What changed in this filing

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Item 1. Financial Statements

2024-11-07 compared with 2024-08-09 · 174 added, 90 removed, 568 unchanged (32% of the section changed)

3 unchanged sentences

(in millions, except per share amounts)

June 30, 2024 March 31, 2024

September 30, 2024 March 31, 2024

Current assets:

2 unchanged sentences

Restricted cash and cash equivalents 357.5 252.1

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

Accounts receivable, net of allowances of $ 1.3 and $ 1.2 at September 30, 2024 and March 31, 2024, respectively

Software development costs and licenses 96.9 88.3

28 unchanged sentences

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

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

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

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

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

199.2 and 194.5 shares issued and 175.5 and 170.8 outstanding at September 30, 2024 and March 31, 2024, respectively

Additional paid-in capital 10,063.4 9,371.6

Treasury stock, at cost;

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

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

( 1,020.6 ) ( 1,020.6 )

7 unchanged sentences

(in millions, except per share amounts)

Three Months Ended June 30,

Three Months Ended September 30, Six Months Ended September 30,

2024 2023 2024 2023

Game $ 1,233.9 $ 1,128.6 $ 2,450.6 $ 2,224.7

7 unchanged sentences

Depreciation and amortization 47.3 45.3 92.1 85.7

Goodwill impairment — 165.4 — 165.4

Business reorganization 16.8 3.4 66.3 10.6

2 unchanged sentences

Interest and other, net ( 25.9 ) ( 31.1 ) ( 50.1 ) ( 56.5 )

(Loss) gain on fair value adjustments, net ( 3.1 ) 0.8

Loss on fair value adjustments, net ( 1.2 ) ( 2.2 ) ( 4.3 ) ( 1.4 )

Loss before income taxes ( 324.3 ) ( 577.0 ) ( 536.5 ) ( 805.9 )

8 unchanged sentences

Three Months Ended

September 30, Six Months Ended September 30,

2024 2023 2024 2023

Net loss $ ( 365.5 ) $ ( 543.6 ) $ ( 627.5 ) $ ( 749.6 )

8 unchanged sentences

(in millions)

Three Months Ended June 30,

Six Months Ended September 30,

Operating activities:

6 unchanged sentences

Depreciation 74.0 67.9

Goodwill impairment — 165.4

Interest expense 80.4 71.4

Gain on debt extinguishment — ( 7.7 )

Fair value adjustments 4.3 1.4

Other, net 5.9 28.8

34 unchanged sentences

(in millions)

Three Months Ended June 30, 2024

Three Months Ended September 30, 2024

Common Stock Additional

3 unchanged sentences

Shares Amount Shares Amount

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

Net loss — — — — — ( 365.5 ) — ( 365.5 )

Change in cumulative foreign currency translation adjustment — — — — — — 71.6 71.6

Stock-based compensation — — 106.3 — — — — 106.3

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

Other changes, net — — ( 5.4 ) — — — — ( 5.4 )

Balance, September 30, 2024 199.2 $ 2.0 $ 10,063.4 ( 23.7 ) $ ( 1,020.6 ) $ ( 3,207.4 ) $ ( 38.9 ) $ 5,798.5

Three Months Ended September 30, 2023

Common Stock Additional

Capital Treasury Stock Retained

Earnings/Accumulated Deficit) Accumulated

Comprehensive

Loss Total Stockholder's Equity

Shares Amount Shares Amount

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

Net loss — — — — — ( 543.6 ) — ( 543.6 )

Change in cumulative foreign currency translation adjustment — — — — — — ( 63.1 ) ( 63.1 )

Net unrealized gain on available-for-sale securities, net of taxes — — — — — — 0.4 0.4

Stock-based compensation — — 112.0 — — — — 112.0

Issuance of restricted stock, net of forfeitures and cancellations 0.3 — — — — — — —

Net share settlement of restricted stock awards ( 0.1 ) — ( 15.8 ) — — — — ( 15.8 )

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

See accompanying Notes.

Six Months Ended September 30, 2024

Common Stock Additional

Capital Treasury Stock Retained

Earnings/(Accumulated Deficit) 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

3 unchanged sentences

Issuance of restricted stock, net of forfeitures and cancellations 1.6 — — — — — — —

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

Employee share purchase plan settlement 0.2 — 23.3 — — — — 23.3

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

Issuance of shares related to Gearbox acquisition 2.8 — 448.6 — — — — 448.6

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

Other changes, net — 0.1 0.4 — — — — 0.5

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

Balance, September 30, 2024 199.2 $ 2.0 $ 10,063.4 ( 23.7 ) $ ( 1,020.6 ) $ ( 3,207.4 ) $ ( 38.9 ) $ 5,798.5

Six Months Ended September 30, 2023

Common Stock Additional

2 unchanged sentences

Comprehensive

Loss Total Stockholder's Equity

Stockholders'

Shares Amount Shares Amount

2 unchanged sentences

Change in cumulative foreign currency translation adjustment — — — — — — ( 37.1 ) ( 37.1 )

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

Net unrealized gain on available-for-sale securities, net of taxes — — — — — — 1.3 1.3

Stock-based compensation — — 211.4 — — — — 211.4

3 unchanged sentences

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

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

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

See accompanying Notes.

6 unchanged sentences

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

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

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

In October 2024, we sold our Private Division label, including our rights to substantially all of the label's titles.

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

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Recent Accounting Pronouncements

Expense Disaggregation Disclosures

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses, which requires additional, disaggregated disclosure about certain income statement expense line items.

ASU 2024-03 is effective for fiscal years beginning after December 15, 2026 (April 1, 2027 for the Company) and interim periods within fiscal years beginning after December 15, 2027 (April 1, 2028 for the Company).

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

Income Tax Disclosures

19 unchanged sentences

Net revenue by timing of recognition was as follows:

Three Months Ended June 30,

Three Months Ended September 30, Six Months Ended September 30,

2024 2023 2024 2023

Net revenue recognized:

5 unchanged sentences

Net revenue by content was as follows:

Three Months Ended June 30,

Three Months Ended September 30, Six Months Ended September 30,

2024 2023 2024 2023

Net revenue recognized:

4 unchanged sentences

Net revenue by geographic region was as follows:

Three Months Ended June 30,

Three Months Ended September 30, Six Months Ended September 30,

2024 2023 2024 2023

Net revenue recognized:

3 unchanged sentences

Net revenue by platform was as follows:

Three Months Ended June 30,

Three Months Ended September 30, Six Months Ended September 30,

2024 2023 2024 2023

Net revenue recognized:

6 unchanged sentences

Net revenue by distribution channel was as follows:

Three Months Ended June 30,

Three Months Ended September 30, Six Months Ended September 30,

2024 2023 2024 2023

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 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.

The balance of deferred revenue, including current and non-current balances as of September 30, 2024 and March 31, 2024 were $ 1,099.6 and $ 1,102.4 , respectively.

For the six months ended September 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 September 30, 2024 and 2023, $ 300.6 and $ 314.3 , respectively, of revenue was recognized that was included in the deferred revenue balance at the beginning of the respective period.

During the six months ended September 30, 2024 and 2023, $ 824.5 and $ 838.2 , respectively, of revenue was recognized that was included in the deferred revenue balance at the beginning of the respective period.

As of September 30, 2024, the aggregate amount of contract revenue allocated to unsatisfied performance obligations is $ 1,218.1 , which includes our deferred revenue balances and amounts to be invoiced and recognized as revenue in future periods.

We expect to recognize approximately $ 1,125.4 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 June 30, 2024 and March 31, 2024, our contract asset balances were $ 80.7 and $ 85.0 , respectively.

As of September 30, 2024 and March 31, 2024, our contract asset balances were $ 79.4 and $ 85.0 , respectively.

MANAGEMENT AGREEMENT

1 unchanged sentence

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.

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").

3 unchanged sentences

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 consideration for ZMC's services, we recorded consulting expense in General and administrative expenses on our Condensed Consolidated Statements of Operations of $ 2.5 and $ 2.4 during the three months ended September 30, 2024 and 2023, respectively, and $ 5.1 and $ 5.2 during the six months ended September 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 $ 14.7 and $ 13.9 during the three months ended September 30, 2024 and 2023, respectively, and $ 27.1 and $ 25.1 during the six months ended September 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,

Six Months Ended September 30,

Time-based 102 97

12 unchanged sentences

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 1.4 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.

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 September 30, 2024 and March 31, 2024, respectively.

During the six months ended September 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.

June 30, 2024

September 30, 2024

Quoted prices

15 unchanged sentences

Equity securities 7.0 — — 7.0

Foreign currency forward contracts — 0.1 — 0.1

Total financial assets $ 1,017.3 $ — $ 26.0 $ 1,043.3

30 unchanged sentences

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 three months ended June 30, 2024.

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 six months ended September 30, 2024.

Nonrecurring fair value measurements

3 unchanged sentences

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

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.

At September 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:

June 30, 2024

September 30, 2024

Amortized Cost Gains Losses Fair Value

7 unchanged sentences

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

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

June 30, 2024

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

September 30, 2024

Short-term investments

8 unchanged sentences

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

June 30, 2024 March 31, 2024

September 30, 2024 March 31, 2024

Forward contracts to sell foreign currencies $ 332.6 $ 243.0

Forward contracts to purchase foreign currencies 156.9 72.2

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.

For the three months ended September 30, 2024 and 2023, we recorded a loss of $ 3.3 and a gain of $ 3.6 , respectively, and for the six months ended September 30, 2024 and 2023, we recorded a gain of $ 0.2 and a gain of $ 7.4 , 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.

2 unchanged sentences

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

June 30, 2024 March 31, 2024

September 30, 2024 March 31, 2024

Current Non-current Current Non-current

3 unchanged sentences

Software development costs and licenses $ 96.9 $ 1,731.2 $ 88.3 $ 1,446.5

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.

During the three months ended September 30, 2024 and 2023, we recorded $ 11.5 and $ 3.5 , respectively, of software development impairment charges (a component of Cost of revenue).

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

The impairment charges recorded during the three months ended September 30, 2023 related to 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.

During the six months ended September 30, 2024 and 2023, we recorded $ 34.8 and $ 21.7 , respectively, of software development impairment charges (a component of Cost of revenue).

The impairment charges recorded during the six months ended September 30, 2024 related to our cost reduction program (refer to Note 15 - Business Reorganization ).

The impairment charges recorded during the six months ended September 30, 2023 related to 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:

June 30, 2024 March 31, 2024

September 30, 2024 March 31, 2024

Software development royalties $ 519.7 $ 413.1

Compensation and benefits 203.1 227.3

Licenses 102.5 64.4

Tax payable 91.7 32.4

Marketing and promotions 86.6 94.5

Licenses 53.2 64.4

Interest payable 31.8 29.4

Settlement accrual 56.4 1.4

Refund liability 40.2 34.5

Interest payable 39.2 29.4

Sales tax liability 22.0 19.3

4 unchanged sentences

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

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

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

2026 Notes 5.00 % March 28, 2026 $ 550.0 $ 555.6

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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 June 30, 2024 Fair Value (Level 2)

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

2025 Notes 3.55 % April 14, 2025 $ 600.0 $ 596.2

7 unchanged sentences

Short-term debt, net $ 24.6

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,

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 and six months ended September 30, 2024 and 2023, respectively, and was as follows:

Three Months Ended September 30, Six Months Ended September 30,

2024 2023 2024 2023

2024 Notes $ — $ 2.9 $ — $ 9.4

8 unchanged sentences

Total $ 40.8 $ 31.3 $ 75.1 $ 65.8

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

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

Fiscal Year Ending March 31, Maturities

16 unchanged sentences

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 .

During the six months ended September 30, 2024, we made interest payments of $ 65.3 .

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.

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

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.

During the three months ended September 30, 2024 and 2023, we recognized $ 1.6 and $ 1.8 , respectively, of amortization of debt issuance costs and $ 0.2 and $ 0.1 , respectively, of amortization of the original issuance discount.

During the six months ended September 30, 2024 and 2023, we recognized $ 3.0 and $ 3.6 , 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, 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.

During the three and six months ended September 30, 2023 we recognized a debt extinguishment gain of approximately $ 0.7 and $ 7.7 , respectively, net of unamortized debt discount and debt issuance costs recorded within Interest and other, net in our Condensed Consolidated Statement of Operations.

Credit Agreement

3 unchanged sentences

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.

Loans under the 2022 Credit Agreement will bear interest at a rate of (a) 0.000 % to 0.625 % above an alternate base rate ( 8.00 % at September 30, 2024) or (b) 1.000 % to 1.625 % above Secured Overnight Financing Rate ("SOFR"), approximately 4.84 % at September 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.

2 unchanged sentences

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 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.

During the three months ended September 30, 2024 and 2023, we amortized $ 0.1 and $ 0.1 , respectively, and during the six months ended September 30, 2024 and 2023, we amortized $ 0.3 and $ 0.3 , respectively, of these debt issuance costs.

As of September 30, 2024, there were no borrowings under the 2022 Credit Agreement, and we had approximately $ 747.7 available for additional borrowings.

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

June 30, 2024 March 31, 2024

September 30, 2024 March 31, 2024

Available borrowings $ 747.7 $ 497.7

29 unchanged sentences

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 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.

As of September 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.

2 unchanged sentences

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.

During the six months ended September 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.

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

We recorded $ 26.0 as the fair value of the remaining outstanding 2026 Convertible Notes, within Long-term debt, net, in our Condensed Consolidated Balance Sheet as of September 30, 2024.

During the three months ended September 30, 2024 and 2023, we recognized a loss of $ 0.1 and a loss of $ 1.7 , respectively, and during the six months ended September 30, 2024 and 2023, we recognized a gain of $ 0.3 and loss of $ 3.2 , respectively, within Loss 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 June 30,

Three Months Ended September 30, Six Months Ended September 30,

2024 2023 2024 2023

Computation of Basic and diluted loss per share:

2 unchanged sentences

Basic and diluted loss per share $ ( 2.08 ) $ ( 3.20 ) $ ( 3.61 ) $ ( 4.42 )

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

We incurred a net loss for the three and six months ended September 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 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.

For the three months ended September 30, 2024, we had 1.6 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.

For the six months ended September 30, 2024, we had 2.0 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 six months ended September 30, 2024, 1.6 restricted stock awards vested, we granted 2.0 unvested restricted stock awards, and 0.4 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 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.

On May 2, 2022, IBM filed suit against Zynga, our wholly-owned subsidiary, in the United States District Court for the District of Delaware.

The suit alleged, in relevant part, that Zynga infringed its U.S.

7,072,849 and 7,702,719.

Starting on September 9, 2024, the case was tried before a jury, which, on September 13, 2024, returned a verdict finding that certain of Zynga’s games infringed each of the patents and awarding damages to IBM in the amount of $ 44.9 .

The patents at issue have expired and Zynga will not have to modify or stop operating any of the games at issue.

Zynga believes this result is not supported by the facts and the law and intends to seek to overturn the verdict and reduce or eliminate the damages award through post-trial motions and appeal.

The provision for income taxes for the three months ended September 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 $ 41.2 for the three months ended September 30, 2024, as compared to the benefit from income taxes of $ 33.4 for the prior year period.

When compared to the statutory rate of 21%, the effective tax rate of ( 12.7 )% for the three months ended September 30, 2024 was due primarily to tax expense of $ 104.9 related to an increase in valuation allowance, tax expense of $ 9.9 related to geographic mix of earnings offset by benefits of $ 17.2 from tax credits.

The provision for income taxes for the six months ended September 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 $ 91.0 for the six months ended September 30, 2024, as compared to the benefit from income taxes of $ 56.3 for the prior year period.

When compared to the statutory rate of 21%, the effective tax rate of ( 17.0 )% for the six months ended September 30, 2024 was due primarily to tax expense of $ 201.8 related to an increase in valuation allowance, tax expense of $ 18.1 related to geographic mix of earnings offset by benefits of $ 35.0 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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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.

The impact of Pillar Two was not material to the tax provision for the three and six months ended September 30, 2024.

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

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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:

4 unchanged sentences

Intangible assets

Intellectual property 79.0 14

Developed game technology 68.0 2

Games in development 36.0 N/A

Game engine technology 9.0 2

Branding and trade names 8.0 7

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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

Three Months Ended September 30, 2024 Six Months Ended September 30, 2024

Net revenue $ 10.3 $ 11.9

1 unchanged sentence

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.

Transaction costs of $ 0.6 and $ 5.1 for the three and six months ended September 30, 2024, respectively, have been recorded within General and administrative expense in our Condensed Consolidated Statements of Operation.

GOODWILL AND INTANGIBLE ASSETS, NET

The change in our goodwill balance is as follows:

Balance at March 31, 2024 $ 4,426.4

Gross balance at March 31, 2024 $ 6,768.5

Accumulated impairment at March 31, 2024 ( 2,342.1 )

Net balance at March 31, 2024 4,426.4

Gearbox Acquisition 208.4

Currency translation adjustment 13.9

Balance at June 30, 2024 $ 4,706.8

Balance at September 30, 2024 $ 4,648.7

During the three and six months ended September 30, 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 decay rate, and discount rate.

Indefinite-lived intangibles

Other intangibles, net, as of September 30, 2024, included in-process research and development ("IPR&D") assets of $ 36.0 acquired as part of the Gearbox acquisition (refer to Note 13 - Acquisitions ), which are indefinite-lived intangibles and therefore not subject to amortization until the related games are released or development is abandoned.

Definite-lived intangibles

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

June 30, 2024 March 31, 2024

September 30, 2024 March 31, 2024

Amount Accumulated

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Game Engine Technology 332.8 ( 185.9 ) 146.9 322.5 ( 147.3 ) 175.2 4 years

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

Intellectual Property 106.5 ( 25.5 ) 81.0 27.5 ( 23.1 ) 4.4 14 years

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Customer Relationships 31.0 ( 14.6 ) 16.4 31.0 ( 11.5 ) 19.5 5 years

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

In Place Lease 2.0 ( 1.7 ) 0.3 2.0 ( 1.4 ) 0.6 4 years

1 unchanged sentence

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

Three Months Ended June 30,

Three Months Ended September 30, Six Months Ended September 30,

2024 2023 2024 2023

Cost of revenue $ 174.1 $ 409.6 $ 338.5 $ 596.8

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Total amortization of intangible assets $ 192.0 $ 427.3 $ 374.1 $ 676.8

During the three and six months ended September 30, 2023, we recorded impairment charges of $ 219.7 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.

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

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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.

We estimated 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.

During the fiscal year ended March 31, 2024, we incurred business reorganization expenses of $ 93.3 in connection with the 2024 Plan, of which $ 88.2 related to title cancellations, $ 3.2 was for employee-related costs, and the remaining $ 1.9 consisted of professional fees.

We incurred business reorganization expenses of $ 16.8 and $ 3.4 during the three months ended September 30, 2024 and 2023, respectively, and $ 66.3 and $ 10.6 during the six months ended September 30, 2024 and 2023, respectively.

In connection with the 2024 Plan, we incurred the following expenses:

Three Months Ended September 30, Six Months Ended September 30,

Title cancellations (1)

$ 10.3 $ 33.6

Employee-related costs 5.9 29.7

Impairment loss of ROU asset (office closures) 0.6 2.4

Professional fees — 0.6

Total business reorganization expenses $ 16.8 $ 66.3

(1) Refer to Note 7 - Software Development Costs and Licenses

During the three and six months ended September 30, 2024 we paid $ 7.7 and $ 41.9 , respectively, related to these reorganization activities and $ 9.3 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