to our debt is recorded within Interest and other, net in our Condensed Consolidated Statements of Operations for the three months ended June 30, 2024, and 2023, respectively, and was as follows:

Three Months Ended June 30,

2024 Notes $ — $ 6.5

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2029 Notes 0.8 —

2032 Notes 5.0 5.0

2034 Notes 0.8 —

Term Loan — 1.5

2022 Credit Agreement — 2.4 — 4.1

Total $ 34.3 $ 34.5

The following table outlines the aggregate amount of maturities of our borrowings, as of December 31, 2023:

The following table outlines the aggregate amount of maturities of our borrowings, as of June 30, 2024:

Fiscal Year Ending March 31, Maturities

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Total face value $ 3,675.9

On June 12, 2024, we completed our offering and sale of $ 600.0 aggregate principal amount of our senior notes, consisting of $ 300.0 principal amount of our 5.400 % Senior Notes due 2029 (the "2029 Notes") and $ 300.0 principal amount of our 5.600 % Senior Notes due 2034 (the "2034 Notes").

The 2029 Notes and 2034 Notes (the “New Notes”) were issued as additional notes under the existing Indenture.

Debt issuance costs of $ 5.4 and original issuance discount of $ 1.1 were incurred in connection with the 2029 and 2034 Senior Notes.

These debt issuance costs and original issuance discount are included as a reduction of the debt within Long-term debt, net on our Condensed Consolidated Balance Sheet and will be amortized into Interest and other, net in our Condensed Consolidated Statements of Operations over the contractual term of the Senior Notes.

On April 14, 2023, we completed our offering and sale of $ 1,000.0 aggregate principal amount of our senior notes, consisting of $ 500.0 principal amount of our 5.000 % Senior Notes due 2026 (the "2026 Notes") and $ 500.0 principal amount of our 4.950 % Senior Notes due 2028 (the "2028 Notes").

On April 14, 2022, we completed our offering and sale of $ 2,700.0 aggregate principal amount of our senior notes, consisting of $ 1,000.0 principal amount of our 3.300 % Senior Notes due 2024 (the “2024 Notes”), $ 600.0 principal amount of our 3.550 % Senior Notes due 2025 (the “2025 Notes”), $ 600.0 principal amount of our 3.700 % Senior Notes due 2027 (the “2027 Notes”), and $ 500.0 principal amount of our 4.000 % Senior Notes due 2032 (the “2032 Notes” and together with the 2024 Notes, 2025 Notes, 2026 Notes, 2027 Notes, and 2028 Notes, the "Senior Notes").

The Senior Notes were issued under an indenture, dated as of April 14, 2022 (the “Base Indenture”), between the Company and The Bank of New York Mellon, as trustee (the “Trustee”) and (i) a first supplemental indenture, with respect to the 2024 Notes, (ii) a second supplemental indenture, with respect to the 2025 Notes, (iii) a third supplemental indenture, with respect to the 2027 Notes, (iv) a fourth supplemental indenture, with respect to the 2032 Notes, (v) a fifth supplemental indenture, with respect to the 2026 Notes, and (vi) a sixth supplemental indenture, with respect to the 2028 Notes (collectively, the “Supplemental Indentures” and together with the Base Indenture, the “Indenture”), between the Company and the Trustee.

On January 8, 2024, we completed our add-on offering and sale of $ 350.0 aggregate principal amount of our senior notes, consisting of $ 50.0 principal amount of additional 2026 Notes and $ 300.0 principal amount of additional 2028 Notes (the "Add-On Offering Notes").

The Senior Notes were issued under an indenture, dated as of April 14, 2022 (the “Base Indenture”), between the Company and The Bank of New York Mellon, as trustee (the “Trustee”) and (i) a first supplemental indenture, with respect to the 2024 Notes, (ii) a second supplemental indenture, with respect to the 2025 Notes, (iii) a third supplemental indenture, with respect to the 2027 Notes, (iv) a fourth supplemental indenture, with respect to the 2032 Notes, (v) a fifth supplemental indenture, with respect to the 2026 Notes, (vi) a sixth supplemental indenture, with respect to the 2028 Notes, (vii) a seventh supplemental indenture, with respect to the 2029 Notes, and (viii) an eighth supplemental indenture, with respect to the 2034 Notes (collectively, the “Supplemental Indentures” and together with the Base Indenture, the “Indenture”), between the Company and the Trustee.

The Senior Notes are the Company’s senior unsecured obligations and rank equally with all of our other existing and future unsubordinated obligations.

We will pay interest on the 2024 Notes, 2026 Notes, and 2028 Notes semi-annually on March 28 and September 28 of each year, commencing September 28, 2022 for the 2024 Notes and September 28, 2023 for the 2026 Notes and 2028 Notes.

We will pay interest on the 2026 Notes and 2028 Notes semi-annually on March 28 and September 28 of each year, commencing September 28, 2023.

We will pay interest on each of the 2025 Notes, 2027 Notes, and 2032 Notes semi-annually on April 14 and October 14 of each year, commencing October 14, 2022.

During the nine months ended December 31, 2023, we made interest payments of $ 95.9 .

The proceeds from the issuances of the Senior Notes were used to finance a portion of our acquisition of Zynga and repay certain of our debt.

We will pay interest on each of the 2029 Notes and 2034 Notes semi-annually on June 12 and December 12 of each year, commencing on December 12, 2024.

During the three months ended June 30, 2024, we made interest payments of $ 31.8 .

The proceeds from the issuances of the Senior Notes in April 2022 were used to finance a portion of our acquisition of Zynga, and the proceeds from the subsequent issuance of Senior Notes were used, or are expected to be used, to repay certain of our debt or for general corporate purposes.

The Senior Notes are not entitled to any sinking fund payments.

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These covenants are subject to a number of important exceptions and limitations, as further provided in the Indenture.

Debt issuance costs of $ 26.6 and original issuance discount of $ 1.9 were incurred in connection with the Senior Notes.

These debt issuance costs and original issuance discount are included as a reduction of the debt within Long-term debt, net on our Condensed Consolidated Balance Sheet and will be amortized into Interest and other, net in our Consolidated Statements of Operations over the contractual term of the Senior Notes.

During the three months ended December 31, 2023 and 2022, we recognized $ 1.2 and $ 1.4 , respectively, of amortization of debt issuance costs and $ 0.1 and $ 0.1 , respectively, of amortization of the original issuance discount.

During the nine months ended December 31, 2023 and 2022, we recognized $ 4.8 and $ 4.0 , respectively, of amortization of debt issuance costs and $ 0.3 and $ 0.3 , respectively, of amortization of the original issuance discount.

On June 5, 2023, pursuant to a tender offer, we purchased and retired $ 650.0 in aggregate principal amount of our 2024 Notes, resulting in a remaining principal amount of $ 350.0 recorded within Short-term debt, net on our Condensed Consolidated Balance Sheet.

During the nine months ended December 31, 2023, we recognized a debt extinguishment gain of approximately $ 7.7 , net of unamortized debt discount and debt issuance costs recorded within Interest and other, net in our Condensed Consolidated Statement of Operations.

The purchase of a portion of our 2024 Notes was funded with proceeds received from the 2026 Notes and 2028 Notes.

During the three months ended June 30, 2024 and 2023, we recognized $ 1.4 and $ 1.8 , respectively, of amortization of debt issuance costs and $ 0.1 and $ 0.2 , respectively, of amortization of the original issuance discount.

On June 5, 2023, pursuant to a tender offer, we purchased and retired $ 650.0 in aggregate principal amount of our 2024 Notes, with proceeds received from the 2026 Notes and 2028 Notes.

We repaid the remaining principal amount of $ 350.0 on its maturity date on March 28, 2024, with proceeds received from the Add-On Offering Notes.

During the three months ended June 30, 2023, we recognized a debt extinguishment gain of approximately $ 7.0 , net of unamortized debt discount and debt issuance costs recorded within Interest and other, net in our Condensed Consolidated Statement of Operations.

Credit Agreement

On May 23, 2022, we entered into a new unsecured Credit Agreement (the "2022 Credit Agreement"), which replaced in its entirety the Company's prior Credit Agreement, dated as of February 8, 2019, which was paid off in full and terminated.

The 2022 Credit Agreement provides for an unsecured five-year revolving credit facility with commitments of $ 500.0 , including sublimits for (i) the issuance of letters of credit in an aggregate face amount of up to $ 100.0 and (ii) borrowings and letters of credit denominated in Pounds Sterling, Euros, and Canadian Dollars in an aggregate principal amount of up to $ 100.0 .

In addition, the 2022 Credit Agreement contains uncommitted incremental capacity permitting the incurrence of up to an additional amount not to exceed the greater of $ 250.0 and 35.0 % of the Company's Consolidated Adjusted EBITDA (as defined in the 2022 Credit Agreement).

Loans under the 2022 Credit Agreement will bear interest at a rate of (a) 0.000 % to 0.625 % above an alternate base rate ( 8.50 % at December 31, 2023) or (b) 1.000 % to 1.625 % above Secured Overnight Financing Rate ("SOFR"), approximately 5.35 % at December 31, 2023, which rates are determined by the Company's credit rating.

On May 23, 2022, we entered into a new unsecured credit agreement (as amended, the "2022 Credit Agreement"), which replaced in its entirety the Company's prior credit agreement, dated as of February 8, 2019, which was paid off in full and terminated.

The 2022 Credit Agreement provided for an unsecured five-year revolving credit facility with commitments of $ 500.0 , including sublimits for (i) the issuance of letters of credit in an aggregate face amount of up to $ 100.0 and (ii) borrowings and letters of credit denominated in Pounds Sterling, Euros, and Canadian Dollars in an aggregate principal amount of up to $ 100.0 .

In addition, the 2022 Credit Agreement contained uncommitted incremental capacity permitting the incurrence of up to an additional amount not to exceed the greater of $ 250.0 and 35.0 % of the Company's Consolidated Adjusted EBITDA (as defined in the 2022 Credit Agreement).

On May 16, 2024, we increased the total commitments under the facility to $ 750.0 pursuant to the 2022 Credit Agreement's incremental provisions, leaving no further uncommitted incremental capacity.

Loans under the 2022 Credit Agreement will bear interest at a rate of (a) 0.000 % to 0.625 % above an alternate base rate ( 8.50 % at June 30, 2024) or (b) 1.000 % to 1.625 % above Secured Overnight Financing Rate ("SOFR"), approximately 5.33 % at June 30, 2024, which rates are determined by the Company's credit rating.

The 2022 Credit Agreement also includes, among other terms and conditions, a maximum leverage ratio covenant, as well as customary affirmative and negative covenants, including covenants that limit or restrict the Company and its subsidiaries’ ability to, among other things, incur subsidiary indebtedness, grant liens, and dispose of all or substantially all assets, in each case subject to certain exceptions and baskets.

In addition, the 2022 Credit Agreement provides for events of default customary for a credit facility of this size and type, including, among others, non-payment of principal and interest when

due thereunder, breaches of representations and warranties, noncompliance with covenants, acts of insolvency, cross-defaults to material indebtedness, and material judgment defaults (subject to certain limitations and cure periods).

In addition, the 2022 Credit Agreement provides for events of default customary for a credit facility of this size and type, including, among others, non-payment of principal and interest when due thereunder, breaches of representations and warranties, noncompliance with covenants, acts of insolvency, cross-defaults to material indebtedness, and material judgment defaults (subject to certain limitations and cure periods).

On June 6, 2024, we amended the 2022 Credit Agreement in order to increase the maximum leverage ratio thresholds applicable to our financial covenant, which is measured on a quarterly basis.

Upon execution of the 2022 Credit Agreement, we incurred $ 3.5 of debt issuance costs that were capitalized within Other assets on our Condensed Consolidated Balance Sheet and will be amortized on a straight-line basis over the five-year term of the 2022 Credit Agreement, with the expense recorded within Interest and other, net in our Condensed Consolidated Statements of Operations.

During the three months ended December 31, 2023, and 2022, we amortized $ 0.2 and $ 0.2 , respectively, and during the nine months ended December 31, 2023 and 2022 we amortized $ 0.5 and $ 0.5 , respectively, of these debt issuance costs.

As of December 31, 2023, there were no borrowings under the 2022 Credit Agreement, and we had approximately $ 499.5 available for additional borrowings.

During the three months ended June 30, 2024, and 2023, we amortized $ 0.2 and $ 0.2 , respectively, of these debt issuance costs.

As of June 30, 2024, there were no borrowings under the 2022 Credit Agreement, and we had approximately $ 747.8 available for additional borrowings.

Information related to availability on our 2022 Credit Agreement for each period was as follows:

December 31, 2023 March 31, 2023

June 30, 2024 March 31, 2024

Available borrowings $ 747.8 $ 497.7

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Convertible Notes

In conjunction with the acquisition of Zynga on May 23, 2022 (refer to Note 13 - Acquisitions ), we entered into (a) the First Supplemental Indenture (the “2024 Supplemental Indenture”) to the Indenture, dated as of June 14, 2019 (the “2024 Indenture”), between Zynga and Computershare Trust Company, N.A.

In conjunction with the acquisition of Zynga on May 23, 2022, we entered into (a) the First Supplemental Indenture (the “2024 Supplemental Indenture”) to the Indenture, dated as of June 14, 2019 (the “2024 Indenture”), between Zynga and Computershare Trust Company, N.A.

(as successor to Wells Fargo Bank, National Association) (the “Convertible Notes Trustee”), relating to Zynga’s 0.25 % Convertible Senior Notes due 2024 (the “2024 Convertible Notes”), and (b) the First Supplemental Indenture (the “2026 Supplemental Indenture” and, together with the 2024 Supplemental Indenture, the “Supplemental Indentures”) to the Indenture, dated as of December 17, 2020 (the “2026 Indenture” and, together with the 2024 Indenture, the “Indentures”), between Zynga and the Convertible Notes Trustee, relating to Zynga’s 0.00 % Convertible Senior Notes due 2026 (the “2026 Convertible Notes” and, together with the 2024 Convertible Notes, the “Convertible Notes”).

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A unit of Reference Property is defined in each Indenture as 0.0406 shares of Take-Two common stock and $ 3.50 in cash, without interest, plus cash in lieu of any fractional shares of Take-Two common stock.

The 2024 Convertible Notes and 2026 Convertible Notes mature on June 1, 2024, and December 15, 2026, respectively, unless earlier converted, redeemed, or repurchased in accordance with their terms, respectively, prior to the maturity date.

Interest is payable semiannually on the 2024 Convertible Notes in arrears on March 1 and September 1 of each year.

The 2026 Convertible Notes do not bear regular interest, and the principal amount does not accrete.

The acquisition of Zynga constituted a Fundamental Change, a Make-Whole Fundamental Change, and a Share Exchange Event (each as defined in the Indentures) under the Indentures.

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In total, we paid $ 321.6 for the tendered or converted 2024 Convertible Notes, including interest, and $ 845.1 for the tendered 2026 Convertible Notes in cash, and we issued 3.7 shares of our common stock upon the conversion of the 2024 Convertible Notes.

After settlement of all Convertible Notes tendered or surrendered for conversion, $ 21.4 aggregate principal amount of the 2024 Convertible Notes remained outstanding and $ 29.4 aggregate principal amount of the 2026 Convertible Notes remained outstanding at December 31, 2023.

The 2024 Convertible Notes and 2026 Convertible Notes constitute senior unsecured indebtedness of Zynga, ranking pari passu with all of our other existing and future senior unsecured unsubordinated obligations of Zynga.

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The Company's guarantees of the 2024 Convertible Notes and 2026 Convertible Notes are the Company's senior unsecured obligations and rank equally with all of the Company's other existing and future senior unsecured unsubordinated obligations.

Under the terms of the applicable Indentures, prior to the close of business on the business day immediately preceding March 1, 2024 with respect to the 2024 Convertible Notes and September 15, 2026 with respect to the 2026 Convertible Notes, the Convertible Notes will be convertible only under the following circumstances:

• during any calendar quarter, if the value of a unit of Reference Property (based on the last reported sales price of our common stock), for at least 20 trading days in a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130 % of the conversion price of the applicable series of the 2024 Convertible Notes or 2026 Convertible Notes, respectively, on each applicable trading day;

• during the five business-day period after any five consecutive trading-day period in which the trading price per one thousand dollar principal amount of each applicable series of the 2024 Convertible Notes or 2026 Convertible Notes for such trading day was less than 98 % of the product of the value of a unit of Reference Property (based on the last reported sale price of our common stock) and the conversion rate of the applicable series of the 2024 Convertible Notes or 2026 Convertible Notes, respectively, on each such trading day;

• if we call the 2024 Convertible Notes or 2026 Convertible Notes for redemption, at any time prior to the close of business on the second scheduled trading day immediately preceding the respective redemption date; or

Under the terms of the applicable Indentures, prior to the close of business on the business day immediately preceding September 15, 2026 with respect to the 2026 Convertible Notes, the Convertible Notes will be convertible only under the following circumstances:

• during any calendar quarter, if the value of a unit of Reference Property (based on the last reported sales price of our common stock), for at least 20 trading days in a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130 % of the conversion price of the applicable series of the 2026 Convertible Notes, on each applicable trading day;

• during the five business-day period after any five consecutive trading-day period in which the trading price per one thousand dollar principal amount of each applicable series of the 2026 Convertible Notes for such trading day was less than 98 % of the product of the value of a unit of Reference Property (based on the last reported sale price of our common stock) and the conversion rate of the applicable series of the 2026 Convertible Notes, on each such trading day;

• if we call the 2026 Convertible Notes for redemption, at any time prior to the close of business on the second scheduled trading day immediately preceding the respective redemption date; or

• upon the occurrence of specified corporate events described in the respective Indentures.

Upon any conversion, holders will receive either cash or a combination of cash and shares of Take-Two common stock, at our election.

As of December 31, 2023, the conditions allowing holders of the Convertible Notes to convert their respective series of the Convertible Notes have not been met, and, therefore, both the Convertible Notes are not yet convertible.

We have elected to account for these Convertible Notes, which are considered derivatives, using the fair value option (Level 2) under ASC 825, as the Convertible Notes were initially recognized at fair value under the acquisition method of accounting in connection with the Zynga Acquisition (refer to Note 13 - Acquisitions ) and we do not expect significant fluctuations in fair value through maturity.

As of June 30, 2024, the conditions allowing holders of the 2026 Convertible Notes to convert their series of the Convertible Notes have not been met, and, therefore, they are not yet convertible.

We have elected to account for these Convertible Notes, which are considered derivatives, using the fair value option (Level 2) under ASC 825, as the Convertible Notes were initially recognized at fair value under the acquisition method of accounting in connection with the Zynga Acquisition and we do not expect significant fluctuations in fair value through maturity.

We initially recorded $ 778.6 as the acquisition date fair value for the 2024 Convertible Notes and $ 874.5 for the 2026 Convertible Notes.

The fair value was determined as the expected cash payment and value of shares to be issued to settle the Convertible Notes.

As of December 31, 2023, we recorded $ 23.2 as the fair value of the remaining outstanding 2024 Convertible Notes, within Short-term debt, net, and $ 24.1 as the fair value of the remaining outstanding 2026 Convertible Notes, within Long-term debt, net, in our Condensed Consolidated Balance Sheet.

During the three months ended December 31, 2023 and 2022, we recognized a gain of $ 0.0 and a gain of $ 1.5 , respectively, and during the nine months ended December 31, 2023 and 2022, we recognized a loss of $ 3.2 and a loss of $ 44.8 , respectively, within (Loss) gain on fair value adjustments, net in our Condensed Consolidated Statements of Operations.

The 2024 Convertible Notes matured on June 1, 2024.

During the three months ended June 30, 2024, we paid $ 8.3 for converted 2024 Convertible Notes, including interest, and we issued 0.1 shares of our common stock upon conversion of the 2024 Convertible Notes.

The 2026 Convertible Notes mature on December 15, 2026, unless earlier converted, redeemed, or repurchased in accordance with their terms, prior to the maturity date.

The 2026 Convertible Notes do not bear regular interest, and the principal amount does not accrete.

An aggregate principal amount of $ 29.4 of the 2026 Convertible Notes remained outstanding at June 30, 2024.

We recorded $ 25.9 as the fair value of the remaining outstanding 2026 Convertible Notes, within Long-term debt, net, in our Condensed Consolidated Balance Sheet as of June 30, 2024.

During the three months ended June 30, 2024 and 2023, we recognized a gain of $ 0.4 and a loss of $ 1.5 , respectively, within (Loss) gain on fair value adjustments, net in our Condensed Consolidated Statements of Operations.

LOSS PER SHARE

The following table sets forth the computation of basic and diluted loss per share:

Three Months Ended December 31, Nine Months Ended December 31,

2023 2022 2023 2022

Three Months Ended June 30,

Computation of Basic and diluted loss per share:

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Basic and diluted loss per share $ ( 1.52 ) $ ( 1.22 )

We incurred a net loss for the three and nine months ended December 31, 2023 and 2022;

We incurred a net loss for the three months ended June 30, 2024 and 2023;

therefore, the diluted weighted average shares outstanding excludes the effect of unvested common stock equivalents because their effect would be antidilutive.

For the three months ended December 31, 2023, we had 2.2 potentially dilutive shares from share-based awards and 0.2 of shares from Convertible Notes that are excluded due to the net loss for the period.

For the nine months ended December 31, 2023, we had 2.2 potentially dilutive shares from share-based awards and 0.2 of shares from Convertible Notes that are excluded due to the net loss for the period.

During the nine months ended December 31, 2023, 1.8 restricted stock awards vested, we granted 2.3 unvested restricted stock awards, and 0.5 unvested restricted stock awards were forfeited.

For the three months ended June 30, 2024, we had 2.2 potentially dilutive shares from share-based awards and 0.1 of shares from Convertible Notes that are excluded due to the net loss for the period.

During the three months ended June 30, 2024, 1.2 restricted stock awards vested, we granted 1.9 unvested restricted stock awards, and 0.2 unvested restricted stock awards were forfeited.

COMMITMENTS AND CONTINGENCIES

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While it is reasonably possible that a loss may be incurred in excess of the amounts accrued in our financial statements, we believe that such losses, unless otherwise disclosed, would not be material.

The benefit from income taxes for the three months ended December 31, 2023 is based on our projected annual effective tax rate for fiscal year 2024, adjusted for specific items that are required to be recognized in the period in which they are incurred.

The benefit from income taxes was $ 60.7 for the three months ended December 31, 2023, as compared to the benefit from income taxes of $ 46.7 for the prior year period.

When compared to the statutory rate of 21%, the effective tax rate of 39.9 % for the three months ended December 31, 2023 was due primarily to tax benefits of $ 40.0 related to the changes in unrecognized tax benefits from a lapse in statute, tax benefits of $ 4.5 from tax credits, offset by tax expense of $ 6.8 related to geographic mix of earnings and tax expense of $ 4.9 related to an increase in the U.S.

valuation allowance.

The benefit from income taxes for the nine months ended December 31, 2023 is based on our projected annual effective tax rate for fiscal year 2024, adjusted for specific items that are required to be recognized in the period in which they are incurred.

The benefit from income taxes was $ 117.0 for the nine months ended December 31, 2023, as compared to the benefit from income taxes of $ 93.1 for the prior year period.

When compared to the statutory rate of 21%, the effective tax rate of 12.2 % for the nine months ended December 31, 2023 was due primarily to tax expense of $ 86.5 related to an increase in the U.S.

valuation allowance, tax expense of $ 33.5 related to the impairment of nondeductible goodwill, tax expense of $ 7.0 related to geographic mix of earnings offset by tax benefits of $ 46.5 from tax credits and tax benefits of $ 40.0 related to the changes in unrecognized tax benefits from a lapse in statute.

The Tax Cuts and Jobs Act of 2017 (“TCJA”) requires taxpayers to capitalize and amortize research and development costs pursuant to Internal Revenue Code ("IRC") Section 174.

The requirement was effective for the Company beginning April

Congress is considering legislation that would repeal or otherwise modify the domestic capitalization and amortization under Section 174 of the TCJA.

The provision for income taxes for the three months ended June 30, 2024 is based on our projected annual effective tax rate for fiscal year 2025, adjusted for specific items that are required to be recognized in the period in which they are incurred.

The provision for income taxes was $ 49.8 for the three months ended June 30, 2024, as compared to the benefit from income taxes of $ 22.9 for the prior year period.

When compared to the statutory rate of 21%, the effective tax rate of ( 23.5 )% for the three months ended June 30, 2024 was due primarily to tax expense of $ 96.8 related to an increase in valuation allowance, tax expense of $ 8.2 related to geographic mix of earnings offset by benefits of $ 17.7 from tax credits.

The Inflation Reduction Act of 2022 (the “Inflation Reduction Act”) includes a new corporate alternative minimum tax (CAMT) of 15% on the adjusted financial statement income (AFSI) of corporations with an average AFSI exceeding $1.0 billion over a consecutive three-year period.

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We will continue to evaluate the potential impact the Inflation Reduction Act may have on our operations and Consolidated Financial Statements in future periods.

The Organization for Economic Co-operation and Development ("OECD") has proposed a global minimum tax of 15% of reported profits, referred to as Pillar Two.

Many countries have already implemented or are taking steps to implement Pillar Two.

Although the model rules provide a framework for applying the minimum tax, countries may enact Pillar Two slightly differently that the model rules and on different timelines.

Many aspects of Pillar Two are effective for the fiscal year ending March 31, 2025.

Pillar Two could result in additional tax liability over the regular corporate tax liability in a particular jurisdiction to the extent tax expense is less than 15% minimum rate.

The impact of Pillar Two was not material to the tax

provision for the three months ended June 30, 2024.

We will continue to evaluate the impact Pillar Two may have on our operations.

We are regularly examined by domestic and foreign taxing authorities.

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It is possible that settlement of audits or the expiration of the statute of limitations may have an impact on our effective tax rate in future periods.

Zynga Acquisition

On May 23, 2022, we completed the Zynga Acquisition.

Under the terms and conditions of the merger agreement, each Zynga stockholder received $ 3.50 in cash and 0.0406 shares of our common stock and cash in lieu of fractional shares for each share of Zynga common stock outstanding at closing.

Our consideration consisted of an aggregate of $ 3,992.4 in cash, 46.3 shares of our common stock, and $ 151.7 of replacement equity awards attributable to the pre-acquisition service period.

In connection with the transaction, on April 14, 2022, we completed our offering and sale of $ 2,700.0 aggregate principal amount of our Senior Notes (refer to Note 9 - Debt ).

The cash portion of the merger consideration was funded from our cash on hand, including the proceeds from our senior notes offering.

We acquired Zynga as part of our ongoing strategy to expand selectively our portfolio of owned intellectual property and to diversify and strengthen further our mobile offerings.

The acquisition-date fair value of the consideration totaled $ 9,521.8 , which consisted of the following:

Fair value of purchase consideration

Cash $ 3,992.4

Common stock ( 46.3 shares)

Replacement equity awards 151.7

Total $ 9,521.8

We used the acquisition method of accounting and recognized assets acquired and liabilities assumed at their fair value as of the date of acquisition, with the excess recorded to goodwill.

The following table summarizes the acquisition date fair value of net tangible and intangible assets acquired, net of liabilities assumed from Zynga:

Fair Value Weighted average useful life

Cash acquired $ 864.9 N/A

Accounts receivable 271.2 N/A

Prepaid expenses and other 194.4 N/A

Fixed assets 54.3 N/A

Right-of-use assets 92.7 N/A

Other tangible assets 67.1 N/A

Accounts payable ( 78.5 ) N/A

Accrued expenses and other current liabilities ( 352.8 ) N/A

Deferred revenue ( 333.1 ) N/A

Lease liabilities ( 15.7 ) N/A

Long-term debt ( 1,653.1 ) N/A

Non-current lease liabilities ( 131.6 ) N/A

Deferred tax liabilities, net ( 922.9 ) N/A

Other liabilities assumed ( 61.5 ) N/A

Intangible Assets

Developed game technology 4,440.0 7

Branding and trade names 384.0 12

Game engine technology 261.0 4

User base 316.0 1

Developer relationships 57.0 4

Advertising technology 43.0 3

Customer relationships 31.0 5

Goodwill 5,994.4 N/A

Total $ 9,521.8

Popcore Acquisition

On November 16, 2022, we completed the acquisition of 100 % of Popcore, a privately-held Germany-based free-to-play mobile game developer, for initial consideration of $ 116.9 in cash, 0.6 shares of our common stock, and a contingent earn-out consideration arrangement that requires us to pay up to an aggregate of $ 105.0 in cash if Popcore achieves certain performance measures over each of the three calendar years following the closing.

The cash portion was funded from our cash on hand.

We acquired Popcore as part of our ongoing strategy to expand selectively our portfolio of owned intellectual property and to diversify and strengthen further our mobile offerings.

On June 11, 2024 , we completed the purchase of 100 % of the issued and outstanding capital stock of The Gearbox Entertainment Company, Inc.

("Gearbox"), from Embracer Group AB, for an initial consideration of 2.8 shares of our common stock.

We acquired Gearbox, a leading developer of console and PC games, as part of our ongoing strategy to strengthen our industry-leading creative talent and portfolio of owned intellectual property.

The combination enhances the financial profile of our existing projects with Gearbox and unlocks the opportunities to drive increased long-term growth.

The acquisition-date fair value of the consideration totaled $ 440.7 , which consisted of the following:

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Common stock ( 2.8 shares)

Contingent earn-out 23.3

Deferred payment 1.0

Settlement of pre-existing relationship ( 14.6 )

Total $ 440.7

The fair value of the contingent earn-out consideration arrangement at the acquisition date was $ 23.3 .

We estimated the fair value of the contingent earn-out consideration using a Monte Carlo simulation model.

This fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement as defined in ASC 820.

(Refer to Note 4 - Fair Value Measurements ).

We used the acquisition method of accounting and recognized assets and liabilities at their fair value as of the date of acquisition, with the excess recorded to goodwill.

The following table summarizes the acquisition date fair value of net tangible and intangible assets acquired, net of liabilities assumed from Popcore:

As we finalize our estimation of the fair value of the assets acquired and liabilities assumed, additional adjustments may be recorded during the measurement period (a period not to exceed 12 months from the acquisition date).

The initial accounting is incomplete as of June 30, 2024 for the acquired assets and assumed liabilities.

Additional intangible assets may be recognized as the valuation is complete.

The following table summarizes the preliminary acquisition date fair value of net tangible and intangible assets acquired, net of liabilities assumed from Gearbox:

Fair Value Weighted average useful life

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Developed game technology 84.1 4

Game engine technology 27.7 7

Games in development 34.9 N/A

Branding and trade names 4.1 5

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Goodwill, which is not deductible for tax purposes, is primarily attributable to the assembled workforce of the acquired business and expected synergies at the time of the acquisition.

The amounts of revenue and earnings of Gearbox included in our Condensed Consolidated Statements of Operations from the acquisition date are as follows:

Three Months Ended June 30, 2024

Net revenue $ 1.6

Net loss ( 4.5 )

Supplemental pro-forma financial information has not been provided as the historical results of Gearbox were not material to us.

Transaction costs of $ 6.0 for the three months ended June 30, 2024 have been recorded within General and administrative expense in our Condensed Consolidated Statements of Operation.

GOODWILL AND INTANGIBLE ASSETS, NET

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Balance at March 31, 2024 $ 4,426.4

Additions from immaterial acquisitions 9.7

Impairment ( 165.4 )

Gearbox Acquisition 285.2

Currency translation adjustment ( 4.8 )

Balance at December 31, 2023 $ 6,614.2

During the nine months ended December 31, 2023, we recognized a goodwill impairment charge of $ 165.4 , representing a partial impairment related to one of our reporting units.

We identified various qualitative factors that, collectively, indicated that the fair value of one of our reporting units was more likely than not less than its carrying amount, including a reduction in the forecasted performance of the reporting unit due to industry conditions and changes in our strategies for games within the reporting unit in response to those conditions.

As a result of this qualitative analysis, we performed a valuation of the reporting unit using discounted cash flow and guideline public company methodologies.

Key assumptions and estimates used in deriving the fair value are forecasted revenue, EBITDA margins, long-term growth rate, and discount rate.

There were no goodwill impairment charges for the three and nine months ended December 31, 2022.

Balance at June 30, 2024 $ 4,706.8

The following table sets forth the intangible assets that are subject to amortization:

December 31, 2023 March 31, 2023

June 30, 2024 March 31, 2024

Amount Accumulated

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User Base 319.2 ( 319.2 ) — 319.2 ( 319.2 ) — 0 years

Intellectual Property 146.4 ( 25.5 ) 120.9 27.5 ( 23.1 ) 4.4 5 years

Developer Relationships 57.0 ( 30.0 ) 27.0 57.0 ( 26.5 ) 30.5 5 years

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Analytics Technology 29.7 ( 29.7 ) — 30.1 ( 30.1 ) — 0 years

Intellectual Property 27.5 ( 22.2 ) 5.3 22.3 ( 18.2 ) 4.1 6 years

In Place Lease 2.0 ( 1.5 ) 0.5 2.0 ( 1.4 ) 0.6 4 years

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Amortization of intangible assets is included in our Condensed Consolidated Statements of Operations as follows:

Three Months Ended December 31, Nine Months Ended December 31,

2023 2022 2023 2022

Three Months Ended June 30,

Cost of revenue $ 164.4 $ 187.2

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Total amortization of intangible assets $ 182.1 $ 249.5

During the three and nine months ended December 31, 2023, we recorded impairment charges of $ 53.4 and $ 273.1 , respectively, for acquisition-related Developed Game Technology intangible assets within Cost of revenue as a result of a reduction in the forecasted performance of certain games due to industry conditions and changes in our strategies for certain games in response to those conditions.

The fair value of those intangible assets was measured using the multi-period excess earnings method, consistent with the approach used at acquisition.

Key assumptions and estimates used in deriving the fair value are forecasted revenue, EBITDA margins, long-term decay rate, and discount rate.

There were no impairment charges for intangible assets for the three and nine months ended December 31, 2022.

Estimated future amortization of intangible assets that will be recorded in Cost of revenue and operating expenses are as follows:

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2025 (remaining) $ 552.5

SUBSEQUENT EVENTS

On January 8, 2024, we completed our add-on offering and sale of $ 350.0 aggregate principal amount of our senior notes, consisting of $ 50.0 principal amount of 5.000 % Senior Notes due 2026 (the "2026 Notes") and $ 300.0 principal amount of 4.950 % Senior Notes due 2028 (the "2028 Notes").

The additional 2026 Notes and 2028 Notes (the “New Notes”) were issued as additional notes under the existing Indenture (refer to Note 9 - Debt ) pursuant to which we previously issued $ 500.0 aggregate principal amount of the 5.000 % Senior Notes due 2026 and $ 500.0 aggregate principal amount of the 4.950 % Senior Notes due 2028 (the “Existing Notes” and, together with the New Notes, the “Notes”), all of which remain outstanding.

The New Notes have the same terms as the respective series of Existing Notes other than the date of issuance and the initial offering price, are treated as a single series of securities with the respective series of Existing Notes under the Indenture, are fungible with the respective series of Existing Notes for U.S.

federal income tax purposes and have the same respective CUSIP numbers as the Existing Notes.

BUSINESS REORGANIZATION

We have implemented a cost reduction program to identify efficiencies across our business (the "2024 Plan"), which includes eliminating several projects in development and streamlining our organizational structure.

The 2024 Plan is expected to be largely completed by December 31, 2024.

We estimate that we will incur approximately $ 160.0 to $ 200.0 in total charges in connection with the 2024 Plan, which consists of approximately $ 120.0 to $ 140.0 related to title cancellations, $ 25.0 to $ 35.0 associated with employee severance and employee-related costs, and approximately $ 15.0 to $ 25.0 related to office space reductions.

We incurred business reorganization expenses of $ 49.5 and $ 7.2 during the three months ended June 30, 2024, and 2023, respectively.

In connection with the 2024 Plan, during the three months ended June 30, 2024, $ 23.8 was for employee-related costs, $ 23.3 related to title cancellations (refer to Note 7 - Software Development Costs and Licenses ), $ 1.8 related to impairment loss for a right-of-use asset due to office closures, and $ 0.6 consisted of professional fees.

During the three months ended June 30, 2024, we paid $ 34.1 related to these reorganization activities and $ 8.1 remained accrued for in Accrued expenses and other current liabilities.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements