TAKE TWO INTERACTIVE SOFTWARE INC
For the period ended Sep 30, 2024. Filed Nov 7, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 7, 2024
TTWO$214.87+0.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-09.
0001628280-24-036273
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-07.
0001628280-24-045867
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 104 previous paragraphs and 149 current paragraphs.
61 unchanged; 41 reworded; 27 added; 2 removed; 0 previous and 20 current paragraphs rearranged.
Tables are not compared: 7 previous and 10 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (27)
Current report
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.
Current report
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. 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 Autoand NBA 2Kfranchises. 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 2Kfranchises. These increases were partially offset by a decrease in net revenue from our Red Dead Redemption franchise.
Current report
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.
Current report
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.
Current report
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.
Current report
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.
Current report
Goodwill impairment
Current report
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).
Current report
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 - Debt).
Current report
Loss on fair value adjustments, net
Current report
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.
Current report
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.
Current report
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. 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 2Kfranchise. This decrease was partially offset by an increase in net revenue from TopSpin 2K25.
Current report
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. 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 2Kand 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 2Kfranchise and LEGO 2K Drive. These decreases were partially offset by an increase in net revenue from TopSpin 2K25.
Current report
Operating Expenses
Current report
Selling and marketing
Current report
Research and development
Current report
General and administrative
Current report
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.
Current report
Depreciation and amortization
Current report
Goodwill impairment
Current report
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).
Current report
Business reorganization
Current report
Interest and other, net
Current report
Loss on fair value adjustments, net
Current report
Provision for Income Taxes
Current report
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.
Removed paragraphs (2)
Previous report
General and administrative expenses increased by $12.6 for the three months ended June 30, 2024, as compared to the prior year period, due primarily to increases in (i) professional fees related to our Gearbox acquisition (refer to Note 13 - Acquisitions), (ii) IT-related expenses for cloud-based services and IT infrastructure, and (iii) personnel expense due to increased headcount, partially offset by a reduction of expense in the current year as compared to the prior year related to updating the fair value of contingent earn-out liability for our acquisition of Popcore.
Previous report
(Loss) gain on fair value adjustments, net
Reworded paragraphs (41)
Previous wording
We are a leading developer, publisher, and marketer of interactive entertainment for consumers around the globe. We develop, operate, and publish products principally through Rockstar Games, 2K, Private Division, and Zynga. Our products are currently designed for console gaming systems, PC, and mobile, including smartphones and tablets. We deliver our products through physical retail, digital download, online platforms, and cloud streaming services.
Current wording
We are a leading developer, publisher, and marketer of interactive entertainment for consumers around the globe. We develop, operate, and publish products principally through Rockstar Games, 2K, and Zynga. Our products are currently designed for console gaming systems, PC, and mobile, including smartphones and tablets. We deliver our products through physical retail, digital download, online platforms, and cloud streaming services.
Previous wording
Our strategy is to be the most creative, innovative, and efficient company in the evolving interactive entertainment industry. With our diverse portfolio that spans all key platforms and numerous genres, we strive to create the highest quality, most engaging interactive entertainment franchises that captivate our global audience. Most of our intellectual property is internally owned and developed, which we believe best positions us financially and competitively. We have established a portfolio of proprietary software content for the major hardware and mobile platforms in a wide range of genres, including action, adventure, family/casual, hyper-casual, role-playing, shooter, social casino, sports, and strategy, which we distribute worldwide. We believe that our player-first approach and commitment to creativity and innovation are distinguishing strengths, enabling us to differentiate our products in the marketplace by combining advanced technology with compelling storylines and characters that provide unique gameplay experiences for consumers. We have created, acquired, or licensed a group of highly recognizable brands to match the broad consumer demographics that we serve, ranging from adults to children and game enthusiasts to casual gamers. Another cornerstone of our strategy is to support the success of our products in the marketplace through innovative marketing programs and global distribution on platforms and through channels that are relevant to our target audience.
Current wording
Our strategy is to be the most creative, innovative, and efficient company in the evolving interactive entertainment industry. With our diverse portfolio that spans all key platforms and numerous genres, we strive to create the highest quality, most engaging interactive entertainment franchises that captivate our global audience. Most of our intellectual property is internally owned and developed, which we believe best positions us financially and competitively. We have established a portfolio of proprietary software content for the major hardware and mobile platforms in a wide range of genres, including action, adventure, family/casual, hyper-casual, role-playing, shooter, social casino, sports, and strategy, which we distribute worldwide. We believe that our player-first approach and commitment to creativity and innovation are distinguishing strengths, enabling us to differentiate our products in the marketplace by combining advanced technology with compelling storylines and characters that provide unique gameplay experiences. We have created, acquired, or licensed a group of highly-recognizable brands to match the broad consumer demographics that we serve, ranging from adults to children and game enthusiasts to casual gamers. Another cornerstone of our strategy is to support the success of our products in the marketplace through innovative marketing programs and global distribution on platforms and through channels that are relevant to our target audience.
Previous wording
Rockstar Games. Rockstar Games' strategy is to develop a limited number of titles that are known for their quality and longevity in the market for which they can create sequels and incremental revenue opportunities through virtual currency, add-on content, and in-game purchases. Software titles published by our Rockstar Games label are primarily internally developed. We expect Rockstar Games, our wholly-owned publisher of the Grand Theft Auto, LA Noire, Max Payne, Midnight Club, Red Dead Redemption, and other popular franchises, to continue to be a leader in the action/adventure product category and to create groundbreaking entertainment. We believe that Rockstar Games has established a uniquely original, popular, cultural phenomenon with its Grand Theft Auto series, which is the interactive entertainment industry's most iconic and critically acclaimed brand and has sold-in over 425 million units worldwide. Our most recent installment, Grand Theft Auto V, which was released in 2013, has sold-in over 200 million units worldwide and includes access to Grand Theft Auto Online. Rockstar Games offers its GTA+ membership program, which engages its player community with an array of rotating benefits, including access to classic Rockstar titles. Rockstar Games continues to invest in the franchise and plans to release Grand Theft Auto VIin the Fall of calendar 2025. The label released its first trailer for the title in December 2023 and will share more details over time. Red Dead Redemption 2, which has been a critical and commercial success that set numerous entertainment industry records, has sold-in more than 60 million units worldwide to date. Rockstar Games continues to expand on its established series by developing sequels, offering downloadable episodes, and providing additional content. Rockstar Games' titles are published across all key platforms, including mobile.
Current wording
Rockstar Games. Rockstar Games' strategy is to develop a limited number of titles that are known for their quality and longevity in the market for which they can create sequels and incremental revenue opportunities through virtual currency, add-on content, and in-game purchases. Software titles published by our Rockstar Games label are primarily internally developed. We expect Rockstar Games, our wholly-owned publisher of the Grand Theft Auto, LA Noire, Max Payne, Midnight Club, Red Dead Redemption, and other popular franchises, to continue to be a leader in the action/adventure product category and to create groundbreaking entertainment. We believe that Rockstar Games has established a uniquely original, popular, cultural phenomenon with its Grand Theft Auto series, which is the interactive entertainment industry's most iconic and critically acclaimed brand and has sold-in over 430 million units worldwide. Our most recent installment, Grand Theft Auto V, which was released in 2013, has sold-in over 205 million units worldwide and includes access to Grand Theft Auto Online. Rockstar Games offers its GTA+ membership program, which engages its player community with an array of rotating benefits, including access to classic Rockstar titles. Rockstar Games continues to invest in the franchise and plans to release Grand Theft Auto VIin 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. 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. Rockstar Games continues to expand on its established series by developing sequels, offering downloadable episodes, and providing additional content. Rockstar Games' titles are published across all key platforms, including mobile.
Previous wording
2K. Our 2K label has published a variety of popular entertainment properties across all key platforms and across a range of genres including shooter, action, role-playing, strategy, sports, and family/casual entertainment. In recent years, 2K has expanded its offerings to include several new franchises that are expected to enhance and diversify its slate of games and provide opportunities for sequels and additional content. We expect 2K to continue to develop new, successful franchises in the future. 2K's internally owned and developed franchises include the critically acclaimed, multi-million unit selling BioShock, Mafia, Sid Meier's Civilization, and XCOM franchises, as well as the Borderlandsand Tiny Tina's Wonderlands franchises, which were added to its portfolio with our June 2024 acquisition of Gearbox. 2K's realistic sports simulation titles include our flagship NBA 2K series, which continues to be the top-ranked NBA basketball video game, the WWE 2K professional wrestling series, PGA TOUR 2K, and TopSpin 2K. 2K also publishes mobile titles, including WWE SuperCard. We expanded our relationship with the NBA through the NBA 2K League.
Current wording
2K. Our 2K label has published a variety of popular entertainment properties across all key platforms and across a range of genres including shooter, action, role-playing, strategy, sports, and family/casual entertainment. In recent years, 2K has expanded its offerings to include several new franchises that are expected to enhance and diversify its slate of games and provide opportunities for sequels and additional content. We expect 2K to continue to develop new, successful franchises in the future. 2K's internally owned and developed franchises include the critically acclaimed, multi-million unit selling BioShock, Mafia, Sid Meier's Civilization, and XCOM franchises, as well as the Borderlandsand Tiny Tina's Wonderlands franchises, which are now owned by us following our June 2024 acquisition of Gearbox. 2K's realistic sports simulation titles include our flagship NBA 2K series, which continues to be the top-ranked NBA basketball video game, the WWE 2K professional wrestling series, PGA TOUR 2K, and TopSpin 2K. 2K also publishes mobile titles, including WWE SuperCard and NFL 2K Playmakers. In 2018, we expanded our relationship with the NBA through the NBA 2K League.
Previous wording
Private Division. Our Private Division label is dedicated to bringing titles from the industry's leading creative talent to market and is the publisher, developer, and owner of Kerbal Space Programand OlliOlli World.
Current wording
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 Programand 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.
Previous wording
Zynga. 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. Zynga's strategy is to have numerous games in concept development and to determine which titles are best suited for soft launch and worldwide launch based on the achievement of various milestones and KPI thresholds. Zynga's diverse portfolio of popular game franchises has been downloaded more than six billion times, including CSR Racing, Dragon City, Empires & Puzzles, FarmVille, Golf Rival, Harry Potter: Puzzles & Spells, Match Factory!, Merge Dragons!, Merge Magic!, Monster Legends, 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, Twisted Tangle, and Tangled Snakes.
Current wording
Zynga. 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. Zynga's strategy is to have numerous games in concept development and to determine which titles are best suited for soft launch and worldwide launch based on the achievement of various milestones and KPI thresholds. Zynga's diverse portfolio of popular game franchises has been downloaded more than six billion times, including CSR Racing, Dragon City, Empires & Puzzles, FarmVille, Game of Thrones: Legends, Golf Rival, Harry Potter: Puzzles & Spells, Match Factory!, Merge Dragons!, Merge Magic!, Monster Legends, Star Wars: 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.
Previous wording
The global market for interactive entertainment continues to grow, and we seek to increase our presence internationally, particularly in Asia, the Middle East, and Latin America. We are continuing to execute on our growth initiatives in Asia, where our strategy is to build on our licensing relationships and also broaden the distribution of our existing products and expand our online gaming presence, especially in China. 2K has secured a multi-year license from the NBA to develop an online version of our NBA simulation game in China, Taiwan, Hong Kong, and Macau. Our first such title, NBA 2K Online, a free-to-play NBA simulation game based on the console edition of NBA 2K, which was co-developed by 2K and Tencent, is the top online PC sports game in China with over 60 million registered users. We have released two iterations of NBA 2K Onlineand continue to enhance the title with new features. While we retain title to all intellectual property, in some regions, local publishers, under license agreements, are responsible for localization of software content, distribution, and marketing of the products in their respective local markets.
Current wording
The global market for interactive entertainment continues to grow, and we seek to increase our presence internationally, particularly in Asia, the Middle East, and Latin America. We are continuing to execute on our growth initiatives in Asia, where our strategy is to build on our licensing relationships and also broaden the distribution of our existing products and expand our online gaming presence, especially in China. 2K has secured a multi-year license from the NBA to develop an online version of our NBA simulation game in China, Taiwan, Hong Kong, and Macau. Our first such title, NBA 2K Online, a free-to-play NBA simulation game based on the console edition of NBA 2K, which was co-developed by 2K and Tencent, is the top online PC sports game in China with over 65 million registered users. We have released two iterations of NBA 2K Onlineand continue to enhance the title with new features. While we retain title to all intellectual property, in some regions, local publishers, under license agreements, are responsible for localization of software content, distribution, and marketing of the products in their respective local markets.
Previous wording
Product Release Schedule. Our financial results are affected by the timing of our product releases and the commercial success of our titles. Generally, a significant portion of our revenue has been derived from a few popular franchises, particularly around new releases within those franchises, some of which have annual or biennial releases. 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 13.1% of our net revenue for the three months ended June 30, 2024. The timing of our Grand Theft Auto product releases may affect our financial performance on a quarterly and annual basis.
Current wording
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. The timing of our Grand Theft Auto product releases may affect our financial performance on a quarterly and annual basis.
Previous wording
Economic Environment and Retailer Performance. We continue to monitor various macroeconomic and geopolitical factors 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. For example, in response to the conflict in Ukraine, we suspended sales of our products in Russia and Belarus, which had a negative impact on our financial results. Actions taken to date and other potential actions could result in additional negative impact in future periods.
Current wording
Economic Environment and Retailer Performance. We continue to monitor various macroeconomic and geopolitical factors 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. 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.
Previous wording
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 38.0% of our net revenue for the three months ended June 30, 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. 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. The latest Sony and Microsoft consoles provide "backwards compatibility" (i.e., the ability to play games for the previous generation of consoles). The inclusion of such features on new consoles could mitigate the risk of such a decline. 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. Accordingly, our strategy for these platforms is to focus our development efforts on a select number of the highest quality titles.
Current wording
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 37.2% of our net revenue for the six months ended September 30, 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. 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. The latest Sony and Microsoft consoles provide "backwards compatibility" (i.e., the ability to play games for the previous generation of consoles). The inclusion of such features on new consoles could mitigate the risk of such a decline. 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. Accordingly, our strategy for these platforms is to focus our development efforts on a select number of the highest quality titles.
Previous wording
Online Content and Digital Distribution. 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 96.8% of our net revenue for the three months ended June 30, 2024. We expect online delivery of games and game offerings to continue to be the primary part of our business over the long term.
Current wording
Online Content and Digital Distribution. 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. We expect online delivery of games and game offerings to continue to be the primary part of our business over the long term.
Previous wording
During fiscal year 2025, 2K released TopSpin 2K25, Private Division released No Rest for the Wicked early access on PC, and Zynga released Star Wars: Huntersand Game of Thrones: Legends RPG.
Current wording
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; and Zynga released Star Wars: Huntersand Game of Thrones: Legends.
Previous wording
To date we have announced that, during the remainder of fiscal year 2025, 2K will release NBA 2K25 and Rockstar plans to release Grand Theft Auto VI in the Fall of calendar 2025
Current wording
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. Rockstar Games plans to release Grand Theft Auto VI in the fall of calendar year 2025.
Previous wording
For the three months ended June 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; Toon Blast; TopSpin 2K25, which released in April 2024; our Red Dead Redemption 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 Bookings from our NBA 2Kfranchise, our hyper-casual mobile portfolio, LEGO 2K Drive, which released in May 2023; Empires & Puzzles, and Merge Dragons!.
Current wording
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.
Previous wording
(1) Includes $2.9 and $6.7 of stock-based compensation expense in 2024 and 2023, respectively, in software development costs and royalties.
Current wording
(1) Includes $3.1 and $7.5 of stock-based compensation expense in 2024 and 2023, respectively, in software development costs and royalties.
Previous wording
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 $29.3 and accounted for 82.0% of net revenue for the three months ended June 30, 2024, as compared to 83.2% 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!, Toon Blast, and Empires & Puzzles. These increases were partially offset by a decrease in net revenue from our hyper-causal mobile portfolio and our Grand Theft Auto franchise. Net revenue from full game and other increased by $24.2 and accounted for 18.0% of net revenue for the three months ended June 30, 2024 as compared to 16.8% of net revenue for the prior year period. The increase in net revenue from full game and other was due primarily to an increase in net revenue from our Red Dead Redemption franchise, TopSpin 2K25, and our Grand Theft Auto franchise. These increases were partially offset by a decrease in net revenue in our NBA 2Kfranchise and LEGO 2K Drive.
Current wording
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 2Kfranchises. 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 Borderlandsand Mafia franchises.
Previous wording
Net revenue from digital online channels increased by $55.5 and accounted for 96.8% of our total net revenue for the three months ended June 30, 2024, as compared to 96.5% 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 hyper-casual mobile portfolio. Net revenue from physical retail and other channels decreased by $2.0 and accounted for 3.2% of our total net revenue for the three months ended June 30, 2024, as compared to 3.5% 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 LEGO 2K Drive and our NBA 2Kand PGA TOUR 2Kfranchises. These decreases were partially offset by an increase in net revenue from physical retail and other channels from TopSpin 2K25 and our Red Dead Redemption franchise.
Current wording
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 Autoand NBA 2Kfranchises. 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 2Kand WWE 2Kfranchises. These decreases were partially offset by an increase in net revenue from physical retail and other channels from our Red Dead Redemption franchise.
Previous wording
Gross profit as a percentage of net revenue for the three months ended June 30, 2024 was 57.6% as compared to 52.9% for the prior year period. The increase in gross profit as a percentage of net revenue was primarily due to (i) lower development royalties due primarily to the timing of releases and (ii) lower amortization of intangibles assets due primarily to impairment charges in the prior year for acquisition-related intangible assets.
Current wording
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.
Previous wording
Changes in foreign currency exchange rates decreased total operating expenses by $2.0 for the three months ended June 30, 2024, as compared to the prior year period.
Current wording
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.
Previous wording
General and administrative expenses for the three months ended June 30, 2024 and 2023 included occupancy expense (primarily rent, utilities and office expenses) of $16.9 and $16.8, respectively, related to our development studios.
Current wording
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.
Previous wording
Business reorganization increased by $42.3 for the three months ended June 30, 2024, as compared to the prior year period, due primarily to the cancellation of titles and employee-related costs as part of our approved cost reduction program (refer to Note 15 - Business Reorganization).
Current wording
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).
Previous wording
(Loss) gain on fair value adjustments, net was a loss of $3.1 for the three months ended June 30, 2024 as compared to a gain of $0.8 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.
Current wording
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. The change was due primarily to changes in fair value based on the observable price changes of our long-term investments.
Previous wording
The provision for income taxes for the three months ended June 30, 2024 is based on our projected annual effective tax rate for fiscal year 2025, adjusted for specific items that are required to be recognized in the period in which they are incurred. The provision for income taxes was $49.8 for the three months ended June 30, 2024, as compared to the benefit from income taxes of $22.9 for the prior year period.
Current wording
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.
Previous wording
When compared to the statutory rate of 21%, the effective tax rate of (23.5)% for the three months ended June 30, 2024 was due primarily to tax expense of $96.8 related to an increase in valuation allowance and tax expense of $8.2 related to geographic mix of earnings offset by benefits of $17.7 from tax credits.
Current wording
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.
Previous wording
For the three months ended June 30, 2024, net revenue increased by $53.5 as compared to the prior year period. The increase was primarily due to an increase in net revenue of $63.2 from Match Factory!, which released in November 2023, and $31.6 from Toon Blast. These increases were partially offset by a decrease in net revenue of $21.2 from our hyper-casual mobile portfolio.
Current wording
For the six months ended September 30, 2024, net revenue increased by $107.4 as compared to the prior year period. The increase was primarily due to an increase in net revenue of (i) $136.8 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 2Kfranchise, (ii) $27.3 from our Grand Theft Auto franchise, and (iii) $19.6 from our hyper-casual mobile portfolio.
Previous wording
Net revenue from mobile increased by $42.5 and accounted for 54.0% of our total net revenue for three months ended June 30, 2024, as compared to 52.9% for the prior year period. The increase was primarily due to an increase in net revenue from Match Factory!, Toon Blast, and Empires & Puzzles. These increases were partially offset by a decrease in net revenue from our hyper-casual mobile portfolio. Net revenue from console games increased by $4.6 and accounted for 38.0% of our total net revenue for the three months ended June 30, 2024, as compared to 39.3% for the prior year period. The increase in net revenue from console games was due to an increase in net revenue from our Red Dead Redemption franchise and TopSpin 2K25, which released in April 2024. These increases were partially offset by a decrease in net revenue from our NBA 2Kfranchise, LEGO 2K Drive, which released in May 2023; and our PGA TOUR 2Kand Grand Theft Auto franchises. Net revenue from PC and other increased by $6.4 and accounted for 8.0% of our total net revenue for the three months ended June 30, 2024, as compared to 7.8% for the prior year period. The increase in net revenue from PC and other was primarily due to an increase in net revenue from No Rest for the Wicked, which released for early access in April 2024, and our Grand Theft Auto franchise. These increases were partially offset by a decrease in net revenue from our NBA 2Kfranchise.
Current wording
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. 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 Autoand 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.
Previous wording
Changes in foreign currency exchange rates decreased net revenue by $1.3 and decreased gross profit by $0.6 for the three months ended June 30, 2024 as compared to the prior year period.
Current wording
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.
Previous wording
Selling and marketing expenses increased by $32.0 for the three months ended June 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, partially offset by lower amortization related to intangible assets related to our Zynga acquisition.
Current wording
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.
Previous wording
Research and development expenses decreased by $18.8 for the three months ended June 30, 2024, as compared to the prior year period, primarily due to the timing of tax related credits related to certain titles, partially offset by an increase in personnel expense due to increased headcount.
Current wording
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.
Previous wording
Depreciation and amortization expenses increased by $4.4 for the three months ended June 30, 2024, as compared to the prior year period, due primarily to an increase in IT infrastructure and leasehold improvements for office buildouts.
Current wording
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.
Previous wording
Interest and other, net was expense of $24.2 for the three months ended June 30, 2024, as compared to expense of $25.4 for the prior year period. The net decrease in expense was due primarily to a decrease in foreign currency losses, partially offset by a gain on debt extinguishment recognized in the prior year.
Current wording
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.
Previous wording
In the prior year period, when compared to the statutory rate of 21.0%, the effective tax rate of 10.0% for the three months ended June 30, 2023 was due primarily to tax expense of $25.4 related to an increase in the U.S. valuation allowance, tax expense of $5.0 from employee stock-based compensation, and tax expense of $2.4 related to geographic mix of earnings offset by benefits of $20.4 from tax credits.
Current wording
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.
Previous wording
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 valuation allowance, increased expense related to geographic mix of earnings, and decreased benefits from tax credits, offset by increased benefits from employee stock-based compensation.
Current wording
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.
Previous wording
For the three months ended June 30, 2024, net loss was $262.0, as compared to a net loss of $206.0 in the prior year period. Basic and diluted loss per share for the three months ended June 30, 2024 was $1.52, as compared to basic and diluted loss per share of $1.22 in the prior year period. Basic weighted average shares of 172.3 were 2.9 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. See Note 10 - Loss Per Share to our Condensed Consolidated Financial Statements for additional information.
Current wording
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. See Note 10 - Loss Per Share to our Condensed Consolidated Financial Statements for additional information.
Previous wording
As of June 30, 2024, we had $15.4 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.
Current wording
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. From time to time, we may make additional short-term investments depending on future market conditions and liquidity needs.
Previous wording
As of June 30, 2024, there were no borrowings under the 2022 Credit Agreement, and we had approximately $747.8 available for additional borrowings.
Current wording
As of September 30, 2024, there were no borrowings under the 2022 Credit Agreement, and we had approximately $747.7 available for additional borrowings.
Previous wording
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 83.1% and 79.9% of net revenue during the three months ended June 30, 2024 and 2023, respectively. As of June 30, 2024 and March 31, 2024, five customers accounted for 70.3% and 69.9% of our gross accounts receivable, respectively. Customers that individually accounted for more than 10% of our gross accounts receivable balance comprised 57.2% and 57.7% of such balances at June 30, 2024 and March 31, 2024, respectively. We had three customers who accounted for 23.0%, 22.7%, and 11.4% of our gross accounts receivable as of June 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 June 30, 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. We are monitoring the current global economic conditions, including credit markets and other factors as it relates to our customers in order to manage the risk of uncollectible accounts receivable.
Current wording
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. 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. We are monitoring the current global economic conditions, including credit markets and other factors as it relates to our customers in order to manage the risk of uncollectible accounts receivable.
Previous wording
As of June 30, 2024, the amount of cash and cash equivalents held outside of the U.S. by our foreign subsidiaries was $669.6. These balances are dispersed across various locations around the world. We believe that such dispersion meets the business and liquidity needs of our foreign affiliates. In addition, we expect to have the ability to generate sufficient cash domestically to support ongoing operations for the foreseeable future.
Current wording
As of September 30, 2024, the amount of cash and cash equivalents held outside of the U.S. by our foreign subsidiaries was $664.3. These balances are dispersed across various locations around the world. We believe that such dispersion meets the business and liquidity needs of our foreign affiliates. In addition, we expect to have the ability to generate sufficient cash domestically to support ongoing operations for the foreseeable future.
Previous wording
At June 30, 2024, we had $1,471.9 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.
Current wording
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. 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.
Previous wording
In fiscal year 2025, we anticipate capital expenditures to be approximately $145.0. During the three months ended June 30, 2024, capital expenditures were $35.1.
Current wording
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.
Showing the first 40 of 41 pairs. Open the source sections for the rest.
Rearranged current paragraphs (20)
Current report — wording carried from elsewhere
Product Release Schedule. Our financial results are affected by the timing of our product releases and the commercial success of our titles. Generally, a significant portion of our revenue has been derived from a few popular franchises, particularly around new releases within those franchises, some of which have annual or biennial releases.
Current report — wording carried from elsewhere
For the six 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!, 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 2Kand Grand Theft Auto franchises, and Empires & Puzzles.
Current report — wording carried from elsewhere
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.
Current report — wording carried from elsewhere
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. See Note 10 - Loss Per Share to our Condensed Consolidated Financial Statements for additional information.
Current report — wording carried from elsewhere
Six Months Ended September 30, 2024 Compared to September 30, 2023
Current report — wording carried from elsewhere
(1) Includes $6.0 and $14.2 of stock-based compensation expense in 2024 and 2023, respectively, in software development costs and royalties.
Current report — wording carried from elsewhere
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. 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.
Current report — wording carried from elsewhere
(1) Includes stock-based compensation expense, which was allocated as follows:
Current report — wording carried from elsewhere
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.
Current report — wording carried from elsewhere
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.
Current report — wording carried from elsewhere
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).
Current report — wording carried from elsewhere
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. The change was due primarily to changes in fair value based on the observable price changes of our long-term investments.
Current report — wording carried from elsewhere
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.
Current report — wording carried from elsewhere
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.
Current report — wording carried from elsewhere
We anticipate that additional excess tax benefits or shortfalls from employee stock compensation, tax 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. Examinations may result in tax assessments in excess of amounts claimed and the payment of additional taxes. We believe our tax positions comply with applicable tax law, and that we have adequately provided for reasonably foreseeable tax assessments. 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.
Current report — wording carried from elsewhere
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 Condensed Consolidated Financial
Current report — wording carried from elsewhere
Statements for the six months ended September 30, 2024. We continue to evaluate the potential impact the ARPA may have on our operations and Consolidated Financial Statements in future periods.
Current report — wording carried from elsewhere
The Inflation Reduction Act of 2022 (the “Inflation Reduction Act”) includes a new corporate alternative minimum tax (CAMT) of 15% on the adjusted financial statement income (AFSI) of corporations with an average AFSI exceeding $1.0 billion over a consecutive three-year period. The CAMT is effective for taxable year ending March 31, 2024. 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 will continue to evaluate the potential impact the Inflation Reduction Act may have on our operations and Consolidated Financial Statements in future periods.
Current report — wording carried from elsewhere
The Organization for Economic Co-operation and Development ("OECD") has proposed a global minimum tax of 15% of reported profits, referred to as Pillar Two. Many countries have already implemented or are taking steps to implement Pillar Two. Although the model rules provide a framework for applying the minimum tax, countries may enact Pillar Two slightly differently that the model rules and on different timelines. Many aspects of Pillar Two are effective for the fiscal year ending March 31, 2025. Pillar Two could result in additional tax liability over the regular corporate tax liability in a particular jurisdiction to the extent tax expense is less than 15% minimum rate. The impact of Pillar Two was not material to the tax provision for the six months ended September 30, 2024. We will continue to evaluate the impact Pillar Two may have on our operations.
Current report — wording carried from elsewhere
Net loss and loss per share