TAKE TWO INTERACTIVE SOFTWARE INC
For the period ended Dec 31, 2024. Filed Feb 7, 2025.
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.
Dec 31, 2024 · Filed Feb 7, 2025
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 2024-09-30; filed 2024-11-07.
0001628280-24-045867
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-12-31; filed 2025-02-07.
0001628280-25-004308
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 149 previous paragraphs and 147 current paragraphs.
77 unchanged; 62 reworded; 6 added; 6 removed; 4 previous and 2 current paragraphs rearranged.
Tables are not compared: 10 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 (6)
Current report
For the three months ended December 31, 2024, net revenue decreased by $6.5 as compared to the prior year period. The decrease was primarily due to a decrease in net revenue of (i) $45.0 from our Grand Theft Auto franchise, (ii) $16.8 from our Red Dead Redemption franchise, and (iii) $11.9 from Empires & Puzzles. These decreases were partially offset by an increase in net revenue of $63.1 from Match Factory!, which released in November 2023.
Current report
General and administrative expenses increased by $24.6 for the three months ended December 31, 2024, as compared to the prior year period, due primarily to increases in (i) personnel expenses due to increased headcount, (ii) consulting expense, (iii) rent expense, and (iv) IT-related expenses for cloud-based services and IT infrastructure.
Current report
Benefit from income taxes
Current report
When compared to the statutory rate of 21%, the effective tax rate of 18.1% for the three months ended December 31, 2024 was due primarily to tax benefits of $18.2 related to divestitures, tax benefits of $6.4 from employee stock-based compensation, tax benefits of $3.9 from tax credits, offset by tax expense of $18.7 related to an increase in the U.S. and international valuation allowances and tax expense of $7.1 related to geographic mix of earnings.
Current report
In the prior year period, when compared to the statutory rate of 21.0%, the effective tax rate of 39.9% for the three months ended December 31, 2023 was due primarily to a tax benefit of $40.0 related to the changes in unrecognized tax benefits from a lapse in statutes of limitation, tax benefits of $4.5 from tax credits, offset by tax expense of $6.8 related to geographic mix of earnings and tax expense of $4.9 related to an increase in the U.S. valuation allowance.
Current report
Gain (loss) on fair value adjustments, net
Removed paragraphs (6)
Previous 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.
Previous 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.
Previous report
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 report
Goodwill impairment
Previous report
Provision for Income Taxes
Previous 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.
Reworded paragraphs (62)
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 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.
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 440 million units worldwide. Our most recent installment, Grand Theft Auto V, which was released in 2013, has sold-in over 210 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 in the coming months. Red Dead Redemption 2, which has been a critical and commercial success that set numerous entertainment industry records, has sold-in more than 65 million units worldwide to date. 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
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.
Current wording
Private Division. In October 2024, we sold our Private Division label, including our rights to substantially all of the label's titles. The label was dedicated to bringing titles from the industry's leading creative talent to market and was the publisher, developer, and owner of Kerbal Space Programand OlliOlli World. Take-Two is continuing to support No Rest for the Wicked, which launched in early access on PC in April 2024.
Previous 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.
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 13% of our net revenue for the nine months ended December 31, 2024. The timing of our Grand Theft Auto product releases may affect our financial performance on a quarterly and annual basis.
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 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.
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 nine months ended December 31, 2024. The success of our business is dependent upon consumer acceptance of these platforms and the continued growth in the installed base of these platforms. 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 96.4% 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.
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 nine months ended December 31, 2024. We expect online delivery of games and game offerings to continue to be the primary part of our business over the long term.
Previous wording
A significant portion of our mobile titles are distributed, marketed, and promoted through third parties, primarily Apple’s App Store and the Google Play Store. Virtual items for our mobile games are purchased through the payment processing systems of these platform providers. We generate a significant portion of our net revenue through the Apple and Google platforms and expect to continue to do so for the foreseeable future. Apple and Google generally have the discretion to set the amounts of their platform fees and change their platforms’ terms of service and other policies with respect to us or other developers at their sole discretion, and those changes may be unfavorable to us. These platform fees are recorded as cost of revenue as incurred. Further, as a result of the platform fees associated with online game sales, our mobile net revenue generally generates a lower gross margin percentage than our Console or PC revenue. Accordingly, the overall product mix between mobile and other game sales may affect our gross margin percentage. We are also expanding our direct-to-consumer efforts more meaningfully across our mobile portfolio to enhance profitability.
Current wording
A significant portion of our mobile titles are distributed, marketed, and promoted through third parties, primarily Apple’s App Store and the Google Play Store. Virtual items for our mobile games are purchased through the payment processing systems of these platform providers. We generate a significant portion of our net revenue through the Apple and Google platforms and expect to continue to do so for the foreseeable future. Apple and Google generally have the discretion to set the amounts of their platform fees and change their platforms’ terms of service and other policies with respect to us or other developers at their sole discretion, and those changes may be unfavorable to us. These platform fees are recorded as cost of revenue as incurred. Further, as a result of the platform fees associated with online game sales, our mobile net revenue generally generates a lower gross margin percentage than our Console or PC revenue. Accordingly, the overall product mix between mobile and other game sales may affect our gross margin percentage. We are also continuing to expand our direct-to-consumer efforts more meaningfully across our mobile portfolio to enhance profitability.
Previous 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.
Current wording
During fiscal year 2025, 2K released NFL 2K Playmakers, TopSpin 2K25, and NBA 2K25; Private Division released No Rest for the Wickedfor 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 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.
Current wording
To date we have announced that, during the remainder of fiscal year 2025, 2K plans to release Sid Meier's Civilization VII, PGA TOUR 2K25, and WWE 2K25. Rockstar Games plans to release Grand Theft Auto VI in the fall of calendar year 2025.
Previous 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.
Current wording
For the three months ended December 31, 2024, Net Bookings increased as compared to the prior year period. The increase was primarily due to an increase in Net Bookings from our NBA 2Kfranchise and Match Factory!, which released in November 2023. These increases were partially offset by a decrease in Net Bookings from our Grand Theft Auto franchise, Empires & Puzzles, and our Red Dead Redemption franchise.
Previous wording
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 wording
For the nine months ended December 31, 2024, Net Bookings increased as compared to the prior year period. The increase was primarily due to an increase in Net Bookings from Match Factory! and Toon Blast. These increases were partially offset by a decrease in Net Bookings from our Grand Theft Auto franchise, Empires & Puzzles, and our hyper-casual mobile portfolio.
Previous wording
(1) Includes $3.1 and $7.5 of stock-based compensation expense in 2024 and 2023, respectively, in software development costs and royalties.
Current wording
(1) Includes $2.6 and $6.3 of stock-based compensation expense in 2024 and 2023, respectively, in software development costs and royalties.
Previous wording
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 wording
Net revenue from mobile increased by $24.9 and accounted for 53.8% of our total net revenue for the three months ended December 31, 2024, as compared to 51.7% for the prior year period. The increase was primarily due to an increase in net revenue from Match Factory!. The increase was partially offset by a decrease in net revenue from our Grand Theft Auto franchise and Empires & Puzzles. Net revenue from console games decreased by $39.7 and accounted for 37.4% of our total net revenue for the three months ended December 31, 2024, as compared to 40.1% for the prior year period. The decrease in net revenue from console games was due to a decrease in net revenue from our Red Dead Redemptionand Grand Theft Auto franchises, and LEGO 2K Drive. These decreases were partially offset by an increase in net revenue from our WWE 2Kfranchise. Net revenue from PC and other increased by $8.3 and accounted for 8.8% of our total net revenue for the three months ended December 31, 2024, as compared to 8.2% for the prior year period. The increase in net revenue from PC and other was primarily due to an increase in net revenue from our NBA 2K franchise.
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 $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.
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 $52.8 and accounted for 80.0% of net revenue for the three months ended December 31, 2024, as compared to 75.7% of net revenue for the prior year period. The increase in net revenue from RCS was primarily due to an increase in net revenue from Match Factory! and our NBA 2Kfranchise. These increases were partially offset by a decrease in net revenue from Empires & Puzzlesand our Grand Theft Auto franchise. Net revenue from full game and other decreased by $59.3 and accounted for 20.0% of net revenue for the three months ended December 31, 2024 as compared to 24.3% of net revenue for the prior year period. The decrease in net revenue from full game and other was due primarily to a decrease in net revenue from our Grand Theft Autoand Red Dead Redemption franchises, and LEGO 2K Drive. These decreases were partially offset by an increase in net revenue from our WWE 2Kfranchise.
Previous 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.
Current wording
Net revenue from digital online channels increased by $13.4 and accounted for 96.4% of our total net revenue for the three months ended December 31, 2024, as compared to 94.9% for the prior year period. The increase was primarily due to an increase in net revenue from Match Factory! and our NBA 2Kfranchise. These increases were partially offset by a decrease in net revenue from our Grand Theft Auto franchise and Empires & Puzzles. Net revenue from physical retail and other channels decreased by $19.9 and accounted for 3.6% of our total net revenue for the three months ended December 31, 2024, as compared to 5.1% for the same period in the prior year period. The decrease in net revenue from physical retail and other channels was due primarily to a decrease in net revenue from our Red Dead Redemptionand Grand Theft Auto franchises and LEGO 2K Drive.
Previous 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.
Current wording
Gross profit as a percentage of net revenue for the three months ended December 31, 2024 was 55.9% as compared to 49.7% for the prior year period. 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.
Previous 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.
Current wording
Changes in foreign currency exchange rates decreased net revenue by $0.2 and decreased gross profit by $0.4 for the three months ended December 31, 2024 as compared to the prior year period.
Previous 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.
Current wording
Changes in foreign currency exchange rates increased total operating expenses by $1.4 for the three months ended December 31, 2024, as compared to the prior year period.
Previous wording
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 wording
Selling and marketing expenses increased by $21.6 for the three months ended December 31, 2024, as compared to the prior year period, due primarily to (i) higher overall marketing expenses due primarily to Match Factory!, which released in November 2023, partially offset by lower marketing expenses for our hyper-casual mobile portfolio and our Grand Theft Auto franchise, and (ii) higher personnel expense due to increased headcount.
Previous 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.
Current wording
General and administrative expenses for the three months ended December 31, 2024 and 2023 included occupancy expense (primarily rent, utilities and office expenses) of $19.8 and $17.8, respectively, related to our development studios.
Previous wording
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 wording
Research and development expenses increased by $8.9 for the three months ended December 31, 2024, as compared to the prior year period, primarily due to increases in personnel expense due to increased headcount, partially offset by lower production and development expenses primarily due to our cost reduction program (refer to Note 15 - Business Reorganization).
Previous wording
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 wording
Depreciation and amortization expenses increased by $6.9 for the three months ended December 31, 2024, as compared to the prior year period, due primarily to increases in IT infrastructure expense and leasehold improvements for office buildouts.
Previous 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).
Current wording
Business reorganization increased by $22.4 for the three months ended December 31, 2024, as compared to the prior year period, due primarily to losses on our divestitures, employee-related costs, and the cancellation of titles as part of our cost reduction program (refer to Note 15 - Business Reorganization).
Previous wording
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 wording
Interest and other, net was expense of $21.0 for the three months ended December 31, 2024, as compared to expense of $22.5 for the prior year period. The net decrease in expense was due primarily to an increase in interest income primarily due to increases in cash balances and a decrease in foreign currency losses. These decreases in net expense were partially offset by an increase in interest expense related to our debt transactions (refer to Note 9 - Debt).
Previous wording
Loss on fair value adjustments, net
Current wording
Gain (loss) on fair value adjustments, net
Previous 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.
Current wording
Gain (loss) on fair value adjustments, net was a gain of $0.2 for the three months ended December 31, 2024 as compared to a loss of $0.3 for the prior year period. The change was due primarily to changes in fair value based on the observable price changes of our long-term investments.
Previous wording
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 wording
The benefit from income taxes for the three months ended December 31, 2024 is based on our projected annual effective tax rate for fiscal year 2025, adjusted for specific items that are required to be recognized in the period in which they are incurred. The benefit from income taxes was $27.7 for the three months ended December 31, 2024, as compared to the benefit from income taxes of $60.7 for the prior year period.
Previous 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, 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 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 benefits related to changes in unrecognized tax benefits, increased tax expense from changes in the U.S. and international valuation allowance, offset by increased tax benefits related to divestitures and increased tax benefits from employee-stock based compensation.
Previous wording
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 wording
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 do not estimate any tax liability relating to CAMT for the current fiscal year. We will continue to evaluate the potential impact the Inflation Reduction Act may have on our operations and Consolidated Financial Statements in future periods.
Previous wording
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 three months ended September 30, 2024. We will continue to evaluate the impact Pillar Two may have on our operations.
Current wording
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 three months ended December 31, 2024. We will continue to evaluate the impact Pillar Two and any additional guidance may have on our operations.
Previous wording
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 wording
For the three months ended December 31, 2024, net loss was $125.2, as compared to a net loss of $91.6 in the prior year period. Basic and diluted loss per share for the three months ended December 31, 2024 was $0.71, as compared to basic and diluted loss per share of $0.54 in the prior year period. Basic weighted average shares of 176.0 were 5.7 shares higher as compared to the prior year period basic weighted average shares, due primarily to stock issued as consideration for the acquisition of Gearbox, as well as normal stock compensation activity, including vests as well as grants and forfeitures in the prior year being fully outstanding in the current year. See Note 10 - Loss Per Share to our Condensed Consolidated Financial Statements for additional information.
Previous wording
Six Months Ended September 30, 2024 Compared to September 30, 2023
Current wording
Nine Months Ended December 31, 2024 Compared to December 31, 2023
Previous wording
(1) Includes $6.0 and $14.2 of stock-based compensation expense in 2024 and 2023, respectively, in software development costs and royalties.
Current wording
(1) Includes $8.6 and $20.5 of stock-based compensation expense in 2024 and 2023, respectively, in software development costs and royalties.
Previous 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.
Current wording
For the nine months ended December 31, 2024, net revenue increased by $100.9 as compared to the prior year period. The increase was primarily due to an increase in net revenue of (i) $199.9 from Match Factory!, which released in November 2023, and (ii) $76.5 from Toon Blast. These increases were partially offset by a decrease in net revenue of (i) $72.3 from our Grand Theft Auto franchise, (ii) $27.1 from our NBA 2Kfranchise, and (iii) $26.7 from our hyper-casual mobile portfolio.
Previous 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.
Current wording
Net revenue from mobile increased by $161.4 and accounted for 54.2% of our total net revenue for nine months ended December 31, 2024, as compared to 51.5% for the prior year period. The increase was primarily due to an increase in net revenue from Match Factory! and Toon Blast. These increases were partially offset by a decrease in net revenue from our Grand Theft Auto franchise, our hyper-casual mobile portfolio, and Merge Dragons!. Net revenue from console games decreased by $90.7 and accounted for 37.2% of our total net revenue for the nine months ended December 31, 2024, as compared to 40.5% for the prior year period. The decrease was primarily due to a decrease in net revenue from our Grand Theft Autoand NBA 2K franchises, and LEGO 2K Drive. These decreases were partially offset by an increase in net revenue from TopSpin 2K25, which released in April 2024. Net revenue from PC and other increased by $30.2 and accounted for 8.6% of our total net revenue for the nine months ended December 31, 2024, as compared to 8.0% for the prior year period. The increase was primarily due to an increase in net revenue from our Risk of Rain franchise, which was acquired in connection with our acquisition of Gearbox in June 2024 (refer to Note 13 - Acquisitions), No Rest for the Wicked, which released for early access in April 2024, and our Grand Theft Auto franchise.
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 $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 wording
Net revenue from RCS increased by $160.7 and accounted for 80.6% of net revenue for the nine months ended December 31, 2024, as compared to 78.6% of net revenue for the prior year period. The increase was primarily due to an increase in net revenue from Match Factory! and Toon Blast. These increases were partially offset by a decrease in net revenue from our Grand Theft Auto franchise, our hyper-casual mobile portfolio, Merge Dragons!, and Golf Rival. Net revenue from full game and other decreased by $59.8 and accounted for 19.4% of net revenue for the nine months ended December 31, 2024 as compared to 21.4% of net revenue for the prior year period. The decrease was primarily due to a decrease in net revenue from our Grand Theft Auto and NBA 2Kfranchise.
Previous wording
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 wording
Net revenue from digital online channels increased by $129.2 and accounted for 96.4% of our total net revenue for the nine months ended December 31, 2024, as compared to 95.6% for the prior year period. The increase was primarily due to an increase in net revenue from Match Factory! and Toon Blast. These increases were partially offset by a decrease in net revenue from our Grand Theft Auto franchise and our hyper-casual mobile portfolio. Net revenue from physical retail and other channels decreased by $28.3 and accounted for 3.6% of our total net revenue for the nine months ended December 31, 2024, as compared to 4.4% for the same period in the prior year period. The decrease in net revenue from physical retail and other channels was due primarily to a decrease in net revenue from our NBA 2Kand Red Dead Redemption franchises, and LEGO 2K Drive.
Previous wording
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 wording
Gross profit as a percentage of net revenue for the nine months ended December 31, 2024 was 55.7% as compared to 44.9% for the prior year period. The increase in gross profit as a percentage of net revenue was primarily due to lower amortization of intangible assets due primarily to impairment charges in the prior year for acquisition-related intangible assets.
Previous wording
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 wording
Changes in foreign currency exchange rates increased total operating expenses by $0.8 for the nine months ended December 31, 2024, as compared to the prior year period.
Previous 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.
Current wording
Selling and marketing expenses increased by $180.3 for the nine months ended December 31, 2024, as compared to the prior year period, due primarily to higher overall marketing expenses for Match Factory!, which released in November 2023.
Previous 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.
Current wording
Research and development expenses increased by $4.7 for the nine months ended December 31, 2024, as compared to the prior year period, due primarily to increases in (i) personnel expense due to increased headcount and (ii) IT-related expenses for cloud-based services and IT infrastructure, partially offset by the timing of tax related credits for certain titles.
Showing the first 40 of 62 pairs. Open the source sections for the rest.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
Changes in foreign currency exchange rates decreased net revenue by $0.9 and decreased gross profit by $0.7 for the nine months ended December 31, 2024 as compared to the prior year period.
Current report — wording carried from elsewhere
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 81.8% and 79.2% of net revenue during the nine months ended December 31, 2024 and 2023, respectively. As of December 31, 2024 and March 31, 2024, five customers accounted for 74.6% and 69.9% of our gross accounts receivable, respectively. Customers that individually accounted for more than 10% of our gross accounts receivable balance comprised 61.4% and 57.7% of such balances at December 31, 2024 and March 31,
Rearranged previous paragraphs (4)
Previous report — wording carried elsewhere
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.
Previous report — wording carried elsewhere
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).
Previous report — wording carried elsewhere
Loss on fair value adjustments, net
Previous report — wording carried 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.