TAKE TWO INTERACTIVE SOFTWARE INC

Previous wording

Our teams have established a portfolio of proprietary software content for the major hardware and mobile platforms, and we aim to be at the forefront of technological innovation. We have a diverse portfolio that spans all key platforms and numerous genres, including action, adventure, family, casual, hyper-casual, role-playing, shooter, social casino, sports, and strategy. This enables us to appeal to a wide array of consumers and demographic groups worldwide, ranging from game enthusiasts to casual gamers. Most of our intellectual property is internally owned and developed, which we believe best positions us financially and competitively. In addition, we license selectively some highly recognizable renowned brands, especially in sports entertainment. We support our products with innovative marketing programs created by our internal global marketing teams.

Current wording

Our teams have established a portfolio of proprietary software content for the major hardware and mobile platforms, and we aim to be at the forefront of technological innovation. We have a diverse portfolio that spans all key platforms and numerous genres, including action, adventure, family, casual, hyper-casual, role-playing, shooter, social casino, sports, and strategy. This enables us to appeal to a wide array of consumers worldwide, ranging from game enthusiasts to casual gamers. Most of our intellectual property is internally owned and developed, which we believe best positions us financially and competitively. In addition, we license selectively some highly recognizable renowned brands, particularly in sports entertainment. We support our products with innovative marketing programs created by our global teams.

Previous wording

We derive substantially all of our revenue from the sale of our interactive entertainment content, which includes internally developed software titles and software titles developed by third parties, in-game virtual items and advertising, and live services on console, mobile, and PC. Operating margins are dependent in part upon our ability to release new, commercially successful software products and to manage effectively their development and marketing costs. We have internal development studios located in Australia, Canada, China, Czech Republic, Finland, Germany, Hungary, India, Serbia, South Korea, Spain, Turkey, the United Kingdom ("U.K."), and the United States ("U.S.").

Current wording

We derive substantially all of our revenue from the sale of our interactive entertainment content, which includes internally developed software titles and software titles developed by third parties, in-game virtual items and advertising, and live services on console, mobile, and PC. Operating margins are dependent in part upon our ability to release new, commercially successful software products and to manage effectively their development and marketing costs.

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, L.A. 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 455 million units worldwide. Our most recent installment, Grand Theft Auto V, which was released in 2013, has sold-in over 220 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 Games titles. Rockstar Games continues to invest in the franchise and announced that Grand Theft Auto VI is planned for release on November 19, 2026, during our fiscal year 2027. The label released its first trailer for the title in December 2023 and the second in May 2025, and will share more details in the future. Red Dead Redemption 2, which has been a critical and commercial success that set numerous entertainment industry records, has sold-in more than 75 million units worldwide. 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 across all key platforms. 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, L.A. 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 460 million units worldwide. Our most recent installment, Grand Theft Auto V, which was released in 2013, has sold-in over 220 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 Games titles. Rockstar Games continues to invest in the franchise and announced that Grand Theft Auto VI is planned for release on November 19, 2026, during our fiscal year 2027. The label released its first trailer for the title in December 2023 and the second in May 2025, and will share more details in the future. Red Dead Redemption 2, which has been a critical and commercial success that set numerous entertainment industry records, has sold-in more than 80 million units worldwide. 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 publishes 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 we now own following our June 2024 acquisition of Gearbox Entertainment. 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 NBA 2K All-Stars.

Current wording

2K. Our 2K label publishes 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, Borderlands, Mafia, Sid Meier's Civilization, Tiny Tina's Wonderlands, and XCOM franchises. 2K's 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 NBA 2K All-Stars.

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 and worldwide launch based on the achievement of various milestones and key performance indicator (KPI) thresholds. Zynga's diverse portfolio of popular game franchises has been downloaded more than ten billion times, including CSR Racing, Dragon City, Empires & Puzzles, FarmVille, Game of Thrones: Legends, Golf Rival, Hair Challenge, Harry Potter: Puzzles & Spells, High Heels!, Match Factory!, Merge Dragons!, Merge Magic!, Monster Legends, Screw Jam, Seat Away, Toon Blast, Top Eleven, Toy Blast, Two Dots, Words With Friends, and Zynga Poker.

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 advertising. Zynga's strategy is to have numerous games in concept development and to determine which titles are best suited for soft and worldwide launch based on the achievement of various milestones and key performance indicator (KPI) thresholds. Zynga's diverse portfolio of popular game franchises has been downloaded more than 10 billion times, including CSR Racing, Dragon City, Empires & Puzzles, FarmVille, Game of Thrones: Legends, Golf Rival, Hair Challenge, Harry Potter: Puzzles & Spells, High Heels!, Match Factory!, Merge Dragons!, Merge Magic!, Monster Legends, Screw Jam, Seat Away, Toon Blast, Top Eleven, Toy Blast, Two Dots, Words With Friends, and Zynga Poker.

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 12.0% of our net revenue for the six months ended September 30, 2025. The timing of our Grand Theft Auto product releases may affect our financial performance on a quarterly and annual basis. Rockstar plans to release Grand Theft Auto VI on November 19, 2026.

Current 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 12.4% of our net revenue for the nine months ended December 31, 2025. The timing of our Grand Theft Auto product releases may affect our financial performance on a quarterly and annual basis. Rockstar plans to release Grand Theft Auto VI on November 19, 2026.

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 38.8% of our net revenue for the six months ended September 30, 2025. The success of our business is dependent upon consumer acceptance of these platforms and the continued growth in the installed base of these platforms, which could be impacted by global economic factors, including global tariff policies. When new hardware platforms are introduced, demand for interactive entertainment developed for older platforms typically declines, which may negatively affect our business during the market transition to the new consoles. 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 for our products. We manage our product delivery on each current and future platform in a manner we believe to be most effective to maximize our revenue opportunities and achieve the desired return on our investments in product development. Accordingly, our strategy for these platforms is to focus our development efforts on a select number of the highest quality titles.

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 38.7% of our net revenue for the nine months ended December 31, 2025. The success of our business is dependent upon consumer acceptance of these platforms and the continued growth in the installed base of these platforms, which could be impacted by global economic factors, including global tariff policies. When new hardware platforms are introduced, demand for interactive entertainment developed for older platforms typically declines, which may negatively affect our business during the market transition to the new consoles. 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 for our products. We manage our product delivery on each current and future platform in a manner we believe to be most effective to maximize our revenue opportunities and achieve the desired return on our investments in product development. Accordingly, our strategy for these platforms is to focus our development efforts on a select number of the highest quality titles.

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, in-game purchases, and in-game advertising, which drive ongoing engagement and incremental revenue from recurrent consumer spending on our titles. Net revenue from digital online channels comprised 96.7% of our net revenue for the six months ended September 30, 2025. 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, in-game purchases, and in-game advertising, which drive ongoing engagement and incremental revenue from recurrent consumer spending on our titles. Net revenue from digital online channels comprised 96.9% of our net revenue for the nine months ended December 31, 2025. 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

For the six months ended September 30, 2025, Net Bookings increased as compared to the prior year period. The increase was primarily driven by higher Net Bookings from our NBA 2Kand Borderlands franchises, Color Block Jam, and our Mafia franchise.

Current wording

For the three months ended December 31, 2025, Net Bookings increased as compared to the prior year period. The increase was primarily driven by higher Net Bookings from our NBA 2Kand Grand Theft Auto franchises; Color Block Jam, which released in November 2024; Toon Blast!, and our Red Dead Redemption franchise.

Previous wording

For the three months ended September 30, 2025, Net Bookings increased as compared to the prior year period. The increase was primarily driven by higher Net Bookings from our NBA 2Kfranchise; our Borderlands franchise, the latest installment of which, Borderlands 4, released in September 2025; Color Block Jam, which released in November 2024; and our Mafia franchise, the latest installment of which, Mafia: The Old Country, released in August 2025.

Current wording

For the nine months ended December 31, 2025, Net Bookings increased as compared to the prior year period. The increase was primarily driven by higher Net Bookings from our NBA 2Kfranchise, Color Block Jam; our Borderlands franchise, the latest installment of which, Borderlands 4, released in September 2025; and our Grand Theft Auto franchise.

Previous wording

(1) Includes $4.8 and $3.1 of stock-based compensation expense in 2025 and 2024, respectively, in software development costs and royalties.

Current wording

(1) Includes $3.6 and $2.6 of stock-based compensation expense in 2025 and 2024, respectively, in software development costs and royalties.

Previous wording

For the six months ended September 30, 2025, net revenue increased by $586.3 as compared to the prior year period. The increase was primarily driven by higher net revenue of (i) $200.7 from our NBA 2Kfranchise, (ii) $151.0 from our Borderlands franchise, the latest installment of which, Borderlands 4, released in September 2025, (iii) $148.8 from Color Block Jam, which released in November 2024, and (iv) $58.4 from our Mafia franchise, the latest installment of which, Mafia: The Old Country, released in August 2025.

Current wording

For the three months ended December 31, 2025, net revenue increased by $339.2 as compared to the prior year period. The increase was primarily driven by higher net revenue of (i) $111.9 from our NBA 2Kfranchise; (ii) $51.5 from Color Block Jam, which released in November 2024; (iii) $43.8 from our Grand Theft Auto franchise; (iv) $42.4 from Toon Blast!; and (v) $30.8 from our Red Dead Redemption franchise.

Previous wording

Net revenue from mobile increased by $81.4 and accounted for 46.3% of our total net revenue for the three months ended September 30, 2025, as compared to 54.7% for the prior year period. The increase was primarily driven by higher net revenue from Color Block Jam. Net revenue from console games increased by $228.9 and accounted for 40.6% of our total net revenue for the three months ended September 30, 2025, as compared to 36.3% for the prior year period. The increase was primarily driven by higher net revenue from our NBA 2K, Borderlands, and Mafia franchises. Net revenue from PC and other increased by $110.4 and accounted for 13.1% of our total net revenue for the three months ended September 30, 2025, as compared to 9.0% for the prior year period. The increase was primarily driven by higher net revenue from our Borderlands, Mafia, and NBA 2K franchises.

Current wording

Net revenue from mobile increased by $134.2 and accounted for 51.0% of our total net revenue for the three months ended December 31, 2025, as compared to 53.8% for the prior year period. The increase in net revenue from mobile was primarily driven by higher net revenue from Color Block Jam, Toon Blast!, and our Red Dead Redemption franchise. Net revenue from console games increased by $144.2 and accounted for 38.3% of our total net revenue for the three months ended December 31, 2025, as compared to 37.4% for the prior year period. The increase in net revenue from console games was primarily driven by higher net revenue from our NBA 2Kfranchise and our Borderlands franchise, the latest installment of which, Borderlands 4, released in September 2025. Net revenue from PC and other increased by $60.8 and accounted for 10.7% of our total net revenue for the three months ended December 31, 2025, as compared to 8.8% for the prior year period. The increase in net revenue from PC and other was primarily driven by higher net revenue from our Grand Theft Auto and Borderlands franchises, as well as the addition of the Risk of Rain franchise from our acquisition of Gearbox in the prior year period.

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 $196.9 and accounted for 71.9% of net revenue for the three months ended September 30, 2025, as compared to 79.7% of net revenue for the prior year period. The increase was primarily driven by higher net revenue from our NBA 2Kfranchise and Color Block Jam. Net revenue from full game and other increased by $223.8 and accounted for 28.1% of net revenue for the three months ended September 30, 2025 as compared to 20.3% of net revenue for the prior year period. The increase was primarily driven by higher net revenue from 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 $216.5 and accounted for 76.8% of net revenue for the three months ended December 31, 2025, as compared to 80.0% of net revenue for the prior year period. The increase in net revenue from RCS was primarily driven by higher net revenue from our NBA 2Kfranchise, Color Block Jam, and Toon Blast!. Net revenue from full game and other increased by $122.7 and accounted for 23.2% of net revenue for the three months ended December 31, 2025 as compared to 20.0% of net revenue for the prior year period. The increase in net revenue from full game and other was primarily driven by higher net revenue from our Grand Theft Auto, Red Dead Redemption, and Borderlands franchises.

Previous wording

Net revenue from digital online channels increased by $393.1 and accounted for 95.5% of our total net revenue for the three months ended September 30, 2025, as compared to 96.1% for the prior year period. The increase was primarily driven by higher net revenue from our NBA 2Kand Borderlands franchises, Color Block Jam, and our Mafia franchise. Net revenue from physical retail and other channels increased by $27.6 and accounted for 4.5% of our total net revenue for the three months ended September 30, 2025, as compared to 3.9% for the same period in the prior year period. The increase was primarily driven by higher net revenue from our Borderlandsand Mafia franchises, partially offset by lower net revenue from our NBA 2K franchise.

Current wording

Net revenue from digital online channels increased by $343.8 and accounted for 97.4% of our total net revenue for the three months ended December 31, 2025, as compared to 96.4% for the prior year period. The increase was primarily driven by higher net revenue from our NBA 2Kfranchise, Color Block Jam, our Grand Theft Auto franchise, Toon Blast!, and our Red Dead Redemption franchise. Net revenue from physical retail and other channels decreased by $4.6 and accounted for 2.6% of our total net revenue for the three months ended December 31, 2025, as compared to 3.6% for the same period in the prior year period. The decrease in net revenue from physical retail and other channels was primarily driven by lower net revenue from our NBA 2Kfranchise.

Previous wording

Gross profit as a percentage of net revenue for the three months ended September 30, 2025 was 55.3% as compared to 53.8% for the prior year period. The increase in gross profit as a percentage of net revenue was primarily driven by (i) lower amortization of intangible assets primarily due to impairments in the prior year and (ii) lower product costs as a percentage of net revenues, partially offset by higher amortization of capitalized software and development costs primarily due to the timing of releases.

Current wording

Gross profit as a percentage of net revenue for the three months ended December 31, 2025 was 55.6% as compared to 55.9% for the prior year period. The decrease in gross profit as a percentage of net revenue was primarily driven by (i) higher amortization of capitalized software and development costs primarily due to the timing of releases and (ii) higher internal royalties due to the timing of when royalties are earned, partially offset by lower amortization of intangible assets, primarily due to impairments in the prior year.

Previous wording

Changes in foreign currency exchange rates increased net revenue by $2.5 and increased gross profit by $5.6 for the three months ended September 30, 2025 as compared to the prior year period.

Current wording

Changes in foreign currency exchange rates increased net revenue by $2.6 and increased gross profit by $12.4 for the three months ended December 31, 2025 as compared to the prior year period.

Previous wording

Changes in foreign currency exchange rates increased total operating expenses by $6.0 for the three months ended September 30, 2025, as compared to the prior year period.

Current wording

Changes in foreign currency exchange rates increased total operating expenses by $7.5 for the three months ended December 31, 2025, as compared to the prior year period.

Previous wording

Selling and marketing expenses increased by $75.3 for the three months ended September 30, 2025, as compared to the prior year period, primarily driven by (i) higher overall marketing expense for our Borderlands franchise, and Color Block Jam, partially offset by lower overall marketing expense for Match Factory!, Screw Jam and Game of Thrones: Legends, and (ii) higher personnel expense due to higher performance-based compensation.

Current wording

Selling and marketing expenses increased by $44.3 for the three months ended December 31, 2025, as compared to the prior year period, primarily driven by higher marketing expense for Color Block Jamand our Grand Theft Auto franchise, as well as higher personnel expense due to higher performance-based compensation. These increases were partially offset by lower marketing expense for Match Factory!.

Previous wording

Research and development expenses increased by $21.3 for the three months ended September 30, 2025, as compared to the prior year period, primarily driven by higher performance-based compensation, partially offset by lower IT-related expenses for cloud-based services and IT infrastructure.

Current wording

Research and development expenses increased by $41.8 for the three months ended December 31, 2025, as compared to the prior year period, primarily driven by higher personnel expense due to higher performance-based compensation.

Previous wording

General and administrative expenses decreased by $28.0 for the three months ended September 30, 2025, as compared to the prior year period, primarily driven by lower legal and settlement fees related to the IBM case against Zynga in the prior year, partially offset by higher personnel expense due to higher performance-based compensation.

Current wording

General and administrative expenses increased by $29.0 for the three months ended December 31, 2025, as compared to the prior year period, primarily driven by an adjustment recorded to legal and settlement fees related to the IBM case against Zynga in the prior year, as well as higher personnel expense due to higher performance-based compensation.

Previous wording

Depreciation and amortization expenses increased by $7.1 for the six months ended September 30, 2025, as compared to the prior year period, primarily driven by (i) higher IT infrastructure expense and (ii) higher leasehold improvement expense for office buildouts, partially offset by lower amortization related to intangible assets related to our acquisitions.

Current wording

Depreciation and amortization expenses decreased by $0.4 for the three months ended December 31, 2025, as compared to the prior year period, primarily driven by lower amortization related to acquired intangible assets due to prior year impairments, partially offset by higher IT infrastructure expense.

Previous wording

Business reorganization decreased by $16.7 for the three months ended September 30, 2025, as compared to the prior year period, primarily driven by the completion of the 2024 Plan.

Current wording

Business reorganization decreased by $22.5 for the three months ended December 31, 2025, as compared to the prior year period, primarily driven by the completion of the 2024 Plan.

Previous wording

Interest and other, net was an expense of $17.5 for the three months ended September 30, 2025, as compared to an expense of $27.1 for the prior year period. The net decrease in expense was primarily driven by lower interest expense related to our debt transactions (refer to Note 9 - Debt) and foreign currency gains in the current period compared to foreign currency losses in the prior year period.

Current wording

Interest and other, net was an expense of $17.1 for the three months ended December 31, 2025, as compared to an expense of $20.8 for the prior year period. The net decrease in expense was primarily driven by lower interest expense due to the repayment of our 2025 Notes in April 2025 and lower outstanding debt balances (refer to Note 9 - Debt) and foreign currency gains in the current period compared to foreign currency losses in the prior year period. This was partially offset by lower interest income primarily due to lower interest rates.

Previous wording

The provision for income taxes for the three months ended September 30, 2025 is based on our projected annual effective tax rate for fiscal year 2026, adjusted for specific items that are required to be recognized in the period in which they are incurred. The provision for income taxes was $18.4 for the three months ended September 30, 2025, as compared to the provision for income taxes of $41.2 for the prior year period.

Current wording

The provision for income taxes for the three months ended December 31, 2025 is based on our projected annual effective tax rate for fiscal year 2026, adjusted for specific items that are required to be recognized in the period in which they are incurred. The provision for income taxes was $37.1 for the three months ended December 31, 2025, as compared to the benefit from income taxes of $27.7 for the prior year period.

Previous wording

When compared to the statutory rate of 21%, the effective tax rate of (15.9)% for the three months ended September 30, 2025 was primarily driven by tax expense of $33.7 related to an increase in the U.S. and international valuation allowances and $16.0 related to geographic mix of earnings and changes in reserves, offset by tax benefits of $10.3 from tax credits.

Current wording

When compared to the statutory rate of 21%, the effective tax rate of (66.5)% for the three months ended December 31, 2025 was primarily due to tax expense of $35.1 related to an increase in the U.S. and international valuation allowances, offset by tax benefits of $12.5 from tax credits and by tax expense of $19.9 related to geographic mix of earnings.

Previous wording

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

Current wording

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

Previous wording

The change in the effective tax rate, when compared to the prior year period's effective tax rate, is primarily driven by lower tax expense from changes in the U.S. and international valuation allowance, lower tax benefits from tax credits, offset by higher tax expense from employee stock-based compensation and lower tax expense from geographic mix of earnings and changes in reserves.

Current wording

The change in effective tax rate, when compared to the prior year period's effective tax rate, is primarily driven by higher tax expense from changes in the U.S. and international valuation allowance, offset by increased tax benefits from tax credits, higher tax expense from geographic mix of earnings, and no tax benefits in the current year from divestitures as compared to the prior year.

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 than the model rules and on different timelines. 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 September 30, 2025. We will continue to evaluate the impact Pillar Two and any additional guidance may have on our results and 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. 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, 2025. On January 5, 2026, the OECD released new administrative guidance outlining a "side-by-side" arrangement following agreement on key elements by the OECD/G20 Inclusive Framework on Pillar Two. It provides new safe harbors for U.S. multinational companies which would exempt U.S.-parented groups from two of the three Pillar Two top up taxes, extend the current Transitional Country-by-Country Reporting Safe Harbor by one year through the end of fiscal year ending March 31, 2028, and make the Simplified Effective Tax Rate Safe Harbor permanent. We will continue to evaluate the impact Pillar Two and any additional guidance may have on our results and operations.

Previous wording

For the three months ended September 30, 2025, net loss was $133.9, as compared to a net loss of $365.5 in the prior year period. Basic and diluted loss per share for the three months ended September 30, 2025 was $0.73, as compared to basic and diluted loss per share of $2.08 in the prior year period. Basic weighted average shares of 184.6 were 9.2 shares higher as compared to the prior year period basic weighted average shares, primarily due to our equity issuance, as well as normal stock compensation activity, including vests, grants, and forfeitures in the prior year being fully outstanding in the current year. See Note 10 - Loss Per Share to our Condensed Consolidated Financial Statements for additional information.

Current wording

For the three months ended December 31, 2025, net loss was $92.9, as compared to a net loss of $125.2 in the prior year period. Basic and diluted loss per share for the three months ended December 31, 2025 was $0.50, as compared to basic and diluted loss per share of $0.71 in the prior year period. Basic weighted average shares of 185.0 were 9.0 shares higher as compared to the prior year period basic weighted average shares, primarily due to our equity issuance, as well as normal stock compensation activity, including vests, grants, and forfeitures in the prior year being fully outstanding in the current year. See Note 10 - Loss Per Share to our Condensed Consolidated Financial Statements for additional information.

Previous wording

Six Months Ended September 30, 2025 Compared to September 30, 2024

Current wording

Nine Months Ended December 31, 2025 Compared to December 31, 2024

Previous wording

(1) Includes $(36.2) and $6.0 of stock-based compensation expense in 2025 and 2024, respectively, in software development costs and royalties.

Current wording

(1) Includes $(32.6) and $8.6 of stock-based compensation expense in 2025 and 2024, respectively, in software development costs and royalties.

Previous wording

For the three months ended September 30, 2025, net revenue increased by $420.7 as compared to the prior year period. The increase was primarily driven by higher net revenue of (i) $148.7 from our Borderlands franchise, the latest installment of which, Borderlands 4, released in September 2025, (ii) $127.9 from our NBA 2Kfranchise, (iii) $72.8 from Color Block Jam, which released in November 2024, and (iv) $55.9 from our Mafia franchise, the latest installment of which, Mafia: The Old Country released in August 2025.

Current wording

For the nine months ended December 31, 2025, net revenue increased by $925.5 as compared to the prior year period. The increase was primarily driven by higher net revenue of (i) $312.6 from our NBA 2Kfranchise; (ii) $200.3 from Color Block Jam, which released in November 2024; (iii) $181.0 from our Borderlands franchise, the latest installment of which, Borderlands 4, released in September 2025; and (iv) $92.7 from Toon Blast!.

Previous wording

Net revenue from mobile increased by $160.6 and accounted for 49.5% of our total net revenue for six months ended September 30, 2025, as compared to 54.3% for the prior year period. The increase was primarily driven by higher net revenue from Color Block Jam. Net revenue from console games increased by $270.6 and accounted for 38.8% of our total net revenue for the six months ended September 30, 2025, as compared to 37.2% for the prior year period. The increase was primarily driven by higher net revenue from our NBA 2K, Borderlands, and Mafia franchises. Net revenue from PC and other increased by $155.1 and accounted for 11.7% of our total net revenue for the six months ended September 30, 2025, as compared to 8.5% for the prior year period. The increase was primarily driven by higher net revenue from our Borderlands, Grand Theft Auto, NBA 2K, and Mafia franchises.

Current wording

Net revenue from mobile increased by $294.8 and accounted for 50.0% of our total net revenue for nine months ended December 31, 2025, as compared to 54.2% for the prior year period. The increase in net revenue from mobile was primarily driven by higher net revenue from Color Block Jam and Toon Blast! Net revenue from console games increased by $414.8 and accounted for 38.7% of our total net revenue for the nine months ended December 31, 2025, as compared to 37.2% for the prior year period. The increase was primarily driven by higher net revenue from our NBA 2K and Borderlands franchises. Net revenue from PC and other increased by $215.9 and accounted for 11.3% of our total net revenue for the nine months ended December 31, 2025, as compared to 8.6% for the prior year period. The increase was primarily driven by higher net revenue from our Borderlands, Grand Theft Auto, and NBA 2Kfranchises.

Previous wording

Net revenue from RCS increased by $355.3 and accounted for 77.3% of net revenue for the six months ended September 30, 2025, as compared to 80.9% of net revenue for the prior year period. The increase was primarily driven by higher net revenue from our NBA 2K franchise and Color Block Jam. Net revenue from full game and other increased by $231.0 and accounted for 22.7% of net revenue for the six months ended September 30, 2025 as compared to 19.1% of net revenue for the prior year period. The increase was primarily driven by higher net revenue from our Borderlands, Grand Theft Auto, and Mafia franchises.

Current wording

Net revenue from RCS increased by $571.8 and accounted for 77.1% of net revenue for the nine months ended December 31, 2025, as compared to 80.6% of net revenue for the prior year period. The increase in net revenue from RCS was primarily driven by higher net revenue from our NBA 2K franchise and Color Block Jam. Net revenue from full game and other increased by $353.7 and accounted for 22.9% of net revenue for the nine months ended December 31, 2025 as compared to 19.4% of net revenue for the prior year period. The increase was primarily driven by higher net revenue from our Borderlandsand Grand Theft Auto franchises, and our Mafia franchise, the latest installment of which, Mafia: The Old Country released in August 2025.

Previous wording

Net revenue from digital online channels increased by $574.2 and accounted for 96.7% of our total net revenue for the six months ended September 30, 2025, as compared to 96.4% for the prior year period. The increase was primarily driven by higher net revenue from our NBA 2Kfranchise, Color Block Jam, and our Borderlands franchise. Net revenue from physical retail and other channels increased by $12.1 and accounted for 3.3% of our total net revenue for the six months ended September 30, 2025, as compared to 3.6% for the same period in the prior year period. The increase was primarily driven by higher net revenue from our Borderlandsand Mafia franchises, partially offset by lower net revenue from our NBA 2Kfranchise; TopSpin 2K25, which released in April 2024; and our Grand Theft Auto franchise.

Current wording

Net revenue from digital online channels increased by $918.0 and accounted for 96.9% of our total net revenue for the nine months ended December 31, 2025, as compared to 96.4% for the prior year period. The increase was primarily due to higher net revenue from our NBA 2Kfranchise, Color Block Jam, and our Borderlands and Grand Theft Auto franchises. Net revenue from physical retail and other channels increased by $7.5 and accounted for 3.1% of our total net revenue for the nine months ended December 31, 2025, as compared to 3.6% for the same period in the prior year period. The increase in net revenue from physical retail and other channels was primarily driven by higher net revenue from our Borderlands and Mafia franchises, partially offset by lower net revenue from our NBA 2Kand Grand Theft Auto franchises; TopSpin 2K25, which released in April 2024; and our WWE 2Kfranchise.

Previous wording

Gross profit as a percentage of net revenue for the six months ended September 30, 2025 was 58.7% as compared to 55.8% for the prior year period. The increase in gross profit as a percentage of net revenue was primarily driven by lower amortization of intangible assets primarily due 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, 2025 was 57.7% as compared to 55.7% for the prior year period. The increase in gross profit as a percentage of net revenue was primarily driven by (i) lower amortization of intangible assets primarily due to impairments in the prior year and (ii) lower product costs as a percentage of net revenue, partially offset by higher amortization of capitalized software and development costs primarily due to the timing of releases, higher external royalties related to our titles, and higher internal royalties due to the timing of when royalties are earned.

Previous wording

Changes in foreign currency exchange rates increased net revenue by $4.3 and increased gross profit by $16.5 for the six months ended September 30, 2025 as compared to the prior year period.

Current wording

Changes in foreign currency exchange rates increased net revenue by $6.9 and increased gross profit by $28.9 for the nine months ended December 31, 2025 as compared to the prior year period.

Previous wording

Changes in foreign currency exchange rates increased total operating expenses by $12.1 for the six months ended September 30, 2025, as compared to the prior year period.

Current wording

Changes in foreign currency exchange rates increased total operating expenses by $19.6 for the nine months ended December 31, 2025, as compared to the prior year period.

Previous wording

Selling and marketing expenses increased by $52.7 for the six months ended September 30, 2025, as compared to the prior year period, primarily driven by (i) higher personnel expense due to higher performance-based compensation and (ii) higher overall marketing expense for Color Block Jam and our Borderlands franchise, partially offset by lower overall marketing expenses for Match Factory!, Screw Jam, Game of Thrones: Legends, Star Wars: Hunters, and Twisted Tangle.

Current wording

Selling and marketing expenses increased by $97.0 for the nine months ended December 31, 2025, as compared to the prior year period, primarily driven by higher marketing expense for Color Block Jamand our Borderlands franchise, as well as higher personnel expense due to higher performance-based compensation. These increases were partially offset by lower marketing expenses for Match Factory!, our hyper- and hybrid-casual mobile portfolio, Game of Thrones: Legends, and Star Wars: Hunters.