What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-05-22 compared with 2025-05-20 · 119 added, 127 removed, 192 unchanged (56% of the section changed)

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

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

Our products are currently designed for console gaming systems, mobile, including smartphones and tablets, and personal computer ("PC").

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

We are continually innovating the design and development of our products, including by investing in artificial intelligence ("AI") tools and technologies, in order to enhance game play, anticipate changes in consumer behavior, and evolve our business as new dynamics develop.

Refer to Item 1 - Business for additional discussion.

During the fiscal year ended March 31, 2025, we recognized Goodwill impairment charges of $3,545.2, representing a partial impairment related to one of our reporting units, and we recognized impairment charges of $137.0 for acquisition-related Developed Game Technology intangible assets within Cost of revenue and $39.3 for acquisition-related Branding and Trade Names intangible assets within Depreciation and amortization.

The impairment charges are a result of a reduction in the forecasted performance of certain games due to industry conditions and changes in our strategies in response to those conditions.

Key assumptions and estimates used in deriving the fair values of these assets are forecasted revenue, EBITDA margins, long-term decay rate, and discount rate (refer to Note 9 - Goodwill and Intangible Assets, Net ).

Future changes in those key assumptions and estimates could result in additional impairments.

During the fiscal year ended March 31, 2025, we also recognized impairment charges related to our Software development costs and licenses of $77.5, of which $35.1 related to title cancellations as part of our cost reduction program (refer to Note 7 - Software Development Costs and Licenses and Note 21 - Business Reorganization) .

Trends and Factors Affecting our Business

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

Rockstar plans to release Grand Theft Auto VI on November 19, 2026.

Economic Environment and Retailer Performance.

We continue to monitor various macroeconomic and geopolitical factors, such as global tariff policy, that may affect our business in several areas, including consumer demand, inflation, pricing pressure on our products, credit quality of our receivables, and foreign currency exchange rates.

We continue to monitor various macroeconomic and geopolitical factors, such as global tariff policies, that may affect our business in several areas, including consumer demand, inflation, pricing pressure on our products and third party hardware platforms, credit quality of our receivables, and foreign currency exchange rates.

Actions we have taken to date and other potential actions we may take in the future in response to these factors could result in negative impacts in future periods.

The economic environment has affected our customers in the past and may do so in the future.

There has been increased consolidation in our industry, as larger, better capitalized competitors will be in a stronger position to withstand prolonged periods of economic downturn and sustain their business through the financial volatility.

Also, bankruptcies or consolidations of our large retail customers could seriously hurt our business, due to uncollectible accounts receivable and the concentration of purchasing power among the remaining large retailers.

There has been increased consolidation in our industry, which is extremely competitive, and larger, better capitalized competitors will be in a stronger position to withstand prolonged periods of economic downturn and sustain their business through periods of financial volatility.

Also, bankruptcies or consolidations of our large retail customers could hurt our business, due to uncollectible accounts receivable and the concentration of purchasing power among the remaining large retailers.

Hardware Platforms.

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 37.3% of our net revenue by product platform for the fiscal year ended March 31, 2025.

The success of our business is dependent upon consumer acceptance of these platforms and

the continued growth in the installed base of these platforms, which could be impacted by global economic factors, including global tariff policy.

Such console revenue comprised 39.0% of our net revenue for the fiscal year ended March 31, 2026.

The success of our business is dependent upon consumer acceptance of these platforms and the continued growth in the installed base of these platforms, which has been and could be impacted by global economic factors, including global tariff policies.

When new hardware platforms are introduced, demand for interactive entertainment developed for older platforms typically declines, which may negatively affect our business during the market transition to the new consoles.

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However, we cannot be certain how backwards compatibility will affect demand for our products.

Further, events beyond our control may impact the availability of these new consoles, which may also affect demand.

We manage our product delivery on each current and future platform in a manner we believe to be most effective to maximize our revenue opportunities and achieve the desired return on our investments in product development.

Further, events beyond our control may impact the availability or pricing of consoles, which may also affect demand for our products.

We manage our product delivery on each current and future platform in a manner we believe to be most effective to maximize our revenue opportunities and

achieve the desired return on our investments in product development.

Accordingly, our strategy for these platforms is to focus our development efforts on a select number of the highest quality titles.

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Principally for our mobile titles, we use advertising and other forms of player acquisition and retention to grow and retain our player audience.

These expenditures, which are recorded within Sales and marketing in our Consolidated Statements of Operations, generally relate to the promotion of new game launches and ongoing performance-based programs to drive new player acquisition and lapsed player reactivation.

These expenditures, which are recorded within Selling and marketing in our Consolidated Statements of Operations, generally relate to the promotion of new game launches and ongoing performance-based programs to drive new player acquisition and lapsed player reactivation.

Over time, the effectiveness or cost of these acquisition and retention-related programs may change, affecting our operating results.

Content Release Highlights

During fiscal year 2025, 2K released NBA 2K25 , TopSpin 2K25 , Sid Meier's Civilization VII , PGA TOUR 2K25 , and WWE 2K25 , and Zynga released Game of Thrones:

Rockstar plans to release Grand Theft Auto VI on May 26, 2026.

During fiscal year 2026, 2K released Mafia:

The Old Country , NBA 2K26, Borderlands 4 , and WWE 2K26 .

Rockstar plans to release Grand Theft Auto VI on November 19, 2026.

Fiscal 2026 Financial Summary

Our net revenue for the fiscal year ended March 31, 2025 was led by a variety of our top franchises, primarily NBA 2K, Grand Theft Auto , Red Dead Redemption , WWE 2K , and Sid Meier's Civilization, as well as top contributors Toon Blast , our hyper-casual mobile portfolio, Empires & Puzzles , Match Factory!

, and Words With Friends.

Our net revenue for the fiscal year ended March 31, 2026 was led by a variety of our top franchises, primarily NBA 2K , Grand Theft Auto , Borderlands , Red Dead Redemption , and WWE 2K , as well as our top mobile contributors, primarily Toon Blast , Match Factory!

, Empires & Puzzles , and Color Block Jam .

Our net revenue for the fiscal year ended March 31, 2026 was $6,656.4, an increase of $1,022.8 or 18.2% compared to the fiscal year ended March 31, 2025.

Our operating loss for the fiscal year ended March 31, 2025 was $4,391.1 compared to operating loss of $3,590.6 for fiscal year ended March 31, 2024, primarily due to an increase in Goodwill impairment charges of $1,203.1 related to an additional partial impairment related to one of our reporting units.

Our operating loss for the fiscal year ended March 31, 2026 was $104.2 compared to operating loss of $4,391.1 for fiscal year ended March 31, 2025, primarily driven by Goodwill impairment charges of $3,545.2 in the prior year, with no corresponding expense in the current year, as well as, higher sales of our products.

For the fiscal year ended March 31, 2026, our net loss was $298.2, as compared to net loss of $4,478.9 in the prior year.

Diluted loss per share for the fiscal year ended March 31, 2025 was $25.58, as compared to Diluted loss per share of $22.01 for the fiscal year ended March 31, 2024.

Basic and diluted loss per share for the fiscal year ended March 31, 2026 was $1.62, as compared to Basic and diluted loss per share of $25.58 for the fiscal year ended March 31, 2025.

At March 31, 2026, we had $1,638.1 of Cash, cash equivalents, and restricted cash and cash equivalents, compared to $1,559.2 at March 31, 2025.

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 11 - Debt ) and the issuance of common stock.

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

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

("Gearbox"), from Embracer Group AB, for an initial consideration of 2.8 shares of our common stock (refer to Note 20 - Acquisitions ).

This increase was primarily driven by proceeds from our May 2025 underwritten public offering of common stock (refer to Note 12 - Loss Per Share ) and positive cash flow from product sales.

These increases were partially offset by the repayment of our 2025 Notes and 2026 Notes (refer to Note 11 - Debt ), as well as continued investments in software, fixed assets, and short-term investments.

Critical Accounting Policies and Estimates

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We monitor Net Bookings as a key operating metric in evaluating the performance of our business.

Net Bookings is defined as the net amount of products and services sold digitally or sold-in physically during the period and includes licensing fees, merchandise, in-game advertising, strategy guides, and publisher incentives.

Net Bookings were as follows:

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Net Bookings $ 6,721.0 5,648.0 $ 1,073.0 19.0 %

For the fiscal year ended March 31, 2025, Net Bookings increased by $315.0 as compared to the prior year.

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

our Sid Meier's Civilization franchise, the latest installment of which, Civilization VII , released in February 2025;

our NBA 2K franchise;

and TopSpin 2K25 , which released in April 2024.

These increases were partially offset by a decrease in Net Bookings from Empires & Puzzles, our Grand Theft Auto franchise, our hyper- and hybrid-casual mobile portfolio, and LEGO 2K Drive , which released in May 2023.

For the fiscal year ended March 31, 2026, Net Bookings increased by $1,073.0 as compared to the prior year period.

The increase was primarily driven by higher Net Bookings from our NBA 2K franchise, our Borderlands franchise, the latest installment of which, Borderlands 4 , released in September 2025;

Color Block Jam , which released in November 2024;

and our Grand Theft Auto franchise.

Results of Operations

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For the comparison of fiscal year 2025 to fiscal year 2024, refer to Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended March 31, 2025.

The following table sets forth, for the periods indicated, our statements of operations, net revenue by content type, net revenue by platform, and net revenue by distribution channel:

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

Fiscal Year Ended March 31,

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Research and development

1,074.6 16.1 % 1,005.2 17.8 % 948.2 17.7 %

General and administrative

874.4 13.1 % 883.3 15.7 % 716.1 13.4 %

Depreciation and amortization 198.5 3.0 % 229.4 4.1 % 171.2 3.2 %

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Total operating expenses 3,913.9 58.7 % 7,453.3 132.3 % 5,832.4 109.0 %

Loss from operations (4,391.1) (78.0) % (3,590.6) (67.1) % (1,165.2) (21.8) %

Income (loss) from operations (104.2) (1.5) % (4,391.1) (78.0) % (3,590.6) (67.1) %

Interest and other, net (93.6) (1.4) % (100.2) (1.8) % (112.2) (2.1) %

Loss on fair value adjustments, net (6.9) (0.1) % (8.6) (0.2) % (31.0) (0.6) %

Loss before income taxes (197.8) (2.9) % (4,491.3) (79.8) % (3,702.8) (69.2) %

(Benefit from) provision for income taxes (12.4) (0.2) % 41.4 0.8 % (213.4) (4.0) %

Provision for (benefit from) income taxes 100.4 1.5 % (12.4) (0.2) % 41.4 0.8 %

Net loss (298.2) (4.4) % (4,478.9) (80.0) % (3,744.2) (70.0) %

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Game intangibles 662.2 9.9 % 811.0 14.4 % (148.8) (18.3) %

Internal royalties 405.4 7.2 % 397.6 7.4 % 7.8 2.0 %

Licenses 463.5 7.0 % 365.8 6.5 % 97.7 26.7 %

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439.8 6.6 % 168.1 3.0 % 271.7 161.6 %

Internal royalties 417.4 6.3 % 405.4 7.2 % 12.0 3.0 %

Cost of revenue 2,846.7 42.8 % 2,571.4 45.7 % 275.3 10.7 %

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(1) Includes $(27.9) and $9.4 of stock-based compensation expense in fiscal year 2026 and 2025, respectively.

For the fiscal year ended March 31, 2025, net revenue increased by $284.0, as compared to the prior year.

The increase was primarily due to an increase in net revenue of $237.1 from Match Factory!

, which released in November 2023;

$127.2 from our Sid Meier's Civilization franchise, the latest installment of which, Civilization VII , released in February 2025;

and $84.2 from Toon Blast .

These increases were partially offset by a decrease in net revenue of $73.3 from our Grand Theft Auto franchise.

For the fiscal year ended March 31, 2026, net revenue increased by $1,022.8, as compared to the prior year period.

The increase was primarily driven by higher net revenue of $416.9 from our NBA 2K franchise;

$210.3 from our Borderlands franchise, the latest installment of which, Borderlands 4 , released in September 2025;

$206.6 from Color Block Jam , which released in November 2024;

$121.9 from Toon Blast ;

and $115.1 from our Grand Theft Auto 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 recurrent consumer spending increased by $261.1 and accounted for 79.4% of net revenue for the fiscal year ended March 31, 2025, as compared to 78.8% for the prior year.

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.

Net revenue from full game and other increased by $22.9 and accounted for 20.6% of net revenue for the fiscal year ended March 31, 2025, as compared to 21.2% for the prior year.

The increase was primarily due to an increase in net revenue from our Sid Meier's Civilization franchise and TopSpin 2K25 .

These increases were partially offset by a decrease in net revenue from our NBA 2K franchise , a decrease as a result of a divestiture in our business, and a decrease in our Grand Theft Auto franchise.

Net revenue from mobile increased by $194.0 and accounted for 52.2% of our total net revenue in the fiscal year ended March 31, 2025, as compared to 51.4% in the prior year.

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 our Grand Theft Auto franchise, Merge Dragons!, and as a result of a divestiture.

Net revenue from console games decreased by $68.2 and accounted for 37.3% of our total net revenue in the fiscal year ended March 31, 2025, as compared to 40.5% in the prior year.

The decrease was primarily due to a decrease in net revenue from our Grand Theft Auto and NBA 2K franchises, and LEGO 2K Drive , which released in May 2023 .

These decreases were partially offset by an increase in net revenue from TopSpin 2K25 , which released in April 2024, and our Sid Meier's Civilization franchise.

Net revenue from PC and other increased by $158.2 and accounted for 10.5% of our total net revenue in the fiscal year ended March 31, 2025, as compared to 8.1% in the prior year.

The increase was primarily due to an increase in net revenue from our Sid Meier's Civilization franchise ;

our Risk of Rain franchise , which was acquired in connection with our acquisition of Gearbox in June 2024 (refer to Note 20 - Acquisitions );

and our Grand Theft Auto and NBA 2K franchises.

Net revenue from digital online channels increased by $319.6 and accounted for 96.4% of our total net revenue for the fiscal year ended March 31, 2025, as compared to 95.6% in the prior year.

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

, our Sid Meier's Civilization franchise, and Toon Blast.

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

Net revenue from physical retail and other channels decreased by $35.6 and accounted for 3.6% of our total net revenue for the fiscal year ended March 31, 2025, as compared to 4.4% for the prior year.

The decrease was primarily due 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 fiscal year ended March 31, 2025 was 54.3%, as compared to 41.9% in the prior year.

The increase was primarily due to lower impairment charges related to intangible assets related to our Zynga acquisition (refer to Note 9 - Goodwill and Intangible Assets, net ).

Changes in foreign currency exchange rates decreased net revenue by $2.5 and increased gross profit by $0.2, respectively, in the fiscal year ended March 31, 2025 as compared to the prior year.

Net revenue from recurrent consumer spending increased by $722.0 and accounted for 78.1% of net revenue for the fiscal year ended March 31, 2026, as compared to 79.4% for the prior year period.

The increase was primarily driven by higher net revenue from our NBA 2K franchise and Color Block Jam .

Net revenue from full game and other increased by $300.8 and accounted for 21.9% of net revenue for the fiscal year ended March 31, 2026, as compared to 20.6% for the prior year period.

The increase was primarily driven by higher net revenue from our Borderlands and Grand Theft Auto franchises, and our Mafia franchise, the latest installment of which, Mafia:

The Old Country released in August 2025, partially offset by lower net revenue from our Sid Meier's Civilization franchise, the latest installment of which, Civilization VII , released in February 2025.

Net revenue from mobile increased by $391.0 and accounted for 50.1% of our total net revenue in the fiscal year ended March 31, 2026, as compared to 52.2% in the prior year period.

The increase was primarily driven by higher net revenue from Color Block Jam and Toon Blast .

Net revenue from console games increased by $498.2 and accounted for 39.0% of our total net revenue in the fiscal year ended March 31, 2026, as compared to 37.3% in the prior year period.

The increase was primarily driven by higher net revenue from our NBA 2K and Borderlands franchises.

Net revenue from PC and other increased by $133.6 and accounted for 10.9% of our total net revenue in the fiscal year ended March 31, 2026, as compared to 10.5% in the prior year period.

The increase was primarily driven by higher net revenue from our Borderlands , Grand Theft Auto , and NBA 2K franchises, partially offset by lower net revenue from our Sid Meier's Civilization franchise.

Net revenue from digital online channels increased by $1,027.9 and accounted for 97.0% of our total net revenue for the fiscal year ended March 31, 2026, as compared to 96.4% in the prior year period.

The increase was primarily driven by higher net revenue from our NBA 2K franchise, Color Block Jam , our Borderlands and Grand Theft Auto franchises, and Toon Blast .

Net revenue from physical retail and other channels decreased by $5.1 and accounted for 3.0% of our total net revenue for the fiscal year ended March 31, 2026, as compared to 3.6% for the prior year period.

Gross profit as a percentage of net revenue for the fiscal year ended March 31, 2026 was 57.2%, as compared to 54.3% in the prior year period.

The increase in gross profit as a percentage of net revenue was primarily driven by (i) lower

amortization of intangible assets primarily due to higher impairments in the prior year and (ii) lower product costs as a percentage of net revenue, partially offset by higher amortization of capitalized software and development costs primarily due to the timing of releases.

Changes in foreign currency exchange rates increased net revenue by $9.9 and increased gross profit by $45.4, respectively, in the fiscal year ended March 31, 2026 as compared to the prior year period.

Operating Expenses

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Research and development

1,074.6 16.1 % 1,005.2 17.8 % 69.4 6.9 %

General and administrative

874.4 13.1 % 883.3 15.7 % (8.9) (1.0) %

Depreciation and amortization 198.5 3.0 % 229.4 4.1 % (30.9) (13.5) %

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Total operating expenses (1)

$ 3,913.9 58.7 % $ 7,453.3 132.3 % $ (3,539.4) (47.5) %

(1) Includes stock-based compensation expense, which was allocated as follows:

Selling and marketing $ 95.3 $ 92.4

Research and development 99.0 104.4

General and administrative 149.0 123.2

Foreign currency exchange rates decreased total operating expenses by $6.8 for the fiscal year ended March 31, 2025 as compared to the prior year.

Research and development 88.9 99.0

Foreign currency exchange rates increased total operating expenses by $31.2 for the fiscal year ended March 31, 2026 as compared to the prior year period.

Selling and marketing

Selling and marketing expenses increased by $133.5 for the fiscal year ended March 31, 2025 as compared to the prior year period, primarily due to (i) higher overall marketing expenses for Match Factory!

Selling and marketing expenses increased by $87.1 for the fiscal year ended March 31, 2026 as compared to the prior year period, primarily driven by higher personnel expense due to higher performance-based compensation, as well as, higher marketing expense for Color Block Jam and our Borderlands franchise.

These increases were partially offset by lower marketing expenses for Match Factory!

, Game of Thrones:

Legends , and our Sid Meier's Civilization franchise, partially offset by lower marketing expenses for our hyper-casual mobile portfolio, and (ii) lower amortization related to our intangible assets.

Legends , our Sid Meier's Civilization franchise, and Star Wars:

Research and development

Research and development expenses increased by $57.0 for the fiscal year ended March 31, 2025, as compared to the prior year period, primarily due to increases in (i) personnel expenses due to increased headcount and (ii) production and development expenses for titles that are not technologically feasible, partially offset by the timing of tax related credits for certain titles.

Research and development expenses increased by $69.4 for the fiscal year ended March 31, 2026, as compared to the prior year period, primarily driven by (i) higher personnel expense due to the acquisition of Gearbox in June 2024 and higher performance-based compensation, and (ii) the timing of additional R&D-related credits related to certain titles.

These increases were partially offset by lower production and development expenses for titles that are not technologically feasible.

General and administrative

General and administrative expenses increased by $167.2 for the fiscal year ended March 31, 2025, as compared to the prior year period, primarily due to increases in (i) transaction costs related to our acquisition of Gearbox (refer to Note 2 0 - Acquisitions ), (ii) personnel expenses due to increased headcount, (iii) legal fees and contingencies related to the IBM case against Zynga, (iv) IT-related expenses for cloud-based services and IT infrastructure, as well as, (v) a reduction of expense in the prior year related to updating the fair value of contingent earn-out liability for our acquisition of Popcore with no corresponding reduction in the current year.

General and administrative expenses for the fiscal years ended March 31, 2025 and 2024 include occupancy expense (primarily rent, utilities and office expenses) of $73.9 and $69.9, respectively, related to our development studios.

General and administrative expenses decreased by $8.9 for the fiscal year ended March 31, 2026, as compared to the prior year period, primarily driven by lower legal fees and contingencies related to the IBM case against Zynga, partially offset by higher personnel expense due to higher performance-based compensation.

Depreciation and amortization

Depreciation and amortization expenses increased by $58.2 for the fiscal year ended March 31, 2025, as compared to the prior year period, primarily due to increases in (i) impairment expense related to our intangible assets (refer to Note 9 - Goodwill and Intangible Assets, Net ), (ii) IT infrastructure expense, and (iii) leasehold improvements for office buildouts.

Depreciation and amortization expenses decreased by $30.9 for the fiscal year ended March 31, 2026, as compared to the prior year period, primarily driven by lower amortization related to intangible assets due to prior year impairments, partially offset by higher IT infrastructure expense and higher leasehold improvement expense for office buildouts.

Goodwill impairment

Goodwill impairment expense for the fiscal years ended March 31, 2025 and 2024, were $3,545.2 and $2,342.1, respectively, due to partial impairments recognized related to one of our reporting units (refer to Note 9 - Goodwill and Intangible Assets, Net ).

Goodwill impairment expense decreased by $3,545.2 for the fiscal year ended March 31, 2026, as compared to the prior year period, primarily driven by partial impairments recognized in the prior year, with no corresponding expense in the current year.

Business reorganization

Business reorganization expense increased by $1.9 for the fiscal year ended March 31, 2025, as compared to the prior year period, primarily due to an increase in employee-related costs and losses on our divestitures, partially offset by a decrease in expense due to cancellations of our titles (refer to Note 21 - Business Reorganization ).

Business reorganization expense decreased by $110.9 for the fiscal year ended March 31, 2026, as compared to the prior year period, primarily driven by our cost reduction program in fiscal year 2025 (the "2024 Plan").

Interest and other, net

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Interest expense (151.4) (2.3) % (167.3) (3.0) % 15.9 (9.5) %

Foreign currency exchange gain (loss) (22.6) (0.4) % (28.6) (0.5) % 6.0 (21.0) %

Foreign currency exchange loss (17.4) (0.3) % (22.6) (0.4) % 5.2 (23.0) %

Other (9.9) (0.1) % (8.9) (0.2) % (1.0) 11.2 %

Interest and other, net $ (93.6) (1.4) % $ (100.2) (1.8) % $ 6.6 (6.6) %

Interest and other, net was expense of $93.3 for the fiscal year ended March 31, 2025, as compared to $103.6 for the fiscal year ended March 31, 2024.

The net decrease in expense was primarily due to an increase in interest income primarily due to increases in interest rates and cash balances and a gain on the sale of an investment.

These decreases in net expense were partially offset by increases in foreign currency losses, interest expense related to our debt transactions (refer to Note 11 - 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 for the fiscal year ended March 31, 2025 was a loss of $6.9 compared to a loss of $8.6 in the prior year period.

The change was primarily due to changes in fair value based on observable price changes of our long-term investments and an increase in fair value of our Convertible Notes.

Benefit from income taxes

Our income tax benefit was $12.4 for the fiscal year ended March 31, 2025 as compared to a provision for income taxes of $41.4 for the fiscal year ended March 31, 2024.

When compared to the statutory rate of 21%, the effective tax rate of 0.3% for the fiscal year ended March 31, 2025 was primarily due to an expense of $718.0 from nondeductible goodwill impairments, $222.7 from an increase in the U.S.

valuation allowance expense, $25.5 from an increase in the foreign valuation allowance expense, $41.4 from our geographic mix and foreign earnings partially offset by a $54.5 benefit from tax credits anticipated to be utilized.

When compared to the statutory rate of 21%, the effective tax rate of (1.1)% for the fiscal year ended March 31, 2024 was primarily due to an expense of $474.7 from nondeductible goodwill impairments, $337.2 from an increase in the U.S.

valuation allowance expense, $41.6 from an increase in the foreign valuation allowance expense, $39.0 from our geographic mix and foreign earnings, and $29.2 from a decrease in the net deferred tax asset relating to the Swiss cantonal basis step-up (as noted below) partially offset by a $63.3 benefit from tax credits anticipated to be utilized and $32.7 benefit from changes in reserves due to statute lapses.

The effective tax rate in the current year was higher compared to the prior year primarily due to increased expense from nondeductible goodwill impairments, decreased benefits from tax credits, decreased expense related to an increase in our valuation allowance, and the impact of geographic mix and foreign earnings.

Interest and other, net was expense of $93.6 for the fiscal year ended March 31, 2026, as compared to expense of $100.2 for the fiscal year ended March 31, 2025.

The net decrease in expense was primarily driven by lower outstanding debt balances and lower interest expense due to the repayment of our 2025 Notes in April 2025 and our 2026 Notes in March 2026 (refer to Note 11 - Debt ), decrease in foreign currency losses, and changes in fair value based on the observable price changes of our long-term investments.

This was partially offset by lower interest income primarily due to lower interest rates.

Provision for income taxes

Our provision for income taxes for the fiscal year ended March 31, 2026 was $100.4 as compared to a benefit from income taxes of $12.4 for the fiscal year ended March 31, 2025.

When compared to the statutory rate of 21%, the effective tax rate of (50.8)% for the fiscal year ended March 31, 2026 was primarily driven by an expense of $113.4 from an increase in the U.S.

valuation allowance expense, $18.2 from an increase in the foreign valuation allowance expense, and $79.0 from our geographic mix and foreign earnings, partially offset by a $45.7 benefit from tax credits and $39.7 of excess benefits from employee stock compensation.

When compared to the statutory rate of 21%, the effective tax rate of 0.3% for the fiscal year ended March 31, 2025 was primarily driven by an expense of $718.0 from nondeductible goodwill impairments, $222.7 from an increase in the U.S.

valuation allowance expense, $25.5 from an increase in the foreign valuation allowance expense, and $41.4 from our geographic mix and foreign earnings, partially offset by a $54.5 benefit from tax credits anticipated to be utilized.

The change in the effective tax rate, when compared to the prior year period's effective tax rate, is primarily driven by the increased proportionate impact of the changes in valuation allowances and geographic mix of earnings.

These were partially offset by increased tax benefits from employee stock compensation and the absence of expenses related to a prior year nondeductible goodwill impairment.

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.

We anticipate that additional excess tax benefits or shortfalls from employee stock compensation, tax credits, changes in valuation allowance, and changes in our geographic mix of earnings could have a significant impact on our effective tax rate in the future.

The accounting for tax incentives and credits may increase or decrease our effective tax rate due to changes in tax legislation and elections we may make.

We anticipate that additional excess tax benefits or shortfalls from employee stock compensation, tax incentives or credits, and changes in our geographic mix of earnings could have a significant impact on our effective tax rate in the future.

In addition, we are regularly examined by domestic and foreign taxing authorities.

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

The ARPA, among other things, includes provisions to expand the IRC Section 162(m) disallowance for deduction of certain compensation paid by publicly held corporations.

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

ARPA did not have a material impact on our Consolidated Financial Statements for the fiscal year ended March 31, 2025.

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

The Inflation Reduction Act includes a new CAMT of 15% on the AFSI of corporations with an average AFSI exceeding $1.0 billion over a consecutive three-year period.

The CAMT is effective for taxable year ending March 31, 2024.

On July 4, 2025, the One Big Beautiful Bill Act ("OBBB") was signed into law.

OBBB includes significant provisions, including but not limited to (1) permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act of 2017 ("TCJA"), (2) modifications to the international provisions relating to Base Erosion Anti Abuse Act ("BEAT"), Global Intangible Low-Tax Income ("GILTI") and Foreign Derived Deduction Eligible Income ("FDDEI"), (3) permanent reinstatement deduction for domestic research expenditures and 100% bonus depreciation for certain qualified property, and (4) modifications to tax credits.

The legislation has multiple effective dates, with certain provisions effective in the fiscal year ended March 31, 2026 and others implemented in future periods.

We have estimated the accounting for income tax effects of

the OBBB, which reduced our estimated U.S.

cash tax liability.

It did not, however, impact our U.S.

deferred tax assets or liabilities since we continue to maintain a full valuation allowance against U.S.

net deferred tax assets.

We are continuing to evaluate the impact of OBBB on the Company.

It is possible that these changes could have an adverse impact on our effective tax rate, tax payments, financial condition, or results of operations.

The new tax law is complex and additional interpretive guidance may be issued that could affect the interpretations and assumptions we have made, as well as actions we may take as a result of OBBB.

The American Rescue Plan Act of 2021 (the “ARPA”), among other things, includes provisions to expand the IRC Section 162(m) disallowance for deduction of certain compensation paid by publicly held corporations.

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 Consolidated Financial Statements for the fiscal year ended March 31, 2026.

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

The Inflation Reduction Act of 2022 (the “Inflation Reduction Act”) includes a 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.

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.

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

The OECD has proposed a global minimum tax of 15% of reported profits, referred to as Pillar Two.

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

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

Although the model rules provide a framework for applying the minimum tax, countries may enact Pillar Two slightly differently 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 a 15% minimum rate.

The impact of Pillar Two was not material to the tax provision for the fiscal year ended March 31, 2026.

Switzerland's Federal Act on Tax Reform and AVH Financing ("TRAF") abolished preferential tax regimes for holding companies, domicile companies, and mixed companies at the cantonal level.

The TRAF allows the cantons to establish transition rules, the implementation of which may be subject to a ruling from the canton.

For the fiscal year ended March 31,

2024, we recorded a net tax expense of $29.2 due to an increase in the valuation of allowance of $81.3 offset by an increase in the deferred tax asset of $52.1 relating to the Swiss cantonal basis step-up, as it is more-likely-than-not that such deferred tax assets would not be realized.

As of March 31, 2025, we had gross unrecognized tax benefits, including interest and penalties, of $267.1, of which $109.5 would affect our effective tax rate if realized.

For the fiscal year ended March 31, 2025, gross unrecognized tax benefits decreased by $9.3.

We are no longer subject to audit for U.S.

federal income tax returns for periods prior to our fiscal year ended March 31, 2022 and state income tax returns for periods prior to the fiscal year ended March 31, 2020.

With few exceptions, we are no longer subject to income tax examinations in non-U.S.

jurisdictions for years prior to fiscal year ended March 31, 2018.

federal, state and foreign taxing authorities are currently examining our income tax returns for the fiscal years ended March 31, 2016 through March 31, 2023.

On January 5, 2026, the OECD released new administrative guidance outlining a “side-by-side” arrangement following agreement on key elements by the OECD/G20 Inclusive Framework on Pillar Two.

It provides new safe harbors for U.S.

multinational companies which would exempt U.S.-parented groups from two of the three Pillar Two top up taxes, extend the current Transitional Country-by-Country Reporting Safe Harbor by one year through the end of fiscal year ending March 31, 2028, and make the Simplified Effective Tax Rate Safe Harbor permanent.

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

Net loss and Loss per share

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Basic and diluted loss per share for the fiscal year ended March 31, 2026 was $1.62, as compared to basic and diluted loss per share of $25.58 for the fiscal year ended March 31, 2025.

Basic weighted average shares of 175.1 were 5.0 higher as compared to the prior year period basic weighted average shares, primarily due 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.

Basic weighted average shares of 183.9 were 8.8 higher as compared to the prior year period basic weighted average shares, primarily due to our May 2025 underwritten public offering of common stock, as well as normal stock compensation activity, including vests, grants, and forfeitures in the prior year being fully outstanding in the current year.

See Note 12 - Loss Per Share to our Consolidated Financial Statements for additional information.

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As of March 31, 2026, we had $443.8 of short-term investments, which primarily consisted of bank time deposits with maturities greater than 90 days.

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

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

As of March 31, 2026, we had $2,500.0 of Senior Notes outstanding.

On March 28, 2026, we repaid our 2026 Notes with a principal amount of $550.0.

On April 14, 2025, we repaid our 2025 Notes with a principal amount of $600.0.

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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 81.0%, 79.8% and 79.6% of net revenue during the fiscal years ended March 31, 2025, 2024 and 2023, respectively.

Our five largest customers accounted for 80.6%, 81.0% and 79.8% of net revenue during the fiscal year ended March 31, 2026, 2025 and 2024, respectively.

As of March 31, 2026, and 2025, five customers comprised 69.6% and 72.1% of our gross accounts receivable, respectively, with our significant customers (those that individually comprised more than 10% of our gross accounts receivable balance) accounting for 57.7% and 61.0% of such balance at March 31, 2026, and 2025, respectively.

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In addition, we expect to have the ability to generate sufficient cash domestically to support ongoing operations for the foreseeable future.

Our Board has authorized the repurchase of up to 21.7 shares of our common stock.

Our Board of Directors has authorized the repurchase of up to 21.7 shares of our common stock.

Under this program, we may purchase shares from time to time through a variety of methods, including in the open market or through privately negotiated transactions, in accordance with applicable securities laws.

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

During the fiscal years ended March 31, 2025, 2024, and 2023, we did not repurchase shares of our common stock.

As of March 31, 2025, we had repurchased a total of 11.7 shares of our common stock under the program, and 10.0 shares of our common stock remained available for repurchase under the share repurchase program.

During the fiscal years ended March 31, 2026, 2025, and 2024, we did not repurchase shares of our common stock under the program, but in the past have repurchased a total of 11.7 shares of our common stock under the program, and as of March 31, 2026, 10.0 shares of our common stock remained available for repurchase under the share repurchase program.

Our changes in cash flows were as follows:

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2026 2025 2024

Net cash (used in) provided by operating activities $ (45.2) $ (16.1) $ 1.1

Net cash (used in) provided by investing activities (151.5) (28.2) (2,876.3)

Net cash provided by (used in) operating activities $ 624.3 $ (45.2) $ (16.1)

Net cash used in investing activities (649.2) (151.5) (28.2)

Net cash provided by (used in) financing activities 94.6 650.5 (91.4)

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At March 31, 2026, we had $1,638.1 of Cash, cash equivalents, and restricted cash and cash equivalents, compared to $1,559.2 at March 31, 2025.

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

The increase was due to Net cash provided by operating activities, which was primarily due to sales of our products, partially offset by investments in software development and licenses.

The increase was also primarily due to Net cash provided by financing activities, primarily related to proceeds from May 2025 underwritten public offering of common stock (refer to Note 1 2 - Loss Per Share ), partially offset by the repayment of our 2025 Notes and 2026 Notes (refer to Note 11 - Debt ).

This net increase was partially offset by the decrease in Net cash used in investing activities, which was primarily due to the purchase of short-term investments and fixed assets.

Refer to Note 14 - Commitments and Contingencies to our Consolidated Financial Statements for disclosures regarding our commitments.

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International Operations

Net revenue earned outside of the U.S.

is principally generated by our operations in Europe, Asia, Australia, Canada and Latin America.

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

For the fiscal years ended March 31, 2026, 2025, and 2024, 40.8%, 39.5%, and 38.7%, respectively, of our net revenue was earned outside the U.S.

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Sales of our full game products are also seasonal, with peak demand typically occurring in the fourth calendar quarter during the holiday season.

For certain of our software products with multiple performance obligations, we defer the recognition of our net revenue over an estimated service period which generally ranges from six to fifteen months.

As a result, the quarter in which we generate the highest Net Bookings may be different from the quarter in which we recognize the highest amount of Net revenue.

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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-K

Item 7. Management’s Discussion and Analysis