TAKE TWO INTERACTIVE SOFTWARE INC

Previous wording

We are a leading developer, publisher, and marketer of interactive entertainment for consumers around the globe. We develop, operate, and publish products principally through Rockstar Games, 2K, and Zynga. Our products are currently designed for console gaming systems, mobile, including smartphones and tablets, and personal computer ("PC"). We deliver our products through physical retail, digital download, online platforms, and cloud streaming services.

Current wording

We are a leading developer, publisher, and marketer of interactive entertainment for consumers around the globe. We develop, operate, and publish products principally through Rockstar Games, 2K, and Zynga. Our products are currently designed for console gaming systems, mobile, including smartphones and tablets, and personal computer ("PC"). We deliver our products through digital download, online platforms, cloud streaming services, and physical retail.

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 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 series, 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 470 million units worldwide. Our most recent installment, Grand Theft Auto V, which was released in 2013, has sold-in over 230 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 series and will release Grand Theft Auto VIon November 19, 2026, during the current fiscal year. The label released its first trailer for the title in December 2023 and the second in May 2025, and pre-orders for the title commenced in June 2026. Red Dead Redemption 2, which has been a critical and commercial success that set numerous entertainment industry records, has sold-in more than 85 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 series, to continue to be a leader in the action/adventure product category and to create groundbreaking entertainment. 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 475 million units worldwide. Our most recent installment, Grand Theft Auto V, which was released in 2013, has sold-in over 230 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 series and will release Grand Theft Auto VIon November 19, 2026, during the current fiscal year. The label has released several trailers and other marketing content for the title, including an Extended Look that debuted on Netflix, which featured nearly 30 minutes of gameplay footage. Pre-orders for the title commenced in June 2026, generating initial demand that has outpaced historical benchmarks for the series. Red Dead Redemption 2, which has been a critical and commercial success that set numerous entertainment industry records, has sold-in more than 85 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

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 series, particularly around new releases within those series, 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 12.8% of our net revenue for the three months ended June 30, 2026. The timing of our Grand Theft Auto product releases may affect our financial performance on a quarterly and annual basis. Rockstar will 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 series, particularly around new releases within those series, some of which have annual or biennial releases. In particular, our Grand Theft Auto products have historically accounted for a significant portion of our revenue. Sales of Grand Theft Auto products generated 12.6% of our net revenue for the six months ended September 30, 2026. The timing of our Grand Theft Auto product releases may affect our financial performance on a quarterly and annual basis. Rockstar Games will release Grand Theft Auto VI on November 19, 2026.

Previous wording

To date we have also announced that, during the remainder of fiscal year 2027, 2K plans to release NBA 2K27, PGA 2K27 and WWE 2K27.

Current wording

During fiscal year 2027, 2K released NBA 2K27. To date we have also announced that, during the remainder of fiscal year 2027, 2K plans to release PGA 2K27 and WWE 2K27.

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 41.8% of our net revenue for the three months ended June 30, 2026. The success of our business is dependent upon consumer acceptance of these platforms and the continued growth in the installed base of these platforms, which has been and could be impacted by global economic factors, including global tariff policies. When new hardware platforms are introduced, demand for interactive entertainment developed for older platforms typically declines, which may negatively affect our business during the market transition to the new consoles. 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 or pricing of consoles, which may also affect demand for our products. We manage our product delivery on each current and future platform in a manner we believe to be most effective to maximize our revenue opportunities and achieve the desired return on our investments in product development. Accordingly, our strategy for these platforms is to focus our development efforts on a select number of the highest quality titles.

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 41.4% of our net revenue for the six months ended September 30, 2026. The success of our business is dependent upon consumer acceptance of these platforms and the continued growth in the installed base of these platforms, which has been and could be impacted by global economic factors, including global tariff policies. When new hardware platforms are introduced, demand for interactive entertainment developed for older platforms typically declines, which may negatively affect our business during the market transition to the new consoles. 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 or pricing of consoles, which may also affect demand for our products. We manage our product delivery on each current and future platform in a manner we believe to be most effective to maximize our revenue opportunities and achieve the desired return on our investments in product development. Accordingly, our strategy for these platforms is to focus our development efforts on a select number of the highest quality titles.

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 98.3% of our net revenue for the three months ended June 30, 2026. 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 97.9% of our net revenue for the six months ended September 30, 2026. 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 three months ended June 30, 2026, Net Bookings decreased by $37.2 as compared to the prior year period. The decrease was primarily driven by lower Net Bookings from our Grand Theft Auto series and Color Block Jam partially offset by higher Net Bookings from NBA 2K.

Current wording

For the six months ended September 30, 2026, Net Bookings decreased by $396.4 as compared to the prior year period. The decrease was primarily driven by lower Net Bookings from our Borderlands franchise, Color Block Jam, our Mafia franchise, NBA 2K, and Match Factory!.

Previous wording

(1) Includes $3.1 and $(41.0) of stock-based compensation expense in 2026 and 2025, respectively, in software development costs and royalties.

Current wording

(1) Includes $3.4 and $4.8 of stock-based compensation expense in 2026 and 2025, respectively, in software development costs and royalties.

Previous wording

Net revenue from mobile decreased by $39.4 and accounted for 49.7% of our total net revenue for the three months ended June 30, 2026, as compared to 53.3% for the prior year period. The decrease in net revenue from mobile was primarily driven by lower net revenue from Color Block Jam. Net revenue from console games increased by $89.9 and accounted for 41.8% of our total net revenue for the three months ended June 30, 2026, as compared to 36.6% for the prior year period. The increase in net revenue from console games was primarily driven by higher net revenue from NBA 2Kand our Borderlands franchise, the latest installment of which, Borderlands 4, released in September 2025. Net revenue from PC and other decreased by $20.4 and accounted for 8.5% of our total net revenue for the three months ended June 30, 2026, as compared to 10.1% for the prior year period. The decrease in net revenue from PC and other was primarily driven by lower net revenue from our Grand Theft Auto series.

Current wording

Net revenue from mobile decreased by $90.5 and accounted for 48.8% of our total net revenue for the three months ended September 30, 2026, as compared to 46.3% for the prior year period. The decrease in net revenue from mobile was primarily driven by lower net revenue from Color Block Jam, Match Factory!, NBA 2K, Toy Blast, and Merge Dragons!. Net revenue from console games decreased by $104.6 and accounted for 41.1% of our total net revenue for the three months ended September 30, 2026, as compared to 40.6% for the prior year period. The decrease in net revenue from console games was primarily driven by lower net revenue from our Borderlandsand Mafia franchises. Net revenue from PC and other decreased by $81.7 and accounted for 10.1% of our total net revenue for the three months ended September 30, 2026, as compared to 13.1% for the prior year period. The decrease in net revenue from PC and other was primarily driven by lower net revenue from our Borderlandsand Mafia franchises.

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 $33.7 and accounted for 84.1% of net revenue for the three months ended June 30, 2026, as compared to 83.5% of net revenue for the prior year period. The increase in net revenue from RCS was primarily driven by higher net revenue from NBA 2K, partially offset by lower net revenue from Color Block Jam. Net revenue from full game and other decreased by $3.6 and accounted for 15.9% of net revenue for the three months ended June 30, 2026 as compared to 16.5% of net revenue for the prior year period. The decrease in net revenue from full game and other was primarily driven by lower net revenue from our Grand Theft Auto series, and PGA TOUR 2K, partially offset by higher net revenue from NBA 2Kand our Borderlands franchise.

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 decreased by $65.7 and accounted for 80.8% of net revenue for the three months ended September 30, 2026, as compared to 71.9% of net revenue for the prior year period. The decrease in net revenue from RCS was primarily driven by lower net revenue from Color Block Jamand Match Factory!. Net revenue from full game and other decreased by $211.1 and accounted for 19.2% of net revenue for the three months ended September 30, 2026 as compared to 28.1% of net revenue for the prior year period. The decrease in net revenue from full game and other was primarily driven by lower net revenue from our Borderlandsand Mafia franchises.

Previous wording

Net revenue from digital online channels increased by $30.7 and accounted for 98.3% of our total net revenue for the three months ended June 30, 2026, as compared to 98.2% for the prior year period. The increase was primarily driven by higher net revenue from NBA 2K, partially offset by lower net revenue from Color Block Jam and our Grand Theft Auto series. Net revenue from physical retail and other channels decreased by $0.6 and accounted for 1.7% of our total net revenue for the three months ended June 30, 2026, as compared to 1.8% for the same period in the prior year period.

Current wording

Net revenue from digital online channels decreased by $234.3 and accounted for 97.4% of our total net revenue for the three months ended September 30, 2026, as compared to 95.5% for the prior year period. The decrease was primarily driven by lower net revenue from our Borderlandsand Mafia franchises, Color Block Jamand Match Factory! The decrease was partially offset by higher net revenue from our Grand Theft Auto series. Net revenue from physical retail and other channels decreased by $42.5 and accounted for 2.6% of our total net revenue for the three months ended September 30, 2026, as compared to 4.5% for the same period in the prior year period. The decrease was primarily driven by lower net revenue from our Borderlandsand Mafia franchises.

Previous wording

Gross profit as a percentage of net revenue for the three months ended June 30, 2026 was 57.5% as compared to 62.9% for the prior year period. The decrease in gross profit as a percentage of net revenue was primarily driven by the reversal of expense related to the forfeiture of awards in the prior year.

Current wording

Gross profit as a percentage of net revenue for the three months ended September 30, 2026 was 57.5% as compared to 55.3% for the prior year period. The increase in gross profit as a percentage of net revenue was primarily driven by lower amortization of capitalized software and development costs primarily due to the timing of releases.

Previous wording

Changes in foreign currency exchange rates increased net revenue by $0.6 and increased gross profit by $1.7 for the three months ended June 30, 2026 as compared to the prior year period.

Current wording

Changes in foreign currency exchange rates decreased net revenue by $0.6 and decreased gross profit by $3.8 for the three months ended September 30, 2026 as compared to the prior year period.

Previous wording

Changes in foreign currency exchange rates increased total operating expenses by $2.7 for the three months ended June 30, 2026, as compared to the prior year period.

Current wording

Changes in foreign currency exchange rates decreased total operating expenses by $3.2 for the three months ended September 30, 2026, as compared to the prior year period.

Previous wording

Depreciation and amortization expenses decreased by $2.2 for the three months ended June 30, 2026, as compared to the prior year period, primarily driven by lower IT infrastructure expense.

Current wording

Depreciation and amortization expenses decreased by $0.7 for the three months ended September 30, 2026, as compared to the prior year period.

Previous wording

In the prior year period, when compared to the statutory rate of 21%, the effective tax rate of 13.8% for the three months ended June 30, 2025 was primarily due to tax expense of $5.6 related to an increase in the U.S. and international valuation allowances and $2.9 by geographic mix of earnings and changes in reserves, offset by tax benefits of $4.9 from employee stock-based compensation, tax benefits of $2.6 from tax credits.

Current wording

In the prior year period, 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.

Previous wording

The change in effective tax rate, when compared to the prior year period's effective tax rate, is primarily driven by higher tax benefits from geographic mix of earnings offset by decreased tax benefits from tax credits and employee stock-based compensation.

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 benefits from geographic mix of earnings and decreased expense from changes in valuation allowances, offset by tax expense related to tax credits.

Previous wording

On July 4, 2025, the One Big Beautiful Bill Act ("OBBB") was signed into law. OBBB includes significant provisions, including but not limited to (1) permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act of 2017 ("TCJA"), (2) modifications to the international provisions relating to Base Erosion Anti Abuse Act ("BEAT"), Global Intangible Low-Tax Income ("GILTI") and Foreign Derived Deduction Eligible Income ("FDDEI"), (3) permanent reinstatement deduction for domestic research expenditures and 100% bonus depreciation for certain qualified property, and (4) modifications to tax credits. The legislation has multiple effective dates, with certain provisions effective in the fiscal year ended March 31, 2026 and others implemented in future periods. We have estimated the accounting for income tax effects of OBBB in our projected annual effective tax rate. We are continuing to evaluate the impact of OBBB on the Company. It is possible that these changes could have an adverse impact on our effective tax rate, tax payments, financial condition, or results of operations. The tax law is complex and additional interpretive guidance may be issued that could affect the interpretations and assumptions we have made, as well as actions we may take as a result of OBBB.

Current wording

On July 4, 2025, the One Big Beautiful Bill Act ("OBBB") was signed into law. OBBB includes significant provisions, including but not limited to (1) permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act of 2017 ("TCJA"), (2) modifications to the international provisions relating to Base Erosion and Anti Abuse Act ("BEAT"), Global Intangible Low-Tax Income ("GILTI") and Foreign Derived Deduction Eligible Income ("FDDEI"), (3) permanent reinstatement deduction for domestic research expenditures and 100% bonus depreciation for certain qualified property, and (4) modifications to tax credits. The legislation has multiple effective dates, with certain provisions effective in the fiscal year ended March 31, 2026 and others implemented in future periods. We have estimated the accounting for income tax effects of OBBB in our projected annual effective tax rate. We are continuing to evaluate the impact of OBBB on the Company. It is possible that these changes could have an adverse impact on our effective tax rate, tax payments, financial condition, or results of operations. The tax law is complex and additional interpretive guidance may be issued that could affect the interpretations and assumptions we have made, as well as actions we may take as a result of OBBB.

Previous wording

Selling and marketing expenses decreased by $39.5 for the three months ended June 30, 2026, as compared to the prior year period, primarily driven by lower marketing expense for Color Block Jam, Match Factory!, and our Sid Meier's Civilization and Borderlands franchises. This was partially offset by higher personnel expense.

Current wording

Selling and marketing expenses decreased by $131.3 for the six months ended September 30, 2026, as compared to the prior year period, primarily driven by lower marketing expense for our Borderlands franchise, Color Block Jam, and Match Factory!, partially offset by higher marketing expense for our Grand Theft Auto series.

Previous wording

Research and development expenses increased by $17.4 for the three months ended June 30, 2026, as compared to the prior year period, primarily driven by higher personnel expense, partially offset by the timing of additional R&D-related credits related to certain titles.

Current wording

Research and development expenses increased by $3.8 for the six months ended September 30, 2026, as compared to the prior year period, primarily driven by higher personnel expense and higher IT infrastructure expense for cloud-based services, partially offset by lower production expenses.

Previous wording

General and administrative expenses increased by $18.9 for the three months ended June 30, 2026, as compared to the prior year period, primarily driven by (i) higher personnel expense, (ii) higher IT-related expenses for cloud-based services and IT infrastructure, and (iii) higher professional fees.

Current wording

General and administrative expenses increased by $24.4 for the six months ended September 30, 2026, as compared to the prior year period, primarily driven by (i) higher IT-related expenses for cloud-based services and IT infrastructure, (ii) higher personnel expense, and (iii) higher online support services expense.

Previous wording

Interest and other, net was an expense of $13.8 for the three months ended June 30, 2026, as compared to an expense of $35.4 for the prior year period. The net decrease in expense was primarily driven by (i) lower interest expense due to lower outstanding debt balances because we repaid our 2025 Notes in April 2025 and our 2026 Notes in March 2026 (refer to Note 9 - Debt), (ii) higher interest income primarily due to higher interest rates, and (iii) a decrease in foreign currency losses.

Current wording

Interest and other, net was an expense of $8.2 for the six months ended September 30, 2026, as compared to $52.9 for the prior year period. The net decrease in expense was primarily driven by (i) lower interest expense due to lower outstanding debt balances due to the repayment of our 2025 Notes in April 2025 and our 2026 Notes in March 2026 (refer to Note 10 - Debt), (ii) changes in fair value based on the observable price changes of our long-term investments, and (iii) higher interest income due to higher interest rates.

Previous wording

The benefit from income taxes for the three months ended June 30, 2026 is based on our projected annual effective tax rate for fiscal year 2027, adjusted for specific items that are required to be recognized in the period in which they are incurred. The benefit from income taxes was $15.2 for the three months ended June 30, 2026, as compared to the benefit from income taxes of $1.9 for the prior year period.

Current wording

The benefit from income taxes for the six months ended September 30, 2026 is based on our projected annual effective tax rate for fiscal year 2027, adjusted for specific items that are required to be recognized in the period in which they are incurred. The benefit from income taxes was $73.1 for the six months ended September 30, 2026, as compared to the provision for income taxes of $16.5 for the prior year period.

Previous wording

For the three months ended June 30, 2026, net loss was $34.1, as compared to a net loss of $11.9 in the prior year period. Basic and diluted loss per share for the three months ended June 30, 2026 was $0.18, as compared to basic and diluted loss per share of $0.07 in the prior year period. Basic weighted average shares of 186.2 were 5.4 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 and grants 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 six months ended September 30, 2026, net loss was $88.1, as compared to net loss of $145.8 in the prior year period. For the six months ended September 30, 2026, basic and diluted loss per share was $0.47 as compared to basic and diluted loss per share of $0.80 in the prior year period. Basic weighted average shares of 186.7 were 4.0 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 11 - Loss Per Share to our Condensed Consolidated Financial Statements for additional information.

Previous wording

On May 19, 2025, we entered into an arrangement to sell designated pools of high credit quality accounts receivable under an uncommitted accounts receivables purchase facility in an initial aggregate amount of up to $215.0 to an unaffiliated financial institution on a true sale basis. As these accounts receivable are sold without recourse, we do not retain the associated risks of lack of payment due to insolvency of the account debtors following the transfer of such accounts receivable to such financial institution. We will continue to collect cash from our account debtors and remit to the financial institution. We will derecognize the carrying value of the financial assets transferred and recognize a net gain or loss on the sale under Interest and other, net on our Consolidated Statements of Operations. The proceeds from these arrangements will be reflected as cash provided by operating activities in the Consolidated Statement of Cash Flows.

Current wording

On May 19, 2025, we entered into an arrangement to sell designated pools of high credit quality accounts receivable under an uncommitted accounts receivables purchase facility in an initial aggregate amount of up to $215.0 to an unaffiliated financial institution on a true sale basis. As these accounts receivable are sold without recourse, we do not retain the associated risks of lack of payment due to insolvency of the account debtors following the transfer of such accounts receivable to such financial institution. We will continue to collect cash from our account debtors and remit to the financial institution. We will derecognize the carrying value of the financial assets transferred and recognize a net gain or loss on the sale under Interest and other, net on our Condensed Consolidated Statements of Operations. The proceeds from these arrangements will be reflected as cash provided by operating activities in the Consolidated Statement of Cash Flows.

Previous wording

No receivables were sold under this facility during the three months ended June 30, 2026. We may utilize this facility in future periods depending on cash flow needs and market conditions.

Current wording

No receivables were sold under this facility during the six months ended September 30, 2026. We may utilize this facility in future periods depending on cash flow needs and market conditions.

Previous wording

As of June 30, 2026, we had $461.7 of short-term investments, which primarily consisted of bank time deposits with maturities greater than 90 days. From time to time, we may make additional short-term investments depending on future market conditions and liquidity needs.

Current wording

As of September 30, 2026, we had $524.2 of short-term investments, which primarily consisted of bank time deposits with maturities greater than 90 days. From time to time, we may make additional short-term investments depending on future market conditions and liquidity needs.

Previous wording

As of June 30, 2026, there were no borrowings under the 2022 Credit Agreement, and we had approximately $997.5 available for additional borrowings.

Current wording

As of September 30, 2026, there were no borrowings under the 2022 Credit Agreement, and we had approximately $997.9 available for additional borrowings.

Previous wording

A majority of our trade receivables are derived from sales to major retailers, including digital storefronts and platform partners, and distributors. Our five largest customers accounted for 82.3% and 83.5% of net revenue during the three months ended June 30, 2026 and 2025, respectively. We had four customers who accounted for 27.6%, 21.1%, 15.0%, and 12.4% of our net revenue as of June 30, 2026, and four customers who accounted for 25.4%, 23.2%, 16.9%, and 12.9% our net revenue as of June 30, 2025. As of June 30, 2026 and March 31, 2026, five customers accounted for 69.5% and 69.6% of our gross accounts receivable, respectively. Customers that individually accounted for more than 10% of our gross accounts receivable balance comprised 55.6% and 57.7% of such balances at June 30, 2026 and March 31, 2026, respectively. We had three customers who accounted for 25.5%, 17.4%, and 12.7% of our gross accounts receivable as of June 30, 2026, and three customers who accounted for 22.7%, 21.0%, and 14.0% of our gross accounts receivable as of March 31, 2026. We did not have any additional customers that exceeded 10% of our gross accounts receivable as of June 30, 2026, and March 31, 2026. Based upon performing ongoing credit evaluations, maintaining trade credit insurance on a majority of our customers who sell our physical products, and our past collection experience, we believe that the receivable balances from these largest customers do not represent a significant credit risk, although we actively monitor each customer's creditworthiness and economic conditions that may affect our customers' business and access to capital. We are monitoring the current global economic conditions, including credit markets and other factors as it relates to our customers in order to manage the risk of uncollectible accounts receivable.

Current wording

A majority of our trade receivables are derived from sales to major retailers, including digital storefronts and platform partners, and distributors. Our five largest customers accounted for 80.8% and 81.5% of net revenue during the six months ended September 30, 2026 and 2025, respectively. We had four customers who accounted for 27.1%, 20.7%, 14.7%, and 11.9% of our net revenue for the six months ended September 30, 2026, and four customers who accounted for 24.9%, 22.7%, 15.1%, and 12.4% of our net revenue for the six months ended September 30, 2025. As of September 30, 2026 and March 31, 2026, five customers accounted for 76.2% and 69.6% of our gross accounts receivable, respectively. Customers that individually accounted for more than 10% of our gross accounts receivable balance comprised 67.2% and 57.7% of such balances at September 30, 2026 and March 31, 2026, respectively. We had three customers who accounted for 30.4%, 19.7%, and 17.1% of our gross accounts receivable as of September 30, 2026, and three customers who accounted for 22.7%, 21.0%, and 14.0% of our gross accounts receivable as of March 31, 2026. We did not have any additional customers that exceeded 10% of our gross accounts receivable as of September 30, 2026, and March 31, 2026. Based upon performing ongoing credit evaluations, maintaining trade credit insurance on a majority of our customers who sell our physical products, and our past collection experience, we believe that the receivable balances from these largest customers do not represent a significant credit risk, although we actively monitor each customer's creditworthiness and economic conditions that may affect our customers' business and access to capital. We are monitoring the current global economic conditions, including credit markets and other factors as it relates to our customers in order to manage the risk of uncollectible accounts receivable.

Previous wording

As of June 30, 2026, the amount of cash and cash equivalents held outside of the U.S. by our foreign subsidiaries was $1,232.0. These balances are dispersed across various locations around the world. We believe that such dispersion meets the business and liquidity needs of our foreign affiliates. In addition, we expect to have the ability to generate sufficient cash domestically to support ongoing operations for the foreseeable future.

Current wording

As of September 30, 2026, the amount of cash and cash equivalents held outside of the U.S. by our foreign subsidiaries was $945.0. These balances are dispersed across various locations around the world. We believe that such dispersion meets the business and liquidity needs of our foreign affiliates. In addition, we expect to have the ability to generate sufficient cash domestically to support ongoing operations for the foreseeable future.

Previous wording

At June 30, 2026, we had $1,446.1 of cash and cash equivalents and restricted cash and cash equivalents, compared to $1,638.1 at March 31, 2026. The decrease during the three months ended June 30, 2026 was primarily due to Net cash used in operating activities, which was primarily due to investments in software development and licenses, partially offset by sales of our products. This net decrease was also due to Net cash used in investing activities, which was primarily due to the purchase of short-term investments and fixed assets. This net decrease was partially offset by the increase in Net cash provided by financing activities, primarily due to issuance of common stock under our employee stock purchase plan.

Current wording

At September 30, 2026, we had $1,232.4 of cash and cash equivalents and restricted cash and cash equivalents, compared to $1,638.1 at March 31, 2026. The decrease during the six months ended September 30, 2026 was primarily due to Net cash used in investing activities, related to the purchase of short-term investments and fixed assets, including our purchase of the building where we previously leased office space in London, England (refer to Note 15 -Asset Acquisition). This net decrease was also due to Net cash used in operating activities, which was primarily driven by our investments in software development and licenses, partially offset by sales of our products. This net decrease was partially offset by Net cash provided by financing activities driven by issuance of common stock.

Previous wording

When compared to the prior year period, Net cash provided by financing activities decreased primarily due to proceeds from our underwritten public offering of common stock in the prior year.

Current wording

When compared to the prior year period, Net cash provided by financing activities decreased primarily due to proceeds from our underwritten public offering of common stock in the prior year, partially offset by the repayment of our 2025 Notes (refer to Note 10 - Debt).

Previous wording

In fiscal year 2027, we anticipate capital expenditures to be approximately $290.0. During the three months ended June 30, 2026, capital expenditures were $25.0.

Current wording

In fiscal year 2027, we anticipate capital expenditures to be approximately $290.0. During the six months ended September 30, 2026, capital expenditures were $163.3.

Previous wording

Net revenue earned outside of the United States is principally generated by our operations in Europe, Asia, Australia, Canada, and Latin America. For the three months ended June 30, 2026 and 2025, 40.0% and 40.1%, respectively, of our net revenue was earned outside the U.S. We are subject to risks inherent in foreign trade, including increased credit risks, tariffs and duties, fluctuations in foreign currency exchange rates, shipping delays and international political, regulatory and economic developments, all of which can have a significant effect on our operating results.

Current wording

Net revenue earned outside of the United States is principally generated by our operations in Europe, Asia, Australia, Canada, and Latin America. For the three months ended September 30, 2026 and 2025, 40.6% and 41.6%, respectively, of our net revenue was earned outside the U.S. We are subject to risks inherent in foreign trade, including increased credit risks, tariffs and duties, fluctuations in foreign currency exchange rates, shipping delays and international political, regulatory and economic developments, all of which can have a significant effect on our operating results.