What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-02-07 compared with 2024-11-07 · 155 added, 168 removed, 321 unchanged (50% of the section changed)

45 unchanged sentences

Rockstar Games continues to invest in the franchise and plans to release Grand Theft Auto VI in the fall of calendar year 2025.

The label released its first trailer for the title in December 2023 and will share more details over time.

The label released its first trailer for the title in December 2023 and will share more details in the coming months.

Red Dead Redemption 2 , which has been a critical and commercial success that set numerous entertainment industry records, has sold-in more than 65 million units worldwide to date.

8 unchanged sentences

In 2018, we expanded our relationship with the NBA through the NBA 2K League.

Private Division.

Our Private Division label was dedicated to bringing titles from the industry's leading creative talent to market and was the publisher, developer, and owner of Kerbal Space Program and OlliOlli World .

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

Take-Two will continue to support No Rest for the Wicked , which launched in early access on PC in April.

Our Zynga label publishes popular free-to-play mobile games that deliver high quality, deeply engaging entertainment experiences and generates revenue from in-game sales and in-game advertising.

7 unchanged sentences

Hunters , Toon Blast , Top Eleven , Top Troops , Toy Blast , Two Dots , Words With Friends , Zynga Poker , and a high volume of hyper-casual mobile titles, including Fill the Fridge!, Parking Jam 3D , Power Slap , Pull the Pin, Screw Jam , Twisted Tangle, and Tangled Snakes .

Private Division.

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

The label was dedicated to bringing titles from the industry's leading creative talent to market and was the publisher, developer, and owner of Kerbal Space Program and OlliOlli World .

Take-Two is continuing to support No Rest for the Wicked , which launched in early access on PC in April 2024.

International Expansion

10 unchanged sentences

Additionally, our Grand Theft Auto products in particular have historically accounted for a significant portion of our revenue.

Sales of Grand Theft Auto products generated 12.9% of our net revenue for the six months ended September 30, 2024.

Sales of Grand Theft Auto products generated 13% of our net revenue for the nine months ended December 31, 2024.

The timing of our Grand Theft Auto product releases may affect our financial performance on a quarterly and annual basis.

7 unchanged sentences

We derive a substantial portion of our revenue from the sale of products made for video game consoles manufactured by third parties.

Such console revenue comprised 37.2% of our net revenue for the six months ended September 30, 2024.

Such console revenue comprised 37.2% of our net revenue for the nine months ended December 31, 2024.

The success of our business is dependent upon consumer acceptance of these platforms and the continued growth in the installed base of these platforms.

8 unchanged sentences

We provide a variety of online delivered products, including direct digital downloads of our titles, and access to additional offerings through virtual currency, add-on content, and in-game purchases, which drive ongoing engagement and incremental revenue from recurrent consumer spending on our titles.

Net revenue from digital online channels comprised 96.4% of our net revenue for the six months ended September 30, 2024.

Net revenue from digital online channels comprised 96.4% of our net revenue for the nine months ended December 31, 2024.

We expect online delivery of games and game offerings to continue to be the primary part of our business over the long term.

6 unchanged sentences

Accordingly, the overall product mix between mobile and other game sales may affect our gross margin percentage.

We are also expanding our direct-to-consumer efforts more meaningfully across our mobile portfolio to enhance profitability.

We are also continuing to expand our direct-to-consumer efforts more meaningfully across our mobile portfolio to enhance profitability.

In addition, we aim to drive ongoing engagement and incremental revenue from recurrent consumer spending on our titles through virtual currency, add-on content, in-game purchases, and in-game advertising, all of which are typically delivered digitally.

5 unchanged sentences

During fiscal year 2025, 2K released NFL 2K Playmakers , TopSpin 2K25, and NBA 2K25;

Private Division released No Rest for the Wicked early access on PC;

Private Division released No Rest for the Wicked for early access on PC;

and Zynga released Star Wars:

Hunters and Game of Thrones:

To date we have announced that, during the remainder of fiscal year 2025, 2K plans to release Sid Meier's Civilization VII and WWE 2K25.

To date we have announced that, during the remainder of fiscal year 2025, 2K plans to release Sid Meier's Civilization VII, PGA TOUR 2K25, and WWE 2K25.

Rockstar Games plans to release Grand Theft Auto VI in the fall of calendar year 2025.

14 unchanged sentences

Net Bookings were as follows:

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

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

2024 2023 Increase/

3 unchanged sentences

Net Bookings $ 1,373.4 $ 1,337.8 $ 35.6 2.7 % $ 4,066.5 $ 3,984.2 $ 82.3 2.1 %

For the three months ended September 30, 2024, Net Bookings increased as compared to the prior year period.

The increase was primarily due to an increase in Net Bookings from Match Factory!

, which released in November 2023, and Toon Blast.

These increases were partially offset by a decrease in Net Bookings from our Grand Theft Auto franchise, our hyper-casual mobile portfolio, our Red Dead Redemption franchise, which included our August 2023 release of Red Dead Redemption and Undead Nightmare, and Empires & Puzzles .

For the six months ended September 30, 2024, Net Bookings increased as compared to the prior year period.

For the three months ended December 31, 2024, Net Bookings increased as compared to the prior year period.

The increase was primarily due to an increase in Net Bookings from our NBA 2K franchise and Match Factory!

, which released in November 2023.

These increases were partially offset by a decrease in Net Bookings from our Grand Theft Auto franchise, Empires & Puzzles, and our Red Dead Redemption franchise.

For the nine months ended December 31, 2024, Net Bookings increased as compared to the prior year period.

The increase was primarily due to an increase in Net Bookings from Match Factory!

, Toon Blast , and TopSpin 2K25 , which released in April 2024.

These increases were partially offset by a decrease in Net Bookings from our hyper-casual mobile portfolio, our NBA 2K and Grand Theft Auto franchises, and Empires & Puzzles .

and Toon Blast .

These increases were partially offset by a decrease in Net Bookings from our Grand Theft Auto franchise, Empires & Puzzles , and our hyper-casual mobile portfolio.

Results of Operations

The following tables set forth, for the periods indicated, our Condensed Consolidated Statements of Operations, net revenue by platform, net revenue by distribution channel, and net revenue by content type:

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

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

2024 2023 2024 2023

11 unchanged sentences

Interest and other, net (21.0) (1.5) % (22.5) (1.6) % (71.1) (1.8) % (79.0) (2.0) %

Loss on fair value adjustments, net (1.2) (0.1) % (2.2) (0.2) % (4.3) (0.2) % (1.4) (0.1) %

Gain (loss) on fair value adjustments, net 0.2 — % (0.3) — % (4.1) (0.1) % (1.7) — %

Loss before income taxes (152.9) (11.1) % (152.3) (11.0) % (689.4) (17.1) % (958.2) (24.1) %

Provision for (benefit from) income taxes 41.2 3.0 % (33.4) (2.6) % 91.0 3.4 % (56.3) (2.2) %

(Benefit from) provision for income taxes (27.7) (2.0) % (60.7) (4.4) % 63.3 1.6 % (117.0) (3.0) %

Net loss $ (125.2) (9.1) % $ (91.6) (6.6) % $ (752.7) (18.7) % $ (841.2) (21.1) %

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

Full game and other 272.3 20.0 % 331.6 24.3 % 786.9 19.4 % 846.7 21.4 %

Three Months Ended September 30, 2024 Compared to September 30, 2023

Three Months Ended December 31, 2024 Compared to December 31, 2023

2024 % 2023 % Increase/

3 unchanged sentences

Game intangibles 171.1 12.6 % 230.1 16.8 % (59.0) (25.6) %

Licenses 97.2 7.2 % 102.8 7.9 % (5.6) (5.4) %

Internal royalties 103.1 7.6 % 134.1 9.8 % (31.0) (23.1) %

Licenses 88.8 6.5 % 73.0 5.3 % 15.8 21.6 %

Software development costs and royalties (1)

3 unchanged sentences

(1) Includes $2.6 and $6.3 of stock-based compensation expense in 2024 and 2023, respectively, in software development costs and royalties.

For the three months ended September 30, 2024, net revenue increased by $53.9 as compared to the prior year period.

The increase was primarily due to an increase in net revenue of $73.6 from Match Factory!, which released in November 2023,

and $35.6 from Toon Blast.

These increases were partially offset by a decrease in net revenue of (i) $27.4 from our Grand Theft Auto franchise, (ii) $21.8 from our NBA 2K franchise, and (iii) $13.1 from our Red Dead Redemption franchise, which included our August 2023 release of Red Dead Redemption and Undead Nightmare .

Net revenue from mobile increased by $94.0 and accounted for 54.7% of our total net revenue for three months ended September 30, 2024, as compared to 49.7% for the prior year period.

For the three months ended December 31, 2024, net revenue decreased by $6.5 as compared to the prior year period.

The decrease was primarily due to a decrease in net revenue of (i) $45.0 from our Grand Theft Auto franchise, (ii) $16.8 from our Red Dead Redemption franchise, and (iii) $11.9 from Empires & Puzzles .

These decreases were partially offset by an increase in net revenue of $63.1 from Match Factory!, which released in November 2023.

Net revenue from mobile increased by $24.9 and accounted for 53.8% of our total net revenue for the three months ended December 31, 2024, as compared to 51.7% for the prior year period.

The increase was primarily due to an increase in net revenue from Match Factory!.

and Toon Blast.

These increases were partially offset by a decrease in net revenue from Merge Dragons!

Net revenue from console games decreased by $55.6 and accounted for 36.3% of our total net revenue for the three months ended September 30, 2024, as compared to 42.1% for the prior year period.

The decrease in net revenue from console games was due to a decrease in net revenue from our Grand Theft Auto and NBA 2K franchises.

These decreases were partially offset by an increase in net revenue from our Borderlands franchise.

Net revenue from PC and other increased by $15.5 and accounted for 9.0% of our total net revenue for the three months ended September 30, 2024, as compared to 8.2% for the prior year period.

The increase in net revenue from PC and other was primarily due to an increase in net revenue from our Risk of Rain franchise , which was acquired in connection with our acquisition of Gearbox in June 2024 (refer to Note 13 - Acquisitions ), and our Borderlands, Grand Theft Auto, and NBA 2K franchises.

These increases were partially offset by a decrease in net revenue from our Red Dead Redemption franchise.

The increase was partially offset by a decrease in net revenue from our Grand Theft Auto franchise and Empires & Puzzles .

Net revenue from console games decreased by $39.7 and accounted for 37.4% of our total net revenue for the three months ended December 31, 2024, as compared to 40.1% for the prior year period.

The decrease in net revenue from console games was due to a decrease in net revenue from our Red Dead Redemption and Grand Theft Auto franchises, and LEGO 2K Drive .

These decreases were partially offset by an increase in net revenue from our WWE 2K franchise.

Net revenue from PC and other increased by $8.3 and accounted for 8.8% of our total net revenue for the three months ended December 31, 2024, as compared to 8.2% for the prior year period.

The increase in net revenue from PC and other was primarily due to an increase in net revenue from our NBA 2K franchise .

Recurrent consumer spending ("RCS") is generated from ongoing consumer engagement and includes revenue from virtual currency, add-on content, in-game purchases, and in-game advertising.

Net revenue from RCS increased by $78.6 and accounted for 79.7% of net revenue for the three months ended September 30, 2024, as compared to 77.0% of net revenue for the prior year period.

The increase in net revenue from RCS was primarily due to increases in net revenue from Match Factory!

and Toon Blast .

These increases were partially offset by a decrease in net revenue from our Grand Theft Auto and NBA 2K franchises .

Net revenue from full game and other decreased by $24.7 and accounted for 20.3% of net revenue for the three months ended September 30, 2024 as compared to 23.0% of net revenue for the prior year period.

The decrease in net revenue from full game and other was due primarily to a decrease in net revenue from our Grand Theft Auto, NBA 2K, and Red Dead Redemption franchises.

These decreases were partially offset by an increase in net revenue in our Borderlands and Mafia franchises.

Net revenue from digital online channels increased by $60.3 and accounted for 96.1% of our total net revenue for the three months ended September 30, 2024, as compared to 95.4% for the prior year period.

The increase was primarily due to increases in net revenue from Match Factory!

and Toon Blast.

These increases were partially offset by a decrease in net revenue in our Grand Theft Auto and NBA 2K franchises.

Net revenue from physical retail and other channels decreased by $6.4 and accounted for 3.9% of our total net revenue for the three months ended September 30, 2024, as compared to 4.6% for the same period in the prior year period.

The decrease in net revenue from physical retail and other channels was due primarily to a decrease in net revenue from our NBA 2K and WWE 2K franchises.

These decreases were partially offset by an increase in net revenue from physical retail and other channels from our Red Dead Redemption franchise.

Gross profit as a percentage of net revenue for the three months ended September 30, 2024 was 53.8% as compared to 32.0% for the prior year period.

The increase in gross profit as a percentage of net revenue was primarily due to (i) lower amortization of intangibles assets due primarily to impairment charges in the prior year for acquisition-related intangible assets and (ii) lower internal royalties due to the timing of when royalties are earned, partially offset by higher digital platform fees.

Changes in foreign currency exchange rates increased net revenue by $0.5 and increased gross profit by $0.2 for the three months ended September 30, 2024 as compared to the prior year period.

Net revenue from RCS increased by $52.8 and accounted for 80.0% of net revenue for the three months ended December 31, 2024, as compared to 75.7% of net revenue for the prior year period.

The increase in net revenue from RCS was primarily due to an increase in net revenue from Match Factory!

and our NBA 2K franchise.

These increases were partially offset by a decrease in net revenue from Empires & Puzzles and our Grand Theft Auto franchise .

Net revenue from full game and other decreased by $59.3 and accounted for 20.0% of net revenue for the three months ended December 31, 2024 as compared to 24.3% of net revenue for the prior year period.

The decrease in net revenue from full game and other was due primarily to a decrease in net revenue from our Grand Theft Auto and Red Dead Redemption franchises, and LEGO 2K Drive .

These decreases were partially offset by an increase in net revenue from our WWE 2K franchise.

Net revenue from digital online channels increased by $13.4 and accounted for 96.4% of our total net revenue for the three months ended December 31, 2024, as compared to 94.9% for the prior year period.

The increase was primarily due to an increase in net revenue from Match Factory!

and our NBA 2K franchise .

These increases were partially offset by a decrease in net revenue from our Grand Theft Auto franchise and Empires & Puzzles .

Net revenue from physical retail and other channels decreased by $19.9 and accounted for 3.6% of our total net revenue for the three months ended December 31, 2024, as compared to 5.1% for the same period in the prior year period.

The decrease in net revenue from physical retail and other channels was due primarily to a decrease in net revenue from our Red Dead Redemption and Grand Theft Auto franchises and LEGO 2K Drive .

Gross profit as a percentage of net revenue for the three months ended December 31, 2024 was 55.9% as compared to 49.7% for the prior year period.

Changes in foreign currency exchange rates decreased net revenue by $0.2 and decreased gross profit by $0.4 for the three months ended December 31, 2024 as compared to the prior year period.

Operating Expenses

2 unchanged sentences

Selling and marketing $ 388.9 28.6 % $ 367.3 26.9 % $ 21.6 5.9 %

General and administrative 253.0 18.7 % 178.3 13.7 % 74.7 41.9 %

Research and development 240.9 17.7 % 232.0 17.0 % 8.9 3.8 %

General and administrative 189.6 13.9 % 165.0 12.1 % 24.6 14.9 %

Depreciation and amortization 49.5 3.6 % 42.6 3.1 % 6.9 16.2 %

Goodwill impairment — — % 165.4 12.7 % (165.4) (100.0) %

Business reorganization 23.1 1.7 % 0.7 — % 22.4 3,200.0 %

3 unchanged sentences

Selling and marketing $ 22.4 $ 23.9

General and administrative 32.4 29.4

Research and development 26.1 26.9

Changes in foreign currency exchange rates increased total operating expenses by $1.2 for the three months ended September 30, 2024, as compared to the prior year period.

General and administrative 31.8 28.8

Changes in foreign currency exchange rates increased total operating expenses by $1.4 for the three months ended December 31, 2024, as compared to the prior year period.

Selling and marketing

Selling and marketing expenses increased by $126.7 for the three months ended September 30, 2024, as compared to the prior year period, due primarily to higher overall marketing expenses for Match Factory!, with no corresponding expense in the prior fiscal year , Game of Thrones:

Legends, and our NBA 2K franchise .

Selling and marketing expenses increased by $21.6 for the three months ended December 31, 2024, as compared to the prior year period, due primarily to (i) higher overall marketing expenses due primarily to Match Factory!, which released in November 2023, partially offset by lower marketing expenses for our hyper-casual mobile portfolio and our Grand Theft Auto franchise, and (ii) higher personnel expense due to increased headcount.

General and administrative

General and administrative expenses increased by $74.7 for the three months ended September 30, 2024, as compared to the prior year period, due primarily to increases in (i) legal fees and contingencies related to the IBM case against Zynga and (ii) personnel expense due to increased headcount.

General and administrative expenses for the three months ended September 30, 2024 and 2023 included occupancy expense (primarily rent, utilities and office expenses) of $19.2 and $16.8, respectively, related to our development studios.

General and administrative expenses increased by $24.6 for the three months ended December 31, 2024, as compared to the prior year period, due primarily to increases in (i) personnel expenses due to increased headcount, (ii) consulting expense, (iii) rent expense, and (iv) IT-related expenses for cloud-based services and IT infrastructure.

General and administrative expenses for the three months ended December 31, 2024 and 2023 included occupancy expense (primarily rent, utilities and office expenses) of $19.8 and $17.8, respectively, related to our development studios.

Research and development

Research and development expenses increased by $14.6 for the three months ended September 30, 2024, as compared to the prior year period, primarily due to increases in personnel expense due to increased headcount and IT-related expenses for cloud-based services and IT infrastructure, partially offset by additional R&D related credits related to certain titles.

Research and development expenses increased by $8.9 for the three months ended December 31, 2024, as compared to the prior year period, primarily due to increases in personnel expense due to increased headcount, partially offset by lower production and development expenses primarily due to our cost reduction program (refer to Note 15 - Business Reorganization ).

Depreciation and amortization

Depreciation and amortization expenses increased by $2.0 for the three months ended September 30, 2024, as compared to the prior year period, due primarily to increases in leasehold improvements for office buildouts and IT infrastructure.

Goodwill impairment

Goodwill impairment expenses decreased by $165.4 for the three months ended September 30, 2024, as compared to the prior year period, due to a partial impairment recognized related to one of our reporting units in the prior year (refer to Note 14 - Goodwill and Intangible Assets, Net ).

Depreciation and amortization expenses increased by $6.9 for the three months ended December 31, 2024, as compared to the prior year period, due primarily to increases in IT infrastructure expense and leasehold improvements for office buildouts.

Business reorganization

Business reorganization increased by $13.4 for the three months ended September 30, 2024, as compared to the prior year period, due primarily to the cancellation of titles and employee-related costs as part of our cost reduction program (refer to Note 15 - Business Reorganization ).

Business reorganization increased by $22.4 for the three months ended December 31, 2024, as compared to the prior year period, due primarily to losses on our divestitures, employee-related costs, and the cancellation of titles as part of our cost reduction program (refer to Note 15 - Business Reorganization ).

Interest and other, net

Interest and other, net was expense of $25.9 for the three months ended September 30, 2024, as compared to expense of $31.1 for the prior year period.

The net decrease in expense was due primarily to an increase in interest income primarily due

to increases in interest rates and a decrease in foreign currency losses.

These decreases in expense were partially offset by an increase in interest expense related to our debt transactions (refer to Note 9 - D ebt ).

Loss on fair value adjustments, net

Loss on fair value adjustments, net was a loss of $1.2 for the three months ended September 30, 2024 as compared to a loss of $2.2 for the prior year period.

Interest and other, net was expense of $21.0 for the three months ended December 31, 2024, as compared to expense of $22.5 for the prior year period.

The net decrease in expense was due primarily to an increase in interest income primarily due to increases in cash balances and a decrease in foreign currency losses.

These decreases in net expense were partially offset by an increase in interest expense related to our debt transactions (refer to Note 9 - Debt ).

Gain (loss) on fair value adjustments, net

Gain (loss) on fair value adjustments, net was a gain of $0.2 for the three months ended December 31, 2024 as compared to a loss of $0.3 for the prior year period.

The change was due primarily to changes in fair value based on the observable price changes of our long-term investments.

Provision for income taxes

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 and tax expense of $9.9 related to geographic mix of earnings offset by benefits of $17.2 from tax credits.

In the prior year period, when compared to the statutory rate of 21.0%, the effective tax rate of 5.8% for the three months ended September 30, 2023 was due primarily to tax expense of $56.3 related to an increase in the U.S.

valuation allowance, tax expense of $33.5 related to the impairment of nondeductible goodwill, $8.1 related to the revaluation of deferred taxes due to a change in the statutory tax rate in Turkey, offset by tax benefits of $21.6 from tax credits and by the geographic mix of earnings.

The change in the effective tax rate, when compared to the prior year period's effective tax rate, is due primarily to decreased tax expense related to the impairment of nondeductible goodwill, decreased tax expense related to the revaluation of deferred taxes due to statutory rate changes in the prior period, offset by increased tax expense from changes in valuation allowance, increased tax expense related to geographic mix of earnings, and decreased tax benefits from tax credits.

Benefit from income taxes

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.

In the prior year period, when compared to the statutory rate of 21.0%, the effective tax rate of 39.9% for the three months ended December 31, 2023 was due primarily to a tax benefit of $40.0 related to the changes in unrecognized tax

benefits from a lapse in statutes of limitation, 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 change in the effective tax rate, when compared to the prior year period's effective tax rate, is due primarily to decreased tax benefits related to changes in unrecognized tax benefits, increased tax expense from changes in the U.S.

and international valuation allowance, offset by increased tax benefits related to divestitures and increased tax benefits from employee-stock based compensation.

The accounting for share-based compensation will increase or decrease our effective tax rate based upon the difference between our share-based compensation expense and the deductions taken on our tax return, which depends on the stock price at the time of the employee award vesting.

6 unchanged sentences

Effective for tax years starting after December 31, 2026 (April 1, 2027 for the Company), the ARPA expands the limitation to cover the next five most highly compensated employees.

The ARPA did not have a material impact on our Condensed Consolidated Financial Statements for the three months ended September 30, 2024.

The ARPA did not have a material impact on our Condensed Consolidated Financial Statements for the three months ended December 31, 2024.

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

2 unchanged sentences

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.

1 unchanged sentence

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 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 months ended December 31, 2024.

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

Net loss and Loss per share

For the three months ended September 30, 2024, net loss was $365.5, as compared to a net loss of $543.6 in the prior year period.

Basic and diluted loss per share for the three months ended September 30, 2024 was $2.08, as compared to basic and diluted loss per share of $3.20 in the prior year period.

Basic weighted average shares of 175.4 were 5.5 shares higher as compared to the prior year period basic weighted average shares, due primarily to normal stock compensation activity.

For the three months ended December 31, 2024, net loss was $125.2, as compared to a net loss of $91.6 in the prior year period.

Basic and diluted loss per share for the three months ended December 31, 2024 was $0.71, as compared to basic and diluted loss per share of $0.54 in the prior year period.

Basic weighted average shares of 176.0 were 5.7 shares higher as compared to the prior year period basic weighted average shares, due primarily to stock issued as consideration for the acquisition of Gearbox, as well as normal stock compensation activity, including vests as well as grants and forfeitures in the prior year being fully outstanding in the current year.

See Note 10 - Loss Per Share to our Condensed Consolidated Financial Statements for additional information.

Six Months Ended September 30, 2024 Compared to September 30, 2023

Nine Months Ended December 31, 2024 Compared to December 31, 2023

2024 % 2023 % Increase/

3 unchanged sentences

Game intangibles 508.0 12.5 % 826.4 20.9 % (318.4) (38.5) %

Licenses 152.3 5.7 % 154.2 6.0 % (1.9) (1.2) %

Internal royalties 249.3 6.2 % 319.5 8.1 % (70.2) (22.0) %

Licenses 241.1 6.0 % 227.2 5.8 % 13.9 6.1 %

Software development costs and royalties (1)

3 unchanged sentences

(1) Includes $8.6 and $20.5 of stock-based compensation expense in 2024 and 2023, respectively, in software development costs and royalties.

For the six months ended September 30, 2024, net revenue increased by $107.4 as compared to the prior year period.

For the nine months ended December 31, 2024, net revenue increased by $100.9 as compared to the prior year period.

The increase was primarily due to an increase in net revenue of (i) $199.9 from Match Factory!

, which released in November 2023, (ii) $67.2 from Toon Blast , and (iii) $21.2 from TopSpin 2K25 , which released in April 2024.

The increase was partially offset by a decrease in net revenue of (i) $38.0 from our NBA 2K franchise, (ii) $27.3 from our Grand Theft Auto franchise , and (iii) $19.6 from our hyper-casual mobile portfolio.

Net revenue from mobile increased by $136.5 and accounted for 54.3% of our total net revenue for six months ended September 30, 2024, as compared to 51.3% for the prior year period.

, which released in November 2023, and (ii) $76.5 from Toon Blast .

These increases were partially offset by a decrease in net revenue of (i) $72.3 from our Grand Theft Auto franchise, (ii) $27.1 from our NBA 2K franchise, and (iii) $26.7 from our hyper-casual mobile portfolio.

Net revenue from mobile increased by $161.4 and accounted for 54.2% of our total net revenue for nine months ended December 31, 2024, as compared to 51.5% for the prior year period.

The increase was primarily due to an increase in net revenue from Match Factory!

and Toon Blast .

These increases were partially offset by a decrease in net revenue from our hyper-casual mobile portfolio.

Net revenue from console games decreased by $51.0 and accounted for 37.2% of our total net revenue for the six months ended September 30, 2024, as compared to 40.7% for the prior year period.

The decrease was due to a decrease in net revenue from our Grand Theft Auto and NBA 2K franchises.

These decreases were partially offset by an increase in net revenue from TopSpin 2K25 .

Net revenue from PC and other increased by $21.9 and accounted for 8.5% of our total net revenue for the six months ended September 30, 2024, as compared to 8.0% for the prior year period.

The increase was due to an increase in net revenue from our Risk of Rain franchise , which was acquired in connection with our acquisition of Gearbox in June 2024 (refer to Note 13 - Acquisitions ), our Grand Theft Auto franchise, and No Rest for the Wicked, which released for early access in April 2024.

These increases were partially offset by a decrease in net revenue from our Red Dead Redemption franchise, which included our August 2023 release of Red Dead Redemption and Undead Nightmare .

Recurrent consumer spending ("RCS") is generated from ongoing consumer engagement and includes revenue from virtual currency, add-on content, in-game purchases, and in-game advertising.

Net revenue from RCS increased by $107.9 and accounted for 80.9% of net revenue for the six months ended September 30, 2024, as compared to 80.1% of net revenue for the prior year period.

These increases were partially offset by a decrease in net revenue from our Grand Theft Auto franchise, our hyper-casual mobile portfolio, and Merge Dragons!

Net revenue from console games decreased by $90.7 and accounted for 37.2% of our total net revenue for the nine months ended December 31, 2024, as compared to 40.5% for the prior year period.

The decrease was primarily due to a decrease in net revenue from our Grand Theft Auto and NBA 2K franchises, and LEGO 2K Drive .

These decreases were partially offset by an increase in net revenue from TopSpin 2K25 , which released in April 2024.

Net revenue from PC and other increased by $30.2 and accounted for 8.6% of our total net revenue for the nine months ended December 31, 2024, as compared to 8.0% for the prior year period.

The increase was primarily due to an increase in net revenue from our Risk of Rain franchise , which was acquired in connection with our acquisition of Gearbox in June 2024 (refer to Note 13 - Acquisitions ), No Rest for the Wicked, which released for early access in April 2024, and our Grand Theft Auto franchise.

Net revenue from RCS increased by $160.7 and accounted for 80.6% of net revenue for the nine months ended December 31, 2024, as compared to 78.6% of net revenue for the prior year period.

The increase was primarily due to an increase in net revenue from Match Factory!

and Toon Blast.

These increases were partially offset by a decrease in net revenue from our Grand Theft Auto franchise, our hyper-casual mobile portfolio, Merge Dragons!, and our NBA 2K franchise.

Net revenue from full game and other decreased by $0.5 and accounted for 19.1% of net revenue for the six months ended September 30, 2024 as compared to 19.9% of net revenue for the prior year period.

The decrease was due to a decrease in net revenue from our NBA 2K franchise .

This decrease was partially offset by an increase in net revenue from TopSpin 2K25.

Net revenue from digital online channels increased by $115.8 and accounted for 96.4% of our total net revenue for the six months ended September 30, 2024, as compared to 96.0% for the prior year period.

These increases were partially offset by a decrease in net revenue from our Grand Theft Auto franchise, our hyper-casual mobile portfolio, Merge Dragons!, and Golf Rival .

Net revenue from full game and other decreased by $59.8 and accounted for 19.4% of net revenue for the nine months ended December 31, 2024 as compared to 21.4% of net revenue for the prior year period.

The decrease was primarily due to a decrease in net revenue from our Grand Theft Auto and NBA 2K franchise .

Net revenue from digital online channels increased by $129.2 and accounted for 96.4% of our total net revenue for the nine months ended December 31, 2024, as compared to 95.6% for the prior year period.

The increase was primarily due to an increase in net revenue from Match Factory!

and Toon Blast.

This increase was partially offset by a decrease in net revenue

from our NBA 2K and Grand Theft Auto franchises, and our hyper-casual mobile portfolio.

Net revenue from physical retail and other channels decreased by $8.4 and accounted for 3.6% of our total net revenue for the six months ended September 30, 2024, as compared to 4.0% for the same period in the prior year period.

The decrease in net revenue from physical retail and other channels was due primarily to a decrease in net revenue from our NBA 2K franchise and LEGO 2K Drive.

These decreases were partially offset by an increase in net revenue from TopSpin 2K25.

Gross profit as a percentage of net revenue for the six months ended September 30, 2024 was 55.8% as compared to 42.3% for the prior year period.

These increases were partially offset by a decrease in net revenue from our Grand Theft Auto franchise and our hyper-casual mobile portfolio.

Net revenue from physical retail and other channels decreased by $28.3 and accounted for 3.6% of our total net revenue for the nine months ended December 31, 2024, as compared to 4.4% for the same period in the prior year period.

The decrease in net revenue from physical retail and other channels was due primarily to a decrease in net revenue from our NBA 2K and Red Dead Redemption franchises, and LEGO 2K Drive.

Gross profit as a percentage of net revenue for the nine months ended December 31, 2024 was 55.7% as compared to 44.9% for the prior year period.

The increase in gross profit as a percentage of net revenue was primarily due to lower amortization of intangible assets due primarily to impairment charges in the prior year for acquisition-related intangible assets.

Changes in foreign currency exchange rates decreased net revenue by $0.8 and decreased gross profit by $0.4 for the six months ended September 30, 2024 as compared to the prior year period.

Changes in foreign currency exchange rates decreased net revenue by $0.9 and decreased gross profit by $0.7 for the nine months ended December 31, 2024 as compared to the prior year period.

Operating Expenses

13 unchanged sentences

General and administrative 92.2 82.3

Changes in foreign currency exchange rates decreased total operating expenses by $0.8 for the six months ended September 30, 2024, as compared to the prior year period.

Changes in foreign currency exchange rates increased total operating expenses by $0.8 for the nine months ended December 31, 2024, as compared to the prior year period.

Selling and marketing

Selling and marketing expenses increased by $158.7 for the six months ended September 30, 2024, as compared to the prior year period, due primarily to higher overall marketing expenses for Match Factory!, with no corresponding expense in the prior fiscal year.

Selling and marketing expenses increased by $180.3 for the nine months ended December 31, 2024, as compared to the prior year period, due primarily to higher overall marketing expenses for Match Factory!, which released in November 2023.

Research and development

Research and development expenses decreased by $4.2 for the six months ended September 30, 2024, as compared to the prior year period, due primarily to the timing of tax related credits for certain titles, partially offset by an increase in personnel expense due to increased headcount and IT-related expenses for cloud-based services and IT infrastructure.

Research and development expenses increased by $4.7 for the nine months ended December 31, 2024, as compared to the prior year period, due primarily to increases in (i) personnel expense due to increased headcount and (ii) IT-related expenses for cloud-based services and IT infrastructure, partially offset by the timing of tax related credits for certain titles.

General and administrative

General and administrative expenses increased by $87.3 for the six months ended September 30, 2024, as compared to the prior year period, due to increases in (i) legal fees and contingencies related to the IBM case against Zynga, (ii) personnel expense due to increased headcount, and (iii) IT-related expenses for cloud-based services and IT infrastructure.

General and administrative expenses for the six months ended September 30, 2024 and 2023 included occupancy expense (primarily rent, utilities and office expenses) of $36.4 and $33.6, respectively, related to our development studios.

General and administrative expenses increased by $111.9 for the nine months ended December 31, 2024, as compared to the prior year period, due to increases in (i) legal fees and contingencies related to the IBM case against Zynga, (ii) personnel expense due to increased headcount, and (iii) IT-related expenses for cloud-based services and IT infrastructure.

General and administrative expenses for the nine months ended December 31, 2024 and 2023 included occupancy expense (primarily rent, utilities and office expenses) of $56.2 and $51.4, respectively, related to our development studios.

Depreciation and amortization

Depreciation and amortization expenses increased by $6.4 for the six months ended September 30, 2024, as compared to the prior year period, primarily due to an increase in IT infrastructure and leasehold improvements for office buildouts.

Depreciation and amortization expenses increased by $13.3 for the nine months ended December 31, 2024, as compared to the prior year period, due primarily to increases in IT infrastructure expense and leasehold improvements for office buildouts.

Goodwill impairment

Goodwill impairment expenses decreased by $165.4 for the six months ended September 30, 2024, as compared to the prior year period, due to a partial impairment recognized related to one of our reporting units in the prior year (refer to Note 14 - Goodwill and Intangible Assets, Net ).

Goodwill impairment expenses decreased by $165.4 for the nine months ended December 31, 2024, as compared to the prior year period, due to a partial impairment recognized related to one of our reporting units in the prior year (refer to Note 14 - Goodwill and Intangible Assets, Net ).

Business reorganization

Business reorganization increased by $55.7 for the six months ended September 30, 2024, as compared to the prior year period, due primarily to the cancellation of titles and employee-related costs as part of our cost reduction program (refer to Note 15 - Business Reorganization ).

Business reorganization increased by $78.1 for the nine months ended December 31, 2024, as compared to the prior year period, due primarily to employee-related costs, the cancellation of titles, and losses on our divestitures as part of our cost reduction program (refer to Note 15 - Business Reorganization ).

Interest and other, net

Interest and other, net was expense of $50.1 for the six months ended September 30, 2024, as compared to $56.5 for the prior year period.

The net decrease in expense was due primarily to an increase in interest income primarily due to increases in interest rates and a decrease in foreign currency losses.

These decreases in expense were partially offset by an increase in interest expense related to our debt transactions (refer to Note 9 - Debt ) and a gain on debt extinguishment recognized in the prior year on the partial repayment of our 2024 Notes.

Loss on fair value adjustments, net

Loss on fair value adjustments, net was $4.3 for the six months ended September 30, 2024 as compared to $1.4 for the prior year period.

Interest and other, net was expense of $71.1 for the nine months ended December 31, 2024, as compared to $79.0 for the prior year period.

The net decrease in expense was due primarily to an increase in interest income primarily due to increases in interest rates and cash balances.

These decreases in net expense were partially offset by increases in foreign currency losses, interest expense related to our debt transactions (refer to Note 9 - Debt ) and a gain on debt extinguishment recognized in the prior year on the partial repayment of our 2024 Notes.

Gain (loss) on fair value adjustments, net

Gain (loss) on fair value adjustments, net was a loss of $4.1 for the nine months ended December 31, 2024 as compared to a loss of $1.7 for the prior year period.

The change was due primarily to changes in fair value based on the observable price changes of our long-term investments.

Provision for Income Taxes

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 the U.S.

valuation allowance, tax expense of $18.1 related to geographic mix of earnings offset by benefits of $35.0 from tax credits.

In the prior year period, when compared to the statutory rate of 21.0%, the effective tax rate of 7.0% for the six months ended September 30, 2023 was due primarily to tax expense of $81.6 related to an increase in the U.S.

valuation allowance, tax expense of $33.5 related to the impairment of nondeductible goodwill, $8.1 related to the revaluation of deferred taxes due to a change in the statutory tax rate in Turkey, offset by tax benefits of $42.0 from tax credits and by the geographic mix of earnings.

The change in the effective tax rate, when compared to the prior year period's effective tax rate, is due primarily to decreased tax expense related to the impairment of nondeductible goodwill, decreased tax expense related to the revaluation of deferred taxes due to statutory rate changes in the prior period and decreased tax expense from employee stock-based compensation, offset by increased tax expense from changes in valuation allowance, increased tax expense related to geographic mix of earnings, and decreased tax benefits from tax credits.

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 a tax expense of $220.5 related to an increase in the U.S.

and international valuation allowances and 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.

In the prior year period, when compared to the statutory rate of 21.0%, 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 statutes of limitation.

The change in the effective tax rate, when compared to the prior year period's effective tax rate, is due primarily to increased tax expense from changes in the US and international valuation allowance, decreased tax benefits related to changes in unrecognized tax benefits, increased tax expense related to geographic mix of earnings, offset by decreased tax expense related to the impairment of nondeductible goodwill, increased tax benefits related to divestitures, and increased tax benefits from employee stock-based compensation.

6 unchanged sentences

Effective for tax years starting after December 31, 2026 (April 1, 2027 for the Company), the ARPA expands the limitation to cover the next five most highly compensated employees.

The ARPA did not have a material impact on our Condensed Consolidated Financial

Statements for the six months ended September 30, 2024.

The ARPA did not have a material impact on our Condensed Consolidated Financial Statements for the nine months ended December 31, 2024.

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

2 unchanged sentences

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.

1 unchanged sentence

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 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 nine months ended December 31, 2024.

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

Net loss and loss per share

For the six months ended September 30, 2024, net loss was $627.5, as compared to net loss of $749.6 in the prior year period.

For the six months ended September 30, 2024, basic and diluted loss per share was $3.61 as compared to basic and diluted loss per share of $4.42 in the prior year period.

Basic weighted average shares of 173.8 were 4.2 shares higher as compared to the prior year period basic weighted average shares, due primarily to normal stock compensation activity, including vests as well as grants and forfeitures in the prior year being fully outstanding in the current year, as well as stock issued as consideration for the acquisition of Gearbox.

For the nine months ended December 31, 2024, net loss was $752.7, as compared to net loss of $841.2 in the prior year period.

For the nine months ended December 31, 2024, basic and diluted loss per share was $4.31 as compared to basic and diluted loss per share of $4.95 in the prior year period.

Basic weighted average shares of 174.5 were 4.6 shares higher as compared to the prior year period basic weighted average shares, due primarily to stock issued as consideration for the acquisition of Gearbox, as well as normal stock compensation activity, including vests as well as grants and forfeitures in the prior year being fully outstanding in the current year.

See Note 10 - Loss Per Share to our Condensed Consolidated Financial Statements for additional information.

4 unchanged sentences

Short-term investments

As of September 30, 2024, we had $3.5 of short-term investments, which primarily consisted of bank time deposits with maturities greater than 90 days.

As of December 31, 2024, we had $3.3 of short-term investments, which primarily consisted of bank time deposits with maturities greater than 90 days.

From time to time, we may make additional short-term investments depending on future market conditions and liquidity needs.

As of September 30, 2024, we had $3,650.0 of Senior Notes outstanding.

As of December 31, 2024, we had $3,650.0 of Senior Notes outstanding.

Credit Agreement

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

As of December 31, 2024, there were no borrowings under the 2022 Credit Agreement, and we had approximately $747.8 available for additional borrowings.

Convertible Notes

1 unchanged sentence

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.

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

Financial Condition

5 unchanged sentences

A majority of our trade receivables are derived from sales to major retailers, including digital storefronts and platform partners, and distributors.

Our five largest customers accounted for 82.2% and 79.5% of net revenue during the six months ended September 30, 2024 and 2023, respectively.

As of September 30, 2024 and March 31, 2024, five customers accounted for 77.4% and 69.9% of our gross accounts receivable, respectively.

Customers that individually accounted for more than 10% of our gross accounts receivable balance comprised 67.2% and 57.7% of such balances at September 30, 2024 and March 31, 2024, respectively.

We had three customers who accounted for 33.9%, 17.8%, and 15.5% of our gross accounts receivable as of September 30, 2024, and three customers who accounted for 21.8%, 18.1%, and 16.9% of our gross accounts receivable as of March 31, 2024.

We did not have any additional customers that exceeded 10% of our gross accounts receivable as of September 30, 2024, and March 31, 2024.

Our five largest customers accounted for 81.8% and 79.2% of net revenue during the nine months ended December 31, 2024 and 2023, respectively.

As of December 31, 2024 and March 31, 2024, five customers accounted for 74.6% and 69.9% of our gross accounts receivable, respectively.

Customers that individually accounted for more than 10% of our gross accounts receivable balance comprised 61.4% and 57.7% of such balances at December 31, 2024 and March 31,

2024, respectively.

We had three customers who accounted for 25.1%, 21.5%, and 14.8% of our gross accounts receivable as of December 31, 2024, and three customers who accounted for 21.8%, 18.1%, and 16.9% of our gross accounts receivable as of March 31, 2024.

We did not have any additional customers that exceeded 10% of our gross accounts receivable as of December 31, 2024, and March 31, 2024.

Based upon performing ongoing credit evaluations, maintaining trade credit insurance on a majority of our customers who sell our physical products, and our past collection experience, we believe that the receivable balances from these largest customers do not represent a significant credit risk, although we actively monitor each customer's creditworthiness and economic conditions that may affect our customers' business and access to capital.

1 unchanged sentence

We believe that our current cash and cash equivalents, short-term investments, and projected cash flow from operations, along with availability under our 2022 Credit Agreement will provide us with sufficient liquidity to satisfy our cash requirements for working capital, capital expenditures, and commitments on both a short-term and long-term basis.

As of September 30, 2024, the amount of cash and cash equivalents held outside of the U.S.

As of December 31, 2024, the amount of cash and cash equivalents held outside of the U.S.

by our foreign subsidiaries was $804.9.

6 unchanged sentences

The program does not require us to repurchase shares and may be suspended or discontinued at any time for any reason.

During the three months ended September 30, 2024, we did not repurchase shares of our common stock in the open market, as part of the program.

We have repurchased a total of 11.7 shares of our common stock under the program, and as of September 30, 2024, 10.0 shares of our common stock remained available for repurchase under the share repurchase program.

During the three months ended December 31, 2024, we did not repurchase shares of our common stock in the open market, as part of the program.

We have repurchased a total of 11.7 shares of our common stock under the program, and as of December 31, 2024, 10.0 shares of our common stock remained available for repurchase under the share repurchase program.

Our changes in cash flows were as follows:

Six Months Ended

September 30,

Nine Months Ended December 31,

(millions of dollars) 2024 2023

4 unchanged sentences

Net change in cash, cash equivalents, and restricted cash and cash equivalents $ 206.9 $ (44.8)

At September 30, 2024, we had $1,319.6 of cash and cash equivalents and restricted cash and cash equivalents, compared to $1,102.0 at March 31, 2024.

At December 31, 2024, we had $1,308.9 of cash and cash equivalents and restricted cash and cash equivalents, compared to $1,102.0 at March 31, 2024.

The increase was primarily due to Net cash provided by financing activities, primarily related to proceeds from the issuance of our 2029 Notes and 2034 Notes (refer to Note 9 - Debt ).

This increase was partially offset by the decrease in (i) Net cash used in operating activities, which was due primarily to investments in software

development and licenses, partially offset by sales of our products and (ii) Net cash used in investing activities which was due primarily to the purchase of fixed assets and our immaterial investments.

This increase was partially offset by the decrease in (i) Net cash used in operating activities, which was due primarily to investments in software development and licenses, partially offset by sales of our products and (ii) Net cash used in investing activities which was due primarily to the purchase of fixed assets.

Refer to Note 11 - Commitments and Contingencies for disclosures regarding our commitments.

1 unchanged sentence

In fiscal year 2025, we anticipate capital expenditures to be approximately $150.0.

During the six months ended September 30, 2024, capital expenditures were $71.9.

During the nine months ended December 31, 2024, capital expenditures were $115.3.

International Operations

Net revenue earned outside of the United States is principally generated by our operations in Europe, Asia, Australia, Canada, and Latin America.

For the three months ended September 30, 2024 and 2023, 39.8% and 38.8%, respectively, of our net revenue was earned outside the United States.

We are subject to risks inherent in foreign trade, including increased credit risks, tariffs and duties, fluctuations in foreign currency exchange rates, shipping delays and international political, regulatory and economic developments, all of which can have a significant effect on our operating results.

For the three months ended December 31, 2024 and 2023, 39.3% and 40.1%, respectively, of our net revenue was earned outside the United States.

We are subject to risks inherent in foreign trade, including increased credit

risks, tariffs and duties, fluctuations in foreign currency exchange rates, shipping delays and international political, regulatory and economic developments, all of which can have a significant effect on our operating results.

Fluctuations in Quarterly Operating Results and Seasonality

5 unchanged sentences

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 2. Management’s Discussion and Analysis