TAKE TWO INTERACTIVE SOFTWARE INC (TTWO) · Quarterly Report (10-Q) SEC Filing

PART I. FINANCIAL INFORMATION Item 1. Financial Statements TAKE-TWO INTERACTIVE SOFTWARE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in millions, except per share amounts) June 30, 2026March 31, 2026 (Unaudited) ASSETS Current assets: Cash and cash equivalents$1,364.9 $1,545.5 Short-term investments461.7 443.8 Restricted cash and cash equivalents14.0 13.2 Accounts receivable, net of allowances of $0.8 and $0.9 at June 30, 2026 and March 31, 2026, respectively 606.9 737.0 Software development costs and licenses36.0 68.8 Contract assets69.7 89.7 Prepaid expenses and other403.9 301.5 Total current assets2,957.1 3,199.5 Fixed assets, net429.6 445.4 Right-of-use assets 321.9 334.6 Software development costs and licenses, net of current portion2,395.0 2,277.5 Goodwill1,060.9 1,061.9 Other intangibles, net1,493.6 1,653.2 Long-term restricted cash and cash equivalents67.2 79.4 Other assets338.9 331.7 Total assets$9,064.2 $9,383.2 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable$179.5 $211.0 Accrued expenses and other current liabilities914.3 1,117.8 Deferred revenue988.4 1,159.9 Lease liabilities71.5 70.1 Short-term debt, net629.9 30.0 Total current liabilities2,783.6 2,588.8 Long-term debt, net1,889.8 2,488.0 Non-current deferred revenue26.1 29.7 Non-current lease liabilities 353.5 370.2 Non-current software development royalties71.1 84.5 Deferred tax liabilities, net197.9 182.3 Other long-term liabilities133.8 128.8 Total liabilities$5,455.8 $5,872.3 Commitments and contingencies (See Note 11) Stockholders' equity: Preferred stock, $0.01 par value, 5.0 shares authorized; no shares issued and outstanding at June 30, 2026 and March 31, 2026 Common stock, $0.01 par value, 300.0 and 300.0 shares authorized; 210.7 and 209.1 shares issued and 187.0 and 185.4 outstanding at June 30, 2026 and March 31, 2026, respectively 2.1 2.1 Additional paid-in capital12,095.8 11,953.7 Treasury stock, at cost; 23.7 and 23.7 common shares at June 30, 2026 and March 31, 2026, respectively (1,020.6)(1,020.6) Accumulated deficit(7,391.1)(7,357.0) Accumulated other comprehensive loss(77.8)(67.3) Total stockholders' equity$3,608.4 $3,510.9 Total liabilities and stockholders' equity$9,064.2 $9,383.2 See accompanying Notes. 2 Table of Contents TAKE-TWO INTERACTIVE SOFTWARE, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in millions, except per share amounts)2025$1,422.8 $1,382.5 111.1 121.3 1,533.9 1,503.8 651.4 558.8 882.5 945.0 369.7 409.2 273.8 256.4 226.3 207.4 48.2 50.4 918.0 923.4 (35.5)21.6 22.8 16.5 (30.4)(38.9)(6.2)(13.0)(13.8)(35.4)(49.3)(13.8)(15.2)(1.9)$(34.1)$(11.9)$(0.18)$(0.07)2025$(34.1)$(11.9)(10.5)82.9 (10.5)82.9 $(44.6)$71.0 20262025 Operating activities: Net loss$(34.1)$(11.9) Adjustments to reconcile net loss to net cash used in operating activities: Amortization and impairment of software development costs and licenses107.5 46.1 Stock-based compensation86.0 40.7 Noncash lease expense14.5 13.1 Amortization and impairment of intangibles168.5 174.8 Depreciation40.1 42.1 30.4 38.9 6.7 16.9 Changes in assets and liabilities: Accounts receivable130.0 114.8 Software development costs and licenses(173.0)(164.6) Prepaid expenses, other current and other non-current assets(104.6)(43.5) Deferred revenue(174.9)(72.3) Accounts payable, accrued expenses and other liabilities(265.9)(239.8) Net cash used in operating activities(168.8)(44.7) Investing activities: Change in bank-time deposits(17.9)(0.7) (25.0)(25.1) (4.9)(6.6) (15.8)(4.4) Proceeds from sale of marketable securities11.2 Net cash used in investing activities(52.4)(36.8) Financing activities: Tax payment related to net share settlements on restricted stock awards(1.3)(1.3) Issuance of common stock31.8 1,219.6 (600.0) 30.5 618.3 Effects of foreign currency exchange rates on cash, cash equivalents, and restricted cash and cash equivalents(1.3)20.2 Net change in cash, cash equivalents, and restricted cash and cash equivalents(192.0)557.0 Cash, cash equivalents, and restricted cash and cash equivalents, beginning of year (1) 1,638.1 1,559.2 Cash, cash equivalents, and restricted cash and cash equivalents, end of period (1) $1,446.1 $2,116.2 (1) Cash, cash equivalents and restricted cash and cash equivalents shown on our Condensed Consolidated Statements of Cash Flow includes amounts in the Cash and cash equivalents, Restricted cash and cash equivalents, and Long-term restricted cash and cash equivalents on our Condensed Consolidated Balance Sheet. See accompanying Notes. 5 TAKE-TWO INTERACTIVE SOFTWARE, INC. CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Unaudited) (in millions) Three Months Ended June 30, 2026 Common StockAdditional Paid-in CapitalTreasury StockRetained Earnings/(Accumulated Deficit)Accumulated Other Comprehensive LossTotal Stockholders' Equity SharesAmountSharesAmount Balance, March 31, 2026209.1 $2.1 $11,953.7 (23.7)$(1,020.6)$(7,357.0)$(67.3)$3,510.9 Net loss (34.1) (34.1) Change in cumulative foreign currency translation adjustment (10.5)(10.5) Stock-based compensation 111.3 111.3 Issuance of restricted stock, net of forfeitures and cancellations1.4 Net share settlement of restricted stock awards (1.3) (1.3) Employee share purchase plan settlement0.2 31.8 31.8 0.3 0.3 Balance, June 30, 2026210.7 $2.1 $12,095.8 (23.7)$(1,020.6)$(7,391.1)$(77.8)$3,608.4 Three Months Ended June 30, 2025 Common StockAdditional Paid-in CapitalTreasury StockRetained Earnings/(Accumulated Deficit)Accumulated Other Comprehensive LossTotal Stockholders' Equity SharesAmountSharesAmount Balance, March 31, 2025200.8 $2.0 $10,312.0 (23.7)$(1,020.6)$(7,058.8)$(96.9)$2,137.7 Net loss (11.9) (11.9) Change in cumulative foreign currency translation adjustment 82.9 82.9 Stock-based compensation 54.3 54.3 Issuance of restricted stock, net of forfeitures and cancellations1.6 (1.3) (1.3) Employee share purchase plan settlement0.2 26.8 26.8 Issuance of common stock5.5 0.1 1,192.7 1,192.8 Other changes, net (0.4) (0.4) Balance, June 30, 2025208.1 $2.1 $11,584.1 (23.7)$(1,020.6)$(7,070.7)$(14.0)$3,480.9 See accompanying Notes. 6 Table of Contents TAKE-TWO INTERACTIVE SOFTWARE, INC. Notes to Condensed Consolidated Financial Statements (Unaudited) (in millions, except per share amounts) 1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES Take-Two Interactive Software, Inc. (the "Company," "we," "us," or similar pronouns) was incorporated in the state of Delaware in 1993. 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. Basis of Presentation The accompanying Condensed Consolidated Financial Statements are unaudited and include the accounts of the Company and its wholly-owned subsidiaries and, in our opinion, reflect all normal and recurring adjustments necessary for the fair presentation of our financial position, results of operations, and cash flows. Interim results may not be indicative of the results that may be expected for the full fiscal year. All intercompany accounts and transactions have been eliminated in consolidation. The preparation of these Condensed Consolidated Financial Statements in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") requires management to make estimates and assumptions that affect the amounts reported in these Condensed Consolidated Financial Statements and accompanying notes. As permitted under U.S. GAAP, interim accounting for certain expenses, including income taxes, is based on full year assumptions when appropriate. Actual results could differ materially from those estimates, which may affect economic conditions in a number of different ways and result in uncertainty and risk. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been omitted pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"), although we believe that the disclosures are adequate to make the information presented not misleading. These Condensed Consolidated Financial Statements and accompanying notes should be read in conjunction with our annual Consolidated Financial Statements and the notes thereto, included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2026. Certain immaterial reclassifications have been made to prior period amounts to conform to the current period presentation. Recently Issued Accounting Pronouncements Government Grants In December 2025, the Financial Accounting Standards Board ("FASB") issued ASU 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities. The ASU establishes the accounting and presentation for government grants received by a business entity. ASU 2025-10 is effective for fiscal years beginning after December 15, 2028 (April 1, 2029 for the Company) and interim periods within fiscal years beginning after December 15, 2029 (April 1, 2030 for the Company). We are currently evaluating the potential impact of adopting this guidance on our Consolidated Financial Statements and related disclosures. Internal-Use Software In September 2025, the FASB issued ASU 2025-06, Intangibles Goodwill and Other Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. The ASU amends the existing standard to remove all references to prescriptive and sequential software development project stages. Under this guidance, eligible software development costs will begin capitalization when management has authorized and committed to funding the software project, and it is probable that the project will be completed and the software will be used to perform the function intended. In evaluating whether it is probable the project will be completed, management is required to consider whether there is significant uncertainty associated with the development activities of the software. ASU 2025-06 is effective for fiscal years beginning after December 15, 2027 (April 1, 2028 for the Company) and interim periods within those annual periods. Early adoption is permitted as of the beginning of an annual reporting period. Entities may adopt the guidance using a prospective, retrospective, or modified retrospective approach. We are currently 7 evaluating the potential impact of adopting this guidance on our Consolidated Financial Statements and related disclosures, including the appropriate transition method. Expense Disaggregation Disclosures In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires additional, disaggregated disclosure about certain income statement expense line items. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026 (April 1, 2027 for the Company) and interim periods within fiscal years beginning after December 15, 2027 (April 1, 2028 for the Company). We are currently evaluating the potential impact of adopting this guidance on our Consolidated Financial Statements and related disclosures. 2. REVENUE FROM CONTRACTS WITH CUSTOMERS Disaggregation of Revenue Timing of recognition Net revenue recognized at a point in time is primarily comprised of the portion of revenue from software products that is recognized when the customer takes control of the product (i.e. upon delivery of the software product). Net revenue recognized over time is primarily comprised of revenue from our software products that include game related services, separate virtual currency transactions, and in-game purchases, which are recognized over an estimated service period. Net revenue recognized over time also includes in-game advertising, which is recognized over a contractual term. Net revenue by timing of recognition was as follows: 2025$1,295.0 $1,262.9 238.9 240.9 $1,533.9 $1,503.8 2025$1,289.8 $1,256.1 244.1 247.7 $1,533.9 $1,503.8 2025$762.3 $801.7 640.5 550.6 131.1 151.5 $1,533.9 $1,503.8 2025$1,507.3 $1,476.6 26.6 27.2 $1,533.9 $1,503.8 20262025 Time-based65 74 Market-based(1) 199 224 Performance-based(1) 66 75 Total Restricted Stock Units330 373 (1) Represents the maximum of shares eligible to vest Time-based restricted stock units granted pursuant to the 2022 Management Agreement in fiscal year 2027 will vest on June 1, 2027, June 1, 2028, and June 1, 2029, and those granted in fiscal year 2026, partially vested on June 1, 2026 and will also vest in part on June 1, 2027 and June 1, 2028. Time-based restricted stock units granted in fiscal year 2025, partially vested on June 1, 2025 and June 1, 2026 and will also vest in part on June 1, 2027. Market-based restricted stock units granted pursuant to the 2022 Management Agreement in fiscal year 2027 are eligible to vest on June 1, 2029, those granted in fiscal year 2026 are eligible to vest on June 1, 2028, and those granted in fiscal year 2025 are eligible to vest on June 1, 2027. Market-based restricted stock units are eligible to vest based on the Company's Total Shareholder Return (as defined in the relevant grant agreement) relative to the Total Shareholder Return (as defined in the relevant grant agreement) of the companies that constitute the NASDAQ 100 index under the 2022 Management Agreement (as defined in the relevant grant agreement) as of the grant date measured over a three-year period, as applicable. To earn the target number of market-based restricted stock units (which represents 50% of the number of the market-based restricted stock units set forth in the table above), the Company must perform at the 50th percentile, with the maximum number of market-based restricted stock units earned if the Company performs at the 75th percentile. Performance-based restricted stock units granted pursuant to the 2022 Management Agreement in fiscal year 2027 are eligible to vest on June 1, 2029, those granted in fiscal year 2026 are eligible to vest on June 1, 2028, and those granted in fiscal year 2025 are eligible to vest on June 1, 2027. The performance-based restricted stock units are tied to "RCS" (as defined in the relevant grant agreement) and are eligible to vest based on the Company's achievement of certain performance metrics (as defined in the relevant grant agreement) of "RCS" measured over a three-year period. The target number of performance-based restricted stock units that may be earned pursuant to these grants is equal to 50% of the grant amounts set forth in the above table (the numbers in the table represent the maximum number of performance-based restricted stock units that may be earned). At the end of each reporting period, we assess the probability of each performance metric and upon determination that certain thresholds are probable, we record expense for the unvested portion of the shares of performance-based restricted stock units. The unvested portions of time-based, market-based and performance-based restricted stock units held by ZMC were 1.1 and 1.3 as of June 30, 2026 and March 31, 2026, respectively. During the three months ended June 30, 2026, 0.4 restricted stock units previously granted to ZMC vested, and 0.1 restricted stock units were forfeited by ZMC. 10 Table of Contents 4. FAIR VALUE MEASUREMENTS Recurring fair value measurements The carrying amounts of our financial instruments, including cash and cash equivalents, restricted cash and cash equivalents, accounts receivable, prepaid expenses and other, accounts payable, and accrued expenses and other current liabilities, approximate fair value because of their short maturities. We follow a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of "observable inputs" and minimize the use of "unobservable inputs." The three levels of inputs used to measure fair value are as follows: Level 1 Quoted prices in active markets for identical assets or liabilities. Level 2 Observable inputs other than quoted prices included in Level 1, such as quoted prices for markets that are not active or other inputs that are observable or can be corroborated by observable market data. Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies, and similar techniques that use significant unobservable inputs. The table below segregates all assets and liabilities that are measured at fair value on a recurring basis (which is measured at least annually) into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date. Significant other observable inputs (level 2)Significant unobservable inputs (level 3)Total Assets:774.6 $ $ $774.6 Bank-time deposits 208.4 Short-term investments: 461.7 Restricted cash and cash equivalents: 12.5 Bank-time deposits 1.5 Restricted cash and cash equivalents, long term: 67.2 26.5 26.5 1,525.9 $ $26.5 $1,552.4 $0.1 $ $0.1 30.7 30.7 Total financial liabilities $30.8 $ $30.8 11 Table of Contents March 31, 2026 Quoted prices in active markets for identical assets (level 1)Significant other observable inputs (level 2)Significant unobservable inputs (level 3)Total Assets: Cash and cash equivalents: Money market funds$909.0 $ $ $909.0 Bank-time deposits204.5 204.5 Short-term investments: Bank-time deposits443.8 443.8 Restricted cash and cash equivalents: Money market funds11.9 11.9 Bank-time deposits1.2 1.2 Prepaid expenses and other: Foreign currency forward contracts 0.2 0.2 Restricted cash and cash equivalents, long term: Money market funds79.4 79.4 Other assets: Equity securities9.3 9.3 Private equity 23.6 23.6 Total financial assets$1,659.1 $0.2 $23.6 $1,682.9 Liabilities: Short-term debt, net: Convertible notes$ $30.0 $ $30.0 Total financial liabilities$ $30.0 $ $30.0 We did not have any transfers between Level 1 and Level 2 fair value measurements, nor did we have any transfers into or out of Level 3 during the three months ended June 30, 2026. Nonrecurring fair value measurements We hold equity investments in certain unconsolidated entities without a readily determinable fair value. These strategic investments represent less than a 20% ownership interest in each of the privately-held affiliates, and we do not maintain significant influence over or control of the entities. We have elected the practical expedient in Topic 321, Investments-Equity Securities, to measure these investments at cost less any impairment, adjusted for observable price changes, if any. Based on these considerations, we estimate that the carrying value of the acquired shares represents the fair value of the investment. At June 30, 2026, and March 31, 2026, we held $18.5 and $18.5, respectively, of such investments in Other assets within our Condensed Consolidated Balance Sheet. 12 5. SHORT-TERM INVESTMENTS Our Short-term investments consisted of the following: June 30, 2026 Gross Unrealized Cost or Amortized CostGainsLossesFair Value Short-term investments Bank-time deposits$461.7 $ $ $461.7 $461.7 $ $ $461.7 March 31, 2026 Gross Unrealized Cost or Amortized CostGainsLossesFair Value Short-term investments Bank-time deposits$443.8 $ $ $443.8 $443.8 $ $ $443.8 The following table summarizes the contracted maturities of our short-term investments at June 30, 2026: June 30, 2026 Amortized CostFair Value Short-term investments Due in 1 year or less$461.7 $461.7 $461.7 $461.7 6. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES Our risk management strategy includes the use of derivative financial instruments to reduce the volatility associated with changes in foreign currency exchange rates on earnings, cash flows, and certain balance sheet amounts. We do not enter into derivative financial contracts for speculative or trading purposes. We recognize derivative instruments as either assets or liabilities on our Consolidated Balance Sheets, and we measure those instruments at fair value. We classify cash flows from derivative transactions as cash flows from operating activities in our Consolidated Statements of Cash Flows. Foreign currency forward contracts The following table shows the gross notional amounts of foreign currency forward contracts: June 30, 2026March 31, 2026 Forward contracts to sell foreign currencies$338.0 $349.2 Forward contracts to purchase foreign currencies87.8 140.3 For the three months ended June 30, 2026 and 2025, we recorded a gain of $5.8 and a loss of $12.4, respectively, related to foreign currency forward contracts in Interest and other, net on our Condensed Consolidated Statements of Operations. Our foreign currency exchange forward contracts are not designated as hedging instruments under hedge accounting and are used to reduce the impact of foreign currency on certain balance sheet exposures. These instruments are generally short-term in nature, with typical maturities of less than one year, and are subject to fluctuations in foreign exchange rates. 13 Table of Contents 7. SOFTWARE DEVELOPMENT COSTS AND LICENSES Details of our capitalized software development costs and licenses were as follows: June 30, 2026March 31, 2026 CurrentNon-currentCurrentNon-current Software development costs, internally developed$22.8 $2,363.4 $46.1 $2,224.6 Software development costs, externally developed0.1 28.9 1.7 52.2 Licenses13.1 2.7 21.0 0.7 Software development costs and licenses$36.0 $2,395.0 $68.8 $2,277.5 During the three months ended June 30, 2026, $43.4 of impairment charges were recorded within Cost of revenue and were primarily related to a decision not to proceed with further development of certain interactive entertainment software products. 8. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accrued expenses and other current liabilities consisted of the following: June 30, 2026March 31, 2026 Software development royalties$347.1 $359.3 Compensation and benefits231.1 371.5 Licenses104.3 100.1 Marketing and promotions63.1 58.5 Tax payable39.8 36.1 Refund liability22.4 34.0 Deferred acquisition payments0.1 31.3 Interest payable20.3 29.2 Other86.0 97.8 Accrued expenses and other current liabilities$914.3 $1,117.8 9. DEBT The components of Long-term debt, net on our Condensed Consolidated Balance Sheet were as follows: Annual Interest RateMaturity DateJune 30, 2026Fair Value (Level 2) 2028 Notes4.95%March 28, 2028800.0 804.1 2029 Notes5.40%June 12, 2029300.0 305.7 2032 Notes4.00%April 14, 2032500.0 477.0 2034 Notes5.60%June 12, 2034300.0 307.1 Total$1,900.0 $1,893.9 Unamortized discount and issuance cost(10.2) Long-term debt, net$1,889.8 Annual Interest RateMaturity DateMarch 31, 2026Fair Value (Level 2) 2027 Notes3.70%April 14, 2027600.0 594.6 2028 Notes4.95%March 28, 2028800.0 807.3 2029 Notes5.40%June 12, 2029300.0 306.6 2032 Notes4.00%April 14, 2032500.0 477.0 2034 Notes5.60%June 12, 2034300.0 305.3 Total$2,500.0 $2,490.8 Unamortized discount and issuance cost(12.0) Long-term debt, net$2,488.0 14 Table of Contents The components of Short-term debt, net on our Condensed Consolidated Balance Sheet were as follows: Annual Interest RateMaturity DateJune 30, 2026Fair Value (Level 2) 2027 Notes3.70%April 14, 2027$600.0 $597.0 2026 Convertible Notes0.00%December 15, 202630.7 30.7 Total$630.7 $627.7 Unamortized discount and issuance cost(0.8) Short-term debt, net$629.9 Annual Interest RateMaturity DateMarch 31, 2026Fair Value (Level 2) 2026 Convertible Notes %December 15, 202630.0 30.0 Total$30.0 $30.0 Unamortized discount and issuance cost Short-term debt, net$30.0 The interest expense as it relates to our debt is recorded within Interest and other, net in our Condensed Consolidated Statements of Operations for the three months ended June 30, 2026 and 2025, respectively, and was as follows: 2025 0.8 6.9 5.6 5.6 9.9 9.9 4.1 4.1 5.0 5.0 4.2 4.2 $28.8 $36.5 Maturities 2027 (remaining)$29.4 20281,400.0 2029 2030300.0 2031 Thereafter800.0 Total2,529.4 Fair value adjustments1.3 Total face value$2,530.7 15 Table of Contents For a complete description of the terms, conditions, and covenants governing our Senior Notes, Credit Agreement and Convertible Notes, refer to Note 11 to the Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended March 31, 2026. Senior Notes The Senior Notes are the Company s senior unsecured obligations and rank equally with all of our other existing and future unsubordinated obligations. Interest is payable semi-annually. During the three months ended June 30, 2026, we made interest payments of $37.6. During the three months ended June 30, 2026 and 2025, we recognized $0.9 and $1.3, respectively, of amortization of debt issuance costs and $0.1 and $0.1, respectively, of amortization of the original issuance discount, within Interest and other, net. On March 28, 2026, we repaid our 2026 Notes with a principal amount of $550.0, with proceeds from our May 2025 equity issuance. On April 14, 2025, we repaid our 2025 Notes with a principal amount of $600.0, with proceeds from our June 2024 note offering. Credit Agreement Our credit agreement dated as of May 23, 2022, (as amended on May 19, 2025, the "2022 Credit Agreement"), provides a $1,000.0 unsecured five-year revolving credit facility that matures on May 19, 2030, subject to certain extension options. Loans under the 2022 Credit Agreement will bear interest at a rate of (a) 0.000% to 0.625% above an alternate base rate (6.75% at June 30, 2026) or (b) 1.000% to 1.625% above Secured Overnight Financing Rate ("SOFR"), approximately 3.65% at June 30, 2026, which rates are determined by the Company's credit rating. As of June 30, 2026, there were no borrowings under the 2022 Credit Agreement, and we had approximately $997.5 available for additional borrowings. Information related to availability on our 2022 Credit Agreement for each period was as follows: June 30, 2026March 31, 2026 Available borrowings$997.5 $997.7 Outstanding letters of credit2.5 2.3 Convertible Notes In conjunction with the acquisition of Zynga on May 23, 2022, we assumed Zynga's outstanding 0.25% Convertible Senior Notes due 2024 (the 2024 Convertible Notes ) and 0.00% Convertible Senior Notes due 2026 (the 2026 Convertible Notes and, together with the 2024 Convertible Notes, the Convertible Notes ). We have elected to account for these Convertible Notes, which are considered derivatives, using the fair value option (Level 2) under ASC 825, as the Convertible Notes were initially recognized at fair value under the acquisition method of accounting in connection with the acquisition of Zynga and we do not expect significant fluctuations in fair value through maturity. Any subsequent adjustments are recorded within Interest and other, net. 2026 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 June 30, 2026. We recorded $30.7 as the fair value of the remaining outstanding 2026 Convertible Notes, within Short-term debt, net, in our Condensed Consolidated Balance Sheet as of June 30, 2026. During the three months ended June 30, 2026 and 2025, we recognized a loss of $0.7 and a loss of $2.6, respectively, within Interest and other, net in our Condensed Consolidated Statements of Operations. 16 10. LOSS PER SHARE The following table sets forth the computation of basic and diluted loss per share:2025$(34.1)$(11.9)186.2 180.8 $(0.18)$(0.07)2025$920.0 $900.4 613.9 603.4 $1,533.9 $1,503.8 2025Increase/ (decrease)% Increase/ (decrease)$1,385.9 $1,423.1 $(37.2)(2.6)%2025$1,533.9 100.0 %$1,503.8 100.0 %651.4 42.5 %558.8 37.1 %882.5 57.5 %945.0 62.9 %369.7 24.1 %409.2 27.2 %273.8 17.8 %256.4 17.1 %226.3 14.8 %207.4 13.8 %48.2 3.1 %50.4 3.4 %918.0 59.8 %923.4 61.5 %(35.5)(2.3)%21.6 1.4 %22.8 1.5 %16.5 1.1 %(30.4)(2.0)%(38.9)(2.6)%(6.2)(0.4)%(13.0)(0.9)%(13.8)(0.9)%(35.4)(2.4)%(49.3)(3.2)%(13.8)(1.0)%(15.2)(1.0)%(1.9)(0.1)%$(34.1)(2.2)%$(11.9)(0.9)%2025$762.3 49.7 %$801.7 53.3 %640.5 41.8 %550.6 36.6 %131.1 8.5 %151.5 10.1 %$1,507.3 98.3 %$1,476.6 98.2 %26.6 1.7 %27.2 1.8 %$1,289.8 84.1 %$1,256.1 83.5 %244.1 15.9 %247.7 16.5 %%2025%Increase/ (decrease)% Increase/ (decrease) Total net revenue$1,533.9 100.0 %$1,503.8 100.0 %$30.1 2.0 % Product costs187.8 12.2 %210.4 14.0 %(22.6)(10.7)% Game intangibles154.3 10.1 %158.5 10.5 %(4.2)(2.6)% Software development costs and royalties (1) 135.1 8.8 %30.1 2.0 %105.0 348.8 % Licenses99.5 6.5 %70.9 4.7 %28.6 40.3 % Internal royalties74.7 4.9 %88.9 5.9 %(14.2)(16.0)% Cost of revenue651.4 42.5 %558.8 37.1 %92.6 16.6 % Gross profit$882.5 57.5 %$945.0 62.9 %$(62.5)(6.6)% (1) Includes $3.1 and $(41.0) of stock-based compensation expense in 2026 and 2025, respectively, in software development costs and royalties. For the three months ended June 30, 2026, net revenue increased by $30.1 as compared to the prior year period. The increase was primarily driven by higher net revenue of $89.0 from NBA 2K, partially offset by lower net revenue of $32.8 from Color Block Jam and $24.2 from our Grand Theft Auto series. 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 2K and 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. 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 2K and our Borderlands franchise. 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. 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. 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. 23 Operating Expenses 2026% of net revenue2025% of net revenueIncrease/ (decrease)% Increase/ (decrease) Selling and marketing$369.7 24.1 %$409.2 27.2 %$(39.5)(9.7)% Research and development273.8 17.8 %256.4 17.1 %17.4 6.8 % General and administrative226.3 14.8 %207.4 13.8 %18.9 9.1 % Depreciation and amortization48.2 3.1 %50.4 3.4 %(2.2)(4.4)% $918.0 59.8 %$923.4 61.5 %$(5.4)(0.6)% (1) Includes stock-based compensation expense, which was allocated as follows: 20262025 Selling and marketing$23.8 $24.4 Research and development19.4 21.1 General and administrative39.7 36.2 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. Selling and marketing 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. Research and development 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. General and administrative 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. Depreciation and amortization 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. Interest and other, net 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. Benefit from income taxes 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. When compared to the statutory rate of 21%, the effective tax rate of 30.8% for the three months ended June 30, 2026 was primarily driven by tax benefits of $16.9 related to geographic mix of earnings and changes in reserves. 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. 24 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. 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. 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 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. 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 three months ended June 30, 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 three months ended June 30, 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 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 25 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. 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 to Note 9 - Debt for additional discussion of our outstanding debt obligations. Accounts Receivable sale program 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. 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. Short-term investments 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. Senior Notes As of June 30, 2026, we had $2,500.0 of Senior Notes outstanding. Credit Agreement As of June 30, 2026, there were no borrowings under the 2022 Credit Agreement, and we had approximately $997.5 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 June 30, 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 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 26 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. 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 June 30, 2026, the amount of cash and cash equivalents held outside of the U.S. by our foreign subsidiaries was $1,232.0. These balances are dispersed across various locations around the world. We believe that such dispersion meets the business and liquidity needs of our foreign affiliates. In addition, we expect to have the ability to generate sufficient cash domestically to support ongoing operations for the foreseeable future. Our Board of Directors has authorized the repurchase of up to 21.7 shares of our common stock. Under this program, we may purchase shares from time to time through a variety of methods, including in the open market or through privately negotiated transactions, in accordance with applicable securities laws. Repurchases are subject to the availability of stock, prevailing market conditions, the trading price of the stock, our financial performance and other conditions. The program does not require us to repurchase shares and may be suspended or discontinued at any time for any reason. During the three months ended June 30, 2026, we did not repurchase shares of our common stock under the program, but in the past have repurchased a total of 11.7 shares of our common stock under the program, and as of June 30, 2026, 10.0 shares of our common stock remained available for repurchase under the share repurchase program. Our changes in cash flows were as follows: Three Months Ended June 30, (millions of dollars)20262025 Net cash used in operating activities$(168.8)$(44.7) Net cash used in investing activities(52.4)(36.8) Net cash provided by financing activities30.5 618.3 Effects of foreign currency exchange rates on cash, cash equivalents, and restricted cash and cash equivalents(1.3)20.2 Net change in cash, cash equivalents, and restricted cash and cash equivalents$(192.0)$557.0 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. 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. Commitments Refer to Note 11 - Commitments and Contingencies for disclosures regarding our commitments. 27 Capital Expenditures 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. 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 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. 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. Item 3. Quantitative and Qualitative Disclosures About Market Risk Market risk is the potential loss arising from fluctuations in market rates and prices. Our market risk exposures primarily include fluctuations in interest rates and foreign currency exchange rates. Interest Rate Risk Our exposure to fluctuations in interest rates relates primarily to our short-term investment portfolio and variable rate debt under the 2022 Credit Agreement. We seek to manage our interest rate risk by maintaining a short-term investment portfolio that includes bank-time deposits with high credit quality and maturities of less than two years. Since short-term investments mature relatively quickly and can be reinvested at the then-current market rates, interest income on a portfolio consisting of short-term securities is more subject to market fluctuations than a portfolio of longer-term maturities. However, the fair value of a short-term portfolio is less sensitive to market fluctuations than a portfolio of longer-term securities. We do not currently use derivative financial instruments in our short-term investment portfolio. Our investments are held for purposes other than trading. As of June 30, 2026, we had $461.7 of short-term investments. We also had $1,364.9 of cash and cash equivalents that are comprised primarily of money market funds and bank-time deposits. We determined that, based on the composition of our investment portfolio, there was no material interest rate risk exposure to our Condensed Consolidated Financial Statements or liquidity as of June 30, 2026. Historically, fluctuations in interest rates have not had a significant effect on our operating results. Under our 2022 Credit Agreement, loans will bear interest at a rate of (a) 0.000% to 0.625% above an alternate base rate (6.75% at June 30, 2026) or (b) 1.000% to 1.625% above SOFR, approximately 3.65% at June 30, 2026, which rates are determined by the Company's credit rating. At June 30, 2026, there were no borrowings under our 2022 Credit Agreement. Foreign Currency Exchange Rate Risk We transact business in foreign currencies and are exposed to risks resulting from fluctuations in foreign currency exchange rates. In particular, during the six months ended September 30, 2023, there was a significant devaluation of the Turkish Lira against the U.S. Dollar, which negatively affected our results. It is possible that further devaluations could occur, which would have a negative impact on our results. Accounts relating to foreign operations are translated into U.S. dollars using prevailing exchange rates at the relevant period end. Translation adjustments are included as a separate component of Stockholders' equity on our Condensed Consolidated Balance Sheets. 28 For the three months ended June 30, 2026 and 2025, our foreign currency translation adjustment was a loss of $10.5 and a gain of $82.9, respectively. The change in foreign currency translation adjustment was primarily driven by the strengthening of the U.S. Dollar against the British Pound during the three months ended June 30, 2026, compared to a significant weakening of the U.S. Dollar against the British Pound in the prior year period. For the three months ended June 30, 2026 and 2025, we recognized a foreign currency exchange transaction loss of $2.7 and a loss of $8.5, respectively, included in Interest and other, net in our Condensed Consolidated Statements of Operations. We use foreign currency forward contracts to mitigate foreign currency exchange rate risk associated with non-functional currency denominated cash balances and intercompany funding loans, non-functional currency denominated accounts receivable and non-functional currency denominated accounts payable. These transactions are not designated as hedging instruments and are accounted for as derivatives whereby the fair value of the contracts is reported as either assets or liabilities on our Condensed Consolidated Balance Sheets, and gains and losses resulting from changes in the fair value are reported in Interest and other, net, in our Condensed Consolidated Statements of Operations. We do not enter into derivative financial contracts for speculative or trading purposes. At June 30, 2026, we had $338.0 of forward contracts outstanding to sell foreign currencies in exchange for U.S. dollars and $87.8 of forward contracts outstanding to buy foreign currencies in exchange for U.S. dollars, all of which have maturities of less than one year. At March 31, 2026, we had $349.2 of forward contracts outstanding to sell foreign currencies in exchange for U.S. dollars and $140.3 of forward contracts outstanding to buy foreign currencies in exchange for U.S. dollars, all of which had maturities of less than one year. For the three months ended June 30, 2026 and 2025, we recorded a gain of $5.8 and a loss of $12.4, respectively, related to foreign currency forward contracts in Interest and other, net on our Condensed Consolidated Statements of Operations. As of June 30, 2026 and March 31, 2026, the fair value of these outstanding forward contracts were immaterial, and were included in Accrued expenses and other current liabilities when in a loss position, or in Prepaid expenses and other when in a gain position. The fair value of these outstanding forward contracts is estimated based on the prevailing exchange rates of the various hedged currencies as of the end of the period. Our hedging programs are designed to reduce, but do not entirely eliminate, the effect of currency exchange rate movements. We believe that the counterparties to these foreign currency forward contracts are creditworthy multinational commercial banks and that the risk of counterparty nonperformance is not material. Notwithstanding our efforts to mitigate some foreign currency exchange rate risks, there can be no assurance that our hedging activities will adequately protect us against the risks associated with foreign currency fluctuations. For the three months ended June 30, 2026, 40.0% of our revenue was generated outside the U.S. Using sensitivity analysis, a hypothetical 10.0% increase in the value of the U.S. dollar against all currencies would decrease revenues by 4.0%, while a hypothetical 10.0% decrease in the value of the U.S. dollar against all currencies would increase revenues by 4.0%. In our opinion, a substantial portion of this fluctuation would be offset by cost of revenue and operating expenses incurred in local currency. Item 4. Controls and Procedures Evaluation of Disclosure Controls and Procedures Based on an evaluation under the supervision and with the participation of management, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures as defined in rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended ("Exchange Act") were effective as of the end of the period covered by this report to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms and (ii) accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Changes in Internal Control Over Financial Reporting There were no changes in our internal control over financial reporting during the quarter ended June 30, 2026, which were identified in connection with management's evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Limitations on Effectiveness of Controls and Procedures In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Inherent limitations to any system of disclosure controls and procedures include, but are not limited to, the possibility of human error and the circumvention or overriding of such controls by one or more persons. In addition, we have 29 designed our system of controls based on certain assumptions, which we believe are reasonable, about the likelihood of future events, and our system of controls may therefore not achieve its desired objectives under all possible future events. 30 PART II. OTHER INFORMATION Item 1. Legal Proceedings Refer to Note 11 - Commitments and Contingencies to our Condensed Consolidated Financial Statements for disclosures regarding legal proceedings. Item 1A. Risk Factors There have been no material changes to the Risk Factors disclosed in Item 1A of our Annual Report on Form 10-K for the fiscal year ended March 31, 2026. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Issuer Purchases of Equity Securities Share Repurchase Program Our Board of Directors previously authorized the repurchase of up to 21.7 shares of our common stock. The authorizations permit us to 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 may be suspended or discontinued at any time for any reason. During the three months ended June 30, 2026, we did not repurchase any shares of our common stock in the open market, as part of the program. As of June 30, 2026, we had repurchased a total of 11.7 shares of our common stock under this program, and 10.0 shares of common stock remained available for repurchase under our share repurchase program. The table below details the share repurchases made by us during the three months ended June 30, 2026: PeriodShares purchasedAverage price per shareTotal number of shares purchased as part of publicly announced plans or programsMaximum number of shares that may yet be purchased under the repurchase program April 1-30, 2026 $ 10.0 May 1-31, 2026 $ 10.0 June 1-30, 2026 $ 10.0 Item 5. Other Information The share numbers in this Item 5 represent the actual number of shares (i.e., not presented in millions). Securities Trading Plans of Directors and Executive Officers Our Section 16 officers and directors, as defined in Rule 16a-1(f) of the Exchange Act, may from time to time enter into plans for the purchase or sale of our common stock that are intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) of the Exchange Act. During the quarter ended June 30, 2026, the following Section 16 officers and directors, as defined in Rule 16a-1(f), adopted, modified, or terminated a "Rule 10b5-1 trading arrangement" (as defined in Item 408 of Regulation S-K of the Exchange Act): On June 17, 2026, Lainie Goldstein, our Chief Financial Officer, adopted a new written trading plan. The plan s maximum duration is until September 17, 2027 and the first trade will not occur until September 17, 2026, at the earliest. The trading plan is intended to permit Ms. Goldstein to sell up to an aggregate of 50,259 shares of our common stock. On June 23, 2026, William "Bing" Gordon, a member of our Board of Directors, adopted a new written trading plan. The plan's maximum duration is until June 30, 2027 and the first trade will not occur until September 29, 2026, at the earliest. The trading plan is intended to permit Mr. Gordon to sell up to an aggregate of 40,000 shares of our common stock. No other Section 16 officers or directors, as defined in Rule 16a-1(f), adopted, modified, or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement, as defined in Item 408 of Regulation S-K, during the three months ended June 30, 2026. 31 Table of Contents