TAKE TWO INTERACTIVE SOFTWARE INC

Take-Two Interactive Software, Inc. is a leading developer, publisher, and marketer of interactive entertainment for consumers around the globe, developing, operating, and publishing products principally through Rockstar Games, 2K, and Zynga. The company's products are designed for console gaming systems, mobile including smartphones and tablets, and personal computers, delivered through physical retail, digital download, online platforms, and cloud streaming services. The company operates in a highly competitive industry where competition is based on innovation, features, playability, product quality, brand name recognition, compatibility with popular platforms, access to distribution channels, price, marketing, and customer service, with hit titles requiring increasing budgets for development and marketing.

The company competes with other interactive entertainment companies including Electronic Arts, Embracer Group, Epic Games, Playrix, Playtika, Roblox, Savvy Games, Tencent, and Ubisoft, as well as with Sony, Microsoft, and Nintendo for the sale of interactive entertainment software. The company's competitive advantages include its player-first approach, commitment to creativity and innovation, a diverse portfolio spanning all key platforms and numerous genres, and internally owned and developed intellectual property which the company believes best positions it financially and competitively. Sales to the five largest customers during the fiscal year ended March 31, 2026 accounted for 80.6% ¹ of net revenue, with Apple, Sony, Google, and Microsoft each accounting for more than 10.0% ² of net revenue.

The company generates revenue from the sale of interactive entertainment content including internally developed software titles and software titles developed by third parties, in-game virtual items and advertising, and live services on console, mobile, and PC. The company engages in evolving business models such as online gaming, virtual currency, add-on content, and in-game purchases, and also generates revenue from advertising primarily within mobile software products. Recurrent consumer spending, which includes revenue from virtual currency, add-on content, in-game purchases, and in-game advertising, generated $5,196.6 ³ and accounted for 78.1% ⁴ of net revenue for the fiscal year ended March 31, 2026.

Rockstar Games' strategy is to develop a limited number of titles known for quality and longevity, creating sequels and incremental revenue opportunities through virtual currency, add-on content, and in-game purchases across all key platforms. The Grand Theft Auto series has sold-in over 465 million ⁵ units worldwide, with Grand Theft Auto V having sold-in over 225 million ⁶ units worldwide since its release in 2013, and includes access to Grand Theft Auto Online. Red Dead Redemption 2 has sold-in more than 80 million ⁷ units worldwide. Grand Theft Auto products contributed 12.4% ⁸ of net revenue for the fiscal year ended March 31, 2026, and the five best-selling franchises in the aggregate accounted for 54.3% ⁹ of net revenue for the same period. Rockstar Games offers its GTA+ membership program and announced that Grand Theft Auto VI is planned for release on November 19, 2026 ¹⁰ during fiscal year 2027.

The 2K label publishes a variety of popular entertainment properties across all key platforms and genres including shooter, action, role-playing, strategy, sports, and family/casual entertainment, with internally owned and developed franchises including BioShock, Borderlands, Mafia, Sid Meier's Civilization, Tiny Tina's Wonderlands, and XCOM. 2K's sports simulation titles include the NBA 2K series, the WWE 2K professional wrestling series, PGA TOUR 2K, and TopSpin 2K, and also publishes mobile titles including WWE SuperCard and NBA 2K All-Stars. The Zynga label publishes popular free-to-play mobile games generating revenue from in-game sales and advertising, with a diverse portfolio of game franchises that have been downloaded more than 10 billion ¹¹ times, including titles such as Color Block Jam, CSR2, Empires & Puzzles, Game of Thrones: Legends, Game of Thrones Slots Casino, Golf Rival, Harry Potter: Puzzles & Spells, Hit it Rich! Casino, Match Factory!, Merge Dragons!, Toon Blast, Toy Blast, Wizard of Oz Slots Casino, Words With Friends, and Zynga Poker.

During the fiscal year, 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 ¹². The company completed an approximately $1.2 billion ¹³ underwritten public offering of common stock in May 2025. The company repaid its 2025 Notes with a principal amount of $600.0 ¹⁴ on April 14, 2025, and repaid its 2026 Notes with a principal amount of $550.0 ¹⁵ on March 28, 2026. The company acquired an office building in Los Angeles, California in October 2025 and office space in New York, New York in November 2025. As of March 31, 2026, the company had repurchased a total of 11.7 ¹⁶ shares of common stock under the share repurchase program, with 10.0 ¹⁷ shares remaining available for repurchase.

Total net revenue for the fiscal year ended March 31, 2026 was $6,656.4 ¹⁸, an increase of $1,022.8 ¹⁹ or 18.2% ²⁰ compared to the fiscal year ended March 31, 2025. Net loss for the fiscal year ended March 31, 2026 was $298.2 ²¹, compared to net loss of $4,478.9 ²² in the prior year. Basic and diluted loss per share for the fiscal year ended March 31, 2026 was $1.62 ²³, compared to basic and diluted loss per share of $25.58 ²⁴ for the fiscal year ended March 31, 2025. Operating loss for the fiscal year ended March 31, 2026 was $104.2 ²⁵ compared to operating loss of $4,391.1 ²⁶ for the prior year, primarily driven by Goodwill impairment charges of $3,545.2 ²⁷ in the prior year with no corresponding expense in the current year. Gross profit as a percentage of net revenue was 57.2% ²⁸ compared to 54.3% ²⁹ in the prior year. Net cash provided by operating activities was $624.3 ³⁰ compared to net cash used in operating activities of $45.2 ³¹ in the prior year.

Rockstar plans to release Grand Theft Auto VI on November 19, 2026 ³² during fiscal year 2027. The label released its first trailer for the title in December 2023 and the second in May 2025, and will share more details this summer.

The company believes there are meaningful opportunities to expand its presence in Asia, the Middle East, and Latin America, with China being its most established market where it offers NBA 2K Online through a partnership with Tencent, describing NBA 2K Online as the top online PC sports game in China. The company is continuing to execute on growth initiatives in Asia, where its strategy is to broaden the distribution of existing products and expand its online gaming presence, especially in China. The company is also continuing to expand its direct-to-consumer efforts more meaningfully across its mobile portfolio to enhance profitability.

The company seeks to run its business in a highly efficient manner to optimize and enhance profitability, regularly assessing opportunities to contain or reduce costs including leveraging shared services and technology. Gross profit as a percentage of net revenue increased to 57.2% ³³ for the fiscal year ended March 31, 2026 from 54.3% ³⁴ in the prior year, driven by lower amortization of intangible assets primarily due to higher impairments in the prior year and lower product costs as a percentage of net revenue, partially offset by higher amortization of capitalized software and development costs due to the timing of releases.

In fiscal year 2027, the company anticipates capital expenditures to be $200.0 ³⁵. The company continues to invest in tools and infrastructure to deepen understanding of players and strengthen relationships, including its customer data platform and customer insights and analytics. The company has internal development studios located in Australia, Canada, China, Czech Republic, Finland, Germany, Hungary, India, Serbia, South Korea, Spain, Turkey, the United Kingdom, and the United States, with a research and development staff of 9,998 ³⁶ full-time employees as of March 31, 2026.

The company's Board has authorized the repurchase of up to 21.7 ³⁷ shares of common stock. As of March 31, 2026, the company had repurchased a total of 11.7 ³⁸ shares under the program, and 10.0 ³⁹ shares remained available for repurchase. During the fiscal years ended March 31, 2026, 2025, and 2024, the company did not repurchase shares of common stock under the program. The company has never declared or paid cash dividends and does not expect to declare or pay any cash dividends in the foreseeable future.

The company continues to monitor various macroeconomic and geopolitical factors such as global tariff policies that may affect its business in several areas including consumer demand, inflation, pricing pressure on products and third party hardware platforms, credit quality of receivables, and foreign currency exchange rates. The economic environment has affected customers in the past and may do so in the future, with increased consolidation in the industry and larger, better capitalized competitors being in a stronger position to withstand prolonged periods of economic downturn. The company is 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 operating results.

The company faces risks from international operations particularly as it continues to grow its business and presence in Asia, Latin America, and other parts of the world, with changes to and compliance with a variety of foreign laws and regulations potentially increasing the cost of doing business. Trade legislation such as changes in tariff structures, import/export compliance laws, or changes in the relationship between the U.S. and any country in which the company has significant operations or sales could adversely affect the ability to sell or distribute in international markets. On February 20, 2026, the U.S. Supreme Court ruled that certain tariffs imposed under the International Economic Emergency Powers Act were unconstitutional, and on February 24, 2026, the U.S. implemented a global 10% ⁴⁰ tariff on all countries for a period of 150 days, though on May 7, 2026, a panel of federal judges on the Court of International Trade voted that such 10% ⁴¹ tariffs on most U.S. imports are illegal.

The company is dependent on the future success of its Grand Theft Auto products and other hit titles, with Grand Theft Auto products contributing 12.4% ⁴² of net revenue for the fiscal year ended March 31, 2026 and the five best-selling franchises accounting for 54.3% ⁴³ of net revenue. A limited number of customers account for a significant portion of sales, with the five largest customers accounting for 80.6% ⁴⁴ of net revenue and Apple, Sony, Google, and Microsoft each accounting for more than 10.0% ⁴⁵. The company has a significant amount of outstanding indebtedness with $2,500.0 ⁴⁶ aggregate principal amount of outstanding senior notes as of March 31, 2026. The company recognized Goodwill impairment charges of $3,545.2 ⁴⁷ during the fiscal year ended March 31, 2025 and $2,342.1 ⁴⁸ during the fiscal year ended March 31, 2024, representing partial impairments related to one reporting unit. The company's business is subject to its ability to develop commercially successful products for current video game platforms, with console revenue comprising 39.0% ⁴⁹ of net revenue for the fiscal year ended March 31, 2026.

Management's message emphasizes the company's strategy to create hit entertainment experiences delivered on every platform relevant to its audience through a variety of sound business models, guided by the pillars of creativity, innovation, and efficiency. The company's player-first approach and commitment to creativity and innovation are described as distinguishing strengths enabling differentiation in the marketplace by combining advanced technology with compelling gameplay. Management highlights the planned release of Grand Theft Auto VI on November 19, 2026 ⁵⁰ during fiscal year 2027 as a key strategic milestone, and emphasizes the company's focus on building a portfolio and forward pipeline of commercially successful franchises across console, PC, and mobile platforms, growing core franchises through high-quality sequels and robust live services, and expanding intellectual property portfolio and talent base through strategic acquisitions and partnerships.