What changed in this filing

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Item 1. Financial Statements

2025-02-07 compared with 2024-11-07 · 119 added, 111 removed, 631 unchanged (27% of the section changed)

3 unchanged sentences

(in millions, except per share amounts)

September 30, 2024 March 31, 2024

December 31, 2024 March 31, 2024

Current assets:

2 unchanged sentences

Restricted cash and cash equivalents 14.9 252.1

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

Accounts receivable, net of allowances of $ 0.8 and $ 1.2 at December 31, 2024 and March 31, 2024, respectively

Software development costs and licenses 67.4 88.3

28 unchanged sentences

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

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

no shares issued and outstanding at December 31, 2024 and March 31, 2024

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

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

200.1 and 194.5 shares issued and 176.4 and 170.8 outstanding at December 31, 2024 and March 31, 2024, respectively

Additional paid-in capital 10,196.3 9,371.6

Treasury stock, at cost;

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

23.7 and 23.7 common shares at December 31, 2024 and March 31, 2024, respectively

( 1,020.6 ) ( 1,020.6 )

7 unchanged sentences

(in millions, except per share amounts)

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

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

2024 2023 2024 2023

13 unchanged sentences

Interest and other, net ( 21.0 ) ( 22.5 ) ( 71.1 ) ( 79.0 )

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

Gain (loss) on fair value adjustments, net 0.2 ( 0.3 ) ( 4.1 ) ( 1.7 )

Loss before income taxes ( 152.9 ) ( 152.3 ) ( 689.4 ) ( 958.2 )

Provision for (benefit from) income taxes 41.2 ( 33.4 ) 91.0 ( 56.3 )

(Benefit from) provision for income taxes ( 27.7 ) ( 60.7 ) 63.3 ( 117.0 )

Net loss $ ( 125.2 ) $ ( 91.6 ) $ ( 752.7 ) $ ( 841.2 )

5 unchanged sentences

(in millions)

Three Months Ended

September 30, Six Months Ended September 30,

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

2024 2023 2024 2023

9 unchanged sentences

(in millions)

Six Months Ended September 30,

Nine Months Ended December 31,

Operating activities:

22 unchanged sentences

Purchases of fixed assets ( 115.3 ) ( 95.5 )

Divestitures 36.0 —

Purchases of long-term investments ( 21.4 ) ( 17.5 )

22 unchanged sentences

(in millions)

Three Months Ended September 30, 2024

Three Months Ended December 31, 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

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

Net loss — — — — — ( 125.2 ) — ( 125.2 )

Change in cumulative foreign currency translation adjustment — — — — — — ( 104.3 ) ( 104.3 )

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

Stock-based compensation — — 101.5 — — — — 101.5

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

Net share settlement of restricted stock awards — — — — — — — —

Exercise of stock options 0.3 — 8.9 — — — — 8.9

Employee share purchase plan settlement 0.2 — 22.2 — — — — 22.2

Other changes, net — — 0.3 — — — — 0.3

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

Balance, December 31, 2024 200.1 $ 2.0 $ 10,196.3 ( 23.7 ) $ ( 1,020.6 ) $ ( 3,332.6 ) $ ( 143.2 ) $ 5,701.9

Three Months Ended December 31, 2023

Common Stock Additional

4 unchanged sentences

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

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 )

4 unchanged sentences

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

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

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

See accompanying Notes.

Six Months Ended September 30, 2024

Nine Months Ended December 31, 2024

Common Stock Additional

12 unchanged sentences

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

Exercise of stock options 0.3 — 9.3 — — — — 9.3

Other changes, net — 0.1 0.3 — — — — 0.4

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

Six Months Ended September 30, 2023

Balance, December 31, 2024 200.1 $ 2.0 $ 10,196.3 ( 23.7 ) $ ( 1,020.6 ) $ ( 3,332.6 ) $ ( 143.2 ) $ 5,701.9

Nine Months Ended December 31, 2023

Common Stock Additional

13 unchanged sentences

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

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

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

See accompanying Notes.

50 unchanged sentences

Net revenue by timing of recognition was as follows:

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

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

2024 2023 2024 2023

6 unchanged sentences

Net revenue by content was as follows:

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

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

2024 2023 2024 2023

5 unchanged sentences

Net revenue by geographic region was as follows:

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

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

2024 2023 2024 2023

4 unchanged sentences

Net revenue by platform was as follows:

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

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

2024 2023 2024 2023

7 unchanged sentences

Net revenue by distribution channel was as follows:

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

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

2024 2023 2024 2023

5 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 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.

The balance of deferred revenue, including current and non-current balances as of December 31, 2024 and March 31, 2024 were $ 1,125.8 and $ 1,102.4 , respectively.

For the nine months ended December 31, 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 December 31, 2024 and 2023, $ 142.1 and $ 153.7 , 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, 2024 and 2023, $ 966.7 and $ 991.8 , respectively, of revenue was recognized that was included in the deferred revenue balance at the beginning of the respective period.

As of December 31, 2024, the aggregate amount of contract revenue allocated to unsatisfied performance obligations is $ 1,343.0 , which includes our deferred revenue balances and amounts to be invoiced and recognized as revenue in future periods.

We expect to recognize approximately $ 1,225.2 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 September 30, 2024 and March 31, 2024, our contract asset balances were $ 79.4 and $ 85.0 , respectively.

As of December 31, 2024 and March 31, 2024, our contract asset balances were $ 77.1 and $ 85.0 , respectively.

MANAGEMENT AGREEMENT

8 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 $ 2.5 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 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 $( 0.7 ) during the three months ended December 31, 2024 and 2023, respectively, and $ 7.6 and $ 4.5 during the nine months ended December 31, 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 $ 14.0 during the three months ended December 31, 2024 and 2023, respectively, and $ 41.8 and $ 39.1 during the nine months ended December 31, 2024 and 2023, respectively.

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

Six Months Ended September 30,

Nine Months Ended December 31,

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 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.

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 December 31, 2024 and March 31, 2024, respectively.

During the nine months ended December 31, 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.

September 30, 2024

December 31, 2024

Quoted prices

15 unchanged sentences

Equity securities 7.5 — — 7.5

Foreign currency forward contracts — 0.1 — 0.1

Total financial assets $ 962.8 $ 0.1 $ 25.7 $ 988.6

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 six months ended September 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 nine months ended December 31, 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 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.

At December 31, 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:

September 30, 2024

December 31, 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 September 30, 2024:

September 30, 2024

The following table summarizes the contracted maturities of our short-term investments at December 31, 2024:

December 31, 2024

Short-term investments

8 unchanged sentences

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

September 30, 2024 March 31, 2024

December 31, 2024 March 31, 2024

Forward contracts to sell foreign currencies $ 270.3 $ 243.0

Forward contracts to purchase foreign currencies 96.3 72.2

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.

For the three months ended December 31, 2024 and 2023, we recorded a gain of $ 9.5 and a loss of $ 8.0 , respectively, and for the nine months ended December 31, 2024 and 2023, we recorded a gain of $ 9.7 and a loss of $ 0.6 , 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:

September 30, 2024 March 31, 2024

December 31, 2024 March 31, 2024

Current Non-current Current Non-current

3 unchanged sentences

Software development costs and licenses $ 67.4 $ 1,904.5 $ 88.3 $ 1,446.5

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.

During the three months ended December 31, 2024 and 2023, we recorded $ 1.5 and $ 0.0 , respectively, of software development impairment charges (a component of Cost of revenue).

The impairment charges recorded during the three months ended December 31, 2024 related to our cost reduction program (refer to Note 15 - Business Reorganization ).

During the nine months ended December 31, 2024 and 2023, we recorded $ 36.3 and $ 21.7 , respectively, of software development impairment charges (a component of Cost of revenue).

The impairment charges recorded during the nine months ended December 31, 2024 related to our cost reduction program (refer to Note 15 - Business Reorganization ).

The impairment charges recorded during the nine months ended December 31, 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:

September 30, 2024 March 31, 2024

Software development royalties $ 519.7 $ 413.1

December 31, 2024 March 31, 2024

Compensation and benefits $ 270.5 $ 227.3

Software development royalties 246.1 413.1

Licenses 91.1 64.4

Tax payable 91.7 32.4

Marketing and promotions 74.7 94.5

Settlement accrual 56.4 1.4

Refund liability 44.1 34.5

Deferred acquisition payments 34.2 17.6

Interest payable 31.8 29.4

Settlement accrual 23.8 1.4

Sales tax liability 19.7 19.3

Tax payable 14.2 32.4

Professional fees 14.0 16.7

Deferred acquisition payments 5.6 17.6

Other 135.5 112.0

1 unchanged sentence

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

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

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

2026 Notes 5.00 % March 28, 2026 $ 550.0 $ 551.9

19 unchanged sentences

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

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

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

2025 Notes 3.55 % April 14, 2025 $ 600.0 $ 597.7

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

Three Months Ended September 30, Six Months Ended September 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 nine months ended December 31, 2024 and 2023, respectively, and was as follows:

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

2024 2023 2024 2023

9 unchanged sentences

Total $ 41.0 $ 31.1 $ 116.1 $ 96.9

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

The following table outlines the aggregate amount of maturities of our borrowings, as of December 31, 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 six months ended September 30, 2024, we made interest payments of $ 65.3 .

During the nine months ended December 31, 2024, we made interest payments of $ 113.6 .

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.

6 unchanged sentences

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

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.

During the three months ended December 31, 2024 and 2023, we recognized $ 1.5 and $ 1.2 , 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, 2024 and 2023, we recognized $ 4.5 and $ 4.8 , respectively, of amortization of debt issuance costs and $ 0.4 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 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.

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.

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 ( 8.00 % 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.

Loans under the 2022 Credit Agreement will bear interest at a rate of (a) 0.000 % to 0.625 % above an alternate base rate ( 7.50 % at December 31, 2024) or (b) 1.000 % to 1.625 % above Secured Overnight Financing Rate ("SOFR"), approximately 4.33 % at December 31, 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 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.

During the three months ended December 31, 2024 and 2023, we amortized $ 0.2 and $ 0.2 , respectively, and during the nine months ended December 31, 2024 and 2023, we amortized $ 0.5 and $ 0.5 , respectively, of these debt issuance costs.

As of December 31, 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:

September 30, 2024 March 31, 2024

December 31, 2024 March 31, 2024

Available borrowings $ 747.8 $ 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 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.

As of December 31, 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 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.

During the nine months ended December 31, 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 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.

An aggregate principal amount of $ 29.4 of the 2026 Convertible Notes remained outstanding at December 31, 2024.

We recorded $ 27.1 as the fair value of the remaining outstanding 2026 Convertible Notes, within Long-term debt, net, in our Condensed Consolidated Balance Sheet as of December 31, 2024.

During the three months ended December 31, 2024 and 2023, we recognized a loss of $ 1.1 and a gain of $ 0.0 , respectively, and during the nine months ended December 31, 2024 and 2023, we recognized a loss of $ 0.8 and loss of $ 3.2 , respectively, within Gain (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 September 30, Six Months Ended September 30,

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

2024 2023 2024 2023

3 unchanged sentences

Basic and diluted loss per share $ ( 0.71 ) $ ( 0.54 ) $ ( 4.31 ) $ ( 4.95 )

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

We incurred a net loss for the three and nine months ended December 31, 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 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.

For the three months ended December 31, 2024, we had 2.1 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 nine months ended December 31, 2024, we had 2.1 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 nine months ended December 31, 2024, 2.3 restricted stock awards vested, we granted 2.1 unvested restricted stock awards, and 0.5 unvested restricted stock awards were forfeited.

COMMITMENTS AND CONTINGENCIES

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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.

During the three months ended December 31, 2024, we entered into a Settlement Agreement and Patent License Agreement with IBM which, in relevant part, resolved all claims, damages, liabilities, and causes of action related to the matter.

The benefit from income taxes for the three months ended December 31, 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 benefit from income taxes was $ 27.7 for the three months ended December 31, 2024, as compared to the benefit from income taxes of $ 60.7 for the prior year period.

When compared to the statutory rate of 21%, the effective tax rate of 18.1 % for the three months ended December 31, 2024 was due primarily to tax benefits of $ 18.2 related to divestitures, tax benefits of $ 6.4 from employee stock-based compensation, tax benefits of $ 3.9 from tax credits, offset by tax expense of $ 18.7 related to an increase in the U.S.

and international valuation allowances and tax expense of $ 7.1 related to geographic mix of earnings.

The provision for income taxes for the nine months ended December 31, 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 $ 63.3 for the nine months ended December 31, 2024, as compared to the benefit from income taxes of $ 117.0 for the prior year period.

When compared to the statutory rate of 21%, the effective tax rate of ( 9.2 )% for the nine months ended December 31, 2024 was due primarily to tax expense of $ 220.5 related to an increase in the U.S.

and international valuation allowances, tax expense of $ 25.2 related to geographic mix of earnings, offset by tax benefits of $ 18.2 related to divestitures and tax benefits of $ 38.8 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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It is possible that the CAMT could result in an additional tax liability over the regular federal corporate tax liability in a particular year based on differences between book and taxable income.

We estimate no tax liability relating to CAMT for the current fiscal year.

We do not estimate any tax liability relating to CAMT for the current fiscal year.

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

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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.

Although the model rules provide a framework for applying the minimum tax, countries may enact Pillar Two slightly differently than 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 and six months ended September 30, 2024.

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

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 a 15% minimum rate.

The impact of Pillar Two was not material to the tax

provision for the three and nine months ended December 31, 2024.

We will continue to evaluate the impact Pillar Two and any additional guidance may have on our operations.

We are regularly examined by domestic and foreign taxing authorities.

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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 September 30, 2024 Six Months Ended September 30, 2024

Three Months Ended December 31, 2024 Nine Months Ended December 31, 2024

Net revenue $ 5.8 $ 17.7

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

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.

Transaction costs of $ 0.2 and $ 5.3 fo r the three and nine months ended December 31, 2024, respectively, have been recorded within General and administrative expense in our Condensed Consolidated Statements of Operation.

GOODWILL AND INTANGIBLE ASSETS, NET

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Gearbox Acquisition 208.4

Divestitures ( 15.8 )

Currency translation adjustment ( 16.4 )

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.

Balance at December 31, 2024 $ 4,602.6

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.

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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.

Other intangibles, net, as of December 31, 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:

September 30, 2024 March 31, 2024

December 31, 2024 March 31, 2024

Amount Accumulated

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Developer Relationships 57.0 ( 37.2 ) 19.8 57.0 ( 26.5 ) 30.5 5 years

Advertising Technology 43.0 ( 33.8 ) 9.2 43.0 ( 26.6 ) 16.4 3 years

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

In Place Lease 2.0 ( 1.6 ) 0.4 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 September 30, Six Months Ended September 30,

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

2024 2023 2024 2023

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Total amortization of intangible assets $ 189.3 $ 248.1 $ 563.4 $ 924.9

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.

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.

During the three and nine months ended December 31, 2024, we divested $ 6.8 , net of Advertising Technology assets, $ 15.3 , net of Customer Relationships assets, and $ 4.1 , net of Branding and Trade Names assets.

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

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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.

to $ 35.0 associated with employee severance and employee-related costs, and approximately $ 15.0 to $ 25.0 related to office space reductions.

The 2024 Plan was largely completed as of December 31, 2024 but additional costs will be incurred into fiscal year 2026.

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.

We incurred business reorganization expenses of $ 23.1 and $ 0.7 during the three months ended December 31, 2024 and 2023, respectively, and $ 89.4 and $ 11.3 during the nine months ended December 31, 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

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

Employee-related costs $ 8.8 $ 38.5

Title cancellations (1)

Loss on divestitures 9.8 9.8

Impairment loss of ROU asset (office closures) 1.1 3.5

Professional fees — 0.6

Other 1.9 2.5

Total business reorganization expenses $ 23.1 $ 89.4

(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.

During the three and nine months ended December 31, 2024 we paid $ 11.3 and $ 53.2 , respectively, related to these reorganization activities and $ 9.0 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