COVER
COVER - shares | 3 Months Ended | |
Jun. 30, 2022 | Jul. 29, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2022 | |
Document Transition Report | false | |
Entity File Number | 001-34003 | |
Entity Registrant Name | TAKE-TWO INTERACTIVE SOFTWARE, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 51-0350842 | |
Entity Address, Address Line One | 110 West 44th Street | |
Entity Address, Postal Zip Code | 10036 | |
Entity Address, City or Town | New York | |
Entity Address, State or Province | NY | |
City Area Code | 646 | |
Local Phone Number | 536-2842 | |
Title of 12(b) Security | Common Stock, $0.01 par value | |
Trading Symbol | TTWO | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 166,690,699 | |
Entity Central Index Key | 0000946581 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q1 | |
Current Fiscal Year End Date | --03-31 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Jun. 30, 2022 | Mar. 31, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 847.4 | $ 1,732.1 |
Short-term investments | 459.2 | 820.1 |
Restricted cash and cash equivalents | 534.8 | 359.8 |
Accounts receivable, net of allowances of $1.3 and $0.4 at June 30, 2022 and March 31, 2022, respectively | 633.7 | 579.4 |
Software development costs and licenses | 63.8 | 81.4 |
Capped call receivable | 140.1 | 0 |
Contract assets | 101.3 | 104.9 |
Prepaid expenses and other | 255.7 | 193.4 |
Total current assets | 3,036 | 3,871.1 |
Fixed assets, net | 300.2 | 242 |
Right-of-use assets | 306.8 | 217.2 |
Software development costs and licenses, net of current portion | 828.3 | 755.9 |
Goodwill | 7,227.2 | 674.6 |
Other intangibles, net | 5,454.6 | 266.5 |
Deferred tax assets | 106.6 | 73.8 |
Long-term restricted cash and cash equivalents | 108.9 | 103.5 |
Other assets | 376.3 | 341.7 |
Total assets | 17,744.9 | 6,546.3 |
Current liabilities: | ||
Accounts payable | 199.9 | 125.9 |
Accrued expenses and other current liabilities | 1,601.7 | 1,074.9 |
Deferred revenue | 1,079.7 | 865.3 |
Lease liabilities | 55.4 | 38.9 |
Short-term debt | 350 | 0 |
Total current liabilities | 3,286.7 | 2,105 |
Long-term debt, net | 2,935.5 | 0 |
Non-current deferred revenue | 21.5 | 70.9 |
Non-current lease liabilities | 341.2 | 211.3 |
Non-current software development royalties | 117.4 | 115.5 |
Deferred tax liabilities, net | 1,093.1 | 21.8 |
Other long-term liabilities | 287.2 | 212.1 |
Total liabilities | 8,082.6 | 2,736.6 |
Commitments and contingencies (See Note 12) | ||
Stockholders' equity: | ||
Preferred stock, $0.01 par value, 5.0 shares authorized; no shares issued and outstanding at June 30, 2022 and March 31, 2022 | 0 | 0 |
Common stock, $0.01 par value, 200.0 shares authorized; 189.9 and 139.0 shares issued and 166.2 and 115.4 outstanding at June 30, 2022 and March 31, 2022, respectively | 1.9 | 1.4 |
Additional paid-in capital | 8,616.5 | 2,597.2 |
Treasury stock, at cost; 23.7 and 23.7 common shares at June 30, 2022 and March 31, 2022, respectively | (1,020.6) | (1,020.6) |
Retained earnings | 2,185 | 2,289 |
Accumulated other comprehensive loss | (120.5) | (57.3) |
Total stockholders' equity | 9,662.3 | 3,809.7 |
Total liabilities and stockholders' equity | $ 17,744.9 | $ 6,546.3 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Millions, $ in Millions | Jun. 30, 2022 | Mar. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowances | $ 1.3 | $ 0.4 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 5 | 5 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 200 | 200 |
Common stock, shares issued (in shares) | 189.9 | 139 |
Common stock, shares outstanding (in shares) | 166.2 | 115.4 |
Treasury stock, shares (in shares) | 23.7 | 23.7 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) $ in Millions | 3 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Total net revenue | $ 1,102.4 | $ 813.3 |
Cost of revenue | 435.7 | 329.7 |
Gross profit | 666.7 | 483.6 |
Selling and marketing | 272.1 | 103.9 |
General and administrative | 237.1 | 104.4 |
Research and development | 172.6 | 92.3 |
Depreciation and amortization | 22.3 | 12.5 |
Total operating expenses | 704.1 | 313.1 |
(Loss) income from operations | (37.4) | 170.5 |
Interest and other, net | (29.3) | (1) |
(Loss) gain on fair value adjustments, net | (39.6) | 2 |
(Loss) income before income taxes | (106.3) | 171.5 |
(Benefit from) provision for income taxes | (2.3) | 19.2 |
Net (loss) income | $ (104) | $ 152.3 |
Earnings (loss) per share: | ||
Basic (loss) earnings per share (in dollars per share) | $ (0.76) | $ 1.32 |
Diluted (loss) earnings per share (in dollars per share) | $ (0.76) | $ 1.30 |
Game | ||
Total net revenue | $ 1,019.2 | $ 796.3 |
Advertising | ||
Total net revenue | $ 83.2 | $ 17 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (Unaudited) - USD ($) $ in Millions | 3 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Statement of Comprehensive Income [Abstract] | ||
Net (loss) income | $ (104) | $ 152.3 |
Other comprehensive (loss) income: | ||
Foreign currency translation adjustment | (62.8) | 6.1 |
Change in fair value of available for sale securities | (0.4) | (0.2) |
Other comprehensive (loss) income | (63.2) | 5.9 |
Comprehensive (loss) income | $ (167.2) | $ 158.2 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Millions | 3 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | ||
Operating activities: | |||
Net (loss) income | $ (104) | $ 152.3 | |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | |||
Amortization and impairment of software development costs and licenses | 47.5 | 24.5 | |
Stock-based compensation | 43.9 | 49.1 | |
Noncash lease expense | 11.4 | 9.4 | |
Amortization of intellectual property | 117.6 | 15.2 | |
Depreciation | 17.5 | 12.5 | |
Impairment of software development costs and licenses | 19.9 | 9.8 | |
Amortization of debt issuance costs | 8.6 | 0 | |
Interest expense | 20.7 | 0 | |
Fair value adjustments | 39.6 | 2 | |
Other, net | (25) | 1.9 | |
Changes in assets and liabilities, net of effect from purchases of businesses: | |||
Accounts receivable | 214.9 | 74.7 | |
Software development costs and licenses | (103.5) | (85.9) | |
Prepaid expenses and other current and other non-current assets | (67.6) | 19.4 | |
Deferred revenue | (159.5) | (94.7) | |
Accounts payable, accrued expenses and other liabilities | 18.8 | (42) | |
Net cash provided by operating activities | 100.8 | 148.2 | |
Investing activities: | |||
Change in bank time deposits | 125.6 | 311.9 | |
Proceeds from available-for-sale securities | 242.8 | 161.2 | |
Purchases of available-for-sale securities | 0 | (302.5) | |
Purchases of fixed assets | (42.5) | (86.4) | |
Purchases of long-term investments | (5.1) | (0.1) | |
Business acquisitions | (3,128.1) | (97.9) | |
Net cash used in investing activities | (2,807.3) | (13.8) | |
Financing activities: | |||
Tax payment related to net share settlements on restricted stock awards | (53.9) | (48.3) | |
Issuance of common stock | 11.4 | 9.2 | |
Payment for settlement of convertible notes | (1,166.8) | 0 | |
Proceeds from issuance of debt | 3,248.9 | 0 | |
Cost of debt | (22.6) | 0 | |
Net cash provided by (used in) financing activities | 2,017 | (39.1) | |
Effects of foreign currency exchange rates on cash, cash equivalents, and restricted cash and cash equivalents | (14.7) | 1.8 | |
Net change in cash, cash equivalents, and restricted cash and cash equivalents | (704.2) | 97.1 | |
Cash, cash equivalents, and restricted cash and cash equivalents, beginning of year | [1] | 2,195.3 | 2,060.2 |
Cash, cash equivalents, and restricted cash and cash equivalents, end of period | [1] | $ 1,491.1 | $ 2,157.3 |
[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. |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Unaudited) - USD ($) shares in Millions, $ in Millions | Total | Common Stock | Additional Paid-in Capital | Treasury Stock | Retained Earnings | Accumulated Other Comprehensive(Loss) Income | Non-controlling interest |
Beginning balance (in shares) at Mar. 31, 2021 | 137.6 | ||||||
Beginning balance (in shares) at Mar. 31, 2021 | (22.4) | ||||||
Beginning balance at Mar. 31, 2021 | $ 3,331.9 | $ 1.4 | $ 2,288.8 | $ (820.6) | $ 1,871 | $ (8.7) | $ 0 |
Increase (Decrease) in Stockholders' Equity | |||||||
Net (loss) income | 152.3 | 152.3 | |||||
Change in cumulative foreign currency translation adjustment | 6.1 | 6.1 | |||||
Net unrealized gain on available-for-sale securities, net of taxes | (0.2) | (0.2) | |||||
Stock-based compensation | 73.8 | 73.8 | |||||
Issuance of restricted stock, net of forfeitures and cancellations (in shares) | 0.9 | ||||||
Net share settlement of restricted stock awards (in shares) | (0.3) | ||||||
Net share settlement of restricted stock awards | (48.2) | (48.2) | |||||
Employee share purchase plan settlement (in shares) | 0.1 | ||||||
Employee share purchase plan settlement | 9.2 | 9.2 | |||||
Issuance of shares related to Nordeus acquisition (in shares) | 0.5 | ||||||
Issuance of shares related to Nordeus acquisition | 94.2 | 94.1 | |||||
Call option related to Nordeus Acquisition | 12.4 | 12.4 | |||||
Ending balance (in shares) at Jun. 30, 2021 | 138.8 | ||||||
Ending balance (in shares) at Jun. 30, 2021 | (22.4) | ||||||
Ending balance at Jun. 30, 2021 | $ 3,631.5 | $ 1.4 | 2,417.7 | $ (820.6) | 2,023.3 | (2.8) | $ 12.4 |
Beginning balance (in shares) at Mar. 31, 2022 | 115.4 | 139 | |||||
Beginning balance (in shares) at Mar. 31, 2022 | (23.7) | ||||||
Beginning balance at Mar. 31, 2022 | $ 3,809.7 | $ 1.4 | 2,597.2 | $ (1,020.6) | 2,289 | (57.3) | |
Increase (Decrease) in Stockholders' Equity | |||||||
Net (loss) income | (104) | (104) | |||||
Change in cumulative foreign currency translation adjustment | (62.8) | (62.8) | |||||
Net unrealized gain on available-for-sale securities, net of taxes | (0.4) | (0.4) | |||||
Stock-based compensation | 61.3 | 61.3 | |||||
Issuance of restricted stock, net of forfeitures and cancellations (in shares) | 1.2 | ||||||
Net share settlement of restricted stock awards (in shares) | (0.4) | ||||||
Net share settlement of restricted stock awards | (53.9) | (53.9) | |||||
Employee share purchase plan settlement (in shares) | 0.1 | ||||||
Employee share purchase plan settlement | 11.4 | 11.4 | |||||
Issuance of shares related to Nordeus acquisition (in shares) | 46.3 | ||||||
Issuance of shares related to Nordeus acquisition | 5,377.7 | $ 0.5 | 5,377.2 | ||||
Stock-based compensation assumed in Zynga Acquisition | 143.6 | 143.6 | |||||
Issuance of shares for conversion of Convertible Notes (in shares) | 3.7 | ||||||
Issuance of shares for conversion of Convertible Notes | $ 479.7 | 479.7 | |||||
Ending balance (in shares) at Jun. 30, 2022 | 166.2 | 189.9 | |||||
Ending balance (in shares) at Jun. 30, 2022 | (23.7) | ||||||
Ending balance at Jun. 30, 2022 | $ 9,662.3 | $ 1.9 | $ 8,616.5 | $ (1,020.6) | $ 2,185 | $ (120.5) |
BASIS OF PRESENTATION AND SIGNI
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Jun. 30, 2022 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | 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 and publish products principally through Rockstar Games, 2K, Private Division, and Zynga. Our products are designed for console gaming systems, personal computers ("PC"), and mobile including smart phones and tablets ("Mobile"), and are delivered through physical retail, digital download, online platforms, and cloud streaming services. Acquisition of Zynga On May 23, 2022, we completed our acquisition of Zynga Inc. ("Zynga"), a leading developer of mobile games. Refer to Note 1 4 - A cquisitions for additional information. 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, are based on full year assumptions when appropriate. Actual results could differ materially from those estimates, including as a result of the COVID-19 pandemic, 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, 2022. Certain immaterial reclassifications have been made to prior period amounts to conform to the current period presentation. We are reiterating our significant accounting policy on revenue recognition included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2022, including certain revenue policies applied upon the close of the Zynga acquisition. Revenue Recognition We derive revenue primarily from the sale of our interactive entertainment content, principally for console gaming systems, personal computers, and Mobile. We also generate revenue from advertising within our software products. Game. Our interactive entertainment content consists of full game software products that may contain offline gameplay, online gameplay, or a combination of offline and online gameplay. We may also sell separate downloadable add-on content to supplement our full game software products. Certain of our software products provide customers with the option to acquire virtual currency or make in-game purchases. We determine revenue recognition by: • identifying the contract, or contracts, with the customer; • identifying the performance obligations in the contract; • determining the transaction price; • allocating the transaction price to performance obligations in the contract; and • recognizing revenue when, or as, we satisfy performance obligations by transferring the promised goods or services. We recognize revenue in the amount that reflects the consideration we expect to receive in exchange for the sales of software products and game related services when control of the promised products and services is transferred to our customers and our performance obligations under the contract have been satisfied. Revenue is recorded net of transaction taxes assessed by governmental authorities such as sales, value-added and other similar taxes. Our software products are sold as full games, which typically provide access to the main game content, primarily for console and PC. Generally, our full game software products deliver a license of our intellectual property that provides a functional offline gaming experience (i.e., one that does not require an Internet connection to access the main game content or other significant game related services). We recognize revenue related to the license of our intellectual property that provides offline functionality at the time control of the products has been transferred to our customers (i.e. upon delivery of the software product). In addition, some of our full game software products that provide a functional offline gaming experience may also include significant game related services delivered over time, such as online functionality that is dependent upon online support services and/or additional free content updates. For full game sales that offer offline functionality and significant game related services we evaluate whether the license of our intellectual property and the game related services are distinct and separable. This evaluation is performed for each software product sold. If we determine that our software products contain a license of intellectual property separate from the game related services (i.e. multiple performance obligations), we estimate a standalone selling price for each identified performance obligation. We allocate the transaction price to each performance obligation using a relative standalone selling price method (the transaction price is allocated to a performance obligation based on the proportion of the standalone selling price of each performance obligation to the sum of the standalone selling prices for all performance obligations in the contract). For the portion of the transaction price allocable to the license, revenue is recognized when the customer takes control of the product. For the portion of the transaction price allocated to game related services, revenue is recognized ratably over an estimated service period for the related software product. We also defer related product costs and recognize the costs as the revenues are recognized. Certain of our full game software products are delivered primarily as an online gaming experience with substantially all gameplay requiring online access to our game related services. We recognize revenue for full game software products that are dependent on our game related services over an estimated service period. For our full game online software products, we also defer related product costs and recognize the costs as the revenue is recognized. We also sell separate downloadable add-on content to supplement our full game software products. Revenue from the sale of separate downloadable add-on content is evaluated for revenue recognition on the same basis as our full game software products. In addition to sales of our full game software products, we also offer free-to-play software products, both of which may provide customers with the option to acquire virtual currency or make in-game purchases. For virtual currency and in-game purchases the satisfaction of our performance obligation is dependent on the nature of the virtual item purchased and as a result, we categorize our virtual items as follows: • Consumable: Consumable virtual items represent items that can be consumed by a specific player action. Consumable virtual items do not result in a direct benefit that the player keeps or provide the player any continuing benefit following consumption, and they often enable a player to perform an in-game action immediately. For the sale of consumable virtual items, we recognize revenue as the items are consumed (i.e., over time), which approximates less than one month. • Durable: Durable virtual items represent items that are accessible to the player over an extended period of time. We recognize revenue from the sale of durable virtual items ratably over the estimated service period for the applicable game (i.e., over time), which represents our best estimate of the average life of the durable virtual item. Certain software products are sold to customers with a “street date” (the earliest date these products may be sold by these retailers). For the transaction price related to the license for these products that also provide a functional offline gaming experience, we recognize revenue on the later of the street date or the sale date as this is generally when we have transferred control of this performance obligation. For the sale of physical software products, recognition of revenue allocated to game related services does not begin until the product is sold-through by our customer to the end user. We currently estimate sell-through to the end user for all our titles to be approximately two months after we have sold-in the software products to retailers. Determining the estimated sell-through period requires management judgment and estimates. In addition, some of our software products are sold as digital downloads. Revenue from digital downloads generally commences when the download is made available to the end user by a third-party digital storefront. In certain countries, we use third-party licensees to distribute and host our games in accordance with license agreements, for which the licensees typically pay us a fixed minimum guarantee and sales-based royalties. These arrangements typically include multiple performance obligations, such as an upfront license of intellectual property and rights to future updates. Based on the allocated transaction price, we recognize revenue associated with the minimum guarantee when we transfer control of the upfront license of intellectual property (generally upon commercial launch) and the remaining portion ratably over the contractual term in which we provide the licensee with future update rights. Royalty payments in excess of the minimum guarantee are generally recognized when the licensed product is sold by the licensee. Advertising. We have contractual relationships with advertising networks, agencies, advertising brokers, and directly with advertisers to display advertisements in our games. For our in-game advertising arrangements, our performance obligation is to provide the inventory for advertisements to be displayed in our games. For contracts made directly with advertisers, we are also obligated to serve the advertisements in our games. However, for those direct advertising arrangements, providing the advertising inventory and serving the advertisement is considered a single performance obligation, as the advertiser cannot benefit from the advertising space without its advertisements being displayed. For in-game display advertisements, in-game offers, engagement advertisements, and other advertisements, our performance obligation is satisfied over the life of the contract, with revenue being recognized as advertising units are delivered. Contract Balances We generally record a receivable related to revenue when we have an unconditional right to invoice and receive payment, and we record deferred revenue when cash payments are received or due in advance of satisfying our performance obligations, even if amounts are refundable. Contract assets generally consist of arrangements for which we have recognized revenue to the extent it is probable that significant reversal will not occur but do not have a right to invoice as of the reporting date. Our allowances for doubtful accounts are typically immaterial and, if required, are based on our best estimate of expected credit losses inherent in our accounts receivable balance. Deferred revenue is comprised primarily of unsatisfied revenue related to the portion of the transaction price allocable to game related services of our full game software products and sales of virtual currency. These sales are typically invoiced at the beginning of the contract period, and revenue is recognized ratably over the estimated service period. Deferred revenue may also include amounts related to software products with future street dates. Refer to Note 2 - Revenue from Contracts with Customers for further information, including changes in deferred revenue during the period. Principal Agent Considerations We offer certain software products via third-party digital storefronts, such as Microsoft’s Xbox Live, Sony’s PlayStation Network, Valve's Steam, Epic Games Store, Apple's App Store, and the Google Play Store. For sales of our software products via third-party digital storefronts, we determine whether or not we are acting as the principal in the sale to the end user, which we consider in determining if revenue should be reported based on the gross transaction price to the end user or based on the transaction price net of fees retained by the third-party digital storefront. An entity is the principal if it controls a good or service before it is transferred to the customer. Key indicators that we use in evaluating these sales transactions include, but are not limited to, the following: • the underlying contract terms and conditions between the various parties to the transaction; • which party is primarily responsible for fulfilling the promise to provide the specified good or service; and • which party has discretion in establishing the price for the specified good or service. Based on our evaluation of the above indicators, for sales arrangements via Microsoft’s Xbox Live, Sony’s PlayStation Network, Valve's Steam, and Epic Games Store we have determined we are not the principal in the sales transaction to the end user and therefore we report revenue based on the consideration received from the digital storefront. For sales arrangements via Apple's App Store and the Google Play Store, we have determined that we are the principal to the end user and thus report revenue on a gross basis and mobile platform fees charged by these digital storefronts are expensed as incurred and reported within Cost of revenue. Shipping and Handling Shipping and handling costs are incurred to move physical software products to customers. We recognize all shipping and handling costs as an expense in Cost of revenue because we are responsible for delivery of the product to our customers prior to transfer of control to the customer. Estimated Service Period For certain performance obligations satisfied over time, we have determined that the estimated service period is the time period in which an average user plays our software products (“user life”) which most faithfully depicts the timing of satisfying our performance obligation. We consider a variety of data points when determining and subsequently reassessing the estimated service period for players of our software products. Primarily, we review the weighted average number of days between players’ first and last days played online. When a new game is launched and therefore no history of online player data is available, we consider other factors to determine the user life, such as the estimated service period of other games actively being sold with similar characteristics. We also consider known online trends, the service periods of our previously released software products, and, to the extent publicly available, the service periods of our competitors’ software products that are similar in nature to ours. We believe this provides a reasonable depiction of the transfer of our game related services to our customers, as it is the best representation of the period during which our customers play our software products. Determining the estimated service period is subjective and requires significant management judgment and estimates. Future usage patterns may differ from historical usage patterns, and therefore the estimated service period may change in the future. The estimated service periods for players of our current software products are generally between six and fifteen months depending on the software product. Revenue Arrangements with Multiple Performance Obligations Our contracts with customers often include promises to transfer multiple products and services. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together requires significant judgment. For software products in which the software license has offline functionality and benefits from meaningful game related services, which may include online functionality that is dependent on our online support services and/or additional free content updates, we believe we have separate performance obligations for the license of the intellectual property and the game related services. Additionally, because each of our product offerings has unique features and because we do not sell our game related services separately, we typically do not have observable standalone selling prices for each performance obligation. Significant judgment and estimates are also required to determine the standalone selling price for each distinct performance obligation and whether a discount needs to be allocated based on the relative standalone selling price of our products and services. To estimate the standalone selling price for each performance obligation, we consider, to the extent available, a variety of data points such as past selling prices of the product or other similar products, competitor pricing, and market data. If observable pricing is not available, we use an expected cost-plus margin approach taking into account relevant costs including product development, post-release support, marketing and licensing costs. This evaluation is performed on a product by product basis. Price Protection, Allowances for Returns, and Sales Incentives We grant price protection and accept returns in connection with our distribution arrangements. Following reductions in the price of our physical software products, we grant price protection to permit customers to take credits against amounts they owe us with respect to merchandise unsold by them. Our customers must satisfy certain conditions to entitle them to receive price protection or return products, including compliance with applicable payment terms and confirmation of field inventory levels. At contract inception and at each subsequent reporting period, we make estimates of price protection and product returns related to current period software product revenue. We estimate the amount of price protection and returns for software products based upon, among other factors, historical experience and performance of the titles in similar genres, historical performance of the hardware platform, customer inventory levels, analysis of sell-through rates, sales force and retail customer feedback, industry pricing, market conditions, and changes in demand and acceptance of our products by consumers. We enter into various sales incentive arrangements with our customers, such as rebates, discounts, and cooperative marketing. These incentives are considered adjustments to the transaction price of our software products and are reflected as reductions to revenue. Sales incentives incurred by us for distinct goods or services received, such as the appearance of our products in a customer’s national circular ad, are included in Selling and marketing expense if there is a separate identifiable benefit and the benefit’s fair value can be established. Otherwise, such sales incentives are reflected as a reduction to revenue. Revenue is recognized after deducting the estimated price protection, allowances for returns, and sales incentives, which are accounted for as variable consideration. Price protection, allowances for returns, and sales incentives are considered refund liabilities and are reported within Accrued expenses and other current liabilities on our Consolidated Balance Sheet. Significant Estimates Significant management judgment and estimates must be used in connection with many of the determinations described above, such as estimating the fair value allocation to distinct and separable performance obligations, the service period over which to defer recognition of revenue, and the amounts of price protection. We believe we can make reliable estimates. However, actual results may differ from initial estimates due to changes in circumstances, market conditions, and assumptions. Adjustments to estimates are recorded in the period in which they become known. Payment Terms Our payment terms and conditions vary by customer and typically provide net 30- to 60-day terms. In instances where the timing of revenue recognition differs from the timing of invoicing, we do not adjust the promised amount of consideration for the effects of a significant financing component when we expect, at contract inception, that the period between our transfer of a promised product or service to our customer and payment for that product or service will be one year or less. Recently Adopted Accounting Pronouncements Accounting for Government Assistance In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance , which requires annual disclosures that increase the transparency of transactions involving government grants, including (1) the types of transactions, (2) the accounting for those transactions, and (3) the effect of those transactions on any entity's financial statements. The new guidance is effective for fiscal years beginning after December 15, 2021 with the new disclosures required on an annual basis, and can be applied either prospectively or retrospectively. The Company adopted the new guidance on April 1, 2022 and will include the disclosures as required in its annual reporting with respect to any government assistance or grants subject to the scope of the guidance to the extent material. Accounting for Contract Assets and Contract Liabilities In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers . Under this new standard, deferred revenue acquired in a business combination is measured pursuant to ASC 606 , Revenue from Contracts with Customers , rather than its assumed acquisition date fair value under the current guidance. We adopted this effective April 1, 2022. The adoption of this update did not have an impact on our Condensed Consolidated Financial Statements and was applied to our acquisition of Zynga. Refer to Note 1 4 - Acquisitions . Accounting for Convertible Debt In August 2020, the FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40) |
REVENUE FROM CONTRACTS WITH CUS
REVENUE FROM CONTRACTS WITH CUSTOMERS | 3 Months Ended |
Jun. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE FROM CONTRACTS WITH CUSTOMERS | 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. Over time net revenue includes in-game advertising. Net revenue by timing of recognition was as follows: Three Months Ended June 30, 2022 2021 Net revenue recognized: Over time $ 807.5 $ 572.3 Point in time 294.9 241.0 Total net revenue $ 1,102.4 $ 813.3 Content Recurrent consumer spending revenue is generated from ongoing consumer engagement and includes revenue from virtual currency, add-on content, in-game purchases, and in-game advertising. Full game and other revenue primarily includes the initial sale of full game software products, which may include offline and/or significant game related services. Net revenue by content was as follows: Three Months Ended June 30, 2022 2021 Net revenue recognized: Recurrent consumer spending $ 825.6 $ 572.3 Full game and other 276.8 241.0 Total net revenue $ 1,102.4 $ 813.3 Geography We attribute net revenue to geographic regions based on software product destination. Net revenue by geographic region was as follows: Three Months Ended June 30, 2022 2021 Net revenue recognized: United States $ 682.9 $ 493.2 International 419.5 320.1 Total net revenue $ 1,102.4 $ 813.3 Platform Net revenue by platform was as follows: Three Months Ended June 30, 2022 2021 Net revenue recognized: Console $ 607.2 $ 602.4 Mobile 369.6 82.3 PC and other 125.6 128.6 Total net revenue $ 1,102.4 $ 813.3 Distribution Channel Our products are delivered through digital online services (digital download, online platforms, and cloud streaming) and physical retail and other. Net revenue by distribution channel was as follows: Three Months Ended June 30, 2022 2021 Net revenue recognized: Digital online $ 1,037.8 $ 740.8 Physical retail and other 64.6 72.5 Total net revenue $ 1,102.4 $ 813.3 Deferred Revenue We record deferred revenue when payments are due or received in advance of the fulfillment of our associated performance obligations. The balance of deferred revenue, including current and non-current balances as of June 30, 2022 and March 31, 2022 were $1,101.2 and $936.2, respectively. For the three months ended June 30, 2022, the additions to our deferred revenue balance were primarily due to the acquisition of Zynga ( Note 1 4 - Acquisition s ), which added $333.1 to our deferred revenue balance and cash payments received or due in advance of satisfying our performance obligations, while the reductions to our deferred revenue balance were due primarily to the recognition of revenue upon fulfillment of our performance obligations, both of which were in the ordinary course of business. During the three months ended June 30, 2022 and 2021, $439.7 and $463.2, respectively, of revenue was recognized that was included in the deferred revenue balance at the beginning of the respective period. During the three months ended June 30, 2022, $80.3 of revenue was recognized from the deferred revenue balance acquired from the Zynga acquisition. As of June 30, 2022, the aggregate amount of contract revenue allocated to unsatisfied performance obligations is $1,254.4, which includes our deferred revenue balances and amounts to be invoiced and recognized as revenue in future periods. We expect to recognize approximately $1,179.5 of this balance as revenue over the next 12 months, and the remainder thereafter. This balance does not include an estimate for variable consideration arising from sales-based royalty license revenue in excess of the contractual minimum guarantee. As of June 30, 2022 and March 31, 2022, our contract asset balances were $101.3 and $104.9, respectively. |
MANAGEMENT AGREEMENT
MANAGEMENT AGREEMENT | 3 Months Ended |
Jun. 30, 2022 | |
MANAGEMENT AGREEMENT | |
MANAGEMENT AGREEMENT | MANAGEMENT AGREEMENT In November 2017, we entered into a management agreement (the "2017 Management Agreement") with ZelnickMedia Corporation ("ZelnickMedia") that replaced our previous agreement with ZelnickMedia and pursuant to which ZelnickMedia was to provide financial and management consulting services to the Company through March 31, 2024. The 2017 Management Agreement became effective January 1, 2018. As part of the 2017 Management Agreement, Strauss Zelnick, the President of ZelnickMedia, continued to serve as Executive Chairman and Chief Executive Officer of the Company, and Karl Slatoff, a partner of ZelnickMedia, continued to serve as President of the Company. The 2017 Management Agreement provided for an annual management fee of $3.1 over the term of the agreement and a maximum annual bonus opportunity of $7.4 over the term of the agreement, based on the Company achieving certain performance thresholds. In May 2022, we entered into a new management agreement (the "2022 Management Agreement") with ZelnickMedia that replaced the 2017 Management Agreement and pursuant to which ZelnickMedia will continue to provide financial and management consulting services to the Company through March 31, 2029. The 2022 Management Agreement became effective on May 23, 2022, when our acquisition of Zynga closed (refer to Note 1 4 - Acquisitions ). On May 21, 2022, ZelnickMedia assigned substantially all of its rights and obligations and other liabilities under the 2022 Management Agreement to ZMC Advisors, L.P. ("ZMC Advisors"). References to "ZMC" herein shall mean either ZelnickMedia or ZMC Advisors, as appropriate. As part of the 2022 Management Agreement, Strauss Zelnick continues to serve as Executive Chairman and Chief Executive Officer of the Company, and Karl Slatoff continues to serve as President of the Company. The 2022 Management Agreement provides for an annual management fee of $3.3 over the term of the agreement and a maximum annual bonus opportunity of $13.2 over the term of the agreement, based on the Company achieving certain performance thresholds. In connection with the 2022 Management Agreement, we have and expect to grant time-based and performance-based restricted units to ZMC. In consideration for ZMC's services, we recorded consulting expense (a component of General and administrative expenses) of $2.7 and $1.7 during the three months ended June 30, 2022 and 2021, respectively. We recorded stock-based compensation expense for restricted stock units granted to ZMC, which is included in General and administrative expenses, of $8.5 and $7.2 during the three months ended June 30, 2022 and 2021, respectively. In connection with the 2022 Management Agreement and 2017 Management Agreement, we have granted restricted stock units (in thousands) to ZMC as follows: Three Months Ended June 30, 2022 2021 Time-based 192 51 Market-based (1) 510 93 Performance-based (1) IP 18 16 Recurrent Consumer Spending ("RCS") 153 16 Total Performance-based 171 32 Total Restricted Stock Units 873 176 (1) Represents the maximum of shares eligible to vest Time-based restricted stock units granted in fiscal year 2023 pursuant to the 2017 Management Agreement will vest on April 13, 2024, and those granted in fiscal year 2022 will vest on April 13, 2023. Time-based restricted stock units granted in fiscal year 2023 pursuant to the 2022 Management Agreement will vest on June 1, 2023, June 1, 2024, and June 1, 2025. Market-based restricted stock units granted in fiscal year 2023 pursuant to the 2017 Management Agreement are eligible to vest on April 13, 2024, and those granted in fiscal year 2022 are eligible to vest on April 13, 2023. Market-based restricted stock units granted in fiscal year 2023 pursuant to the 2022 Management Agreement are eligible to vest on June 1, 2024 and June 1, 2025. 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 either the NASDAQ Composite Index under the 2017 Management Agreement or the NASDAQ 100 index under the 2022 Management Agreement (as defined in the relevant grant agreement) as of the grant date measured over a two-year period or three-year period. 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 in fiscal year 2023 pursuant to the 2017 Management Agreement are eligible to vest on April 13, 2024, and those granted in fiscal year 2022 are eligible to vest on April 13, 2023. Performance-based restricted stock units granted in fiscal year 2023 pursuant to the 2022 Management Agreement are eligible to vest on June 1, 2024 and June 1, 2025. The performance-based restricted stock units, of which certain are tied to "IP" and "RCS" (as defined in the relevant grant agreement), are eligible to vest based on the Company's achievement of certain performance metrics (as defined in the relevant grant agreement) of either individual product releases of "IP" or "RCS" measured over a two The unvested portion of time-based, market-based and performance-based restricted stock units held by ZMC were 1.1 and 0.4 as of June 30, 2022 and March 31, 2022, respectively. During the three months ended June 30, 2022, 0.2 restricted stock units previously granted to ZMC vested, and 0.1 restricted stock units were forfeited by ZMC. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended |
Jun. 30, 2022 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | 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. June 30, 2022 Quoted prices Significant Significant Total Assets: Cash and cash equivalents: Money market funds $ 14.3 $ — $ — $ 14.3 Bank-time deposits 251.8 — — 251.8 Short-term investments: Corporate bonds — 416.2 — 416.2 Bank-time deposits 16.1 — — 16.1 US Treasuries 5.0 — — 5.0 Commercial paper — 21.9 — 21.9 Restricted cash and cash equivalents: Money market funds 466.8 — — 466.8 Bank-time deposits 0.5 — — 0.5 Restricted cash and cash equivalents, long term: Money market funds 108.7 — — 108.7 Other assets: Private equity — — 26.1 26.1 Capped call receivable — 140.1 — 140.1 Total financial assets $ 863.2 $ 578.2 $ 26.1 $ 1,467.5 Liabilities: Accrued expenses and other current liabilities: Contingent earn-out consideration — — (116.6) (116.6) Other-long term liabilities: Contingent earn-out consideration — — (6.2) (6.2) Long-term debt, net: Convertible notes — (54.4) — (54.4) Total financial liabilities $ — $ (54.4) $ (122.8) $ (177.2) March 31, 2022 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: Bank-time deposits $ 636.0 $ — $ — $ 636.0 Money market funds 501.9 — — 501.9 Commercial paper — 119.4 — 119.4 US Treasuries 52.0 — — 52.0 Certificates of Deposit — 10.0 — 10.0 Corporate bonds — 2.8 — 2.8 Restricted cash and cash equivalents: Money market funds 356.8 — — 356.8 Bank-time deposits 0.5 — — 0.5 Short-term investments: Corporate bonds — 538.5 — 538.5 Bank-time deposits 131.8 — — 131.8 Commercial paper — 125.4 — 125.4 US Treasuries 23.4 — — 23.4 Certificates of Deposit — 1.0 — 1.0 Other assets: Private equity — — 16.1 16.1 Restricted cash and cash equivalents, long term: Money market funds 103.5 — — 103.5 Total financial assets $ 1,805.9 $ 797.1 $ 16.1 $ 2,619.1 Liabilities Accrued expenses and other current liabilities: Foreign currency forward contracts — (0.2) — (0.2) Contingent earn-out consideration — — (66.0) (66.0) Other long-term liabilities: Contingent earn-out consideration $ — $ — $ (43.0) (43.0) Total financial liabilities $ — $ (0.2) $ (109.0) $ (109.2) 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, 2022. In connection with the Nordeus acquisition we completed on June 1, 2021, our consideration included a contingent earn-out consideration arrangement that requires us to pay an aggregate of $153.0 in cash if Nordeus achieves certain performance measures over the 12- and 24-month periods following the closing. We recorded $61.1 as the initial fair value of contingent earn-out consideration. The fair value was estimated using a Monte-Carlo simulation model, which included significant unobservable Level 3 inputs, such as projected financial performance over the earn-out period along with estimates for market volatility and the discount rate applicable to potential cash payouts. During the three months ended June 30, 2022, we recognized General and administrative expense of $6.3 within our Condensed Consolidated Statements of Operations for the increase in fair value of the contingent earn-out consideration liability associated with the Nordeus acquisition, which increased the fair value of the contingent consideration liability to $115.3 and is recorded within Accrued expenses and other current liabilities in our Condensed Consolidated Balance Sheet as of June 30, 2022. The increase resulted from Nordeus achieving certain performance measures in the first 12-month period and a higher probability of Nordeus achieving certain performance measures in the second 12-month period. The remaining contingent consideration of $7.5 relates to immaterial earn-out arrangements from Zynga's historical acquisitions. For these acquisitions, we estimated the acquisition date fair value of the contingent consideration obligations using a discounted cash flow model. 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, 2022, we held $25.0 of such investments in Other assets within our Condensed Consolidated Balance Sheet. |
SHORT-TERM INVESTMENTS
SHORT-TERM INVESTMENTS | 3 Months Ended |
Jun. 30, 2022 | |
Investments, Debt and Equity Securities [Abstract] | |
SHORT-TERM INVESTMENTS | SHORT-TERM INVESTMENTS Our Short-term investments consisted of the following: June 30, 2022 Gross Cost or Gains Losses Fair Value Short-term investments Bank time deposits $ 16.1 $ — $ — $ 16.1 Available-for-sale securities: Corporate bonds 422.5 — (6.3) 416.2 US Treasuries 5.0 — — 5.0 Commercial paper 21.9 — — 21.9 Total Short-term investments $ 465.5 $ — $ (6.3) $ 459.2 March 31, 2022 Gross Cost or Gains Losses Fair Value Short-term investments Bank time deposits $ 131.8 $ — $ — $ 131.8 Available-for-sale securities: Corporate bonds 544.3 — (5.8) 538.5 US Treasuries 23.4 — — 23.4 Commercial Paper 125.4 — — 125.4 Certificates of Deposit 1.0 — — 1.0 Total Short-term investments $ 825.9 $ — $ (5.8) $ 820.1 The following table summarizes the contracted maturities of our short-term investments at June 30, 2022: June 30, 2022 Amortized Fair Short-term investments Due in 1 year or less $ 389.4 $ 385.4 Due in 1 - 2 years 76.1 73.8 Total Short-term investments $ 465.5 $ 459.2 |
DERIVATIVE INSTRUMENTS AND HEDG
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | 3 Months Ended |
Jun. 30, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | 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, 2022 March 31, 2022 Forward contracts to sell foreign currencies $ 99.5 $ 132.8 Forward contracts to purchase foreign currencies 311.6 75.8 For the three months ended June 30, 2022 and 2021, we recorded a gain of $1.6 and a loss of $1.8, respectively, related to foreign currency forward contracts in Interest and other, net in our Condensed Consolidated Statements of Operations. Our foreign currency exchange forward contracts are not designated as hedging instruments under hedge accounting. 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. |
SOFTWARE DEVELOPMENT COSTS AND
SOFTWARE DEVELOPMENT COSTS AND LICENSES | 3 Months Ended |
Jun. 30, 2022 | |
SOFTWARE DEVELOPMENT COSTS AND LICENSES | |
SOFTWARE DEVELOPMENT COSTS AND LICENSES | SOFTWARE DEVELOPMENT COSTS AND LICENSES Details of our capitalized software development costs and licenses were as follows: June 30, 2022 March 31, 2022 Current Non-current Current Non-current Software development costs, internally developed $ 36.5 $ 678.4 $ 59.2 $ 599.3 Software development costs, externally developed 21.7 126.9 19.3 145.2 Licenses 5.6 23.0 2.9 11.4 Software development costs and licenses $ 63.8 $ 828.3 $ 81.4 $ 755.9 During the three months ended June 30, 2022 and 2021, we recorded $19.9 and $9.8, respectively, of software development impairment charges (a component of Cost of revenue). The impairment charges recorded during the three months ended June 30, 2022 related to a decision not to proceed with further development of certain interactive entertainment software products. The impairment charges recorded during the three months ended June 30, 2021 related to unamortized capitalized costs for the development of a title, which were anticipated to exceed the net realizable value of the asset at the time they were impaired. |
ACCRUED EXPENSES AND OTHER CURR
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 3 Months Ended |
Jun. 30, 2022 | |
Liabilities, Current [Abstract] | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accrued expenses and other current liabilities consisted of the following: June 30, 2022 March 31, 2022 Software development royalties $ 658.9 $ 615.7 Deferred acquisition payments 192.4 78.6 Tax payable 159.7 14.1 Compensation and benefits 130.1 134.0 Licenses 119.1 81.1 Marketing and promotions 85.4 30.6 Refund liability 41.2 51.7 Professional fees 26.6 17.0 Interest payable 20.7 — Sales tax liability 18.0 17.2 Other 149.6 34.9 Accrued expenses and other current liabilities $ 1,601.7 $ 1,074.9 |
DEBT
DEBT | 3 Months Ended |
Jun. 30, 2022 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT Bridge Loan During the fiscal year ended March 31, 2022, in connection with our acquisition of Zynga (refer to Note 1 4 - Acquisitions ), we received a bridge loan commitment of $2,700.0. The bridge loan commitment was terminated in April 2022 as a result of our Senior Notes debt offering discussed below. During the three months ended June 30, 2022, we recognized expense related to interest and fees of $6.1 related to the bridge loan commitment within Interest and other, net in our Condensed Consolidated Statements of Operations. At June 30, 2022, all deferred financing costs related to the bridge loan commitment were fully amortized. Senior Notes On April 14, 2022, we completed our offering and sale of $2,700.0 aggregate principal amount of our senior notes, consisting of $1,000.0 principal amount of our 3.300% Senior Notes due 2024 (the “2024 Notes”), $600.0 principal amount of our 3.550% Senior Notes due 2025 (the “2025 Notes”), $600.0 principal amount of our 3.700% Senior Notes due 2027 (the “2027 Notes”), and $500.0 principal amount of our 4.000% Senior Notes due 2032 (the “2032 Notes” and, together with the 2024 Notes, the 2025 Notes and the 2027 Notes, the “Senior Notes”). The Senior Notes were issued under an indenture, dated as of April 14, 2022 (the “Base Indenture”), between the Company and The Bank of New York Mellon, as trustee (the “Trustee”) and (i) a first supplemental indenture, with respect to the 2024 Notes, (ii) a second supplemental indenture, with respect to the 2025 Notes, (iii) a third supplemental indenture, with respect to the 2027 Notes and (iv) a fourth supplemental indenture, with respect to the 2032 Notes (collectively, the “Supplemental Indentures” and together with the Base Indenture, the “Indenture”), each dated as of April 14, 2022, between the Company and the Trustee. The Senior Notes are the Company’s senior unsecured obligations and rank equally with all of our other existing and future unsubordinated obligations. The 2024 Notes mature on March 28, 2024 and bear interest at an annual rate of 3.300%. The 2025 Notes mature on April 14, 2025 and bear interest at an annual rate of 3.550%. The 2027 Notes mature on April 14, 2027 and bear interest at an annual rate of 3.700%. The 2032 Notes mature on April 14, 2032 and bear interest at an annual rate of 4.000%. We will pay interest on the 2024 Notes semi-annually on March 28 and September 28 of each year, commencing September 28, 2022. We will pay interest on each of the 2025 Notes, 2027 Notes, and 2032 Notes semi-annually on April 14 and October 14 of each year, commencing October 14, 2022. The proceeds were used to finance a portion of our acquisition of Zynga. The Senior Notes are not entitled to any sinking fund payments. We may redeem each series of the Senior Notes at any time in whole or from time to time in part at the applicable redemption prices set forth in each Supplemental Indenture. Upon the occurrence of a Change of Control Repurchase Event (as defined in each of the Supplemental Indentures) with respect to a series of the Senior Notes, each holder of the Senior Notes of such series will have the right to require the Company to purchase that holder’s Notes of such series at a price equal to 101% of the aggregate principal amount thereof, plus accrued and unpaid interest to, but excluding, the date of repurchase, unless the Company has exercised its option to redeem all the Senior Notes. In the case of an event of default arising from certain events of bankruptcy or insolvency with respect to the Company, all outstanding Senior Notes will become due and payable immediately. If any other event of default specified in the Indenture occurs and is continuing with respect to any series of the Senior Notes, the Trustee or the holders of at least 25% in aggregate principal amount of that series of the outstanding Notes may declare the principal of such series of Senior Notes immediately due and payable. The Indenture contains certain limitations on the ability of the Company and its subsidiaries to grant liens without equally securing the Senior Notes, or to enter into certain sale and lease-back transactions. These covenants are subject to a number of important exceptions and limitations, as further provided in the Indenture. During the three months ended June 30, 2022, we recognized interest expense of $20.2 within Interest and other, net in our Condensed Consolidated Statements of Operations. Debt issuance costs of $19.1 and original issuance discount of $1.3 were incurred in connection with the Senior Notes. These debt issuance costs and original issuance discount are included as a reduction of the debt within Long-term debt, net on our Condensed Consolidated Balance Sheet and will be amortized into Interest and other, net in our Consolidated Statements of Operations over the contractual term of the Senior Notes. During the three months ended June 30, 2022, we recognized $1.2 of amortization of debt issuance costs and $0.1 of amortization of the original issuance discount. As of June 30, 2022, $2,681.0 was recorded within Long term debt, net on Condensed Consolidated Balance Sheet, and the fair value (Level 2) of the Senior Notes was $2,630.9. Credit Agreement On May 23, 2022, we entered into a new unsecured Credit Agreement (the "2022 Credit Agreement"), which replaced in its entirety the Company's prior Credit Agreement, dated as of February 8, 2019, which was paid off in full and terminated. The 2022 Credit Agreement provides for an unsecured five-year revolving credit facility with commitments of $500.0, including sublimits for (i) the issuance of letters of credit in an aggregate face amount of up to $100.0 and (ii) borrowings and letters of credit denominated in Pounds Sterling, Euros, and Canadian Dollars in an aggregate principal amount of up to $100.0. In addition, the 2022 Credit Agreement contains uncommitted incremental capacity permitting the incurrence of up to an additional amount not to exceed the greater of $250.0 and 35.0% of the Company's Consolidated Adjusted EBITDA (as defined in the 2022 Credit Agreement). Loans under the 2022 Credit Agreement will bear interest at a rate of (a) 0.000% to 0.625% above an alternate base rate (3.25% at June 30, 2022) or (b) 1.000% to 1.625% above Secured Overnight Financing Rate ("SOFR"), approximately 0.10% at June 30, 2022, which rates are determined by the Company's credit rating. The 2022 Credit Agreement also includes, among other terms and conditions, a maximum leverage ratio covenant, as well as customary affirmative and negative covenants, including covenants that limit or restrict the Company and its subsidiaries’ ability to, among other things, incur subsidiary indebtedness, grant liens, and dispose of all or substantially all assets, in each case subject to certain exceptions and baskets. In addition, the 2022 Credit Agreement provides for events of default customary for a credit facility of this size and type, including, among others, non-payment of principal and interest when due thereunder, breaches of representations and warranties, noncompliance with covenants, acts of insolvency, cross-defaults to material indebtedness, and material judgment defaults (subject to certain limitations and cure periods). Upon execution of the 2022 Credit Agreement, we incurred $3.5 of debt issuance costs that were capitalized within Other assets on our Condensed Consolidated Balance Sheet and will be amortized on a straight-line basis over the five-year term of the 2022 Credit Agreement, with the expense recorded within Interest and other, net in our Condensed Consolidated Statements of Operations. During the three months ended June 30, 2022, we amortized $0.1 of these debt issuance costs. On June 22, 2022, we drew down $200.0 at approximately 3.28% from our facility under the 2022 Credit Agreement, which constitutes senior unsecured indebtedness of the Company, ranking equally with all of our other existing and future senior unsecured unsubordinated obligations, and will record interest within Interest and other, net in our Condensed Consolidated Statement of Operations. This borrowing has a maturity date of May 23, 2027. The proceeds were used to finance a portion of the repurchase of the Convertible Notes (see below). After giving effect to this borrowing, $200.0 is recorded within Long Term Debt, net on our Condensed Consolidated Balance Sheet; the fair value (Level 2) of the debt was $200.0; and we had approximately $297.5 available for additional borrowings as of June 30, 2022. Information related to availability on our respective credit agreements for each period was as follows: June 30, 2022 March 31, 2022 Available borrowings $ 297.5 $ 247.5 Outstanding letters of credit 2.5 2.5 We recorded interest expense and fees related to the 2022 Credit Agreement and our prior credit agreement of $0.1 and $0.1 for the three months ended June 30, 2022 and 2021, respectively, within Interest and other, net in our Condensed Consolidated Statement of Operations. Term Loan On June 22, 2022, we entered into an unsecured 364-Day Term Loan Credit Agreement ("Term Loan"). The Term Loan provides for an unsecured 364-day term loan credit facility in the aggregate principal amount of $350.0 and matures on June 21, 2023, and will bear interest at our election at a margin of (a) 0.000% to 0.375% above an alternate base rate (defined on the basis of prime rate) or (b) 0.750% to 1.375% above SOFR, which margins are determined by reference to the our credit rating. The Term Loan constitutes senior unsecured indebtedness of the Company, ranking equally with all of our other existing and future senior unsecured unsubordinated obligations. The Term Loan also includes, among other terms and conditions, a maximum leverage ratio covenant, as well as customary affirmative and negative covenants, including covenants that limit or restrict the Company and its subsidiaries’ ability to, among other things, incur subsidiary indebtedness, grant liens, and dispose of all or substantially all assets, in each case subject to certain exceptions and baskets. In addition, the Term Loan provides for events of default customary for a credit facility of this size and type, including, among others, non-payment of principal and interest when due thereunder, breaches of representations and warranties, noncompliance with covenants, acts of insolvency, cross-defaults to material indebtedness, and material judgment defaults (subject to certain limitations and cure periods). We fully drew down on the Term Loan on June 22, 2022 at approximately 3.6%. The proceeds were used to finance a portion of the repurchase of the Convertible Notes (see below). We will record interest within Interest and other, net in our Condensed Consolidated Statement of Operations. As of June 30, 2022, $350.0 was recorded within Short-term debt on Condensed Consolidated Balance Sheet, and the fair value (Level 2) of the Term Loan debt approximates book value. Convertibles Notes In conjunction with the acquisition of Zynga on May 23, 2022 (refer to Note 1 4 - Acquisitions ), we entered into (a) the First Supplemental Indenture (the “2024 Supplemental Indenture”) to the Indenture, dated as of June 14, 2019 (the “2024 Indenture”), between Zynga and Computershare Trust Company, N.A. (as successor to Wells Fargo Bank, National Association) (the “Trustee”), relating to Zynga’s 0.25% Convertible Senior Notes due 2024 (the “2024 Convertible Notes”), and (b) the First Supplemental Indenture (the “2026 Supplemental Indenture” and, together with the 2024 Supplemental Indenture, the “Supplemental Indentures”) to the Indenture, dated as of December 17, 2020 (the “2026 Indenture” and, together with the 2024 Indenture, the “Indentures”), between Zynga and the Trustee, relating to Zynga’s 0% Convertible Senior Notes due 2026 (the “2026 Convertible Notes” and, together with the 2024 Convertible Notes, the “Convertible Notes”). As of the closing date of the acquisition, approximately $690.0 aggregate principal amount of the 2024 Convertible Notes were outstanding and approximately $874.5 aggregate principal amount of the 2026 Convertible Notes were outstanding. Following the acquisition and according to the Supplemental Indentures, we assumed all of Zynga’s rights and obligations under the Indentures, and the Company guaranteed the payment and other obligations of Zynga under the Convertible Notes. As a result of our acquisition of Zynga, the right to convert each one thousand dollar principal amount of such Convertible Notes into shares of Zynga common stock was changed into a right to convert such principal amount of such Convertible Notes into the number of units of Reference Property equal to the conversion rate in effect immediately prior to the closing of the Zynga Acquisition, in each case pursuant to the terms and procedures set forth in the applicable Indenture. A unit of Reference Property is defined in each Indenture as 0.0406 shares of Take-Two common stock and $3.50 in cash, without interest, plus cash in lieu of any fractional shares of Take-Two common stock. The 2024 Convertible Notes and 2026 Convertible Notes mature on June 1, 2024, and December 15, 2026, respectively, unless earlier converted, redeemed, or repurchased in accordance with their terms, respectively, prior to the maturity date. Interest is payable semiannually on the 2024 Convertible Notes in arrears on March 1 and September 1 of each year. The 2026 Convertible Notes do not bear regular interest, and the principal amount does not accrete. The acquisition of Zynga constituted a Fundamental Change, a Make-Whole Fundamental Change, and a Share Exchange Event (each as defined in the Indentures) under the Indentures. The effective date of the Fundamental Change, Make- Whole Fundamental Change and Share Exchange Event in respect of the Convertible Notes was May 23, 2022 (the “Convertible Notes Effective Date”), and the related tender and conversion periods expired on June 22, 2022. As a result, each holder of Convertible Notes had the right to tender its Convertible Notes to the Company for cash or surrender its Convertible Notes for conversion into the Reference Property at the applicable conversion rate, in each case pursuant to the terms and procedures set forth in the applicable Indenture. As of the expiration of the Fundamental Change, Make-Whole Fundamental Change, and Share Exchange Event, (a) $0.3 aggregate principal amount of the 2024 Convertible Notes and (b) $845.1 aggregate principal amount of the 2026 Convertible Notes were tendered for cash. In addition, (a) $668.3 aggregate principal amount of the 2024 Convertible Notes, and (b) no 2026 Convertible Notes were surrendered for conversion into the applicable Reference Property. In total, we paid $321.6 for the tendered or converted 2024 Convertible Notes, including interest, and $845.1 for the tendered 2026 Convertible Notes in cash, and we issued 3.7 shares of our common stock upon the conversion of the 2024 Convertible Notes. After settlement of all Convertible Notes tendered or surrendered for conversion, $21.4 aggregate principal amount of the 2024 Convertible Notes remained outstanding and $29.4 aggregate principal amount of the 2026 Convertible Notes remained outstanding at June 30, 2022. The 2024 Convertible Notes and 2026 Convertible Notes constitute senior unsecured indebtedness of Zynga, ranking pari passu with all of our other existing and future senior unsecured unsubordinated obligations of Zynga. As a result the 2024 Convertible Notes and 2026 Convertible Notes are structurally senior to the indebtedness of the Company as to Zynga and its assets. As noted above, the Company also guaranteed the payment and other obligations of Zynga under the Convertible Notes. The Company's guarantees of the 2024 Convertible Notes and 2026 Convertible Notes are the Company's senior unsecured obligations and rank equally with all of the Company's other existing and future senior unsecured unsubordinated obligations. Under the terms of the applicable Indentures, prior to the close of business on the business day immediately preceding March 1, 2024 with respect to the 2024 Convertible Notes and September 15, 2026 with respect to the 2026 Convertible Notes, the Convertible Notes will be convertible only under the following circumstances: • during any calendar quarter, if the value of a unit of Reference Property (based on the last reported sales price of our common stock), for at least 20 trading days in a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price of the applicable series of the 2024 Convertible Notes or 2026 Convertible Notes, respectively, on each applicable trading day; • during the five business-day period after any five consecutive trading-day period in which the trading price per one thousand dollar principal amount of each applicable series of the 2024 Convertible Notes or 2026 Convertible Notes for such trading day was less than 98% of the product of the value of a unit of Reference Property (based on the last reported sale price of our common stock) and the conversion rate of the applicable series of the 2024 Convertible Notes or 2026 Convertible Notes, respectively, on each such trading day; • if we call the 2024 Convertible Notes or 2026 Convertible Notes for redemption, at any time prior to the close of business on the second scheduled trading day immediately preceding the respective redemption date; or • upon the occurrence of specified corporate events described in the respective Indentures. Upon any conversion, holders will receive either cash or a combination of cash and shares of Take-Two common stock, at our election. As of June 30, 2022, the conditions allowing holders of the Convertible Notes to convert their respective series of the Convertible Notes have not been met and therefore both the Convertible Notes are not yet convertible. 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 Zynga Acquisition (refer to Note 14 - Acquisitions ) and we do not expect significant fluctuations in fair value through maturity. We initially recorded $778.6 as the acquisition date fair value for the 2024 Convertible Notes and $874.5 for the 2026 Convertible Notes. The fair value was determined as the expected cash payment and value of shares to be issued to settle the Convertible Notes. As of June 30, 2022, we recorded $25.0 as the fair value of the remaining outstanding 2024 Convertible Notes, or $3.6 more than principal, and $29.3 as the fair value of the remaining outstanding 2026 Convertible Notes, or $0.1 less than principal, within Long-term debt, net in our Condensed Consolidated Balance Sheet. During the three months ended June 30, 2022, we recognized a loss of $47.8 within (Loss) gain on fair value adjustments, net in our Condensed Consolidated Statements of Operations, which includes the loss recognized on the converted Convertible Notes. Capped Calls In connection with the Convertible Notes, Zynga also previously entered into privately negotiated Capped Call options with certain counterparties. These Capped Call options were intended to reduce the potential economic dilution of Zynga shares upon any conversion of the Convertible Notes and/or offset any cash payments made in excess of the principal amount of converted notes with such reduction and/or offset, as the case might have been, subject to a maximum based on the cap price. Following the acquisition of Zynga, we entered into Termination Agreements with each counterparty related to the acquired Capped Call arrangements to be settled in cash. Pursuant to the terms of the Termination Agreements, the Capped Call options will be terminated over a period of time specified in each Termination Agreement and each counterparty will owe a cash payment to the Company, as applicable, as a result of the termination of the Capped Call options that will be calculated based on their fair market value calculated by each counterparty during a termination valuation period. We have accounted for these Capped Calls as derivatives under ASC 815. We initially recorded $131.3 as the acquisition date fair value of these Capped Calls, and, as of June 30, 2022, the fair value of $140.1 is recorded on our Condensed Consolidated Balance Sheet. The fair value (Level 2), in each instance, was determined based on negotiated termination agreements with the counterparties, which are dependent on our stock price over a certain period of time as further defined in the respective agreements. During the three months ended June 30, 2022, we recognized a gain of $8.8 within (Loss) gain on fair value adjustments, net in our Consolidated Statements of Operations. In July 2022, we received $140.1 in cash for settlement of these Capped Calls. Maturities As a result of the different debt components discuss above, the aggregate amount of maturities for all of our long-term borrowings is as follows: Fiscal Year Ended March 31, Maturities 2023 (remaining) $ — 2024 1,000.0 2025 21.4 2026 600.0 2027 $ 29.4 |
(LOSS) EARNINGS PER SHARE ("EPS
(LOSS) EARNINGS PER SHARE ("EPS") | 3 Months Ended |
Jun. 30, 2022 | |
Earnings Per Share [Abstract] | |
(LOSS) EARNINGS PER SHARE ("EPS") | EARNINGS PER SHARE ("EPS") The following table sets forth the computation of basic and diluted (loss) earnings per share: Three Months Ended June 30, 2022 2021 Computation of Basic (loss) earnings per share: Net (loss) income $ (104.0) $ 152.3 Weighted average shares outstanding—basic 136.5 115.7 Basic (loss) earnings per share $ (0.76) $ 1.32 Computation of Diluted (loss) earnings per share: Net (loss) income $ (104.0) $ 152.3 Weighted average shares outstanding—basic 136.5 115.7 Add: dilutive effect of common stock equivalents — 1.4 Weighted average common shares outstanding—diluted 136.5 117.1 Diluted (loss) earnings per share $ (0.76) $ 1.30 We incurred a net loss for the three months ended June 30, 2022; therefore, the diluted weighted average shares outstanding exclude the effect of unvested common stock equivalents because their effect would be antidilutive. For the three months ended June 30, 2022, we had 2.7 potentially dilutive shares from share-based awards and 1.7 of shares from Convertible Notes that are excluded due to the net loss for the period. |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE LOSS | 3 Months Ended |
Jun. 30, 2022 | |
Equity [Abstract] | |
ACCUMULATED OTHER COMPREHENSIVE LOSS | ACCUMULATED OTHER COMPREHENSIVE LOSS The following table provides the components of accumulated other comprehensive loss: Three Months Ended June 30, 2022 Foreign Unrealized Total Balance at March 31, 2022 $ (52.8) $ (4.5) $ (57.3) Other comprehensive loss before reclassifications (62.8) (0.4) (63.2) Balance at June 30, 2022 $ (115.6) $ (4.9) $ (120.5) Three Months Ended June 30, 2021 Foreign Unrealized Total Balance at March 31, 2021 $ (9.3) $ 0.6 $ (8.7) Other comprehensive income (loss) before reclassifications 6.1 (0.2) 5.9 Balance at June 30, 2021 $ (3.2) $ 0.4 $ (2.8) |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Jun. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES A summary of annual minimum contractual obligations and commitments as of June 30, 2022 is as follows: Fiscal Year Ending March 31, Software Marketing Operating Leases Purchase Total 2023 (remaining) $ 315.3 $ 39.3 $ 51.3 $ 192.4 $ 598.3 2024 207.8 53.9 56.8 93.4 411.9 2025 183.7 68.5 63.2 24.7 340.1 2026 113.8 46.0 46.5 1.9 208.2 2027 22.9 1.3 42.8 0.3 67.3 Thereafter 21.9 — 240.6 — 262.5 Total $ 865.4 $ 209.0 $ 501.2 $ 312.7 $ 1,888.3 Software Development and Licensing Agreements: We make payments to third-party software developers that include contractual payments to developers under several software development agreements that expire at various times through July 2031. Our aggregate outstanding software development commitments assume satisfactory performance by third-party software developers. We also have licensing commitments that primarily consist of obligations to holders of intellectual property rights for use of their trademarks, copyrights, technology or other intellectual property rights in the development of our products. Marketing Agreements: We have certain minimum marketing support commitments where we commit to spend specified amounts related to marketing our products. Marketing commitments expire at various times through March 2027 and primarily reflect our agreements with major sports leagues and players' associations. Purchase Obligations: These obligations are primarily related to agreements to purchase services that are enforceable and legally binding on us that specifies all significant terms, including fixed, minimum or variable pricing provisions; and the approximate timing of the transactions, expiring at various times through March 2027. Operating Leases: Our offices are occupied under non-cancelable operating leases expiring at various times through December 2037. We also lease certain furniture, equipment and automobiles under non-cancelable leases expiring through February 2026. Legal and Other Proceedings: We are, or may become, subject to demands and claims (including intellectual property and employment related claims) and are involved in routine litigation in the ordinary course of business which we do not believe to be material to our business or financial condition or results of operations. We have appropriately accrued amounts related to certain of these claims and legal and other proceedings. While it is reasonably possible that a loss may be incurred in excess of the amounts accrued in our financial statements, we believe that such losses, unless otherwise disclosed, would not be material. |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Jun. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The benefit from income taxes for the three months ended June 30, 2022 is based on our projected annual effective tax rate for fiscal year 2023, adjusted for specific items that are required to be recognized in the period in which they are incurred. The benefit from income taxes was $2.3 for the three months ended June 30, 2022, as compared to the provision for income taxes of $19.2 for the prior year period. When compared to the statutory rate of 21%, the effective tax rate of 2.2% for the three months ended June 30, 2022 was due primarily to tax expense of $12.1 related to the geographic mix of earnings, tax expense of $9.4 from employee stock-based compensation, nondeductible expense of $8.2 related to the settlement of convertible debt, offset by benefits of $22.4 from tax credits. Tax Cuts and Jobs Act of 2017 (“TCJA”) requires taxpayers to capitalize and amortize research and development costs pursuant to Internal Revenue Code ("IRC") Section 174. Although Congress is considering legislation that would defer the capitalization and amortization requirement to later years, we have no assurance that the requirement will be repealed or otherwise modified. The requirement is effective for the Company beginning April 1, 2022. For the three months ended June 30, 2022, we recorded an estimated increase to income tax payable and deferred tax assets of approximately $70.0 due to Section 174 capitalization. The actual impact of Section 174 capitalization and amortization on the income tax payable and deferred tax asset will depend on multiple factors, including the amount of research and development expenses we will incur and whether we conduct our research and development activities inside or outside the United States. If legislation is not passed to defer, repeal, or otherwise modify the capitalization and amortization requirement we expect our cash taxes payable and deferred tax assets to increase in the future. 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 may have an impact on our effective tax rate in future periods. |
ACQUISITIONS
ACQUISITIONS | 3 Months Ended |
Jun. 30, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
ACQUISITIONS | ACQUISITIONS On May 23, 2022, we completed our acquisition of 100% of the issued and outstanding shares of Zynga, a leading developer of mobile games (the "Zynga Acquisition"). Under the terms and conditions of the merger agreement, each Zynga stockholder received $3.50 in cash and 0.0406 shares of our common stock and cash in lieu of fractional shares for each share of Zynga common stock outstanding at closing. Our consideration consisted of an aggregate of $3,992.4 in cash, 46.3 shares of our common stock, and $143.6 of replacement equity awards attributable to the pre-acquisition service period (see below). In connection with the transaction, on April 14, 2022, we completed our offering and sale of $2,700.0 aggregate principal amount of our Senior Notes (refer to Note 9 - D ebt ). The cash portion of the merger consideration was funded from our cash on hand, including the proceeds from our senior notes offering. Transaction costs of $104.8, $8.3, and $5.6 for the three months ended June 30, 2022 have been recorded within General and administrative expense, Research and development, and Selling and marketing, respectively, in our Condensed Consolidated Statements of Operations. We acquired Zynga as part of our ongoing strategy to expand selectively our portfolio of owned intellectual property and to diversify and strengthen further our mobile offerings The acquisition-date fair value of the consideration totaled $9,513.7, which consisted of the following: Fair value of purchase consideration Cash $ 3,992.4 Common stock (46.3 shares) 5,377.7 Replacement equity awards 143.6 Total $ 9,513.7 We used the acquisition method of accounting and recognized assets acquired and liabilities assumed at their fair value as of the date of acquisition, with the excess recorded to goodwill. As we finalize our estimation of the fair value of the assets acquired and liabilities assumed, additional adjustments may be recorded during the measurement period (a period not to exceed 12 months from the acquisition date). The initial accounting is incomplete as of June 30, 2022 for the acquired assets and assumed liabilities as the Company is currently in the process of completing the assessment of intangible assets. Additional intangible assets may be recognized as the valuation is complete. The following table summarizes the preliminary acquisition date fair value of net tangible and intangible assets acquired, net of liabilities assumed from Zynga: Fair Value Weighted average useful life Cash acquired $ 864.9 N/A Accounts receivable 271.2 N/A Prepaid expenses and other 192.6 N/A Fixed assets 41.5 N/A Right-of-use assets 85.7 N/A Other tangible assets 67.3 N/A Accounts payable (78.5) N/A Accrued expenses and other current liabilities (355.5) N/A Deferred revenue (333.1) N/A Lease liabilities (15.4) N/A Long-term debt (1,653.1) N/A Non-current lease liabilities (129.1) N/A Deferred tax liabilities, net (1,254.7) N/A Other liabilities assumed (61.5) N/A Intangible Assets Developed game technology 4,526.0 7 Branding and trade names 384.0 12 Game engine technology 130.0 3 User base 126.0 1 Developer relationships 72.0 7 Advertising technology 42.0 3 Customer relationships 35.0 5 Goodwill 6,556.4 N/A Total $ 9,513.7 Convertible Notes and Related Capped Calls Refer to Note 9 - Debt for a discussion of the Convertible Notes and related Capped Calls that were previously issued by Zynga. Identifiable Intangible Assets Acquired and Goodwill The preliminary fair value estimates of Developed game technology, Game engine technology, and Advertising technology were estimated using the multi-period excess earnings method. The excess earnings methodology is an income approach methodology that estimates the projected cash flows of the business attributable to the Developed game technology, Advertising technology, and Game engine technology intangible assets, respectively, net of charges for the use of other identifiable assets of the business including working capital, fixed assets and other intangible assets. The amortization for these intangible assets have been recorded to Cost of revenue in our Condensed Consolidated Statements of Operations . The preliminary fair value estimate of Branding and trade names was estimated using the relief-from-royalty method, which presumes the owner of the asset avoids hypothetical royalty payments that would need to be made for the use of the asset if the asset was not owned. The amortization for the Branding and trade names intangible asset has been recorded to Depreciation and amortization in our Condensed Consolidated Statements of Operations . The preliminary fair value estimate of User base was estimated using the replacement cost method. The replacement cost methodology is a cost approach methodology based on replacement or reproduction cost of the User Base as an indicator of fair value. The amortization for the User base intangible asset has been recorded to Selling and marketing in our Condensed Consolidated Statements of Operations . The preliminary fair value estimate of Developer relationships and Customer relationships were estimated using the with and without method, which is a form of the income approach. The with and without method considers the hypothetical impact to the projected cash flows of the business if the asset were not in place. The amortization for the Developer relationships and Customer relationships intangible assets have been recorded to Research and development and Selling and marketing, respectively, in our Condensed Consolidated Statements of Operations . The $6,556.4 of goodwill recognized, which is not deductible for U.S. income tax purposes, is primarily attributable to the assembled workforce of the acquired business and expected synergies at the time of the acquisition. Stock-Based Compensation In connection with the Zynga Acquisition, (i) the outstanding and unexercised options to purchase Zynga common stock were assumed by the Company and automatically converted into options exercisable for shares of Take-Two common stock (the “Converted Options”), (ii) the issued and outstanding restricted stock unit awards with respect to Zynga common stock were assumed by the Company and automatically converted into a Take-Two restricted stock unit award with respect to shares of Take-Two common stock (the “Converted RSUs”), and (iii) the issued and outstanding performance stock unit awards with respect to Zynga common stock were assumed by the Company and automatically converted into a Take-Two restricted stock unit award with respect to shares of Take-Two common stock (the “Converted PSUs” and together with the Converted Options and the Converted RSUs, the “Converted Awards”). As a result, we issued replacement equity options and PSU/RSU awards of 1.5 and 4.2, respectively. The portion of the fair value related to pre-combination services of $143.6 was included in the purchase price, and $28.6 was recognized as day-one post-combination expense for acceleration of awards, while the remaining fair value will be recognized over the remaining service periods. As of June 30, 2022, the future expense for the Converted RSU and PSU Awards was approximately $411.5, which will be recognized over a weighted average service period of approximately 1.7 years. As of June 30, 2022, the future expense for the Converted Options was approximately $4.8, which will be recognized over a weighted average service period of approximately 0.9 years. Zynga Revenue and Earnings The amounts of revenue and earnings of Zynga included in our Condensed Consolidated Statement of Operations from the acquisition date are as follows: Three Months Ended June 30, 2022 Net revenue $ 276.7 Net loss $ 177.5 Pro-forma Financial Information The following table summarizes the pro-forma consolidated results of operations (unaudited) for the three months ended June 30, 2022 and 2021, as though the acquisition had occurred on April 1, 2021, the beginning of fiscal year 2022, and Zynga had been included in our consolidated results for the entire periods subsequent to that date. Three Months Ended June 30, 2022 2021 Pro-forma Net revenue $ 1,480.6 $ 1,538.3 Pro-forma Net loss $ 19.1 $ 295.4 The unaudited pro-forma consolidated results above are based on the historical financial statements of Take-Two and Zynga and are not necessarily indicative of the results of operations that would have been achieved if the acquisition was completed at the beginning of fiscal year 2022 and are not indicative of the future operating results of the combined company. The unaudited pro-forma information for all periods presented includes the following adjustments, where applicable, for business combination accounting effects resulting from the acquisition: (i) alignment of revenue accounting policy regarding the timing of recognition of consumable and durable virtual items, (ii) additional interest expense related to financing for the acquisition, (iii) additional incremental stock-based compensation expense for the replacement of Zynga’s outstanding equity awards with Take-Two replacement equity awards, (iv) alignment of Zynga's accounting policy with Take-Two’s policy to expense certain royalty prepayments until technological feasibility is established, (v) additional lease expense resulting from the fair value adjustments to the operating lease liabilities and operating lease assets, (vi) additional amortization expense related to finite-lived intangible assets acquired, and (vii) the related tax effects assuming that the business combination occurred on April 1, 2021. The significant nonrecurring adjustments reflected in the unaudited pro-forma consolidated information above include the reclassification of the transaction costs and the related tax effects incurred after the acquisition to the earliest period presented. |
GOODWILL AND INTANGIBLE ASSETS,
GOODWILL AND INTANGIBLE ASSETS, NET | 3 Months Ended |
Jun. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND INTANGIBLE ASSETS, NET | GOODWILL AND INTANGIBLE ASSETS, NET Goodwill The change in our goodwill balance is as follows: Total Balance at March 31, 2022 $ 674.6 Acquisition of Zynga (see Note 14 ) 6,556.4 Additions from immaterial acquisitions 1.7 Currency translation adjustment (5.5) Balance at June 30, 2022 $ 7,227.2 Intangibles The following table sets forth the intangible assets that are subject to amortization: June 30, 2022 Gross Accumulated Net Book Weighted average useful life Developed game technology $ 4,825.5 $ (172.9) $ 4,652.6 7 years Branding and trade names $ 394.9 $ (7.4) $ 387.5 10 years Game engine technology $ 159.4 $ (18.8) $ 140.6 3 years User base $ 135.4 $ (23.1) $ 112.3 1 year Developer relationships $ 72.0 $ (1.1) $ 70.9 7 years Advertising technology $ 42.0 $ (1.5) $ 40.5 3 years Intellectual property $ 41.1 $ (26.8) $ 14.3 6 years Customer relationships $ 35.0 $ (0.8) $ 34.2 5 years Analytics technology $ 29.3 $ (29.3) $ — 0 years In place lease $ 2.4 $ (0.7) $ 1.7 4 years Total intangible assets $ 5,737.0 $ (282.4) $ 5,454.6 Amortization of intangible assets is included in our Condensed Consolidated Statements of Operations as follows: Three Months Ended June 30, 2022 2021 Cost of revenue $ 97.4 $ 11.3 Selling and marketing $ 14.9 $ 1.8 Research and development $ — $ 1.7 Depreciation and amortization $ 5.3 $ 0.4 Total amortization of intangible assets $ 117.6 $ 15.2 Estimated future amortization of intangible assets that will be recorded in Cost of revenue and operating expenses are as follows: Fiscal Year Ended March 31, Amortization 2023 (remaining) $ 734.7 2024 $ 872.5 2025 $ 849.4 2026 $ 792.2 2027 $ 775.4 |
BASIS OF PRESENTATION AND SIG_2
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Jun. 30, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation | 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, are based on full year assumptions when appropriate. Actual results could differ materially from those estimates, including as a result of the COVID-19 pandemic, 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, 2022. Certain immaterial reclassifications have been made to prior period amounts to conform to the current period presentation. We are reiterating our significant accounting policy on revenue recognition included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2022, including certain revenue policies applied upon the close of the Zynga acquisition. |
Revenue Recognition | Revenue Recognition We derive revenue primarily from the sale of our interactive entertainment content, principally for console gaming systems, personal computers, and Mobile. We also generate revenue from advertising within our software products. Game. Our interactive entertainment content consists of full game software products that may contain offline gameplay, online gameplay, or a combination of offline and online gameplay. We may also sell separate downloadable add-on content to supplement our full game software products. Certain of our software products provide customers with the option to acquire virtual currency or make in-game purchases. We determine revenue recognition by: • identifying the contract, or contracts, with the customer; • identifying the performance obligations in the contract; • determining the transaction price; • allocating the transaction price to performance obligations in the contract; and • recognizing revenue when, or as, we satisfy performance obligations by transferring the promised goods or services. We recognize revenue in the amount that reflects the consideration we expect to receive in exchange for the sales of software products and game related services when control of the promised products and services is transferred to our customers and our performance obligations under the contract have been satisfied. Revenue is recorded net of transaction taxes assessed by governmental authorities such as sales, value-added and other similar taxes. Our software products are sold as full games, which typically provide access to the main game content, primarily for console and PC. Generally, our full game software products deliver a license of our intellectual property that provides a functional offline gaming experience (i.e., one that does not require an Internet connection to access the main game content or other significant game related services). We recognize revenue related to the license of our intellectual property that provides offline functionality at the time control of the products has been transferred to our customers (i.e. upon delivery of the software product). In addition, some of our full game software products that provide a functional offline gaming experience may also include significant game related services delivered over time, such as online functionality that is dependent upon online support services and/or additional free content updates. For full game sales that offer offline functionality and significant game related services we evaluate whether the license of our intellectual property and the game related services are distinct and separable. This evaluation is performed for each software product sold. If we determine that our software products contain a license of intellectual property separate from the game related services (i.e. multiple performance obligations), we estimate a standalone selling price for each identified performance obligation. We allocate the transaction price to each performance obligation using a relative standalone selling price method (the transaction price is allocated to a performance obligation based on the proportion of the standalone selling price of each performance obligation to the sum of the standalone selling prices for all performance obligations in the contract). For the portion of the transaction price allocable to the license, revenue is recognized when the customer takes control of the product. For the portion of the transaction price allocated to game related services, revenue is recognized ratably over an estimated service period for the related software product. We also defer related product costs and recognize the costs as the revenues are recognized. Certain of our full game software products are delivered primarily as an online gaming experience with substantially all gameplay requiring online access to our game related services. We recognize revenue for full game software products that are dependent on our game related services over an estimated service period. For our full game online software products, we also defer related product costs and recognize the costs as the revenue is recognized. We also sell separate downloadable add-on content to supplement our full game software products. Revenue from the sale of separate downloadable add-on content is evaluated for revenue recognition on the same basis as our full game software products. In addition to sales of our full game software products, we also offer free-to-play software products, both of which may provide customers with the option to acquire virtual currency or make in-game purchases. For virtual currency and in-game purchases the satisfaction of our performance obligation is dependent on the nature of the virtual item purchased and as a result, we categorize our virtual items as follows: • Consumable: Consumable virtual items represent items that can be consumed by a specific player action. Consumable virtual items do not result in a direct benefit that the player keeps or provide the player any continuing benefit following consumption, and they often enable a player to perform an in-game action immediately. For the sale of consumable virtual items, we recognize revenue as the items are consumed (i.e., over time), which approximates less than one month. • Durable: Durable virtual items represent items that are accessible to the player over an extended period of time. We recognize revenue from the sale of durable virtual items ratably over the estimated service period for the applicable game (i.e., over time), which represents our best estimate of the average life of the durable virtual item. Certain software products are sold to customers with a “street date” (the earliest date these products may be sold by these retailers). For the transaction price related to the license for these products that also provide a functional offline gaming experience, we recognize revenue on the later of the street date or the sale date as this is generally when we have transferred control of this performance obligation. For the sale of physical software products, recognition of revenue allocated to game related services does not begin until the product is sold-through by our customer to the end user. We currently estimate sell-through to the end user for all our titles to be approximately two months after we have sold-in the software products to retailers. Determining the estimated sell-through period requires management judgment and estimates. In addition, some of our software products are sold as digital downloads. Revenue from digital downloads generally commences when the download is made available to the end user by a third-party digital storefront. In certain countries, we use third-party licensees to distribute and host our games in accordance with license agreements, for which the licensees typically pay us a fixed minimum guarantee and sales-based royalties. These arrangements typically include multiple performance obligations, such as an upfront license of intellectual property and rights to future updates. Based on the allocated transaction price, we recognize revenue associated with the minimum guarantee when we transfer control of the upfront license of intellectual property (generally upon commercial launch) and the remaining portion ratably over the contractual term in which we provide the licensee with future update rights. Royalty payments in excess of the minimum guarantee are generally recognized when the licensed product is sold by the licensee. Advertising. We have contractual relationships with advertising networks, agencies, advertising brokers, and directly with advertisers to display advertisements in our games. For our in-game advertising arrangements, our performance obligation is to provide the inventory for advertisements to be displayed in our games. For contracts made directly with advertisers, we are also obligated to serve the advertisements in our games. However, for those direct advertising arrangements, providing the advertising inventory and serving the advertisement is considered a single performance obligation, as the advertiser cannot benefit from the advertising space without its advertisements being displayed. For in-game display advertisements, in-game offers, engagement advertisements, and other advertisements, our performance obligation is satisfied over the life of the contract, with revenue being recognized as advertising units are delivered. Contract Balances We generally record a receivable related to revenue when we have an unconditional right to invoice and receive payment, and we record deferred revenue when cash payments are received or due in advance of satisfying our performance obligations, even if amounts are refundable. Contract assets generally consist of arrangements for which we have recognized revenue to the extent it is probable that significant reversal will not occur but do not have a right to invoice as of the reporting date. Our allowances for doubtful accounts are typically immaterial and, if required, are based on our best estimate of expected credit losses inherent in our accounts receivable balance. Deferred revenue is comprised primarily of unsatisfied revenue related to the portion of the transaction price allocable to game related services of our full game software products and sales of virtual currency. These sales are typically invoiced at the beginning of the contract period, and revenue is recognized ratably over the estimated service period. Deferred revenue may also include amounts related to software products with future street dates. Refer to Note 2 - Revenue from Contracts with Customers for further information, including changes in deferred revenue during the period. Principal Agent Considerations We offer certain software products via third-party digital storefronts, such as Microsoft’s Xbox Live, Sony’s PlayStation Network, Valve's Steam, Epic Games Store, Apple's App Store, and the Google Play Store. For sales of our software products via third-party digital storefronts, we determine whether or not we are acting as the principal in the sale to the end user, which we consider in determining if revenue should be reported based on the gross transaction price to the end user or based on the transaction price net of fees retained by the third-party digital storefront. An entity is the principal if it controls a good or service before it is transferred to the customer. Key indicators that we use in evaluating these sales transactions include, but are not limited to, the following: • the underlying contract terms and conditions between the various parties to the transaction; • which party is primarily responsible for fulfilling the promise to provide the specified good or service; and • which party has discretion in establishing the price for the specified good or service. Based on our evaluation of the above indicators, for sales arrangements via Microsoft’s Xbox Live, Sony’s PlayStation Network, Valve's Steam, and Epic Games Store we have determined we are not the principal in the sales transaction to the end user and therefore we report revenue based on the consideration received from the digital storefront. For sales arrangements via Apple's App Store and the Google Play Store, we have determined that we are the principal to the end user and thus report revenue on a gross basis and mobile platform fees charged by these digital storefronts are expensed as incurred and reported within Cost of revenue. Shipping and Handling Shipping and handling costs are incurred to move physical software products to customers. We recognize all shipping and handling costs as an expense in Cost of revenue because we are responsible for delivery of the product to our customers prior to transfer of control to the customer. Estimated Service Period For certain performance obligations satisfied over time, we have determined that the estimated service period is the time period in which an average user plays our software products (“user life”) which most faithfully depicts the timing of satisfying our performance obligation. We consider a variety of data points when determining and subsequently reassessing the estimated service period for players of our software products. Primarily, we review the weighted average number of days between players’ first and last days played online. When a new game is launched and therefore no history of online player data is available, we consider other factors to determine the user life, such as the estimated service period of other games actively being sold with similar characteristics. We also consider known online trends, the service periods of our previously released software products, and, to the extent publicly available, the service periods of our competitors’ software products that are similar in nature to ours. We believe this provides a reasonable depiction of the transfer of our game related services to our customers, as it is the best representation of the period during which our customers play our software products. Determining the estimated service period is subjective and requires significant management judgment and estimates. Future usage patterns may differ from historical usage patterns, and therefore the estimated service period may change in the future. The estimated service periods for players of our current software products are generally between six and fifteen months depending on the software product. Revenue Arrangements with Multiple Performance Obligations Our contracts with customers often include promises to transfer multiple products and services. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together requires significant judgment. For software products in which the software license has offline functionality and benefits from meaningful game related services, which may include online functionality that is dependent on our online support services and/or additional free content updates, we believe we have separate performance obligations for the license of the intellectual property and the game related services. Additionally, because each of our product offerings has unique features and because we do not sell our game related services separately, we typically do not have observable standalone selling prices for each performance obligation. Significant judgment and estimates are also required to determine the standalone selling price for each distinct performance obligation and whether a discount needs to be allocated based on the relative standalone selling price of our products and services. To estimate the standalone selling price for each performance obligation, we consider, to the extent available, a variety of data points such as past selling prices of the product or other similar products, competitor pricing, and market data. If observable pricing is not available, we use an expected cost-plus margin approach taking into account relevant costs including product development, post-release support, marketing and licensing costs. This evaluation is performed on a product by product basis. Price Protection, Allowances for Returns, and Sales Incentives We grant price protection and accept returns in connection with our distribution arrangements. Following reductions in the price of our physical software products, we grant price protection to permit customers to take credits against amounts they owe us with respect to merchandise unsold by them. Our customers must satisfy certain conditions to entitle them to receive price protection or return products, including compliance with applicable payment terms and confirmation of field inventory levels. At contract inception and at each subsequent reporting period, we make estimates of price protection and product returns related to current period software product revenue. We estimate the amount of price protection and returns for software products based upon, among other factors, historical experience and performance of the titles in similar genres, historical performance of the hardware platform, customer inventory levels, analysis of sell-through rates, sales force and retail customer feedback, industry pricing, market conditions, and changes in demand and acceptance of our products by consumers. We enter into various sales incentive arrangements with our customers, such as rebates, discounts, and cooperative marketing. These incentives are considered adjustments to the transaction price of our software products and are reflected as reductions to revenue. Sales incentives incurred by us for distinct goods or services received, such as the appearance of our products in a customer’s national circular ad, are included in Selling and marketing expense if there is a separate identifiable benefit and the benefit’s fair value can be established. Otherwise, such sales incentives are reflected as a reduction to revenue. Revenue is recognized after deducting the estimated price protection, allowances for returns, and sales incentives, which are accounted for as variable consideration. Price protection, allowances for returns, and sales incentives are considered refund liabilities and are reported within Accrued expenses and other current liabilities on our Consolidated Balance Sheet. Significant Estimates Significant management judgment and estimates must be used in connection with many of the determinations described above, such as estimating the fair value allocation to distinct and separable performance obligations, the service period over which to defer recognition of revenue, and the amounts of price protection. We believe we can make reliable estimates. However, actual results may differ from initial estimates due to changes in circumstances, market conditions, and assumptions. Adjustments to estimates are recorded in the period in which they become known. Payment Terms Our payment terms and conditions vary by customer and typically provide net 30- to 60-day terms. In instances where the timing of revenue recognition differs from the timing of invoicing, we do not adjust the promised amount of consideration for the effects of a significant financing component when we expect, at contract inception, that the period between our transfer of a promised product or service to our customer and payment for that product or service will be one year or less. |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements Accounting for Government Assistance In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance , which requires annual disclosures that increase the transparency of transactions involving government grants, including (1) the types of transactions, (2) the accounting for those transactions, and (3) the effect of those transactions on any entity's financial statements. The new guidance is effective for fiscal years beginning after December 15, 2021 with the new disclosures required on an annual basis, and can be applied either prospectively or retrospectively. The Company adopted the new guidance on April 1, 2022 and will include the disclosures as required in its annual reporting with respect to any government assistance or grants subject to the scope of the guidance to the extent material. Accounting for Contract Assets and Contract Liabilities In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers . Under this new standard, deferred revenue acquired in a business combination is measured pursuant to ASC 606 , Revenue from Contracts with Customers , rather than its assumed acquisition date fair value under the current guidance. We adopted this effective April 1, 2022. The adoption of this update did not have an impact on our Condensed Consolidated Financial Statements and was applied to our acquisition of Zynga. Refer to Note 1 4 - Acquisitions . Accounting for Convertible Debt In August 2020, the FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40) |
REVENUE FROM CONTRACTS WITH C_2
REVENUE FROM CONTRACTS WITH CUSTOMERS (Tables) | 3 Months Ended |
Jun. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | Net revenue by timing of recognition was as follows: Three Months Ended June 30, 2022 2021 Net revenue recognized: Over time $ 807.5 $ 572.3 Point in time 294.9 241.0 Total net revenue $ 1,102.4 $ 813.3 Net revenue by content was as follows: Three Months Ended June 30, 2022 2021 Net revenue recognized: Recurrent consumer spending $ 825.6 $ 572.3 Full game and other 276.8 241.0 Total net revenue $ 1,102.4 $ 813.3 Net revenue by platform was as follows: Three Months Ended June 30, 2022 2021 Net revenue recognized: Console $ 607.2 $ 602.4 Mobile 369.6 82.3 PC and other 125.6 128.6 Total net revenue $ 1,102.4 $ 813.3 Three Months Ended June 30, 2022 2021 Net revenue recognized: Digital online $ 1,037.8 $ 740.8 Physical retail and other 64.6 72.5 Total net revenue $ 1,102.4 $ 813.3 |
Net Revenue by Geographic Region | We attribute net revenue to geographic regions based on software product destination. Net revenue by geographic region was as follows: Three Months Ended June 30, 2022 2021 Net revenue recognized: United States $ 682.9 $ 493.2 International 419.5 320.1 Total net revenue $ 1,102.4 $ 813.3 |
MANAGEMENT AGREEMENT (Tables)
MANAGEMENT AGREEMENT (Tables) | 3 Months Ended |
Jun. 30, 2022 | |
MANAGEMENT AGREEMENT | |
Schedule of Restricted Stock Units Granted | In connection with the 2022 Management Agreement and 2017 Management Agreement, we have granted restricted stock units (in thousands) to ZMC as follows: Three Months Ended June 30, 2022 2021 Time-based 192 51 Market-based (1) 510 93 Performance-based (1) IP 18 16 Recurrent Consumer Spending ("RCS") 153 16 Total Performance-based 171 32 Total Restricted Stock Units 873 176 (1) Represents the maximum of shares eligible to vest |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 3 Months Ended |
Jun. 30, 2022 | |
Fair Value Disclosures [Abstract] | |
Segregation of All Assets and Liabilities Measured at Fair Value on a Recurring Basis | 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. June 30, 2022 Quoted prices Significant Significant Total Assets: Cash and cash equivalents: Money market funds $ 14.3 $ — $ — $ 14.3 Bank-time deposits 251.8 — — 251.8 Short-term investments: Corporate bonds — 416.2 — 416.2 Bank-time deposits 16.1 — — 16.1 US Treasuries 5.0 — — 5.0 Commercial paper — 21.9 — 21.9 Restricted cash and cash equivalents: Money market funds 466.8 — — 466.8 Bank-time deposits 0.5 — — 0.5 Restricted cash and cash equivalents, long term: Money market funds 108.7 — — 108.7 Other assets: Private equity — — 26.1 26.1 Capped call receivable — 140.1 — 140.1 Total financial assets $ 863.2 $ 578.2 $ 26.1 $ 1,467.5 Liabilities: Accrued expenses and other current liabilities: Contingent earn-out consideration — — (116.6) (116.6) Other-long term liabilities: Contingent earn-out consideration — — (6.2) (6.2) Long-term debt, net: Convertible notes — (54.4) — (54.4) Total financial liabilities $ — $ (54.4) $ (122.8) $ (177.2) March 31, 2022 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: Bank-time deposits $ 636.0 $ — $ — $ 636.0 Money market funds 501.9 — — 501.9 Commercial paper — 119.4 — 119.4 US Treasuries 52.0 — — 52.0 Certificates of Deposit — 10.0 — 10.0 Corporate bonds — 2.8 — 2.8 Restricted cash and cash equivalents: Money market funds 356.8 — — 356.8 Bank-time deposits 0.5 — — 0.5 Short-term investments: Corporate bonds — 538.5 — 538.5 Bank-time deposits 131.8 — — 131.8 Commercial paper — 125.4 — 125.4 US Treasuries 23.4 — — 23.4 Certificates of Deposit — 1.0 — 1.0 Other assets: Private equity — — 16.1 16.1 Restricted cash and cash equivalents, long term: Money market funds 103.5 — — 103.5 Total financial assets $ 1,805.9 $ 797.1 $ 16.1 $ 2,619.1 Liabilities Accrued expenses and other current liabilities: Foreign currency forward contracts — (0.2) — (0.2) Contingent earn-out consideration — — (66.0) (66.0) Other long-term liabilities: Contingent earn-out consideration $ — $ — $ (43.0) (43.0) Total financial liabilities $ — $ (0.2) $ (109.0) $ (109.2) |
SHORT-TERM INVESTMENTS (Tables)
SHORT-TERM INVESTMENTS (Tables) | 3 Months Ended |
Jun. 30, 2022 | |
Investments, Debt and Equity Securities [Abstract] | |
Schedule of Short-Term Investments | Our Short-term investments consisted of the following: June 30, 2022 Gross Cost or Gains Losses Fair Value Short-term investments Bank time deposits $ 16.1 $ — $ — $ 16.1 Available-for-sale securities: Corporate bonds 422.5 — (6.3) 416.2 US Treasuries 5.0 — — 5.0 Commercial paper 21.9 — — 21.9 Total Short-term investments $ 465.5 $ — $ (6.3) $ 459.2 March 31, 2022 Gross Cost or Gains Losses Fair Value Short-term investments Bank time deposits $ 131.8 $ — $ — $ 131.8 Available-for-sale securities: Corporate bonds 544.3 — (5.8) 538.5 US Treasuries 23.4 — — 23.4 Commercial Paper 125.4 — — 125.4 Certificates of Deposit 1.0 — — 1.0 Total Short-term investments $ 825.9 $ — $ (5.8) $ 820.1 |
Summary of the Contracted Maturities of Short-Term Investments | The following table summarizes the contracted maturities of our short-term investments at June 30, 2022: June 30, 2022 Amortized Fair Short-term investments Due in 1 year or less $ 389.4 $ 385.4 Due in 1 - 2 years 76.1 73.8 Total Short-term investments $ 465.5 $ 459.2 |
DERIVATIVE INSTRUMENTS AND HE_2
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Tables) | 3 Months Ended |
Jun. 30, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Gross Notional Amounts of Foreign Currency Forward Contracts | The following table shows the gross notional amounts of foreign currency forward contracts: June 30, 2022 March 31, 2022 Forward contracts to sell foreign currencies $ 99.5 $ 132.8 Forward contracts to purchase foreign currencies 311.6 75.8 |
SOFTWARE DEVELOPMENT COSTS AN_2
SOFTWARE DEVELOPMENT COSTS AND LICENSES (Tables) | 3 Months Ended |
Jun. 30, 2022 | |
SOFTWARE DEVELOPMENT COSTS AND LICENSES | |
Schedule of Capitalized Software Development Costs and Licenses | Details of our capitalized software development costs and licenses were as follows: June 30, 2022 March 31, 2022 Current Non-current Current Non-current Software development costs, internally developed $ 36.5 $ 678.4 $ 59.2 $ 599.3 Software development costs, externally developed 21.7 126.9 19.3 145.2 Licenses 5.6 23.0 2.9 11.4 Software development costs and licenses $ 63.8 $ 828.3 $ 81.4 $ 755.9 |
ACCRUED EXPENSES AND OTHER CU_2
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables) | 3 Months Ended |
Jun. 30, 2022 | |
Liabilities, Current [Abstract] | |
Schedule of Components of Accrued Expenses and Other Current Liabilities | Accrued expenses and other current liabilities consisted of the following: June 30, 2022 March 31, 2022 Software development royalties $ 658.9 $ 615.7 Deferred acquisition payments 192.4 78.6 Tax payable 159.7 14.1 Compensation and benefits 130.1 134.0 Licenses 119.1 81.1 Marketing and promotions 85.4 30.6 Refund liability 41.2 51.7 Professional fees 26.6 17.0 Interest payable 20.7 — Sales tax liability 18.0 17.2 Other 149.6 34.9 Accrued expenses and other current liabilities $ 1,601.7 $ 1,074.9 |
DEBT (Tables)
DEBT (Tables) | 3 Months Ended |
Jun. 30, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of Information Related to Availability on Credit Agreement | Information related to availability on our respective credit agreements for each period was as follows: June 30, 2022 March 31, 2022 Available borrowings $ 297.5 $ 247.5 Outstanding letters of credit 2.5 2.5 |
Schedule of Debt Maturities | As a result of the different debt components discuss above, the aggregate amount of maturities for all of our long-term borrowings is as follows: Fiscal Year Ended March 31, Maturities 2023 (remaining) $ — 2024 1,000.0 2025 21.4 2026 600.0 2027 $ 29.4 |
(LOSS) EARNINGS PER SHARE ("E_2
(LOSS) EARNINGS PER SHARE ("EPS") (Tables) | 3 Months Ended |
Jun. 30, 2022 | |
Earnings Per Share [Abstract] | |
Schedule of Computation of Basic and Diluted EPS | The following table sets forth the computation of basic and diluted (loss) earnings per share: Three Months Ended June 30, 2022 2021 Computation of Basic (loss) earnings per share: Net (loss) income $ (104.0) $ 152.3 Weighted average shares outstanding—basic 136.5 115.7 Basic (loss) earnings per share $ (0.76) $ 1.32 Computation of Diluted (loss) earnings per share: Net (loss) income $ (104.0) $ 152.3 Weighted average shares outstanding—basic 136.5 115.7 Add: dilutive effect of common stock equivalents — 1.4 Weighted average common shares outstanding—diluted 136.5 117.1 Diluted (loss) earnings per share $ (0.76) $ 1.30 |
ACCUMULATED OTHER COMPREHENSI_2
ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables) | 3 Months Ended |
Jun. 30, 2022 | |
Equity [Abstract] | |
Schedule of Components of Accumulated Other Comprehensive Loss | The following table provides the components of accumulated other comprehensive loss: Three Months Ended June 30, 2022 Foreign Unrealized Total Balance at March 31, 2022 $ (52.8) $ (4.5) $ (57.3) Other comprehensive loss before reclassifications (62.8) (0.4) (63.2) Balance at June 30, 2022 $ (115.6) $ (4.9) $ (120.5) Three Months Ended June 30, 2021 Foreign Unrealized Total Balance at March 31, 2021 $ (9.3) $ 0.6 $ (8.7) Other comprehensive income (loss) before reclassifications 6.1 (0.2) 5.9 Balance at June 30, 2021 $ (3.2) $ 0.4 $ (2.8) |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 3 Months Ended |
Jun. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Summary of Annual Minimum Contractual Obligations | A summary of annual minimum contractual obligations and commitments as of June 30, 2022 is as follows: Fiscal Year Ending March 31, Software Marketing Operating Leases Purchase Total 2023 (remaining) $ 315.3 $ 39.3 $ 51.3 $ 192.4 $ 598.3 2024 207.8 53.9 56.8 93.4 411.9 2025 183.7 68.5 63.2 24.7 340.1 2026 113.8 46.0 46.5 1.9 208.2 2027 22.9 1.3 42.8 0.3 67.3 Thereafter 21.9 — 240.6 — 262.5 Total $ 865.4 $ 209.0 $ 501.2 $ 312.7 $ 1,888.3 |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 3 Months Ended |
Jun. 30, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Schedule of Business Acquisitions, by Acquisition | The acquisition-date fair value of the consideration totaled $9,513.7, which consisted of the following: Fair value of purchase consideration Cash $ 3,992.4 Common stock (46.3 shares) 5,377.7 Replacement equity awards 143.6 Total $ 9,513.7 |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table summarizes the preliminary acquisition date fair value of net tangible and intangible assets acquired, net of liabilities assumed from Zynga: Fair Value Weighted average useful life Cash acquired $ 864.9 N/A Accounts receivable 271.2 N/A Prepaid expenses and other 192.6 N/A Fixed assets 41.5 N/A Right-of-use assets 85.7 N/A Other tangible assets 67.3 N/A Accounts payable (78.5) N/A Accrued expenses and other current liabilities (355.5) N/A Deferred revenue (333.1) N/A Lease liabilities (15.4) N/A Long-term debt (1,653.1) N/A Non-current lease liabilities (129.1) N/A Deferred tax liabilities, net (1,254.7) N/A Other liabilities assumed (61.5) N/A Intangible Assets Developed game technology 4,526.0 7 Branding and trade names 384.0 12 Game engine technology 130.0 3 User base 126.0 1 Developer relationships 72.0 7 Advertising technology 42.0 3 Customer relationships 35.0 5 Goodwill 6,556.4 N/A Total $ 9,513.7 |
Business Acquisition, Pro Forma Information | The amounts of revenue and earnings of Zynga included in our Condensed Consolidated Statement of Operations from the acquisition date are as follows: Three Months Ended June 30, 2022 Net revenue $ 276.7 Net loss $ 177.5 Pro-forma Financial Information The following table summarizes the pro-forma consolidated results of operations (unaudited) for the three months ended June 30, 2022 and 2021, as though the acquisition had occurred on April 1, 2021, the beginning of fiscal year 2022, and Zynga had been included in our consolidated results for the entire periods subsequent to that date. Three Months Ended June 30, 2022 2021 Pro-forma Net revenue $ 1,480.6 $ 1,538.3 Pro-forma Net loss $ 19.1 $ 295.4 |
GOODWILL AND INTANGIBLE ASSET_2
GOODWILL AND INTANGIBLE ASSETS, NET (Tables) | 3 Months Ended |
Jun. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Change in Goodwill Balance | The change in our goodwill balance is as follows: Total Balance at March 31, 2022 $ 674.6 Acquisition of Zynga (see Note 14 ) 6,556.4 Additions from immaterial acquisitions 1.7 Currency translation adjustment (5.5) Balance at June 30, 2022 $ 7,227.2 |
Schedule of Components of the Intangible Assets Subject to Amortization | The following table sets forth the intangible assets that are subject to amortization: June 30, 2022 Gross Accumulated Net Book Weighted average useful life Developed game technology $ 4,825.5 $ (172.9) $ 4,652.6 7 years Branding and trade names $ 394.9 $ (7.4) $ 387.5 10 years Game engine technology $ 159.4 $ (18.8) $ 140.6 3 years User base $ 135.4 $ (23.1) $ 112.3 1 year Developer relationships $ 72.0 $ (1.1) $ 70.9 7 years Advertising technology $ 42.0 $ (1.5) $ 40.5 3 years Intellectual property $ 41.1 $ (26.8) $ 14.3 6 years Customer relationships $ 35.0 $ (0.8) $ 34.2 5 years Analytics technology $ 29.3 $ (29.3) $ — 0 years In place lease $ 2.4 $ (0.7) $ 1.7 4 years Total intangible assets $ 5,737.0 $ (282.4) $ 5,454.6 |
Schedule of Amortization of Intangible Assets | Amortization of intangible assets is included in our Condensed Consolidated Statements of Operations as follows: Three Months Ended June 30, 2022 2021 Cost of revenue $ 97.4 $ 11.3 Selling and marketing $ 14.9 $ 1.8 Research and development $ — $ 1.7 Depreciation and amortization $ 5.3 $ 0.4 Total amortization of intangible assets $ 117.6 $ 15.2 |
Schedule of Estimated Future Amortization of Intangible Assets | Estimated future amortization of intangible assets that will be recorded in Cost of revenue and operating expenses are as follows: Fiscal Year Ended March 31, Amortization 2023 (remaining) $ 734.7 2024 $ 872.5 2025 $ 849.4 2026 $ 792.2 2027 $ 775.4 |
REVENUE FROM CONTRACTS WITH C_3
REVENUE FROM CONTRACTS WITH CUSTOMERS - Disaggregated Revenue (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Revenue from External Customer [Line Items] | ||
Total net revenue | $ 1,102.4 | $ 813.3 |
Recurrent consumer spending | ||
Revenue from External Customer [Line Items] | ||
Total net revenue | 825.6 | 572.3 |
Full game and other | ||
Revenue from External Customer [Line Items] | ||
Total net revenue | 276.8 | 241 |
Console | ||
Revenue from External Customer [Line Items] | ||
Total net revenue | 607.2 | 602.4 |
Mobile | ||
Revenue from External Customer [Line Items] | ||
Total net revenue | 369.6 | 82.3 |
PC and other | ||
Revenue from External Customer [Line Items] | ||
Total net revenue | 125.6 | 128.6 |
Digital online | ||
Revenue from External Customer [Line Items] | ||
Total net revenue | 1,037.8 | 740.8 |
Physical retail and other | ||
Revenue from External Customer [Line Items] | ||
Total net revenue | 64.6 | 72.5 |
Over time | ||
Revenue from External Customer [Line Items] | ||
Total net revenue | 807.5 | 572.3 |
Point in time | ||
Revenue from External Customer [Line Items] | ||
Total net revenue | $ 294.9 | $ 241 |
REVENUE FROM CONTRACTS WITH C_4
REVENUE FROM CONTRACTS WITH CUSTOMERS - Geographical (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Disaggregation of Revenue [Line Items] | ||
Total net revenue | $ 1,102.4 | $ 813.3 |
United States | ||
Disaggregation of Revenue [Line Items] | ||
Total net revenue | 682.9 | 493.2 |
International | ||
Disaggregation of Revenue [Line Items] | ||
Total net revenue | $ 419.5 | $ 320.1 |
REVENUE FROM CONTRACTS WITH C_5
REVENUE FROM CONTRACTS WITH CUSTOMERS - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Mar. 31, 2022 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |||
Contract with liability | $ 1,101.2 | $ 936.2 | |
Contract with liability, increase from acquisition | 333.1 | ||
Contract with liability recognized | 439.7 | $ 463.2 | |
Remaining obligation | 1,254.4 | ||
Contract asset | 101.3 | $ 104.9 | |
Zynga Inc | |||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |||
Contract with liability recognized | 80.3 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-07-01 | |||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |||
Remaining obligation | $ 1,179.5 | ||
Remaining obligation period | 12 months |
MANAGEMENT AGREEMENT (Details)
MANAGEMENT AGREEMENT (Details) - USD ($) shares in Thousands, $ in Millions | 1 Months Ended | 3 Months Ended | |||
May 31, 2022 | Nov. 30, 2017 | Jun. 30, 2022 | Jun. 30, 2021 | Mar. 31, 2022 | |
Restricted stock units | |||||
Management Agreement | |||||
Stock-based compensation expense for non-employee awards | $ 8.5 | $ 7.2 | |||
2017 Management Agreement | Restricted Stock Awards | |||||
Management Agreement | |||||
Vested (in shares) | 200 | ||||
Forfeited (in shares) | 100 | ||||
2017 Management Agreement | Maximum | Market-based Restricted Stock | |||||
Management Agreement | |||||
Vesting requirement for market-based restricted stock | 75% | ||||
Zelnick Media Corporation | |||||
Management Agreement | |||||
Consulting expense benefit | $ 2.7 | $ 1.7 | |||
Zelnick Media Corporation | 2017 Management Agreement | |||||
Management Agreement | |||||
Annual management fee | $ 3.3 | $ 3.1 | |||
Zelnick Media Corporation | 2017 Management Agreement | Time-based | |||||
Management Agreement | |||||
Granted (in shares) | 192 | 51 | |||
Zelnick Media Corporation | 2017 Management Agreement | Market-based | |||||
Management Agreement | |||||
Granted (in shares) | 510 | 93 | |||
Zelnick Media Corporation | 2017 Management Agreement | Performance-based | |||||
Management Agreement | |||||
Granted (in shares) | 171 | 32 | |||
Percentage of grants earned | 50% | ||||
Zelnick Media Corporation | 2017 Management Agreement | IP | |||||
Management Agreement | |||||
Granted (in shares) | 18 | 16 | |||
Zelnick Media Corporation | 2017 Management Agreement | Recurrent Consumer Spending ("RCS") | |||||
Management Agreement | |||||
Granted (in shares) | 153 | 16 | |||
Zelnick Media Corporation | 2017 Management Agreement | Restricted stock units | |||||
Management Agreement | |||||
Granted (in shares) | 873 | 176 | |||
Unvested portion of the shares of restricted stock granted (in shares) | 1,100 | 400 | |||
Zelnick Media Corporation | 2017 Management Agreement | Market-based Restricted Stock | |||||
Management Agreement | |||||
Vesting requirement for market-based restricted stock | 50% | ||||
Zelnick Media Corporation | 2017 Management Agreement | Maximum | |||||
Management Agreement | |||||
Annual management fee | $ 7.4 | ||||
Bonus per fiscal year based on the achievement of certain performance thresholds | $ 13.2 | ||||
Measurement period | 3 years | ||||
Zelnick Media Corporation | 2017 Management Agreement | Minimum | |||||
Management Agreement | |||||
Measurement period | 2 years |
FAIR VALUE MEASUREMENTS - Recur
FAIR VALUE MEASUREMENTS - Recurring Fair Value Measurements (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Mar. 31, 2022 |
Assets measured at fair value on a recurring basis | ||
Short-term investments | $ 459.2 | $ 820.1 |
Capped calls | 140.1 | |
Total financial assets | 1,467.5 | 2,619.1 |
Contingent earn-out consideration | (116.6) | (66) |
Contingent earn-out consideration | (6.2) | (43) |
Convertible notes | (54.4) | |
Total financial liabilities | (177.2) | (109.2) |
Money market funds | ||
Assets measured at fair value on a recurring basis | ||
Cash and cash equivalents | 14.3 | 501.9 |
Restricted cash and cash equivalents | 466.8 | 356.8 |
Restricted cash and cash equivalents, long term | 108.7 | 103.5 |
Corporate bonds | ||
Assets measured at fair value on a recurring basis | ||
Cash and cash equivalents | 2.8 | |
Short-term investments | 416.2 | 538.5 |
Bank-time deposits | ||
Assets measured at fair value on a recurring basis | ||
Cash and cash equivalents | 251.8 | 636 |
Short-term investments | 16.1 | 131.8 |
Restricted cash and cash equivalents | 0.5 | 0.5 |
US Treasuries | ||
Assets measured at fair value on a recurring basis | ||
Cash and cash equivalents | 52 | |
Short-term investments | 5 | 23.4 |
Commercial paper | ||
Assets measured at fair value on a recurring basis | ||
Cash and cash equivalents | 119.4 | |
Short-term investments | 21.9 | 125.4 |
Certificates of Deposit | ||
Assets measured at fair value on a recurring basis | ||
Cash and cash equivalents | 10 | |
Short-term investments | 1 | |
Private equity | ||
Assets measured at fair value on a recurring basis | ||
Private equity | 26.1 | 16.1 |
Foreign currency forward contracts | ||
Assets measured at fair value on a recurring basis | ||
Derivative Liability | (0.2) | |
Quoted prices in active markets for identical assets (level 1) | ||
Assets measured at fair value on a recurring basis | ||
Capped calls | 0 | |
Total financial assets | 863.2 | 1,805.9 |
Contingent earn-out consideration | 0 | 0 |
Contingent earn-out consideration | 0 | 0 |
Convertible notes | 0 | |
Total financial liabilities | 0 | 0 |
Quoted prices in active markets for identical assets (level 1) | Money market funds | ||
Assets measured at fair value on a recurring basis | ||
Cash and cash equivalents | 14.3 | 501.9 |
Restricted cash and cash equivalents | 466.8 | 356.8 |
Restricted cash and cash equivalents, long term | 108.7 | 103.5 |
Quoted prices in active markets for identical assets (level 1) | Corporate bonds | ||
Assets measured at fair value on a recurring basis | ||
Cash and cash equivalents | 0 | |
Short-term investments | 0 | 0 |
Quoted prices in active markets for identical assets (level 1) | Bank-time deposits | ||
Assets measured at fair value on a recurring basis | ||
Cash and cash equivalents | 251.8 | 636 |
Short-term investments | 16.1 | 131.8 |
Restricted cash and cash equivalents | 0.5 | 0.5 |
Quoted prices in active markets for identical assets (level 1) | US Treasuries | ||
Assets measured at fair value on a recurring basis | ||
Cash and cash equivalents | 52 | |
Short-term investments | 5 | 23.4 |
Quoted prices in active markets for identical assets (level 1) | Commercial paper | ||
Assets measured at fair value on a recurring basis | ||
Cash and cash equivalents | 0 | |
Short-term investments | 0 | 0 |
Quoted prices in active markets for identical assets (level 1) | Certificates of Deposit | ||
Assets measured at fair value on a recurring basis | ||
Cash and cash equivalents | 0 | |
Short-term investments | 0 | |
Quoted prices in active markets for identical assets (level 1) | Private equity | ||
Assets measured at fair value on a recurring basis | ||
Private equity | 0 | 0 |
Quoted prices in active markets for identical assets (level 1) | Foreign currency forward contracts | ||
Assets measured at fair value on a recurring basis | ||
Derivative Liability | 0 | |
Significant other observable inputs (level 2) | ||
Assets measured at fair value on a recurring basis | ||
Capped calls | 140.1 | |
Total financial assets | 578.2 | 797.1 |
Contingent earn-out consideration | 0 | 0 |
Contingent earn-out consideration | 0 | 0 |
Convertible notes | (54.4) | |
Total financial liabilities | (54.4) | (0.2) |
Significant other observable inputs (level 2) | Money market funds | ||
Assets measured at fair value on a recurring basis | ||
Cash and cash equivalents | 0 | 0 |
Restricted cash and cash equivalents | 0 | 0 |
Restricted cash and cash equivalents, long term | 0 | 0 |
Significant other observable inputs (level 2) | Corporate bonds | ||
Assets measured at fair value on a recurring basis | ||
Cash and cash equivalents | 2.8 | |
Short-term investments | 416.2 | 538.5 |
Significant other observable inputs (level 2) | Bank-time deposits | ||
Assets measured at fair value on a recurring basis | ||
Cash and cash equivalents | 0 | 0 |
Short-term investments | 0 | 0 |
Restricted cash and cash equivalents | 0 | 0 |
Significant other observable inputs (level 2) | US Treasuries | ||
Assets measured at fair value on a recurring basis | ||
Cash and cash equivalents | 0 | |
Short-term investments | 0 | 0 |
Significant other observable inputs (level 2) | Commercial paper | ||
Assets measured at fair value on a recurring basis | ||
Cash and cash equivalents | 119.4 | |
Short-term investments | 21.9 | 125.4 |
Significant other observable inputs (level 2) | Certificates of Deposit | ||
Assets measured at fair value on a recurring basis | ||
Cash and cash equivalents | 10 | |
Short-term investments | 1 | |
Significant other observable inputs (level 2) | Private equity | ||
Assets measured at fair value on a recurring basis | ||
Private equity | 0 | 0 |
Significant other observable inputs (level 2) | Foreign currency forward contracts | ||
Assets measured at fair value on a recurring basis | ||
Derivative Liability | (0.2) | |
Significant unobservable inputs (level 3) | ||
Assets measured at fair value on a recurring basis | ||
Capped calls | 0 | |
Total financial assets | 26.1 | 16.1 |
Contingent earn-out consideration | (116.6) | (66) |
Contingent earn-out consideration | (6.2) | (43) |
Convertible notes | 0 | |
Total financial liabilities | (122.8) | (109) |
Significant unobservable inputs (level 3) | Money market funds | ||
Assets measured at fair value on a recurring basis | ||
Cash and cash equivalents | 0 | 0 |
Restricted cash and cash equivalents | 0 | 0 |
Restricted cash and cash equivalents, long term | 0 | 0 |
Significant unobservable inputs (level 3) | Corporate bonds | ||
Assets measured at fair value on a recurring basis | ||
Cash and cash equivalents | 0 | |
Short-term investments | 0 | 0 |
Significant unobservable inputs (level 3) | Bank-time deposits | ||
Assets measured at fair value on a recurring basis | ||
Cash and cash equivalents | 0 | 0 |
Short-term investments | 0 | 0 |
Restricted cash and cash equivalents | 0 | 0 |
Significant unobservable inputs (level 3) | US Treasuries | ||
Assets measured at fair value on a recurring basis | ||
Cash and cash equivalents | 0 | |
Short-term investments | 0 | 0 |
Significant unobservable inputs (level 3) | Commercial paper | ||
Assets measured at fair value on a recurring basis | ||
Cash and cash equivalents | 0 | |
Short-term investments | 0 | 0 |
Significant unobservable inputs (level 3) | Certificates of Deposit | ||
Assets measured at fair value on a recurring basis | ||
Cash and cash equivalents | 0 | |
Short-term investments | 0 | |
Significant unobservable inputs (level 3) | Private equity | ||
Assets measured at fair value on a recurring basis | ||
Private equity | $ 26.1 | 16.1 |
Significant unobservable inputs (level 3) | Foreign currency forward contracts | ||
Assets measured at fair value on a recurring basis | ||
Derivative Liability | $ 0 |
FAIR VALUE MEASUREMENTS - Narra
FAIR VALUE MEASUREMENTS - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jun. 01, 2021 | Jun. 30, 2022 | |
Assets measured at fair value on a recurring basis | ||
Investments in other assets | $ 25 | |
Nordeus Limited | ||
Assets measured at fair value on a recurring basis | ||
Contingent earn-out | $ 153 | |
Contingent consideration liability | $ 61.1 | 115.3 |
Contingent consideration liability, increase | $ 6.3 | |
Nordeus Limited | Performance Period One | ||
Assets measured at fair value on a recurring basis | ||
Performance period | 12 months | 12 months |
Nordeus Limited | Performance Period Two | ||
Assets measured at fair value on a recurring basis | ||
Performance period | 24 months | 12 months |
Zynga Inc | ||
Assets measured at fair value on a recurring basis | ||
Contingent consideration liability | $ 7.5 |
SHORT-TERM INVESTMENTS - Schedu
SHORT-TERM INVESTMENTS - Schedule of Short-Term Investments (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Mar. 31, 2022 |
Debt Securities, Available-for-sale [Line Items] | ||
Cost or Amortized Cost | $ 465.5 | $ 825.9 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | (6.3) | (5.8) |
Fair Value | 459.2 | 820.1 |
Bank-time deposits | ||
Debt Securities, Available-for-sale [Line Items] | ||
Cost or Amortized Cost | 16.1 | 131.8 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 16.1 | 131.8 |
Corporate bonds | ||
Debt Securities, Available-for-sale [Line Items] | ||
Cost or Amortized Cost | 422.5 | 544.3 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | (6.3) | (5.8) |
Fair Value | 416.2 | 538.5 |
US Treasuries | ||
Debt Securities, Available-for-sale [Line Items] | ||
Cost or Amortized Cost | 5 | 23.4 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 5 | 23.4 |
Asset-backed securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Cost or Amortized Cost | 125.4 | |
Gross Unrealized Gains | 0 | |
Gross Unrealized Losses | 0 | |
Fair Value | 125.4 | |
Commercial paper | ||
Debt Securities, Available-for-sale [Line Items] | ||
Cost or Amortized Cost | 21.9 | 1 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | $ 21.9 | $ 1 |
SHORT-TERM INVESTMENTS - Contra
SHORT-TERM INVESTMENTS - Contracted Maturities of Short-Term Investments (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Mar. 31, 2022 |
Debt Securities, Available-for-sale, Maturity, Amortized Cost, Rolling Maturity [Abstract] | ||
Amortized cost, Due in 1 year or less | $ 389.4 | |
Amortized cost, Due in 1-2 years | 76.1 | |
Cost or Amortized Cost | 465.5 | $ 825.9 |
Debt Securities, Available-for-sale, Maturity, Fair Value, Rolling Maturity [Abstract] | ||
Fair value, Due in 1 year or less | 385.4 | |
Fair value, Due in 1-2 years | 73.8 | |
Total fair value | $ 459.2 | $ 820.1 |
DERIVATIVE INSTRUMENTS AND HE_3
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Mar. 31, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||
Forward contracts to sell foreign currencies | $ 99.5 | $ 132.8 | |
Forward contracts to purchase foreign currencies | 311.6 | $ 75.8 | |
Derivative instrument not designated as hedging instruments, gain (loss), net | $ 1.6 | $ (1.8) |
SOFTWARE DEVELOPMENT COSTS AN_3
SOFTWARE DEVELOPMENT COSTS AND LICENSES (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Mar. 31, 2022 | |
Capitalized software development costs and licenses | |||
Software development costs and licenses, Current | $ 63.8 | $ 81.4 | |
Software development costs and licenses, Non-current | 828.3 | 755.9 | |
Impairment of software development costs and licenses | 19.9 | $ 9.8 | |
Software development costs, internally developed | |||
Capitalized software development costs and licenses | |||
Software development costs and licenses, Current | 36.5 | 59.2 | |
Software development costs and licenses, Non-current | 678.4 | 599.3 | |
Software development costs, externally developed | |||
Capitalized software development costs and licenses | |||
Software development costs and licenses, Current | 21.7 | 19.3 | |
Software development costs and licenses, Non-current | 126.9 | 145.2 | |
Licenses | |||
Capitalized software development costs and licenses | |||
Software development costs and licenses, Current | 5.6 | 2.9 | |
Software development costs and licenses, Non-current | $ 23 | $ 11.4 |
ACCRUED EXPENSES AND OTHER CU_3
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Mar. 31, 2022 |
Liabilities, Current [Abstract] | ||
Software development royalties | $ 658.9 | $ 615.7 |
Deferred acquisition payments | 192.4 | 78.6 |
Tax payable | 159.7 | 14.1 |
Compensation and benefits | 130.1 | 134 |
Licenses | 119.1 | 81.1 |
Marketing and promotions | 85.4 | 30.6 |
Refund liability | 41.2 | 51.7 |
Professional fees | 26.6 | 17 |
Interest payable | 20.7 | 0 |
Sales tax liability | 18 | 17.2 |
Other | 149.6 | 34.9 |
Accrued expenses and other current liabilities | $ 1,601.7 | $ 1,074.9 |
DEBT - Bridge Loan (Details)
DEBT - Bridge Loan (Details) - Zynga Inc - Bridge Loan - USD ($) $ in Millions | 12 Months Ended | |
Mar. 31, 2022 | Apr. 14, 2022 | |
Debt Instrument [Line Items] | ||
Principal amount at issuance | $ 2,700 | |
Interest expense | $ 6.1 |
DEBT - Senior Notes (Details)
DEBT - Senior Notes (Details) - USD ($) $ in Millions | 3 Months Ended | |||
Jun. 30, 2022 | Jun. 30, 2021 | Apr. 14, 2022 | Mar. 31, 2022 | |
Debt Instrument [Line Items] | ||||
Amortization of debt issuance costs | $ 8.6 | $ 0 | ||
Long-term debt, net | 2,935.5 | $ 0 | ||
Senior Notes | ||||
Debt Instrument [Line Items] | ||||
Principal amount at issuance | $ 2,700 | |||
Interest expense | 20.2 | |||
Purchase price, percent | 101% | |||
Percent of principal threshold | 25% | |||
Debt issuance cost | $ 19.1 | |||
Debt discount | 1.3 | |||
Amortization of debt issuance costs | 1.2 | |||
Amortization of debt discount | 0.1 | |||
Long-term debt, net | 2,681 | |||
Senior Notes | Significant other observable inputs (level 2) | ||||
Debt Instrument [Line Items] | ||||
Fair value of debt | $ 2,630.9 | |||
Senior Notes | 3.300% Senior Notes due 2024 | ||||
Debt Instrument [Line Items] | ||||
Principal amount at issuance | $ 1,000 | |||
Interest rate | 3.30% | |||
Senior Notes | 3.550% Senior Notes due 2025 | ||||
Debt Instrument [Line Items] | ||||
Principal amount at issuance | $ 600 | |||
Interest rate | 3.55% | |||
Senior Notes | 3.700% Senior Notes due 2027 | ||||
Debt Instrument [Line Items] | ||||
Principal amount at issuance | $ 600 | |||
Interest rate | 3.70% | |||
Senior Notes | 4.000% Senior Notes due 2032 | ||||
Debt Instrument [Line Items] | ||||
Principal amount at issuance | $ 500 | |||
Interest rate | 4% |
DEBT - Credit Agreement (Detail
DEBT - Credit Agreement (Details) - USD ($) $ in Millions | 3 Months Ended | ||||
Jun. 22, 2022 | May 23, 2022 | Jun. 30, 2022 | Jun. 30, 2021 | Mar. 31, 2022 | |
Debt Instrument [Line Items] | |||||
Amortization of debt issuance costs | $ 8.6 | $ 0 | |||
Long-term debt, net | $ 2,935.5 | $ 0 | |||
Credit Agreement | |||||
Debt Instrument [Line Items] | |||||
Debt term | 5 years | ||||
Amount of additional borrowings by which maximum borrowing capacity may be increased | $ 250 | ||||
Amount of additional borrowings by which maximum borrowing capacity may be increased, percent | 35% | ||||
Debt issuance cost | $ 3.5 | ||||
Amortization of debt issuance costs | 0.1 | ||||
Amount drawn | $ 200 | ||||
Percent drawn | 3.28% | ||||
Long-term debt, net | $ 200 | ||||
Fair value of debt | $ 200 | ||||
Available borrowings | 297.5 | 247.5 | |||
Outstanding letters of credit | 2.5 | $ 2.5 | |||
Interest expense and fees | $ 0.1 | $ 0.1 | |||
Credit Agreement | Base rate | |||||
Debt Instrument [Line Items] | |||||
Interest rate at end of period | 3.25% | ||||
Credit Agreement | SOFR | |||||
Debt Instrument [Line Items] | |||||
Interest rate at end of period | 0.10% | ||||
Credit Agreement | Minimum | Base rate | |||||
Debt Instrument [Line Items] | |||||
Interest rate added to base rate | 0% | ||||
Credit Agreement | Minimum | SOFR | |||||
Debt Instrument [Line Items] | |||||
Interest rate added to base rate | 1% | ||||
Credit Agreement | Maximum | Base rate | |||||
Debt Instrument [Line Items] | |||||
Interest rate added to base rate | 0.625% | ||||
Credit Agreement | Maximum | SOFR | |||||
Debt Instrument [Line Items] | |||||
Interest rate added to base rate | 1.625% | ||||
Credit Agreement | Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Debt term | 5 years | ||||
Maximum borrowing capacity | $ 500 | ||||
Credit Agreement | Letter of Credit | |||||
Debt Instrument [Line Items] | |||||
Maximum borrowing capacity | $ 100 |
DEBT - Term Loan (Details)
DEBT - Term Loan (Details) - USD ($) $ in Millions | Jun. 22, 2022 | Jun. 30, 2022 | Mar. 31, 2022 |
Short-Term Debt [Line Items] | |||
Short-term debt | $ 350 | $ 0 | |
Term Loan | |||
Short-Term Debt [Line Items] | |||
Debt term | 364 days | ||
Principal amount at issuance | $ 350 | ||
Short-term debt | $ 350 | ||
Term Loan | Minimum | Base rate | |||
Short-Term Debt [Line Items] | |||
Interest rate added to base rate | 0% | ||
Term Loan | Minimum | SOFR | |||
Short-Term Debt [Line Items] | |||
Interest rate added to base rate | 0.75% | ||
Term Loan | Maximum | Base rate | |||
Short-Term Debt [Line Items] | |||
Interest rate added to base rate | 0.375% | ||
Term Loan | Maximum | SOFR | |||
Short-Term Debt [Line Items] | |||
Interest rate added to base rate | 1.375% |
DEBT - Convertibles Notes (Deta
DEBT - Convertibles Notes (Details) | 3 Months Ended | ||||
Jun. 22, 2022 USD ($) day shares | May 23, 2022 USD ($) $ / shares shares | Jun. 30, 2022 USD ($) | Jun. 30, 2021 USD ($) | Mar. 31, 2022 USD ($) | |
Debt Instrument [Line Items] | |||||
Long-term debt, net | $ 2,935,500,000 | $ 0 | |||
Loss on fair value | 39,600,000 | $ 2,000,000 | |||
Convertible Debt | |||||
Debt Instrument [Line Items] | |||||
Principal amount of each bond | $ 1,000 | ||||
Loss on fair value | 47,800,000 | ||||
Convertible Debt | Debt Instrument, Redemption, Period One | |||||
Debt Instrument [Line Items] | |||||
Number of trading days | day | 20 | ||||
Number of consecutive trading days | day | 30 | ||||
Redemption price, percentage | 130% | ||||
Convertible Debt | Debt Instrument, Redemption, Period Two | |||||
Debt Instrument [Line Items] | |||||
Number of trading days | day | 5 | ||||
Number of consecutive trading days | day | 5 | ||||
Redemption price, percentage | 98% | ||||
0.25% Convertible Senior Notes due 2024 | Convertible Debt | |||||
Debt Instrument [Line Items] | |||||
Principal tendered for cash | $ 300,000 | ||||
Principal surrendered for conversion | 668,300,000 | ||||
Amount paid for tendered or conversion of notes | $ 321,600,000 | ||||
Shares issued (in shares) | shares | 3,700,000 | ||||
Long-term debt, net | $ 21,400,000 | 778,600,000 | |||
Difference in principal, more than (less than) | 3,600,000 | ||||
0.25% Convertible Senior Notes due 2024 | Convertible Debt | Significant other observable inputs (level 2) | |||||
Debt Instrument [Line Items] | |||||
Fair value of debt | 25,000,000 | ||||
0% Convertible Senior Notes due 2026 | Convertible Debt | |||||
Debt Instrument [Line Items] | |||||
Principal tendered for cash | 845,100,000 | ||||
Principal surrendered for conversion | 0 | ||||
Amount paid for tendered or conversion of notes | 845,100,000 | ||||
Long-term debt, net | $ 29,400,000 | $ 874,500,000 | |||
Difference in principal, more than (less than) | (100,000) | ||||
0% Convertible Senior Notes due 2026 | Convertible Debt | Significant other observable inputs (level 2) | |||||
Debt Instrument [Line Items] | |||||
Fair value of debt | $ 29,300,000 | ||||
Zynga Inc | |||||
Debt Instrument [Line Items] | |||||
Exchange ratio (in shares) | shares | 0.0406 | ||||
Cash consideration, per share (in dollars per share) | $ / shares | $ 3.50 | ||||
Zynga Inc | Convertible Debt | |||||
Debt Instrument [Line Items] | |||||
Exchange ratio (in shares) | shares | 0.0406 | ||||
Cash consideration, per share (in dollars per share) | $ / shares | $ 3.50 | ||||
Zynga Inc | 0.25% Convertible Senior Notes due 2024 | Convertible Debt | |||||
Debt Instrument [Line Items] | |||||
Interest rate | 0.25% | ||||
Principal amount at issuance | $ 690,000,000 | ||||
Zynga Inc | 0% Convertible Senior Notes due 2026 | Convertible Debt | |||||
Debt Instrument [Line Items] | |||||
Interest rate | 0% | ||||
Principal amount at issuance | $ 874,500,000 |
DEBT - Capped Calls (Details)
DEBT - Capped Calls (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | |
Jul. 31, 2022 | Jun. 30, 2022 | May 23, 2022 | |
Derivative [Line Items] | |||
Capped calls | $ 140.1 | ||
Capped Call Options | |||
Derivative [Line Items] | |||
Capped calls | 140.1 | $ 131.3 | |
Gain from fair value adjustments | $ 8.8 | ||
Capped Call Options | Subsequent Event | |||
Derivative [Line Items] | |||
Cash received for settlement of capped calls | $ 140.1 |
DEBT - Debt Maturities (Details
DEBT - Debt Maturities (Details) $ in Millions | Jun. 30, 2022 USD ($) |
Debt Disclosure [Abstract] | |
2023 (remaining) | $ 0 |
2024 | 1,000 |
2025 | 21.4 |
2026 | 600 |
2027 | $ 29.4 |
(LOSS) EARNINGS PER SHARE ("E_3
(LOSS) EARNINGS PER SHARE ("EPS") - Schedule of Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Computation of Basic (loss) earnings per share: | ||
Net (loss) income | $ (104) | $ 152.3 |
Weighted average shares outstanding—basic (in shares) | 136.5 | 115.7 |
Basic (loss) earnings per share (in dollars per share) | $ (0.76) | $ 1.32 |
Computation of Diluted (loss) earnings per share: | ||
Net (loss) income | $ (104) | $ 152.3 |
Weighted average shares outstanding—basic (in shares) | 136.5 | 115.7 |
Add: dilutive effect of common stock equivalents (in shares) | 0 | 1.4 |
Weighted average common shares outstanding—diluted (in shares) | 136.5 | 117.1 |
Diluted (loss) earnings per share (in dollars per share) | $ (0.76) | $ 1.30 |
(LOSS) EARNINGS PER SHARE ("E_4
(LOSS) EARNINGS PER SHARE ("EPS") - Narrative (Details) shares in Thousands, $ in Millions | 3 Months Ended |
Jun. 30, 2022 USD ($) shares | |
Restricted stock | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
Restricted stock awards, vested (in shares) | 1,200 |
Restricted stock awards, granted (in shares) | 2,500 |
Restricted stock awards, forfeited (in shares) | 800 |
Reversal of expense | $ | $ 47.7 |
Reversal of amounts capitalized | $ | $ 6.1 |
Share-Based Payment Arrangement | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
Potentially dilutive shares (in shares) | 2,700 |
Convertible Debt Securities | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
Potentially dilutive shares (in shares) | 1,700 |
ACCUMULATED OTHER COMPREHENSI_3
ACCUMULATED OTHER COMPREHENSIVE LOSS (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Changes in accumulated other comprehensive loss | ||
Beginning balance | $ 3,809.7 | |
Other comprehensive income (loss) before reclassifications | (63.2) | $ 5.9 |
Ending balance | 9,662.3 | |
Total | ||
Changes in accumulated other comprehensive loss | ||
Beginning balance | (57.3) | (8.7) |
Ending balance | (120.5) | (2.8) |
Foreign currency translation adjustments | ||
Changes in accumulated other comprehensive loss | ||
Beginning balance | (52.8) | (9.3) |
Other comprehensive income (loss) before reclassifications | (62.8) | 6.1 |
Ending balance | (115.6) | (3.2) |
Unrealized gain (loss) on available-for- sales securities | ||
Changes in accumulated other comprehensive loss | ||
Beginning balance | (4.5) | 0.6 |
Other comprehensive income (loss) before reclassifications | (0.4) | (0.2) |
Ending balance | $ (4.9) | $ 0.4 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Annual Minimum Obligations (Details) $ in Millions | Jun. 30, 2022 USD ($) |
Operating Leases | |
2023 (remaining) | $ 51.3 |
2024 | 56.8 |
2025 | 63.2 |
2026 | 46.5 |
2027 | 42.8 |
Thereafter | 240.6 |
Total future lease payments | 501.2 |
Purchase Obligations | |
2023 (remaining) | 192.4 |
2024 | 93.4 |
2025 | 24.7 |
2026 | 1.9 |
2027 | 0.3 |
Thereafter | 0 |
Total | 312.7 |
2023 (remaining) | 598.3 |
2024 | 411.9 |
2025 | 340.1 |
2026 | 208.2 |
2027 | 67.3 |
Thereafter | 262.5 |
Total | 1,888.3 |
Software Development and Licensing | |
Unrecorded Unconditional Purchase Obligation | |
2023 (remaining) | 315.3 |
2024 | 207.8 |
2025 | 183.7 |
2026 | 113.8 |
2027 | 22.9 |
Thereafter | 21.9 |
Total | 865.4 |
Marketing | |
Unrecorded Unconditional Purchase Obligation | |
2023 (remaining) | 39.3 |
2024 | 53.9 |
2025 | 68.5 |
2026 | 46 |
2027 | 1.3 |
Thereafter | 0 |
Total | $ 209 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Income Tax Disclosure [Abstract] | ||
(Benefit from) provision for income taxes | $ (2.3) | $ 19.2 |
Effective rate | 2.20% | |
Income tax rate reconciliation, geographic mix of earnings, expense | $ 12.1 | |
Income tax rate reconciliation, employee stock-based compensation, expense | 9.4 | |
Employee stock-based compensation, nondeductible expense | 8.2 | |
Income tax rate reconciliation, tax credit | 22.4 | |
Increase in income tax payable and deferred tax assets | $ 70 |
ACQUISITIONS - Narrative (Detai
ACQUISITIONS - Narrative (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | ||||
May 23, 2022 | Jun. 30, 2022 | Jun. 30, 2021 | Apr. 14, 2022 | Mar. 31, 2022 | |
Business Acquisition [Line Items] | |||||
Cash paid for business acquisition | $ 3,128.1 | $ 97.9 | |||
Goodwill | 7,227.2 | $ 674.6 | |||
Zynga Inc | |||||
Business Acquisition [Line Items] | |||||
Business acquisition, percentage of voting interests acquired | 100% | ||||
Cash consideration, per share (in dollars per share) | $ 3.50 | ||||
Exchange ratio (in shares) | 0.0406 | ||||
Cash paid for business acquisition | $ 3,992.4 | ||||
Replacement equity awards | 143.6 | ||||
Consideration | 9,513.7 | ||||
Goodwill | $ 6,556.4 | ||||
Acceleration of awards, cost | 28.6 | ||||
Zynga Inc | Options | |||||
Business Acquisition [Line Items] | |||||
Number of awards issued (in shares) | 1,500,000 | ||||
Future expense | $ 4.8 | ||||
Weighted average service period for recognition of future expense | 10 months 24 days | ||||
Zynga Inc | RSU and PSU | |||||
Business Acquisition [Line Items] | |||||
Number of awards issued (in shares) | 4,200,000 | ||||
Future expense | $ 411.5 | ||||
Weighted average service period for recognition of future expense | 1 year 8 months 12 days | ||||
Zynga Inc | General and Administrative Expense | |||||
Business Acquisition [Line Items] | |||||
Acquisition costs | $ 104.8 | ||||
Zynga Inc | Research and Development | |||||
Business Acquisition [Line Items] | |||||
Acquisition costs | 8.3 | ||||
Zynga Inc | Selling and Marketing | |||||
Business Acquisition [Line Items] | |||||
Acquisition costs | $ 5.6 | ||||
Zynga Inc | Common Stock | |||||
Business Acquisition [Line Items] | |||||
Issuance of common stock in connection with acquisition (in shares) | 46,300,000 | ||||
Zynga Inc | Bridge Loan | |||||
Business Acquisition [Line Items] | |||||
Principal amount at issuance | $ 2,700 |
ACQUISITIONS - Schedule of Cons
ACQUISITIONS - Schedule of Consideration at Fair Value (Details) - Zynga Inc shares in Millions, $ in Millions | May 23, 2022 USD ($) shares |
Business Acquisition [Line Items] | |
Cash | $ 3,992.4 |
Common stock (46.3 shares) | 5,377.7 |
Replacement equity awards | 143.6 |
Total | $ 9,513.7 |
Common Stock | |
Business Acquisition [Line Items] | |
Issuance of common stock in connection with acquisition (in shares) | shares | 46.3 |
ACQUISITIONS - Schedule of Asse
ACQUISITIONS - Schedule of Assets and Liabilities Assumed (Details) - USD ($) $ in Millions | May 23, 2022 | Jun. 30, 2022 | Mar. 31, 2022 |
Business Acquisition [Line Items] | |||
Goodwill | $ 7,227.2 | $ 674.6 | |
Zynga Inc | |||
Business Acquisition [Line Items] | |||
Cash acquired | $ 864.9 | ||
Accounts receivable | 271.2 | ||
Prepaid expenses and other | 192.6 | ||
Fixed assets | 41.5 | ||
Right-of-use assets | 85.7 | ||
Other tangible assets | 67.3 | ||
Accounts payable | (78.5) | ||
Accrued expenses and other current liabilities | (355.5) | ||
Deferred revenue | (333.1) | ||
Lease liabilities | (15.4) | ||
Long-term debt | (1,653.1) | ||
Non-current lease liabilities | (129.1) | ||
Deferred tax liabilities, net | (1,254.7) | ||
Other liabilities assumed | (61.5) | ||
Goodwill | 6,556.4 | ||
Total | 9,513.7 | ||
Zynga Inc | Developed game technology | |||
Business Acquisition [Line Items] | |||
Intangible assets, excluding goodwill | $ 4,526 | ||
Weighted average useful life | 7 years | ||
Zynga Inc | Branding and trade names | |||
Business Acquisition [Line Items] | |||
Intangible assets, excluding goodwill | $ 384 | ||
Weighted average useful life | 12 years | ||
Zynga Inc | Game engine technology | |||
Business Acquisition [Line Items] | |||
Intangible assets, excluding goodwill | $ 130 | ||
Weighted average useful life | 3 years | ||
Zynga Inc | User base | |||
Business Acquisition [Line Items] | |||
Intangible assets, excluding goodwill | $ 126 | ||
Weighted average useful life | 1 year | ||
Zynga Inc | Developer relationships | |||
Business Acquisition [Line Items] | |||
Intangible assets, excluding goodwill | $ 72 | ||
Weighted average useful life | 7 years | ||
Zynga Inc | Advertising technology | |||
Business Acquisition [Line Items] | |||
Intangible assets, excluding goodwill | $ 42 | ||
Weighted average useful life | 3 years | ||
Zynga Inc | Customer relationships | |||
Business Acquisition [Line Items] | |||
Intangible assets, excluding goodwill | $ 35 | ||
Weighted average useful life | 5 years |
ACQUISITIONS - Schedule of Reve
ACQUISITIONS - Schedule of Revenue and Earnings Included in Statement of Operations (Details) - Zynga Inc $ in Millions | 3 Months Ended |
Jun. 30, 2022 USD ($) | |
Business Acquisition [Line Items] | |
Net revenue | $ 276.7 |
Net loss | $ 177.5 |
ACQUISITIONS - Schedule of Pro
ACQUISITIONS - Schedule of Pro Forma Information (Details) - Zynga Inc - USD ($) $ in Millions | 3 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Business Acquisition [Line Items] | ||
Pro-forma Net revenue | $ 1,480.6 | $ 1,538.3 |
Pro-forma Net loss | $ 19.1 | $ 295.4 |
GOODWILL AND INTANGIBLE ASSET_3
GOODWILL AND INTANGIBLE ASSETS, NET - Goodwill (Details) $ in Millions | 3 Months Ended |
Jun. 30, 2022 USD ($) | |
Change in the goodwill balance | |
Balance at the beginning of the period | $ 674.6 |
Currency translation adjustment | (5.5) |
Balance at the end of the period | 7,227.2 |
Zynga Inc | |
Change in the goodwill balance | |
Additions from acquisitions | 6,556.4 |
Series of Individually Immaterial Business Acquisitions | |
Change in the goodwill balance | |
Additions from acquisitions | $ 1.7 |
GOODWILL AND INTANGIBLE ASSET_4
GOODWILL AND INTANGIBLE ASSETS, NET - Schedule of Intangibles (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jun. 30, 2022 | Mar. 31, 2022 | |
Capitalized software development costs and licenses | ||
Gross Carrying Amount | $ 5,737 | |
Accumulated Amortization | (282.4) | |
Other intangibles, net | 5,454.6 | $ 266.5 |
Developed game technology | ||
Capitalized software development costs and licenses | ||
Gross Carrying Amount | 4,825.5 | |
Accumulated Amortization | (172.9) | |
Other intangibles, net | $ 4,652.6 | |
Weighted average useful life | 7 years | |
Branding and trade names | ||
Capitalized software development costs and licenses | ||
Gross Carrying Amount | $ 394.9 | |
Accumulated Amortization | (7.4) | |
Other intangibles, net | $ 387.5 | |
Weighted average useful life | 10 years | |
Game engine technology | ||
Capitalized software development costs and licenses | ||
Gross Carrying Amount | $ 159.4 | |
Accumulated Amortization | (18.8) | |
Other intangibles, net | $ 140.6 | |
Weighted average useful life | 3 years | |
User base | ||
Capitalized software development costs and licenses | ||
Gross Carrying Amount | $ 135.4 | |
Accumulated Amortization | (23.1) | |
Other intangibles, net | $ 112.3 | |
Weighted average useful life | 1 year | |
Developer relationships | ||
Capitalized software development costs and licenses | ||
Gross Carrying Amount | $ 72 | |
Accumulated Amortization | (1.1) | |
Other intangibles, net | $ 70.9 | |
Weighted average useful life | 7 years | |
Advertising technology | ||
Capitalized software development costs and licenses | ||
Gross Carrying Amount | $ 42 | |
Accumulated Amortization | (1.5) | |
Other intangibles, net | $ 40.5 | |
Weighted average useful life | 3 years | |
Intellectual property | ||
Capitalized software development costs and licenses | ||
Gross Carrying Amount | $ 41.1 | |
Accumulated Amortization | (26.8) | |
Other intangibles, net | $ 14.3 | |
Weighted average useful life | 6 years | |
Customer relationships | ||
Capitalized software development costs and licenses | ||
Gross Carrying Amount | $ 35 | |
Accumulated Amortization | (0.8) | |
Other intangibles, net | $ 34.2 | |
Weighted average useful life | 5 years | |
Analytics technology | ||
Capitalized software development costs and licenses | ||
Gross Carrying Amount | $ 29.3 | |
Accumulated Amortization | (29.3) | |
Other intangibles, net | $ 0 | |
Weighted average useful life | 0 years | |
In place lease | ||
Capitalized software development costs and licenses | ||
Gross Carrying Amount | $ 2.4 | |
Accumulated Amortization | (0.7) | |
Other intangibles, net | $ 1.7 | |
Weighted average useful life | 4 years |
GOODWILL AND INTANGIBLE ASSET_5
GOODWILL AND INTANGIBLE ASSETS, NET - Amortization of Intangible Assets (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Capitalized software development costs and licenses | ||
Total amortization of intangible assets | $ 117.6 | $ 15.2 |
Cost of revenue | ||
Capitalized software development costs and licenses | ||
Total amortization of intangible assets | 97.4 | 11.3 |
Selling and marketing | ||
Capitalized software development costs and licenses | ||
Total amortization of intangible assets | 14.9 | 1.8 |
Research and development | ||
Capitalized software development costs and licenses | ||
Total amortization of intangible assets | 0 | 1.7 |
Depreciation and amortization | ||
Capitalized software development costs and licenses | ||
Total amortization of intangible assets | $ 5.3 | $ 0.4 |
GOODWILL AND INTANGIBLE ASSET_6
GOODWILL AND INTANGIBLE ASSETS, NET - Estimated Future Amortization (Details) $ in Millions | Jun. 30, 2022 USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2023 (remaining) | $ 734.7 |
2024 | 872.5 |
2025 | 849.4 |
2026 | 792.2 |
2027 | $ 775.4 |