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Take-two Interactive Software, Inc.
Take Two Interactive Software : Annual Report for Fiscal Year Ending March 31, 2026 (Form 10-K)
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Take Two Interactive Software : Annual Report for Fiscal Year Ending March 31, 2026 (Form 10-K)

Management's Discussion and Analysis of Financial Condition and Results of Operations
Overview
Our Business
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. We are continually innovating the design and development of our products, including by investing in artificial intelligence ("AI") tools and technologies, in order to enhance game play, anticipate changes in consumer behavior, and evolve our business as new dynamics develop. Refer toItem 1 - Business for additional discussion.
Trends and Factors Affecting our Business
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 fiscal year ended March 31, 2026. The timing of our Grand Theft Auto product releases may affect our financial performance on a quarterly and annual basis. Rockstar plans to release Grand Theft Auto VI on November 19, 2026.
Economic Environment and Retailer Performance. We continue to monitor various macroeconomic and geopolitical factors, such as global tariff policies, that may affect our business in several areas, including consumer demand, inflation, pricing pressure on our products and third party hardware platforms, credit quality of our receivables, and foreign currency exchange rates. Actions we have taken to date and other potential actions we may take in the future in response to these factors could result in negative impacts in future periods.
The economic environment has affected our customers in the past and may do so in the future. There has been increased consolidation in our industry, which is extremely competitive, and larger, better capitalized competitors will be in a stronger position to withstand prolonged periods of economic downturn and sustain their business through periods of financial volatility. Also, bankruptcies or consolidations of our large retail customers could hurt our business, due to uncollectible accounts receivable and the concentration of purchasing power among the remaining large retailers.
Hardware Platforms. We derive a substantial portion of our revenue from the sale of products made for video game consoles manufactured by third parties. Such console revenue comprised 39.0% of our net revenue for the fiscal year ended March 31, 2026. The success of our business is dependent upon consumer acceptance of these platforms and the continued growth in the installed base of these platforms, which has been and could be impacted by global economic factors, including global tariff policies. When new hardware platforms are introduced, demand for interactive entertainment developed for older platforms typically declines, which may negatively affect our business during the market transition to the new consoles. 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.
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 97.0% of our net revenue for the fiscal year ended March 31, 2026. We expect online delivery of games and game offerings to continue to be the primary part of our business over the long term.
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 principally through the payment processing systems of these platform providers, as well as our direct-to-consumer commerce platform. 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.
Player acquisition costs. Principally for our mobile titles, we use advertising and other forms of player acquisition and retention to grow and retain our player audience. These expenditures, which are recorded within Selling and marketing in our Consolidated Statements of Operations, generally relate to the promotion of new game launches and ongoing performance-based programs to drive new player acquisition and lapsed player reactivation. Over time, the effectiveness or cost of these acquisition and retention-related programs may change, affecting our operating results.
Content Release Highlights
During fiscal year 2026, 2K released Mafia: The Old Country, NBA 2K26, Borderlands 4, and WWE 2K26. Rockstar plans to release Grand Theft Auto VI on November 19, 2026.
Fiscal 2026 Financial Summary
Our net revenue for the fiscal year ended March 31, 2026 was led by a variety of our top franchises, primarily NBA 2K, Grand Theft Auto, Borderlands, Red Dead Redemption, and WWE 2K, as well as our top mobile contributors, primarily Toon Blast, Match Factory!, Empires & Puzzles, and Color Block Jam. Our net revenue for the fiscal year ended March 31, 2026 was $6,656.4, an increase of $1,022.8 or 18.2% compared to the fiscal year ended March 31, 2025.
Our operating loss for the fiscal year ended March 31, 2026 was $104.2 compared to operating loss of $4,391.1 for fiscal year ended March 31, 2025, primarily driven by Goodwill impairment charges of $3,545.2 in the prior year, with no corresponding expense in the current year, as well as, higher sales of our products. For the fiscal year ended March 31, 2026, our net loss was $298.2, as compared to net loss of $4,478.9 in the prior year. Basic and diluted loss per share for the fiscal year ended March 31, 2026 was $1.62, as compared to Basic and diluted loss per share of $25.58 for the fiscal year ended March 31, 2025.
At March 31, 2026, we had $1,638.1 of Cash, cash equivalents, and restricted cash and cash equivalents, compared to $1,559.2 at March 31, 2025. This increase was primarily driven by proceeds from our May 2025 underwritten public offering of common stock (refer toNote 12 - Loss Per Share) and positive cash flow from product sales. These increases were partially offset by the repayment of our 2025 Notes and 2026 Notes (refer toNote 11 - Debt), as well as continued investments in software, fixed assets, and short-term investments.
Critical Accounting Policies and Estimates
Our most critical accounting policies, which are those that require significant judgment, include revenue recognition, capitalization and recognition of software development costs and licenses, fair value estimates including valuation of goodwill and intangible assets, valuation and recognition of stock-based compensation, and income taxes. SeeNote 1 - Basis of Presentation and Significant Accounting Policies in the Notes to our Consolidated Financial Statements in this Annual Report on Form 10-K.
Recently Adopted and Recently Issued Accounting Pronouncements
SeeNote 1 - Basis of Presentation and Significant Accounting Policies.
Operating Metric
Net Bookings
We monitor Net Bookings as a key operating metric in evaluating the performance of our business. Net Bookings is defined as the net amount of products and services sold digitally or sold-in physically during the period and includes licensing fees, merchandise, in-game advertising, and publisher incentives. Net Bookings were as follows:
Fiscal Year Ended March 31,
2026 2025 Increase/(decrease) Increase/(decrease) %
Net Bookings $ 6,721.0 5,648.0 $ 1,073.0 19.0 %
For the fiscal year ended March 31, 2026, Net Bookings increased by $1,073.0 as compared to the prior year period. The increase was primarily driven by higher Net Bookings from our NBA 2K franchise, our Borderlands franchise, the latest installment of which, Borderlands 4, released in September 2025; Color Block Jam, which released in November 2024; and our Grand Theft Auto franchise.
Results of Operations
In this section, we discuss the results of our operations for the fiscal year ended March 31, 2026 compared to the fiscal year ended March 31, 2025. For the comparison of fiscal year 2025 to fiscal year 2024, refer toPart II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the year ended March 31, 2025.
The following tables set forth, for the periods indicated, our Consolidated Statements of Operations, net revenue by platform, net revenue by distribution channel, and net revenue by content type:
Fiscal Year Ended March 31,
2026 2025 2024
Total net revenue $ 6,656.4 100.0 % $ 5,633.6 100.0 % $ 5,349.6 100.0 %
Cost of revenue 2,846.7 42.8 % 2,571.4 45.7 % 3,107.8 58.1 %
Gross profit 3,809.7 57.2 % 3,062.2 54.3 % 2,241.8 41.9 %
Selling and marketing 1,770.8 26.6 % 1,683.7 29.9 % 1,550.2 29.0 %
Research and development
1,074.6 16.1 % 1,005.2 17.8 % 948.2 17.7 %
General and administrative
874.4 13.1 % 883.3 15.7 % 716.1 13.4 %
Depreciation and amortization 198.5 3.0 % 229.4 4.1 % 171.2 3.2 %
Goodwill impairment - - % 3,545.2 62.9 % 2,342.1 43.8 %
Business reorganization (4.4) (0.1) % 106.5 1.9 % 104.6 1.9 %
Total operating expenses 3,913.9 58.7 % 7,453.3 132.3 % 5,832.4 109.0 %
Income (loss) from operations (104.2) (1.5) % (4,391.1) (78.0) % (3,590.6) (67.1) %
Interest and other, net (93.6) (1.4) % (100.2) (1.8) % (112.2) (2.1) %
Loss before income taxes (197.8) (2.9) % (4,491.3) (79.8) % (3,702.8) (69.2) %
Provision for (benefit from) income taxes 100.4 1.5 % (12.4) (0.2) % 41.4 0.8 %
Net loss (298.2) (4.4) % (4,478.9) (80.0) % (3,744.2) (70.0) %
Fiscal Year Ended March 31,
2026 2025 2024
Net revenue by content:
Recurrent consumer spending $ 5,196.6 78.1 % $ 4,474.6 79.4 % $ 4,213.5 78.8 %
Full game and other 1,459.8 21.9 % 1,159.0 20.6 % 1,136.1 21.2 %
Net revenue by platform:
Mobile $ 3,333.0 50.1 % $ 2,942.0 52.2 % $ 2,748.0 51.4 %
Console 2,597.3 39.0 % 2,099.1 37.3 % 2,167.3 40.5 %
PC and other 726.1 10.9 % 592.5 10.5 % 434.3 8.1 %
Net revenue by distribution channel:
Digital online $ 6,459.7 97.0 % $ 5,431.8 96.4 % $ 5,112.2 95.6 %
Physical retail and other 196.7 3.0 % 201.8 3.6 % 237.4 4.4 %
Fiscal Years ended March 31, 2026 and 2025
2026 % of net revenue 2025 % of net revenue Increase/(decrease) % Increase/(decrease)
Total net revenue $ 6,656.4 100.0 % $ 5,633.6 100.0 % $ 1,022.8 18.2 %
Product costs 863.8 13.0 % 821.1 14.6 % 42.7 5.2 %
Game intangibles 662.2 9.9 % 811.0 14.4 % (148.8) (18.3) %
Licenses 463.5 7.0 % 365.8 6.5 % 97.7 26.7 %
Software development costs and royalties(1)
439.8 6.6 % 168.1 3.0 % 271.7 161.6 %
Internal royalties 417.4 6.3 % 405.4 7.2 % 12.0 3.0 %
Cost of revenue 2,846.7 42.8 % 2,571.4 45.7 % 275.3 10.7 %
Gross profit $ 3,809.7 57.2 % $ 3,062.2 54.3 % $ 747.5 24.4 %
(1) Includes $(27.9) and $9.4 of stock-based compensation expense in fiscal year 2026 and 2025, respectively.
For the fiscal year ended March 31, 2026, net revenue increased by $1,022.8, as compared to the prior year period. The increase was primarily driven by higher net revenue of $416.9 from our NBA 2K franchise; $210.3 from our Borderlands franchise, the latest installment of which, Borderlands 4, released in September 2025; $206.6 from Color Block Jam, which released in November 2024; $121.9 from Toon Blast; and $115.1 from our Grand Theft Auto franchise.
Recurrent consumer spending ("RCS") is generated from ongoing consumer engagement and includes revenue from virtual currency, add-on content, in-game purchases, and in-game advertising. Net revenue from recurrent consumer spending increased by $722.0 and accounted for 78.1% of net revenue for the fiscal year ended March 31, 2026, as compared to 79.4% for the prior year period. The increase was primarily driven by higher net revenue from our NBA 2K franchise and Color Block Jam. Net revenue from full game and other increased by $300.8 and accounted for 21.9% of net revenue for the fiscal year ended March 31, 2026, as compared to 20.6% for the prior year period. The increase was primarily driven by higher net revenue from our Borderlands and Grand Theft Auto franchises, and our Mafia franchise, the latest installment of which, Mafia: The Old Country released in August 2025, partially offset by lower net revenue from our Sid Meier's Civilization franchise, the latest installment of which, Civilization VII, released in February 2025.
Net revenue from mobile increased by $391.0 and accounted for 50.1% of our total net revenue in the fiscal year ended March 31, 2026, as compared to 52.2% in the prior year period. The increase was primarily driven by higher net revenue from Color Block Jam and Toon Blast. Net revenue from console games increased by $498.2 and accounted for 39.0% of our total net revenue in the fiscal year ended March 31, 2026, as compared to 37.3% in the prior year period. The increase was primarily driven by higher net revenue from our NBA 2K and Borderlands franchises. Net revenue from PC and other increased by $133.6 and accounted for 10.9% of our total net revenue in the fiscal year ended March 31, 2026, as compared to 10.5% in the prior year period. The increase was primarily driven by higher net revenue from our Borderlands, Grand Theft Auto, and NBA 2K franchises, partially offset by lower net revenue from our Sid Meier's Civilization franchise.
Net revenue from digital online channels increased by $1,027.9 and accounted for 97.0% of our total net revenue for the fiscal year ended March 31, 2026, as compared to 96.4% in the prior year period. The increase was primarily driven by higher net revenue from our NBA 2K franchise, Color Block Jam, our Borderlands and Grand Theft Auto franchises, and Toon Blast. Net revenue from physical retail and other channels decreased by $5.1 and accounted for 3.0% of our total net revenue for the fiscal year ended March 31, 2026, as compared to 3.6% for the prior year period.
Gross profit as a percentage of net revenue for the fiscal year ended March 31, 2026 was 57.2%, as compared to 54.3% in the prior year period. The increase in gross profit as a percentage of net revenue was primarily driven by (i) lower
amortization of intangible assets primarily due to higher impairments in the prior year and (ii) lower product costs as a percentage of net revenue, partially offset by higher amortization of capitalized software and development costs primarily due to the timing of releases.
Changes in foreign currency exchange rates increased net revenue by $9.9 and increased gross profit by $45.4, respectively, in the fiscal year ended March 31, 2026 as compared to the prior year period.
Operating Expenses
2026 % of net revenue 2025 % of net revenue Increase/(decrease) % Increase/(decrease)
Selling and marketing $ 1,770.8 26.6 % $ 1,683.7 29.9 % $ 87.1 5.2 %
Research and development
1,074.6 16.1 % 1,005.2 17.8 % 69.4 6.9 %
General and administrative
874.4 13.1 % 883.3 15.7 % (8.9) (1.0) %
Depreciation and amortization 198.5 3.0 % 229.4 4.1 % (30.9) (13.5) %
Goodwill impairment - - % 3,545.2 62.9 % (3,545.2) (100.0) %
Business reorganization (4.4) (0.1) % $ 106.5 1.9 % (110.9) (104.1) %
Total operating expenses(1)
$ 3,913.9 58.7 % $ 7,453.3 132.3 % $ (3,539.4) (47.5) %
(1)Includes stock-based compensation expense, which was allocated as follows:
2026 2025
Selling and marketing $ 95.3 $ 92.4
General and administrative 149.0 123.2
Research and development 88.9 99.0
Foreign currency exchange rates increased total operating expenses by $31.2 for the fiscal year ended March 31, 2026 as compared to the prior year period.
Selling and marketing
Selling and marketing expenses increased by $87.1 for the fiscal year ended March 31, 2026 as compared to the prior year period, primarily driven by higher personnel expense due to higher performance-based compensation, as well as, higher marketing expense for Color Block Jam and our Borderlands franchise. These increases were partially offset by lower marketing expenses for Match Factory!, Game of Thrones: Legends, our Sid Meier's Civilization franchise, and Star Wars: Hunters.
Research and development
Research and development expenses increased by $69.4 for the fiscal year ended March 31, 2026, as compared to the prior year period, primarily driven by (i) higher personnel expense due to the acquisition of Gearbox in June 2024 and higher performance-based compensation, and (ii) the timing of additional R&D-related credits related to certain titles. These increases were partially offset by lower production and development expenses for titles that are not technologically feasible.
General and administrative
General and administrative expenses decreased by $8.9 for the fiscal year ended March 31, 2026, as compared to the prior year period, primarily driven by lower legal fees and contingencies related to the IBM case against Zynga, partially offset by higher personnel expense due to higher performance-based compensation.
Depreciation and amortization
Depreciation and amortization expenses decreased by $30.9 for the fiscal year ended March 31, 2026, as compared to the prior year period, primarily driven by lower amortization related to intangible assets due to prior year impairments, partially offset by higher IT infrastructure expense and higher leasehold improvement expense for office buildouts.
Goodwill impairment
Goodwill impairment expense decreased by $3,545.2 for the fiscal year ended March 31, 2026, as compared to the prior year period, primarily driven by partial impairments recognized in the prior year, with no corresponding expense in the current year.
Business reorganization
Business reorganization expense decreased by $110.9 for the fiscal year ended March 31, 2026, as compared to the prior year period, primarily driven by our cost reduction program in fiscal year 2025 (the "2024 Plan").
Interest and other, net
2026 % of net revenue 2025 % of net revenue Increase/(decrease) % Increase/(decrease)
Interest income $ 85.1 1.3 % $ 98.6 1.8 % $ (13.5) (13.7) %
Interest expense (151.4) (2.3) % (167.3) (3.0) % 15.9 (9.5) %
Foreign currency exchange loss (17.4) (0.3) % (22.6) (0.4) % 5.2 (23.0) %
Other (9.9) (0.1) % (8.9) (0.2) % (1.0) 11.2 %
Interest and other, net $ (93.6) (1.4) % $ (100.2) (1.8) % $ 6.6 (6.6) %
Interest and other, net was expense of $93.6 for the fiscal year ended March 31, 2026, as compared to expense of $100.2 for the fiscal year ended March 31, 2025. The net decrease in expense was primarily driven by lower outstanding debt balances and lower interest expense due to the repayment of our 2025 Notes in April 2025 and our 2026 Notes in March 2026 (refer toNote 11 - Debt), decrease in foreign currency losses, and changes in fair value based on the observable price changes of our long-term investments. This was partially offset by lower interest income primarily due to lower interest rates.
Provision for income taxes
Our provision for income taxes for the fiscal year ended March 31, 2026 was $100.4 as compared to a benefit from income taxes of $12.4 for the fiscal year ended March 31, 2025.
When compared to the statutory rate of 21%, the effective tax rate of (50.8)% for the fiscal year ended March 31, 2026 was primarily driven by an expense of $113.4 from an increase in the U.S. valuation allowance expense, $18.2 from an increase in the foreign valuation allowance expense, and $79.0 from our geographic mix and foreign earnings, partially offset by a $45.7 benefit from tax credits and $39.7 of excess benefits from employee stock compensation.
When compared to the statutory rate of 21%, the effective tax rate of 0.3% for the fiscal year ended March 31, 2025 was primarily driven by an expense of $718.0 from nondeductible goodwill impairments, $222.7 from an increase in the U.S. valuation allowance expense, $25.5 from an increase in the foreign valuation allowance expense, and $41.4 from our geographic mix and foreign earnings, partially offset by a $54.5 benefit from tax credits anticipated to be utilized.
The change in the effective tax rate, when compared to the prior year period's effective tax rate, is primarily driven by the increased proportionate impact of the changes in valuation allowances and geographic mix of earnings. These were partially offset by increased tax benefits from employee stock compensation and the absence of expenses related to a prior year nondeductible goodwill impairment.
The accounting for share-based compensation will increase or decrease our effective tax rate based upon the difference between our share-based compensation expense and the deductions taken on our tax return, which depends on the stock price at the time of the employee award vesting.
The accounting for tax incentives and credits may increase or decrease our effective tax rate due to changes in tax legislation and elections we may make.
We anticipate that additional excess tax benefits or shortfalls from employee stock compensation, tax incentives or credits, and changes in our geographic mix of earnings could have a significant impact on our effective tax rate in the future. In addition, we are regularly examined by domestic and foreign taxing authorities. Examinations may result in tax assessments in excess of amounts claimed and the payment of additional taxes. We believe our tax positions comply with applicable tax law, and that we have adequately provided for reasonably foreseeable tax assessments. It is possible that settlement of audits or the expiration of the statute of limitations could have an impact on our effective tax rate in future periods.
On July 4, 2025, the One Big Beautiful Bill Act ("OBBB") was signed into law. OBBB includes significant provisions, including but not limited to (1) permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act of 2017 ("TCJA"), (2) modifications to the international provisions relating to Base Erosion Anti Abuse Act ("BEAT"), Global Intangible Low-Tax Income ("GILTI") and Foreign Derived Deduction Eligible Income ("FDDEI"), (3) permanent reinstatement deduction for domestic research expenditures and 100% bonus depreciation for certain qualified property, and (4) modifications to tax credits. The legislation has multiple effective dates, with certain provisions effective in the fiscal year ended March 31, 2026 and others implemented in future periods. We have estimated the accounting for income tax effects of
the OBBB, which reduced our estimated U.S. cash tax liability. It did not, however, impact our U.S. deferred tax assets or liabilities since we continue to maintain a full valuation allowance against U.S. net deferred tax assets. We are continuing to evaluate the impact of OBBB on the Company. It is possible that these changes could have an adverse impact on our effective tax rate, tax payments, financial condition, or results of operations. The new tax law is complex and additional interpretive guidance may be issued that could affect the interpretations and assumptions we have made, as well as actions we may take as a result of OBBB.
The American Rescue Plan Act of 2021 (the "ARPA"), among other things, includes provisions to expand the IRC Section 162(m) disallowance for deduction of certain compensation paid by publicly held corporations. Effective for tax years starting after December 31, 2026 (April 1, 2027 for the Company), the ARPA expands the limitation to cover the next five most highly compensated employees. The ARPA did not have a material impact on our Consolidated Financial Statements for the fiscal year ended March 31, 2026. We continue to evaluate the potential impact the ARPA may have on our operations and Consolidated Financial Statements in future periods.
The Inflation Reduction Act of 2022 (the "Inflation Reduction Act") includes a corporate alternative minimum tax ("CAMT") of 15% on the adjusted financial statement income ("AFSI") of corporations with an average AFSI exceeding $1.0 billion over a consecutive three-year period. It is possible that the CAMT could result in an additional tax liability over the regular federal corporate tax liability in a particular year based on differences between book and taxable income. 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.
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 fiscal year ended March 31, 2026. On January 5, 2026, the OECD released new administrative guidance outlining a "side-by-side" arrangement following agreement on key elements by the OECD/G20 Inclusive Framework on Pillar Two. It provides new safe harbors for U.S. multinational companies which would exempt U.S.-parented groups from two of the three Pillar Two top up taxes, extend the current Transitional Country-by-Country Reporting Safe Harbor by one year through the end of fiscal year ending March 31, 2028, and make the Simplified Effective Tax Rate Safe Harbor permanent. We will continue to evaluate the impact Pillar Two and any additional guidance may have on our results and operations.
Net loss and Loss per share
For the fiscal year ended March 31, 2026, net loss was $298.2, as compared to a net loss of $4,478.9 in the prior year. Basic and diluted loss per share for the fiscal year ended March 31, 2026 was $1.62, as compared to basic and diluted loss per share of $25.58 for the fiscal year ended March 31, 2025. Basic weighted average shares of 183.9 were 8.8 higher as compared to the prior year period basic weighted average shares, primarily due to our May 2025 underwritten public offering of common stock, as well as normal stock compensation activity, including vests, grants, and forfeitures in the prior year being fully outstanding in the current year. SeeNote 12 - Loss Per Share to our Consolidated Financial Statements for additional information.
Liquidity and Capital Resources
Our primary cash requirements are to fund (i) the development, manufacturing and marketing of our published products, (ii) working capital, (iii) capital expenditures, (iv) debt and interest payments, (v) tax payments, and (vi) acquisitions. We expect to rely on cash and cash equivalents as well as on short-term investments, funds provided by our operating activities, and our 2022 Credit Agreement to satisfy our working capital needs. Refer toNote 11 - Debt for additional discussion of our outstanding debt obligations.
Short-term Investments
As of March 31, 2026, we had $443.8 of short-term investments, which primarily consisted of bank time deposits with maturities greater than 90 days. From time to time, we may make additional short-term investments depending on future market conditions and liquidity needs.
Senior Notes
As of March 31, 2026, we had $2,500.0 of Senior Notes outstanding.
On March 28, 2026, we repaid our 2026 Notes with a principal amount of $550.0.
On April 14, 2025, we repaid our 2025 Notes with a principal amount of $600.0.
Credit Agreement
As of March 31, 2026, there were no borrowings under the 2022 Credit Agreement, and we had approximately $997.7 available for additional borrowings.
Convertible Notes
The 2026 Convertible Notes mature on December 15, 2026, unless earlier converted, redeemed, or repurchased in accordance with their terms, prior to the maturity date. The 2026 Convertible Notes do not bear regular interest, and the principal amount does not accrete. An aggregate principal amount of $29.4 of the 2026 Convertible Notes remained outstanding at March 31, 2026.
Financial Condition
We are subject to credit risks, particularly if any of our receivables represent a limited number of customers or are concentrated in foreign markets. If we are unable to collect our accounts receivable as they become due, it could adversely affect our liquidity and working capital position.
Generally, we have been able to collect our accounts receivable in the ordinary course of business. We do not hold any collateral to secure payment from customers. We have trade credit insurance on the majority of our customers to mitigate accounts receivable risk.
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 80.6%, 81.0% and 79.8% of net revenue during the fiscal year ended March 31, 2026, 2025 and 2024, respectively. As of March 31, 2026, and 2025, five customers comprised 69.6% and 72.1% of our gross accounts receivable, respectively, with our significant customers (those that individually comprised more than 10% of our gross accounts receivable balance) accounting for 57.7% and 61.0% of such balance at March 31, 2026, and 2025, respectively. We had three customers who accounted for 22.7%, 21.0%, and 14.0% of our gross accounts receivable as of March 31, 2026, and three customers who accounted for 24.0%, 21.3%, and 15.7% of our gross accounts receivable as of March 31, 2025. We did not have any additional customers that exceeded 10% of our gross accounts receivable as of March 31, 2026, and 2025. 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.
We believe that our current cash and cash equivalents, short-term investments, and projected cash flow from operations, along with availability under our 2022 Credit Agreement will provide us with sufficient liquidity to satisfy our cash requirements for working capital, capital expenditures, and commitments on both a short-term and long-term basis.
As of March 31, 2026, the amount of cash and cash equivalents held outside of the U.S. by our foreign subsidiaries was $1,359.7. 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.
Our Board of Directors has authorized the repurchase of up to 21.7 shares of our common stock. Under this program, we may purchase shares from time to time through a variety of methods, including in the open market or through privately negotiated transactions, in accordance with applicable securities laws. Repurchases are subject to the availability of stock, prevailing market conditions, the trading price of the stock, our financial performance and other conditions. The program does not require us to repurchase shares and may be suspended or discontinued at any time for any reason.
During the fiscal years ended March 31, 2026, 2025, and 2024, we did not repurchase shares of our common stock under the program, but in the past have repurchased a total of 11.7 shares of our common stock under the program, and as of March 31, 2026, 10.0 shares of our common stock remained available for repurchase under the share repurchase program.
Our changes in cash flows were as follows:
Fiscal Year Ended March 31,
2026 2025 2024
Net cash provided by (used in) operating activities $ 624.3 $ (45.2) $ (16.1)
Net cash used in investing activities (649.2) (151.5) (28.2)
Net cash provided by (used in) financing activities 94.6 650.5 (91.4)
Effects of foreign currency exchange rates on cash, cash equivalents, and restricted cash and cash equivalents 9.2 3.4 3.1
Net change in cash, cash equivalents, and restricted cash and cash equivalents $ 78.9 $ 457.2 $ (132.6)
At March 31, 2026, we had $1,638.1 of Cash, cash equivalents, and restricted cash and cash equivalents, compared to $1,559.2 at March 31, 2025. The increase was due to Net cash provided by operating activities, which was primarily due to sales of our products, partially offset by investments in software development and licenses. The increase was also primarily due to Net cash provided by financing activities, primarily related to proceeds from May 2025 underwritten public offering of common stock (refer toNote 12 - Loss Per Share), partially offset by the repayment of our 2025 Notes and 2026 Notes (refer toNote 11 - Debt). This net increase was partially offset by the decrease in Net cash used in investing activities, which was primarily due to the purchase of short-term investments and fixed assets.
Commitments
Refer toNote 14 - Commitments and Contingencies to our Consolidated Financial Statements for disclosures regarding our commitments.
Capital Expenditures
In fiscal year 2027, we anticipate capital expenditures to be $200.0.
Off-Balance Sheet Arrangements
As of March 31, 2026 and 2025, we did not have any material relationships with unconsolidated entities or financial parties, such as entities often referred to as structured finance or variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. As such, we are not exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in such relationships.
International Operations
Net revenue earned outside of the United States is principally generated by our operations in Europe, Asia, Australia, Canada, and Latin America. For the fiscal years ended March 31, 2026, 2025, and 2024, 40.8%, 39.5%, and 38.7%, respectively, of our net revenue was earned outside the U.S. 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.
Fluctuations in Quarterly Operating Results and Seasonality
We have experienced fluctuations in quarterly and annual operating results as a result of the timing of the introduction of new titles, variations in sales of titles developed for particular platforms, market acceptance of our titles, development and promotional expenses relating to the introduction of new titles, sequels or enhancements of existing titles, projected and actual changes in platforms, the timing and success of title introductions by our competitors, product returns, changes in pricing policies by us and our competitors, the accuracy of retailers' forecasts of consumer demand, the size and timing of acquisitions, the timing of orders from major customers, and order cancellations and delays in product shipment. Sales of our full game products are also seasonal, with peak demand typically occurring in the fourth calendar quarter during the holiday season. For certain of our software products with multiple performance obligations, we defer the recognition of our net revenue over an estimated service period which generally ranges from five to fifteen months. As a result, the quarter in which we generate the highest Net Bookings may be different from the quarter in which we recognize the highest amount of Net revenue. Quarterly comparisons of operating results are not necessarily indicative of future operating results.