Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q



☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2019



OR
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to .

Commission file number 001-34003

TAKE-TWO INTERACTIVE SOFTWARE, INC.

(Exact Name of Registrant as Specified in Its Charter)



Delaware		51-0350842
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)
110 West 44th Street		10036
New York	New York	(Zip Code)
(Address of principal executive offices)

Registrant's Telephone Number, Including Area Code: (646) 536-2842

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading symbol	Name of each exchange on which registered
Common Stock, $.01 par value	TTWO	NASDAQ Global Select Market

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.



Large accelerated filer	ý	Accelerated filer	o	Non-accelerated filer	o	Smaller reporting company	☐	Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ý

As of October 28, 2019, there were 113,346,942 shares of the Registrant's Common Stock outstanding, net of treasury stock.

Table of Contents

INDEX



PART I.	FINANCIAL INFORMATION	2
Item 1.	Financial Statements (Unaudited)	2
	Condensed Consolidated Balance Sheets	2
	Condensed Consolidated Statements of Operations	3
	Condensed Consolidated Statements of Comprehensive Income	4
	Condensed Consolidated Statements of Cash Flows	5
	Condensed Consolidated Statements of Stockholder's Equity	6
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33
Item 4.	Controls and Procedures	34
PART II.	OTHER INFORMATION	36
Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	36
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 6.	Exhibits	37
	Signatures	38

(All other items in this report are inapplicable)

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

TAKE-TWO INTERACTIVE SOFTWARE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)



	September 30, 2019			March 31, 2019
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	762,032		$	826,525
Short-term investments	742,613			744,485
Restricted cash and cash equivalents	668,371			565,461
Accounts receivable, net of allowances of $442 and $995 at September 30, 2019 and March 31, 2019, respectively	858,597			395,729
Inventory	39,293			28,200
Software development costs and licenses	62,328			28,880
Deferred cost of goods sold	36,426			51,867
Prepaid expenses and other	218,673			186,688
Total current assets	3,388,333			2,827,835
Fixed assets, net	129,168			127,882
Right-of-use assets	119,313			—
Software development costs and licenses, net of current portion	527,622			603,436
Deferred cost of goods sold, net of current portion	479			1,028
Goodwill	383,778			381,717
Other intangibles, net	61,159			73,115
Deferred tax assets	110,167			134,732
Other assets	95,092			93,320
Total assets	$	4,815,111		$	4,243,065
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	114,946		$	72,797
Accrued expenses and other current liabilities	1,251,196			1,035,695
Deferred revenue	901,813			843,302
Lease liabilities	22,273			—
Total current liabilities	2,290,228			1,951,794
Non-current deferred revenue	25,378			21,058
Non-current lease liabilities	118,789			—
Other long-term liabilities	198,953			229,633
Total liabilities	$	2,633,348		$	2,202,485
Commitments and contingencies (See Note 13)
Stockholders' equity:
Preferred stock, $.01 par value, 5,000 shares authorized; no shares issued and outstanding at September 30, 2019 and March 31, 2019	—			—
Common stock, $.01 par value, 200,000 shares authorized; 135,616 and 134,602 shares issued and 113,195 and 112,181 outstanding at September 30, 2019 and March 31, 2019, respectively	1,356			1,346
Additional paid-in capital	2,059,720			2,019,369
Treasury stock, at cost; 22,421 common shares at September 30, 2019 and March 31, 2019	(820,572		)	(820,572		)
Retained earnings	995,721			877,626
Accumulated other comprehensive loss	(54,462		)	(37,189		)
Total stockholders' equity	2,181,763			2,040,580
Total liabilities and stockholders' equity	$	4,815,111		$	4,243,065

See accompanying Notes.

Table of Contents

TAKE-TWO INTERACTIVE SOFTWARE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(in thousands, except per share amounts)



	Three Months Ended September 30,				Six Months Ended September 30,
	2019		2018		2019		2018
Net revenue	$	857,841	$	492,667	$	1,398,300	$	880,649
Cost of goods sold	468,248		234,880		709,717		366,245
Gross profit	389,593		257,787		688,583		514,404
Selling and marketing	149,566		94,165		241,387		152,471
General and administrative	76,659		67,320		151,492		135,055
Research and development	76,197		60,565		145,160		111,277
Depreciation and amortization	12,024		9,751		23,281		19,011
Business reorganization	327		—		713		(242		)
Total operating expenses	314,773		231,801		562,033		417,572
Income from operations	74,820		25,986		126,550		96,832
Interest and other, net	8,054		4,975		18,479		11,576
Income before income taxes	82,874		30,961		145,029		108,408
Provision for income taxes	11,059		5,594		26,934		11,348
Net income	$	71,815	$	25,367	$	118,095	$	97,060
Earnings per share:
Basic earnings per share	$	0.63	$	0.22	$	1.05	$	0.86
Diluted earnings per share	$	0.63	$	0.22	$	1.04	$	0.84

See accompanying Notes.

Table of Contents

TAKE-TWO INTERACTIVE SOFTWARE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

(in thousands)



	Three Months Ended September 30,						Six Months Ended September 30,
	2019			2018			2019			2018
Net income	$	71,815		$	25,367		$	118,095		$	97,060
Other comprehensive income (loss):
Foreign currency translation adjustment	(12,567		)	2,482			(21,364		)	(24,335		)
Cash flow hedges:
Change in unrealized gains	5,889			878			6,092			1,869
Reclassification to earnings	(4,490		)	—			(3,408		)	—
Tax effect on effective cash flow hedges	696			(24		)	687			109
Change in fair value of effective cash flow hedge	2,095			854			3,371			1,978
Change in fair value of available for sale securities	(2		)	481			720			890
Other comprehensive (loss) income	(10,474		)	3,817			(17,273		)	(21,467		)
Comprehensive income	$	61,341		$	29,184		$	100,822		$	75,593

See accompanying Notes.

TAKE-TWO INTERACTIVE SOFTWARE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(in thousands)



	Six Months Ended September 30,
	2019			2018
Operating activities:
Net income	$	118,095		$	97,060
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Amortization and impairment of software development costs and licenses	72,505			20,269
Depreciation	23,037			18,753
Amortization and impairment of intellectual property	10,627			12,272
Stock-based compensation	113,199			54,941
Other, net	4,325			(1,614		)
Changes in assets and liabilities:
Accounts receivable	(463,019		)	(233,236		)
Inventory	(12,064		)	(25,925		)
Software development costs and licenses	(51,932		)	(133,008		)
Prepaid expenses and other assets	(131,055		)	(6,681		)
Deferred revenue	66,148			12,601
Deferred cost of goods sold	15,287			6,867
Accounts payable, accrued expenses and other liabilities	379,005			(28,334		)
Net cash provided by (used in) operating activities	144,158			(206,035		)
Investing activities:
Change in bank time deposits	6,720			33,604
Proceeds from available-for-sale securities	137,071			114,266
Purchases of available-for-sale securities	(141,244		)	(95,888		)
Purchases of fixed assets	(25,532		)	(29,144		)
Purchase of long-term investment	(4,500		)	—
Business acquisitions	(8,715		)	(3,149		)
Net cash (used in) provided by investing activities	(36,200		)	19,689
Financing activities:
Tax payment related to net share settlements on restricted stock awards	(61,478		)	(63,967		)
Repurchase of common stock	—			(153,500		)
Net cash used in financing activities	(61,478		)	(217,467		)
Effects of foreign currency exchange rates on cash and cash equivalents	(8,063		)	(9,464		)
Net change in cash, cash equivalents, and restricted cash	38,417			(413,277		)
Cash, cash equivalents, and restricted cash, beginning of year	1,391,986			1,246,371
Cash, cash equivalents, and restricted cash, end of period	$	1,430,403		$	833,094

See accompanying Notes.

TAKE-TWO INTERACTIVE SOFTWARE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (Unaudited)

(in thousands)



	Three Months Ended September 30, 2019
	Common Stock					Additional Paid-in Capital			Treasury Stock					Retained Earnings		Accumulated Other Comprehensive Income (Loss)			Total Stockholders' Equity
	Shares		Amount						Shares		Amount
	Shares		Amount						Shares		Amount
Balance, June 30, 2019	135,527		$	1,355		$	2,025,626		(22,421	)	$	(820,572	)	$	923,906	$	(43,988	)	$	2,086,327
Net income	—		—			—			—		—			71,815		—			71,815
Change in cumulative foreign currency translation adjustment	—		—			—			—		—			—		(12,567		)	(12,567		)
Change in unrealized gains on cash flow hedge, net	—		—			—			—		—			—		2,095			2,095
Net unrealized gain on available-for-sale securities, net of taxes	—		—			—			—		—			—		(2		)	(2		)
Stock-based compensation	—		—			43,455			—		—			—		—			43,455
Issuance of restricted stock, net of forfeitures and cancellations	164		2			(2		)	—		—			—		—			—
Net share settlement of restricted stock awards	(75	)	(1		)	(9,359		)	—		—			—		—			(9,360		)
Balance, September 30, 2019	135,616		$	1,356		$	2,059,720		(22,421	)	$	(820,572	)	$	995,721	$	(54,462	)	$	2,181,763



	Three Months Ended September 30, 2018
	Common Stock				Additional Paid-in Capital			Treasury Stock					Retained Earnings		Accumulated Other Comprehensive Income (Loss)			Total Stockholders' Equity
	Shares		Amount					Shares		Amount
	Shares		Amount					Shares		Amount
Balance, June 30, 2018	133,811		$	1,338	$	1,888,080		(20,302	)	$	(611,680	)	$	615,482	$	(41,015	)	$	1,852,205
Net income	—		—		—			—		—			25,367		—			25,367
Change in cumulative foreign currency translation adjustment	—		—		—			—		—			—		2,481			2,481
Change in unrealized gains on cash flow hedge, net	—		—		—			—		—			—		854			854
Net unrealized gain on available-for-sale securities, net of taxes	—		—		—			—		—			—		481			481
Stock-based compensation	—		—		63,433			—		—			—		—			63,433
Issuance of restricted stock, net of forfeitures and cancellations	94		1		(1		)	—		—			—		—			—
Conversion of 1.00% Convertible Notes Due 2018	241		2		5,180			—		—			—		—			5,182
Net share settlement of restricted stock awards	(40	)	—		(5,564		)	—		—			—		—			(5,564		)
Balance, September 30, 2018	134,106		$	1,341	$	1,951,128		(20,302	)	$	(611,680	)	$	640,849	$	(37,199	)	$	1,944,439



	Six Months Ended September 30, 2019
	Common Stock					Additional Paid-in Capital			Treasury Stock					Retained Earnings		Accumulated Other Comprehensive Income (Loss)			Total Stockholders' Equity
	Shares		Amount						Shares		Amount
	Shares		Amount						Shares		Amount
Balance, March 31, 2019	134,602		$	1,346		$	2,019,369		(22,421	)	$	(820,572	)	$	877,626	$	(37,189	)	$	2,040,580
Net income	—		—			—			—		—			118,095		—			118,095
Change in cumulative foreign currency translation adjustment	—		—			—			—		—			—		(21,364		)	(21,364		)
Change in unrealized gains on cash flow hedge, net	—		—			—			—		—			—		3,371			3,371
Net unrealized gain on available-for-sale securities, net of taxes	—		—			—			—		—			—		720			720
Stock-based compensation	—		—			96,706			—		—			—		—			96,706
Issuance of restricted stock, net of forfeitures and cancellations	1,503		15			(15		)	—		—			—		—			—
Net share settlement of restricted stock awards	(551	)	(6		)	(61,472		)	—		—			—		—			(61,478		)
Employee share purchase plan settlement	62		1			5,132			—		—			—		—			5,133
Balance, September 30, 2019	135,616		$	1,356		$	2,059,720		(22,421	)	$	(820,572	)	$	995,721	$	(54,462	)	$	2,181,763



	Six Months Ended September 30, 2018
	Common Stock					Additional Paid-in Capital			Treasury Stock					Retained Earnings		Accumulated Other Comprehensive Income (Loss)			Total Stockholders' Equity
	Shares		Amount						Shares		Amount
	Shares		Amount						Shares		Amount
Balance, March 31, 2018	132,743		$	1,327		$	1,888,039		(18,705	)	$	(458,180	)	$	73,516	$	(15,732	)	$	1,488,970
Net income	—		—			—			—		—			97,060		—			97,060
Change in cumulative foreign currency translation adjustment	—		—			—			—		—			—		(28,989		)	(28,989		)
Change in unrealized gains on cash flow hedge, net	—		—			—			—		—			—		1,979			1,979
Net unrealized gain on available-for-sale securities, net of taxes	—		—			—			—		—			—		890			890
Stock-based compensation	—		—			118,956			—		—			—		—			118,956
Repurchased common stock	—		—			—			(1,597	)	(153,500		)	—		—			(153,500		)
Issuance of restricted stock, net of forfeitures and cancellations	1,532		15			(15		)	—		—			—		—			—
Conversion of 1.00% Convertible Notes Due 2018	378		4			8,109			—		—			—		—			8,113
Net share settlement of restricted stock awards	(547	)	(5		)	(63,961		)	—		—			—		—			(63,966		)
Impact from adoption of New Revenue Accounting Standard	—		—			—			—		—			470,273		4,653			474,926
Balance, September 30, 2018	134,106		$	1,341		$	1,951,128		(20,302	)	$	(611,680	)	$	640,849	$	(37,199	)	$	1,944,439

See accompanying Notes.

Table of Contents

TAKE-TWO INTERACTIVE SOFTWARE, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(in thousands, except per share amounts)

1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Take-Two Interactive Software, Inc. (the "Company," "we," "us," or similar pronouns) was incorporated in the state of Delaware in 1993. We are a leading developer, publisher, and marketer of interactive entertainment for consumers around the globe. We develop and publish products through our labels Rockstar Games, 2K, and Private Division, as well as Social Point, a leading developer of mobile games. Our products are designed for console systems and personal computers, including smart phones and tablets, and are delivered through physical retail, digital download, online platforms, and cloud streaming services.

Basis of Presentation

The accompanying Condensed Consolidated Financial Statements are unaudited and include the accounts of the Company and its wholly-owned subsidiaries and, in our opinion, reflect all normal and recurring adjustments necessary for the fair presentation of our financial position, results of operations, and cash flows. Interim results may not be indicative of the results that may be expected for the full fiscal year. All intercompany accounts and transactions have been eliminated in consolidation. The preparation of these Condensed Consolidated Financial Statements in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") requires management to make estimates and assumptions that affect the amounts reported in these Condensed Consolidated Financial Statements and accompanying notes. As permitted under U.S. GAAP, interim accounting for certain expenses, including income taxes, are based on full year assumptions when appropriate. Actual results could differ materially from those estimates.

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, 2019.

Certain immaterial reclassifications have been made to prior period amounts to conform to the current period presentation.

Recently Adopted Accounting Pronouncements

Accounting for Leases

In February 2016, the Financial Accounting Standards Board (“FASB”) issued new guidance related to the accounting for leases codified under Topic 842, Leases. The new lease accounting standard replaces all current U.S. GAAP guidance on this topic. The new standard, among other things, requires a lessee to classify a lease as either an operating or financing lease and to recognize a lease liability and a right-of-use (“ROU”) asset for its leases. On April 1, 2019, we adopted the new lease accounting standard using the alternative transition approach provided in ASU 2018-11, “Leases (Topic 842) - Targeted Improvements,” which allows initial application of the new standard using the modified retrospective method.

As part of the adoption, the new lease accounting standard allows a number of practical expedients and exemptions. At transition, we elected the following:


•	The package of practical expedients, which allows us to carryforward our historical lease classification, our assessment of whether a contract is or contains a lease and our initial direct costs for any leases that exist prior to adoption of the new standard;


•	The practical expedient to not separate non-lease components from the related lease components; and


•	The exemption to not apply the balance sheet recognition requirements for leases with a lease term of 12 months or less and instead expense those costs on a straight-line basis over the lease term or in the period in which the obligation is incurred, if such costs are variable.

As a result of the adoption, we have updated our significant accounting policy disclosure as set forth below to include our accounting policy under Topic 842 for transactions from April 1, 2019 and thereafter:

Leases

We determine if an arrangement is a lease at contract inception. If there is an identified asset in the contract (either explicitly or implicitly) and we have control over its use, the contract is (or contains) a lease. In certain of our lease arrangements, primarily those related to our data center arrangements, judgment is required in determining if a contract contains a lease. For these arrangements, there is judgment in evaluating if the arrangement provides us with an asset that is physically distinct, or that represents substantially all of the capacity of the asset, and if we have the right to direct the use of the asset. Lease assets and liabilities are recognized based on the present value of future lease payments over the lease term at the commencement date. Included in the lease liability are future lease payments that are fixed, in-substance fixed, or payments based on an index or rate known at the commencement date of the lease. Variable lease payments are recognized as lease expenses as incurred. The operating lease ROU asset also includes any lease payments made prior to commencement, initial direct costs incurred, and lease incentives received. All ROU assets are reviewed for impairment.

As most of our leases do not provide an implicit rate, we generally use our incremental borrowing rate in determining the present value of future lease payments. The incremental borrowing rate represents the rate required to borrow funds over a similar term to purchase the leased asset and is based on an unsecured borrowing rate and risk-adjusted to approximate a collateralized rate at the commencement date of the lease.

In determining our lease liability, the lease term includes options to extend or terminate the lease when it is reasonably certain that we will exercise such option. For operating leases, the lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Lease modifications result in remeasurement of the lease liability. Leases with an initial term of 12 months or less are not recorded on the balance sheet, and we recognize lease expense for these leases on a straight-line basis over the lease term.

Impact of adoption

As a result of adopting Topic 842, the following adjustments, including reclassifying prepaid and deferred rent to ROU, were made to our Condensed Consolidated Balance Sheet at April 1, 2019:



	March 31, 2019		Adjustments			April 1, 2019
ASSETS
Prepaid expenses and other	$	186,688	$	(792	)	$	185,896
Right-of-use assets	$	—	$	118,799		$	118,799

LIABILITIES AND STOCKHOLDERS' EQUITY
Accrued expenses and other current liabilities	$	1,035,695	$	(2,976	)	$	1,032,719
Lease liabilities	$	—	$	18,937		$	18,937
Non-current lease liabilities	$	—	$	122,041		$	122,041
Other long-term liabilities	$	229,633	$	(19,995	)	$	209,638

The adoption of Topic 842 did not have an impact on our Condensed Consolidated Statements of Operation or Condensed Consolidated Statements of Cash Flows.

Recently Issued Accounting Pronouncements

Accounting for Fair Value Measurement

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement, which modifies the disclosure requirements on fair value measurements by removing, modifying, or adding certain disclosures. ASU 2018-13 is effective for fiscal years, and interim periods within those fiscal years, beginning December 15, 2019 (April 1, 2020 for the Company), with early adoption permitted. Certain disclosures in ASU 2018-13 are required to be applied on a retrospective basis and others on a prospective basis. We are currently evaluating the potential impact of adopting this guidance on our Consolidated Financial Statements.

2. REVENUE FROM CONTRACTS WITH CUSTOMERS

Disaggregation of revenue

Product revenue

Product revenue 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).

Service and other revenue

Service and other revenue is primarily comprised of revenue from game related services, virtual currency transactions, and in-game purchases which are recognized over an estimated service period.

Net revenue by product revenue and service and other was as follows:



	Three Months Ended September 30,				Six Months Ended September 30,
	2019		2018		2019		2018
Net revenue recognized:
Service and other	421,747		313,194		846,132		622,381
Product	436,094		179,473		552,168		258,268
Total net revenue	$	857,841	$	492,667	$	1,398,300	$	880,649

Full game and other revenue

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.

Recurrent consumer spending revenue

Recurrent consumer spending revenue is generated from ongoing consumer engagement and includes revenue from virtual currency, add-on content, and in-game purchases.

Net revenue by full game and other revenue and recurrent consumer spending was as follows:



	Three Months Ended September 30,				Six Months Ended September 30,
	2019		2018		2019		2018
Net revenue recognized:
Full game and other	539,373		252,068		764,974		399,020
Recurrent consumer spending	318,468		240,599		633,326		481,629
Total net revenue	$	857,841	$	492,667	$	1,398,300	$	880,649

Geography

We attribute net revenue to geographic regions based on software product destination. Net revenue by geographic region was as follows:



	Three Months Ended September 30,				Six Months Ended September 30,
	2019		2018		2019		2018
Net revenue recognized:
United States	$	494,661	$	279,306	$	825,140	$	500,717
International	363,180		213,361		573,160		379,932
Total net revenue	$	857,841	$	492,667	$	1,398,300	$	880,649

Platform

Net revenue by platform was as follows:



	Three Months Ended September 30,				Six Months Ended September 30,
	2019		2018		2019		2018
Net revenue recognized:
Console	$	651,818	$	372,240	$	1,086,632	$	666,970
PC and other	206,023		120,427		311,668		213,679
Total net revenue	$	857,841	$	492,667	$	1,398,300	$	880,649

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 September 30,				Six Months Ended September 30,
	2019		2018		2019		2018
Net revenue recognized:
Digital online	$	615,774	$	358,371	$	1,043,555	$	673,418
Physical retail and other	242,067		134,296		354,745		207,231
Total net revenue	$	857,841	$	492,667	$	1,398,300	$	880,649

Deferred Revenue

We record deferred revenue when payments are due or received in advance of the fulfillment of our associated performance obligations. Deferred revenue, including current and non-current balances as of September 30, 2019 and March 31, 2019 were $927,191 and $864,360, respectively. For the three months ended September 30, 2019, the additions to our deferred revenue balance were due primarily to 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 September 30, 2019 and 2018, $234,411 and $183,644, respectively, of revenue was recognized that was included in the deferred revenue balance at the beginning of the period. During the six months ended September 30, 2019 and 2018, $564,833 and $424,129, respectively, of revenue was recognized that was included in the deferred revenue balance at the beginning of the period. As of September 30, 2019, the aggregate amount of contract revenue allocated to unsatisfied performance obligations is $1,074,206, which includes our deferred revenue balances and amounts to be invoiced and recognized in future periods. We expect to recognize approximately $991,328 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 September 30, 2019 and March 31, 2019, our contract asset balances were $80,501 and $57,643, respectively, which are recorded within Prepaid expenses and other in our Condensed Consolidated Balance Sheets.

3. MANAGEMENT AGREEMENT

In November 2017, we entered into a new management agreement (the "2017 Management Agreement"), with ZelnickMedia Corporation ("ZelnickMedia") that replaces our previous agreement with ZelnickMedia and pursuant to which ZelnickMedia provides financial and management consulting services 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, continues to serve as Executive Chairman and Chief Executive Officer of the Company, and Karl Slatoff, a partner of ZelnickMedia, continues to serve as President of the Company. The 2017 Management Agreement provides for an annual management fee of $3,100 over the term of the agreement and a maximum annual bonus opportunity of $7,440 over the term of the agreement, based on the Company achieving certain performance thresholds.

In consideration for ZelnickMedia's services, we recorded consulting expense (a component of General and administrative expenses) of $1,705 and $1,705 during the three months ended September 30, 2019 and 2018, respectively, and $3,375 and $3,410

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during the six months ended September 30, 2019 and 2018, respectively. We recorded stock-based compensation expense for restricted stock units granted to ZelnickMedia, which is included in General and administrative expenses, of $5,956 and $5,682 during the three months ended September 30, 2019 and 2018, respectively, and $11,501 and $10,199 during the six months ended September 30, 2019 and 2018, respectively.

In connection with the 2017 Management Agreement, we have granted restricted stock units as follows:



	Six Months Ended September 30,
	2019	2018
Time-based	92	86
Market-based(1)	168	158
Performance-based(1)
IP	28	27
Recurrent Consumer Spending ("RCS")	28	26
Total—Performance-based	56	53
Total Restricted Stock Units	316	297

_______________________________________________________________________________


(1)	Represents the maximum number of shares eligible to vest.

Time-based restricted stock units granted in fiscal year 2020 will vest on April 13, 2021, and those granted in fiscal year 2019 will vest on April 13, 2020, in each case provided that the 2017 Management Agreement has not been terminated prior to such vesting date.

Market-based restricted stock units granted in fiscal year 2020 are eligible to vest on April 13, 2021, and those granted in fiscal year 2019 are eligible to vest on April 13, 2020, in each case provided that the 2017 Management Agreement has not been terminated prior to such vesting date. Market-based restricted stock units are eligible to vest based on the Company's Total Shareholder Return (as defined in the relevant grant agreement) relative to the Total Shareholder Return (as defined in the relevant grant agreement) of the companies that constitute the NASDAQ Composite Index as of the grant date measured over a two-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 2020 are eligible to vest on April 13, 2021, and those granted in fiscal year 2019 are eligible to vest on April 13, 2020, in each case provided that the 2017 Management Agreement has not been terminated prior to such vesting date. The performance-based restricted stock units, of which 50% are tied to "IP" and 50% to "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-year period. The target number of performance-based restricted stock units that may be earned pursuant to these grants is equal to 50% of the grant amounts set forth in the above table (the numbers in the table represent the maximum number of performance-based restricted stock units that may be earned). At the end of each reporting period, we assess the probability of each performance metric and upon determination that certain thresholds are probable, we record expense for the unvested portion of the shares of performance-based restricted stock units.

The unvested portion of time-based, market-based and performance-based restricted stock units held by ZelnickMedia were 613 and 526 as of September 30, 2019 and March 31, 2019, respectively. 209 restricted stock units previously granted to ZelnickMedia vested and 20 restricted stock units were forfeited by ZelnickMedia during the six months ended September 30, 2019.

4. FAIR VALUE MEASUREMENTS

The carrying amounts of our financial instruments, including cash and cash equivalents, restricted cash, accounts receivable, 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:

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•	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.



	September 30, 2019			Quoted prices in active markets for identical assets (level 1)		Significant other observable inputs (level 2)			Significant unobservable inputs (level 3)		Balance Sheet Classification
Money market funds	$	320,146		$	320,146	$	—		$	—	Cash and cash equivalents
Bank-time deposits	10,333			10,333		—			—		Cash and cash equivalents
Commercial paper	104,612			—		104,612			—		Cash and cash equivalents
Corporate bonds	2,565			—		2,565			—		Cash and cash equivalents
Corporate bonds	274,027			—		274,027			—		Short-term investments
Bank-time deposits	381,000			381,000		—			—		Short-term investments
US Treasuries	28,941			28,941		—			—		Short-term investments
Commercial paper	58,645			—		58,645			—		Short-term investments
Money market funds	661,397			661,397		—			—		Restricted cash and cash equivalents
Cross-currency swap	6,683			—		6,683			—		Prepaid expenses and other
Private equity	2,066			—		—			2,066		Other assets
Foreign currency forward contracts	(168		)	—		(168		)	—		Accrued expenses and other current liabilities
Total recurring fair value measurements, net	$	1,850,247		$	1,401,817	$	446,364		$	2,066

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	March 31, 2019			Quoted prices in active markets for identical assets (level 1)		Significant other observable inputs (level 2)			Significant unobservable inputs (level 3)		Balance Sheet Classification
Money market funds	$	389,936		$	389,936	$	—		$	—	Cash and cash equivalents
Commercial paper	39,246			—		39,246			—		Cash and cash equivalents
US Treasuries	25,449			25,449		—			—		Cash and cash equivalents
Money market funds	565,461			565,461		—			—		Restricted cash and cash equivalents
Bank-time deposits	387,720			387,720		—			—		Short-term investments
Corporate bonds	296,141			—		296,141			—		Short-term investments
US Treasuries	55,634			55,634		—			—		Short-term investments
Commercial paper	4,990			—		4,990			—		Short-term investments
Cross-currency swap	791			—		791			—		Prepaid expenses and other
Private equity	1,823			—		—			1,823		Other assets
Foreign currency forward contracts	(423		)	—		(423		)	—		Accrued and other current liabilities
Total recurring fair value measurements, net	$	1,766,768		$	1,424,200	$	340,745		$	1,823

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 six months ended September 30, 2019.

5. SHORT-TERM INVESTMENTS

Our Short-term investments consisted of the following:



	September 30, 2019
			Gross Unrealized
	Cost or Amortized Cost		Gains		Losses			Fair Value
Short-term investments
Bank time deposits	$	381,000	$	—	$	—		$	381,000
Available-for-sale securities:
Corporate bonds	272,758		1,286		(17		)	274,027
US Treasuries	28,898		43		—			28,941
Commercial paper	58,645		—		—			58,645
Total Short-term investments	$	741,301	$	1,329	$	(17	)	$	742,613



	March 31, 2019
			Gross Unrealized
	Cost or Amortized Cost		Gains		Losses			Fair Value
Short-term investments
Bank time deposits	$	387,720	$	—	$	—		$	387,720
Available-for-sale securities:
Corporate bonds	295,526		742		(127		)	296,141
US Treasuries	55,656		27		(49		)	55,634
Commercial paper	4,990							4,990
Total short-term investments	$	743,892	$	769	$	(176	)	$	744,485

Based on our review of investments with unrealized losses, we did not consider these investments to be other-than-temporarily impaired as of September 30, 2019 or March 31, 2019. We do not intend to sell any of our investments with unrealized losses, nor is it more likely than not that we will be required to sell those investments.

The following table summarizes the contracted maturities of our short-term investments at September 30, 2019:



	September 30, 2019
	Amortized Cost		Fair Value
Short-term investments
Due in 1 year or less	$	637,405	$	638,236
Due in 1 - 2 years	103,896		104,377
Total short-term investments	$	741,301	$	742,613

6. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

Our risk management strategy includes the use of derivative financial instruments to reduce the volatility of earnings and cash flows associated with changes in foreign currency exchange rates. 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:



	September 30, 2019		March 31, 2019
Forward contracts to sell foreign currencies	$	211,668	$	116,590
Forward contracts to purchase foreign currencies	40,512		87,793

For the three months ended September 30, 2019 and 2018, we recorded a gain of $2,210 and a loss of $247, respectively, and for the six months ended September 30, 2019 and 2018 we recorded a loss of $1,087 and $2,157, 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 and are used to reduce the impact of foreign currency on certain balance sheet exposures and certain revenue and expense. 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.

Cross-currency swaps

We entered into a cross-currency swap agreement in August 2017 related to an intercompany loan that has been designated and accounted for as a cash flow hedge of foreign currency exchange risk. The intercompany loan is related to the acquisition of Social Point. As of September 30, 2019, the notional amount of the cross-currency swap is $115,641. This cross-currency swap mitigates the exposure to fluctuations in the U.S. dollar-euro exchange rate related to the intercompany loan. The critical terms

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of the cross-currency swap agreement correspond to the intercompany loan and both mature at the same time in 2027; as such, there was no ineffectiveness during the period.

Changes in the fair value of this cross-currency swap are recorded in Accumulated other comprehensive income (loss) and offset the change in value of interest and principal payment as a result of changes in foreign exchange rates. Resulting gains or losses from the cross-currency swap are reclassified from Accumulated other comprehensive income (loss) to earnings to completely offset foreign currency transaction gains and losses recognized on the intercompany loan. We recognize the difference between the U.S. dollar interest payments received from the swap counterparty and the U.S. dollar equivalent of the euro interest payments made to the swap counterparty in Interest and other, net on our Consolidated Statement of Operations. There are no credit-risk related contingent features associated with these swaps.

7. INVENTORY

Inventory balances by category were as follows:



	September 30, 2019		March 31, 2019
Finished products	$	34,408	$	24,847
Parts and supplies	4,885		3,353
Inventory	$	39,293	$	28,200

Estimated product returns included in inventory at September 30, 2019 and March 31, 2019 were $347 and $491, respectively.

8. SOFTWARE DEVELOPMENT COSTS AND LICENSES

Details of our capitalized software development costs and licenses were as follows:



	September 30, 2019				March 31, 2019
	Current		Non-current		Current		Non-current
Software development costs, internally developed	$	40,292	$	417,113	$	14,809	$	434,712
Software development costs, externally developed	10,690		108,077		3,655		168,381
Licenses	11,346		2,432		10,416		343
Software development costs and licenses	$	62,328	$	527,622	$	28,880	$	603,436

9. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consisted of the following:



	September 30, 2019		March 31, 2019

Software development royalties	$	897,304	$	713,201
Licenses	82,354		56,221
Refund liability	73,278		65,853
Compensation and benefits	68,640		73,695
Marketing and promotions	45,365		42,390
Other	84,255		84,335
Accrued expenses and other current liabilities	$	1,251,196	$	1,035,695

10. DEBT

Credit Agreement

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amount of up to $25,000. In addition, the Credit Agreement contains uncommitted incremental capacity permitting the incurrence of up to an additional $250,000 in term loans or revolving credit facilities.

Loans under the New Credit Agreement will bear interest at a rate of (a) 0.250% to 0.750% above a certain base rate (5.50% at September 30, 2019) or (b) 1.125% to 1.750% above LIBOR (approximately 2.02% at September 30, 2019), which rates are determined by reference to our consolidated total net leverage ratio. We had no outstanding borrowings at September 30, 2019.

Information related to availability on our Credit Agreement was as follows:



	September 30, 2019		March 31, 2019
Available borrowings	$	198,336	$	198,336
Outstanding letters of credit	1,664		1,664

We recorded interest expense and fees related to the Credit Agreement of $84 and $166 for the three and six months ended September 30, 2019, respectively, and $111 and $221 for the three and six months ended September 30, 2018, respectively, under a prior credit arrangement, which was terminated on the same day that we entered into the Credit Agreement. The Credit Agreement also includes, among other terms and conditions, maximum leverage ratio, minimum cash reserves and, in certain circumstances, minimum interest coverage ratio financial covenants, as well as limitations on us and each of our subsidiaries’ ability to: create, incur, assume or be liable for indebtedness; dispose of assets outside the ordinary course; acquire, merge or consolidate with or into another person or entity; create, incur or allow any lien on any of its property; make investments; or pay dividends or make distributions, in each case subject to certain exceptions. In addition, the Credit Agreement provides for certain events of default such as nonpayment of principal and interest when due thereunder, breaches of representations and warranties, noncompliance with covenants, acts of insolvency and default on indebtedness held by third parties (subject to certain limitations and cure periods).

11. EARNINGS PER SHARE ("EPS")

The following table sets forth the computation of basic and diluted earnings per share:



	Three Months Ended September 30,				Six Months Ended September 30,
	2019		2018		2019		2018
Computation of Basic earnings per share:
Net income	$	71,815	$	25,367	$	118,095	$	97,060
Weighted average shares outstanding—basic	113,117		113,735		112,869		113,339
Basic earnings per share	$	0.63	$	0.22	$	1.05	$	0.86

Computation of Diluted earnings per share:
Net income	$	71,815	$	25,367	$	118,095	$	97,060

Weighted average shares outstanding—basic	113,117		113,735		112,869		113,339
Add: dilutive effect of common stock equivalents	960		2,360		1,056		2,462
Weighted average common shares outstanding—diluted	114,077		116,095		113,925		115,801

Diluted earnings per share	$	0.63	$	0.22	$	1.04	$	0.84

Certain of our unvested stock-based awards (including restricted stock units and restricted stock awards) are considered participating securities since these securities have non-forfeitable rights to dividends or dividend equivalents during the contractual period of the award and thus requires the two-class method of computing EPS. As of September 30, 2019, we have no material participating securities outstanding.

During the six months ended September 30, 2019, 1,501 restricted stock awards vested, we granted 716 unvested restricted stock awards, and 66 unvested restricted stock awards were forfeited.

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12. ACCUMULATED OTHER COMPREHENSIVE LOSS

The following table provides the components of accumulated other comprehensive loss:



	Six Months Ended September 30, 2019
	Foreign currency translation adjustments			Unrealized gain (loss) on forward contracts		Unrealized gain (loss) on cross-currency swap			Unrealized gain (loss) on available-for- sales securities		Total
Balance at March 31, 2019	$	(33,090	)	$	600	$	(5,285	)	$	586	$	(37,189	)
Other comprehensive income (loss) before reclassifications	(21,364		)	—		6,779			720		(13,865		)
Amounts reclassified from accumulated other comprehensive loss	—			—		(3,408		)	—		(3,408		)
Balance at September 30, 2019	$	(54,454	)	$	600	$	(1,914	)	$	1,306	$	(54,462	)



	Six Months Ended September 30, 2018
	Foreign currency translation adjustments			Unrealized gain (loss) on derivative instruments		Unrealized gain (loss) on cross-currency swap			Unrealized gain (loss) on available-for- sales securities			Total
Balance at March 31, 2018	$	(4,287	)	$	600	$	(10,191	)	$	(1,854	)	$	(15,732	)
Other comprehensive income (loss) before reclassifications	(24,335		)	—		9,054			890			(14,391		)
Amounts reclassified from accumulated other comprehensive loss	—			—		(7,076		)	—			(7,076		)
Balance at September 30, 2018	$	(28,622	)	$	600	$	(8,213	)	$	(964	)	$	(37,199	)

13. COMMITMENTS AND CONTINGENCIES

We have entered into various agreements in the ordinary course of business that require substantial cash commitments over the next several years. Other than agreements entered into in the ordinary course of business and in addition to the agreements requiring known cash commitments as reported in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended March 31, 2019, we did not have any significant changes to our commitments since March 31, 2019.

Legal and Other Proceedings

We are, or may become, subject to demands and claims (including intellectual property 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.

14. BUSINESS REORGANIZATION

In the first quarter of fiscal year 2018, we announced and initiated actions to implement a strategic reorganization at one of our labels (the "2018 Plan"). In connection with this initiative, we recorded business reorganization expense of $327 and $713 during the three and six months ended September 30, 2019, respectively, due to updating estimates for employee separation costs and did not make any payments related to these reorganization activities. As of September 30, 2019, $3,869 remained accrued for in Accrued expenses and other current liabilities and $3,116 in Other non-current liabilities. Although we may record additional expense or benefit in future periods to true-up estimates, we do not expect to incur additional reorganization costs in connection with the 2018 Plan.

15. INCOME TAXES

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The provision for income taxes was $11,059 for the three months ended September 30, 2019 as compared to $5,594 for the prior year period.

When compared to the statutory rate of 21%, the effective tax rate of 13.3% for the three months ended September 30, 2019 was primarily due to tax benefits of $3,209 as a result of tax credits anticipated to be utilized and $1,402 due to geographic mix of earnings.

The provision for income taxes for the six months ended September 30, 2019 is based on our projected annual effective tax rate for fiscal year 2020, adjusted for specific items that are required to be recognized in the period in which they are incurred. The provision for income taxes was $26,934 for the six months ended September 30, 2019 as compared to $11,348 for the prior year period.

When compared to the statutory rate of 21%, the effective tax rate of 18.6% for the six months ended September 30, 2019 was primarily due to a tax benefit of $11,749 from changes in unrecognized tax benefits due to audit settlements, a benefit of $6,026 as a result of tax credits anticipated to be utilized, and a benefit of $3,170 from our geographic mix of earnings. To a lesser extent the rate was also affected by excess tax benefits from employee stock-based compensation. These benefits were partially offset by a tax expense of $19,826 from the reversal of net deferred tax benefits relating to the Altera case, discussed below.

On July 27, 2015, the U.S. Tax Court issued an opinion in Altera Corp. v. Commissioner, which concluded that related parties in an intercompany cost-sharing arrangement are not required to share costs related to stock-based compensation. In February 2016, the U.S. Internal Revenue Service appealed the decision to the U.S Court of Appeals for the Ninth Circuit. On June 7, 2019, the Ninth Circuit reversed the 2015 decision of the U.S. Tax Court. As a result of this decision, we are no longer reflecting a net tax benefit within our financial statements related to the removal of stock-based compensation from our intercompany cost-sharing arrangement. During the six months ended September 30, 2019, we removed the deferred tax asset and a deferred tax liability associated with this matter from our financial statements, resulting in a cumulative net discrete income tax expense of $19,826. On July 22, 2019, the taxpayer requested a rehearing before the full Ninth Circuit and may subsequently appeal from the Ninth Circuit to the U.S. Supreme Court. As a result, the final outcome of the case is uncertain. We will continue to monitor ongoing developments of this matter and potential impacts to our financial statements.

In addition, on June 21, 2018, the U.S. Supreme Court issued its decision in South Dakota v. Wayfair, which overturned previous case law that precluded states from requiring retailers to collect and remit sales and use tax collection on sales made to in-state customers unless the retailer had physical presence in the state. Although this case is limited to sales tax collection obligations, we continue to monitor the potential impact of this decision on our state income tax footprint.

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.

16. LEASES

Our lease arrangements are primarily for (1) corporate, administrative, and development studio offices and (2) data centers and server equipment. Our existing leases have remaining lease terms ranging from one to thirteen years. In certain instances, such leases include one or more options to renew, with renewal terms that generally extend the lease term by one to five years for each option. The exercise of lease renewal options is generally at our sole discretion. Additionally, the majority of our leases are classified as operating leases.

Information related to our operating leases are as follows:



	Three Months Ended September 30, 2019		Six Months Ended September 30, 2019
Lease costs
Operating lease costs	$	6,555	$	13,563
Short term lease costs	$	682	$	1,355

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	Six Months Ended September 30, 2019
Supplemental operating cash flow information
Cash paid for amounts included in the measurement of lease liabilities	$	13,216
ROU assets obtained in exchange for lease obligations	$	11,625



	At September 30, 2019
Weighted average information
Remaining lease term	8.0
Discount rate	5.0	%

Future undiscounted lease payments for our operating lease liabilities, and a reconciliation of these payments to our operating lease liabilities at September 30, 2019, are as follows:



For the years ending March 31,
Remaining 2020	$	13,251
2021	30,046
2022	28,497
2023	24,311
2024	17,073
Thereafter	58,581
Total future lease payments	171,759
Less imputed interest	(30,697		)
Total lease liabilities	$	141,062

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

CAUTIONARY NOTE ABOUT FORWARD-LOOKING STATEMENTS

The statements contained herein which are not historical facts are considered forward-looking statements under federal securities laws and may be identified by words such as "anticipates," "believes," "estimates," "expects," "intends," "plans," "potential," "predicts," "projects," "seeks," "should" "will," or words of similar meaning and include, but are not limited to, statements regarding the outlook for the Company's future business and financial performance. Such forward-looking statements are based on the current beliefs of our management as well as assumptions made by and information currently available to them, which are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Actual outcomes and results may vary materially from these forward-looking statements based on a variety of risks and uncertainties including those contained herein, in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2019, in the section entitled "Risk Factors," and the Company's other periodic filings with the Securities and Exchange Commission. All forward-looking statements are qualified by these cautionary statements and speak only as of the date they are made. The Company undertakes no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.

Our Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is provided in addition to the accompanying Condensed Consolidated Financial Statements and notes to assist readers in understanding our results of operations, financial condition and cash flows. The following discussion should be read in conjunction with the MD&A and 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, 2019.

Overview

Our Business

We are a leading developer, publisher and marketer of interactive entertainment for consumers around the globe. We develop and publish products through our labels Rockstar Games, 2K, and Private Division, as well as Social Point, a leading developer of mobile games. Our products are currently designed for console gaming systems, such as Sony's PlayStation®4 ("PS4"), Microsoft's Xbox One® ("Xbox One"), or Nintendo's Switch™ ("Switch"), and personal computers ("PC"), including

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smartphones and tablets. We deliver our products through physical retail, digital download, online platforms, and cloud streaming services.

We endeavor to be the most creative, innovative and efficient company in our industry. Our core strategy is to capitalize on the popularity of video games by developing and publishing high-quality interactive entertainment experiences across a range of genres. We focus on building compelling entertainment franchises by publishing a select number of titles for which we can create sequels and incremental revenue opportunities through virtual currency, add-on content, and in-game purchases. Most of our intellectual property is internally owned and developed, which we believe best positions us financially and competitively. We have established a portfolio of proprietary software content for the major hardware platforms in a wide range of genres, including action, adventure, family/casual, racing, role-playing, shooter, sports and strategy, which we distribute worldwide. We believe that our commitment to creativity and innovation is a distinguishing strength, enabling us to differentiate our products in the marketplace by combining advanced technology with compelling storylines and characters that provide unique gameplay experiences for consumers. We have created, acquired, or licensed a group of highly recognizable brands to match the broad consumer demographics that we serve, ranging from adults to children and game enthusiasts to casual gamers. Another cornerstone of our strategy is to support the success of our products in the marketplace through innovative marketing programs and global distribution on platforms and through channels that are relevant to our target audience.

Our revenue is primarily derived from the sale of internally developed software titles and software titles developed by third parties. Operating margins are dependent in part upon our ability to release new, commercially successful software products and to manage effectively their development and marketing costs. We have internal development studios located in Australia, Canada, China, Czech Republic, Hungary, India, Spain, the United Kingdom, and the United States.

Software titles published by our Rockstar Games label are primarily internally developed. We expect Rockstar Games, our wholly-owned publisher of the Grand Theft Auto, Max Payne, Midnight Club, Red Dead Redemption, and other popular franchises, to continue to be a leader in the action/adventure product category and to create groundbreaking entertainment by leveraging our existing titles as well as by developing new brands. We believe that Rockstar Games has established a uniquely original, popular cultural phenomenon with its Grand Theft Auto series, which is the interactive entertainment industry's most iconic and critically acclaimed brand and has sold-in over 305 million units. The latest installment, Grand Theft Auto V, has sold in over 115 million units worldwide and includes access to Grand Theft Auto Online. On October 26, 2018, Rockstar Games launched Red Dead Redemption 2, which has been a critical and commercial success that set numerous entertainment industry records. To date, Red Dead Redemption 2 has sold-in more than 25 million units worldwide. Rockstar Games is also well known for developing brands in other genres, including the L.A. Noire, Bully, and Manhunt franchises. Rockstar Games continues to expand on our established franchises by developing sequels, offering downloadable episodes, content, and virtual currency, and releasing titles for smartphones and tablets.

Our 2K label has published a variety of popular entertainment properties across all key platforms and across a range of genres including shooter, action, role-playing, strategy, sports and family/casual entertainment. We expect 2K to continue to develop new, successful franchises in the future. 2K's internally owned and developed franchises include the critically acclaimed, multi-million unit selling BioShock, Mafia, Sid Meier's Civilization and XCOM series. 2K also publishes externally developed brands, such as Borderlands. The latest installment, Borderlands 3, launched on September 13, 2019. 2K's realistic sports simulation titles include our flagship NBA 2K series, which continues to be the top-ranked NBA basketball video game, the WWE 2K professional wrestling series, and the Golf Club.

Our Private Division label is dedicated to bringing titles from top independent developers to market and is the publisher of Kerbal Space Program. During fiscal year 2020, Private Division has released The Outer Worlds and Ancestors: The Humankind Odyssey, based on new IP from renowned industry creative talent. Private Division has announced that Kerbal Space Program 2 and Disintegration are planned for release in fiscal year 2021.

Social Point develops and publishes popular free-to-play mobile games that deliver high-quality, deeply-engaging entertainment experiences, including its two most successful games, Dragon City and Monster Legends. In addition, Social Point has a robust development pipeline with a number of exciting games planned for launch in the coming years.

We are continuing to execute on our growth initiatives in Asia, where our strategy is to broaden the distribution of our existing products and expand our online gaming presence, especially in China and South Korea. 2K has secured a multi-year license from the NBA to develop an online version of the NBA simulation game in China, Taiwan, South Korea, and Southeast Asia. NBA 2K Online, our free-to-play NBA simulation game, which was co-developed by 2K and Tencent, is the top online PC sports game in China with over 47 million registered users. On August 2, 2018, 2K and Tencent commercially launched NBA 2K Online 2 in China. The title is based on the console edition of NBA 2K and includes an array of new features.

In February 2017, we expanded our relationship with the NBA through the creation of the NBA 2K League. Launched in May 2018, this groundbreaking competitive gaming league is jointly owned by us and the NBA and consists of teams operated

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by actual NBA franchises. The NBA 2K League follows a professional sports league format: the inaugural season included head-to-head competition throughout a regular season, followed by a bracketed playoff system and a finals match-up that was held in August 2018. The NBA 2K League's second season finals were held in August 2019.

Trends and Factors Affecting our Business

Product Release Schedule. Our financial results are affected by the timing of our product releases and the commercial success of those titles. Our Grand Theft Auto products in particular have historically accounted for a significant portion of our revenue. Sales of Grand Theft Auto products generated 23% of our net revenue for the six months ended September 30, 2019. In October 2018, we released Red Dead Redemption 2. Sales of Red Dead Redemption products generated 13% of our net revenue for the six months ended September 30, 2019. The timing of our Grand Theft Auto or Red Dead Redemption product releases may affect our financial performance on a quarterly and annual basis.

Economic Environment and Retailer Performance. We continue to monitor economic conditions that may unfavorably affect our businesses, such as deteriorating consumer demand, pricing pressure on our products, credit quality of our receivables, and foreign currency exchange rates. Our business is dependent upon a limited number of customers that account for a significant portion of our revenue. Our five largest customers accounted for 74.8% and 75.4% of net revenue during the six months ended September 30, 2019 and 2018, respectively. As of September 30, 2019 and March 31, 2019, our five largest customers comprised 66.0% and 66.6% of our gross accounts receivable, respectively, with our significant customers (those that individually comprised more than 10% of our gross accounts receivable balance) accounting for 50.0% and 55.8% of such balance at September 30, 2019 and March 31, 2019, respectively. We had two customers who accounted for 31.4% and 18.7%, respectively, of our gross accounts receivable as of September 30, 2019 and two customers who accounted for 40.1% and 15.7%, respectively, of our gross accounts receivable as of March 31, 2019. The economic environment has affected our customers in the past, and may do so in the future. Bankruptcies or consolidations of our large retail customers could seriously hurt our business, due to uncollectible accounts receivables and the concentration of purchasing power among the remaining large retailers. Certain of our large customers sell used copies of our games, which may negatively affect our business by reducing demand for new copies of our games. While the online and downloadable content that we now offer for certain of our titles may serve to reduce used game sales, we expect used game sales to continue to adversely affect our business.

Hardware Platforms. We derive most of our revenue from the sale of software products made for video game consoles manufactured by third parties, such as Sony's PS4, Microsoft's Xbox One, and Nintendo's Switch, which comprised 77.7% of our net revenue by product platform for the three months ended September 30, 2019. The success of our business is dependent upon the consumer acceptance of these platforms and continued growth in their installed base. When new hardware platforms are introduced, demand for software used on older platforms typically declines, which may negatively affect our business during the market transition to the new consoles. Accordingly, our strategy is to focus our development efforts on a select number of the highest quality titles for these platforms, while also expanding our offerings for emerging platforms such as tablets, smartphones and online games.

Online Content and Digital Distribution. The interactive entertainment software industry is delivering a growing amount of content through digital online delivery methods. We provide a variety of online delivered products and offerings. Virtually all of our titles that are available through retailers as packaged goods products are also available through direct digital download (from websites we own and others owned by third parties) as well as a larger selection of our catalog titles. In addition, we aim to drive ongoing engagement and incremental revenue from recurrent consumer spending, which is generated from ongoing consumer engagement and includes revenue from virtual currency, add-on content, and in-game purchases. We also publish an expanding variety of titles for tablets and smartphones, which are delivered to consumers through digital download. Our "Results of Operations" discloses that net revenue from digital online channels comprised 74.6% of our net revenue by distribution channel for the six months ended September 30, 2019. We expect online delivery of games and game offerings to continue to grow and to become an increasing part of our business over the long-term.

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Product Releases

We released the following key titles during the six months ended September 30, 2019:



Title	Publishing Label	Internal or External Development	Platform(s)	Date Released
Borderlands: Game of the Year Edition	2K	External	PS4, Xbox One, PC	April 3, 2019
NBA 2K Mobile	2K	Internal	Android	April 17, 2019
Ancestors: The Humankind Odyssey	Private Division	External	PC (digital only)	August 27, 2019
NBA 2K20	2K	Internal	PS4, Xbox One, Switch, PC, iOS, Android	September 6, 2019
Borderlands 3	2K	Internal / External	PS4, Xbox One, PC	September 13, 2019

Product Pipeline

We have announced the following future key titles to date (this list does not represent all titles currently in development):



Title	Publishing Label	Internal or External Development	Platform(s)	Expected Release Date
WWE 2K20	2K	Internal	PS4, Xbox One, PC	October 22, 2019 (released)
The Outer Worlds	Private Division	External	PS4, Xbox One, PC	October 25, 2019 (released)
Red Dead Redemption 2	Rockstar Games	Internal	PC	November 5,2019 (released)
Sid Meier's Civilization VI	2K	Internal	PS4, Xbox One	November 22, 2019
Red Dead Redemption 2	Rockstar Games	Internal / External	Google Stadia	November 2019
Borderlands 3	2K	Internal / External	Google Stadia	November 2019
NBA 2K20	2K	Internal	Google Stadia	November 2019
Ancestors: The Humankind Odyssey	Private Division	External	PS4, Xbox One	December 2019
Kerbal Space Program 2	Private Division	External	PC (digital only), PS4, Xbox One	Fiscal 2021
Disintegration	Private Division	External	TBA	Fiscal 2021

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Critical Accounting Policies and Estimates

Our most critical accounting policies, which are those that require significant judgment, include revenue recognition; price protection and allowances for returns; capitalization and recognition of software development costs and licenses; fair value estimates including valuation of goodwill, intangible assets, and long-lived assets; valuation and recognition of stock-based compensation; and income taxes. In-depth descriptions of these can be found in our Annual Report on Form 10-K for the fiscal year ended March 31, 2019.

During the six months ended September 30, 2019, there were no significant changes to the above critical accounting policies and estimates, with the exception of our adoption of Topic 842, Leases. Refer to Note 1 - Basis of Presentation and Significant Accounting Policies in the Notes to our Condensed Consolidated Financial Statements for disclosures regarding our updated lease accounting policies.

Recently Adopted and Recently Issued Accounting Pronouncements

See Note 1 - Basis of Presentation and Significant Accounting Policies for further discussion.

Operating Metric

Net Bookings

We monitor Net Bookings as a key operating metric in evaluating the performance of our business. Net Bookings is defined as the net amount of products and services sold digitally or sold-in physically during the period and includes licensing fees, merchandise, in-game advertising, strategy guides, and publisher incentives. Net Bookings were as follows:



	Three Months Ended September 30,								Six Months Ended September 30,
	2019		2018		Increase/ (decrease)		% Increase/ (decrease)		2019		2018		Increase/ (decrease)		% Increase/ (decrease)
Net Bookings	$	950,516	$	583,421	$	367,095	62.9	%	$	1,372,756	$	871,746	$	501,010	57.5	%

For the three months ended September 30, 2019, Net Bookings increased by $367.1 million as compared to the prior year period due primarily to Borderlands 3, which released in September 2019, Grand Theft Auto Online and Grand Theft Auto V, Red Dead Redemption 2 and Red Dead Online, and our NBA 2K franchise. For the six months ended September 30, 2019, Net Bookings increased by $501.0 million as compared to the prior year period primarily due to Borderlands 3, our NBA 2K franchise, Red Dead Redemption 2 and Red Dead Online, and Grand Theft Auto Online.

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Results of Operations

The following tables set forth, for the periods indicated, our Condensed Consolidated Statements of Operations, net revenue by geographic region, net revenue by platform, net revenue by distribution channel, and net revenue by content type:



	Three Months Ended September 30,								Six Months Ended September 30,
(thousands of dollars)	2019				2018				2019				2018
Net revenue	$	857,841	100.0	%	$	492,667	100.0	%	$	1,398,300	100.0	%	$	880,649		100.0	%
Cost of goods sold	468,248		54.6	%	234,880		47.7	%	709,717		50.8	%	366,245			41.6	%
Gross profit	389,593		45.4	%	257,787		52.3	%	688,583		49.2	%	514,404			58.4	%
Selling and marketing	149,566		17.4	%	94,165		19.1	%	241,387		17.3	%	152,471			17.3	%
General and administrative	76,659		8.9	%	67,320		13.7	%	151,492		10.8	%	135,055			15.3	%
Research and development	76,197		8.9	%	60,565		12.3	%	145,160		10.4	%	111,277			12.6	%
Depreciation and amortization	12,024		1.4	%	9,751		2.0	%	23,281		1.7	%	19,011			2.2	%
Business reorganization	327		—	%	—		—	%	713		0.1	%	(242		)	—	%
Total operating expenses	314,773		36.7	%	231,801		47.1	%	562,033		40.2	%	417,572			47.4	%
Income from operations	74,820		8.7	%	25,986		5.3	%	126,550		9.1	%	96,832			11.0	%
Interest and other, net	8,054		0.9	%	4,975		1.0	%	18,479		1.3	%	11,576			1.3	%
Income before income taxes	82,874		9.7	%	30,961		6.3	%	145,029		10.4	%	108,408			12.3	%
Provision for income taxes	11,059		1.3	%	5,594		1.1	%	26,934		1.9	%	11,348			1.3	%
Net income	$	71,815	8.4	%	$	25,367	5.1	%	$	118,095	8.4	%	$	97,060		11.0	%



	Three Months Ended September 30,								Six Months Ended September 30,
	2019				2018				2019				2018
Net revenue by geographic region:
United States	$	494,661	57.7	%	$	279,306	56.7	%	$	825,140	59.0	%	$	500,717	56.9	%
International	363,180		42.3	%	213,361		43.3	%	573,160		41.0	%	379,932		43.1	%
Net revenue by platform:
Console	$	651,818	76.0	%	$	372,240	75.6	%	$	1,086,632	77.7	%	$	666,970	75.7	%
PC and other	206,023		24.0	%	120,427		24.4	%	311,668		22.3	%	213,679		24.3	%
Net revenue by distribution channel:
Digital online	$	615,774	71.8	%	$	358,371	72.7	%	$	1,043,555	74.6	%	$	673,418	76.5	%
Physical retail and other	242,067		28.2	%	134,296		27.3	%	354,745		25.4	%	207,231		23.5	%
Net revenue by content:
Full game and other	$	539,373	62.9	%	$	252,068	51.2	%	$	764,974	54.7	%	$	399,020	45.3	%
Recurrent consumer spending	318,468		37.1	%	240,599		48.8	%	633,326		45.3	%	481,629		54.7	%

Three Months Ended September 30, 2019 Compared to September 30, 2018



(thousands of dollars)	2019		%		2018		%		Increase/ (decrease)		% Increase/ (decrease)
Net revenue	$	857,841	100.0	%	$	492,667	100.0	%	$	365,174	74.1	%
Software development costs and royalties(1)	211,996		24.7	%	42,648		8.7	%	169,348		397.1	%
Internal royalties	109,991		12.8	%	82,113		16.7	%	27,878		34.0	%
Product costs	86,568		10.1	%	55,885		11.3	%	30,683		54.9	%
Licenses	59,693		7.0	%	54,234		11.0	%	5,459		10.1	%
Cost of goods sold	468,248		54.6	%	234,880		47.7	%	233,368		99.4	%
Gross profit	$	389,593	45.4	%	$	257,787	52.3	%	$	131,806	51.1	%

_______________________________________________________________________________


(1)	Includes $27,832 and $7,688 of stock-based compensation expense in 2019 and 2018, respectively, in software development costs and royalties.

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For the three months ended September 30, 2019, net revenue increased by $365.2 million as compared to the prior year period. The increase was due to (i) $255.4 million in net revenue from Borderlands 3, which released in September 2019, (ii) $80.3 million in net revenue from Red Dead Redemption 2, which released in October 2018, and (iii) an increase of $22.9 million in net revenue from our NBA 2K franchise.

Net revenue from console games increased by $279.6 million and accounted for 76.0% of our total net revenue for the three months ended September 30, 2019, as compared to 75.6% for the prior year period. The increase was due to an increase in net revenue from Borderlands 3, Red Dead Redemption 2, and our NBA 2K franchise. Net revenue from PC and other increased by $85.6 million and accounted for 24.0% of our total net revenue for the three months ended September 30, 2019, as compared to 24.4% for the prior year period. The increase was due to net revenue from Borderlands 3, partially offset by a decrease in net revenue from our NBA 2K franchise.

Net revenue from digital online channels increased by $257.4 million and accounted for 71.8% of our total net revenue for the three months ended September 30, 2019, as compared to 72.7% for the prior year period. The increase was due to an increase in net revenue from Borderlands 3, our NBA 2K franchise, and Red Dead Redemption 2. Net revenue from physical retail and other channels increased by $107.8 million and accounted for 28.2% of our total net revenue for the three months ended September 30, 2019, as compared to 27.3% for the same period in the prior year period. The increase in net revenue from physical retail and other channels was due to net revenue from Borderlands 3 and Red Dead Redemption 2, partially offset by a decrease in net revenue from our NBA 2K franchise.

Recurrent consumer spending is generated from ongoing consumer engagement and includes revenue from virtual currency, add-on content, and in-game purchases. Net revenue from recurrent consumer spending increased by $77.9 million and accounted for 37.1% of net revenue for the three months ended September 30, 2019, as compared to 48.8% of net revenue for the prior year period. The increase in net revenue from recurrent consumer spending is due to an increase in net revenue from our NBA 2K franchise, Borderlands 3, Red Dead Redemption 2 and Red Dead Online, partially offset by a decrease in net revenue from Grand Theft Auto Online. Net revenue from full game and other increased by $287.3 million and accounted for 62.9% of net revenue for the three months ended September 30, 2019 as compared to 51.2% of net revenue for the prior year period. The increase in net revenue from full game and other was due to net revenue from Borderlands 3 and Red Dead Redemption 2, partially offset by a decrease in net revenue from our NBA 2K franchise.

Gross profit as a percentage of net revenue for the three months ended September 30, 2019 was 45.4% as compared to 52.3% for the prior year period. The decrease in gross profit as a percentage of net revenue was due to higher royalties and amortization of capitalized software costs as a percentage of net revenue due primarily to the timing of releases.

Net revenue earned outside of the United States increased by $149.8 million and accounted for 42.3% of our total net revenue for the three months ended September 30, 2019, as compared to 43.3% in the prior year period. The increase in net revenue outside of the United States was due to net revenue from Borderlands 3 and Red Dead Redemption 2, partially offset by a decrease in net revenue from our NBA 2K franchise. Changes in foreign currency exchange rates decreased net revenue by $4.4 million and decreased gross profit by $1.8 million for the three months ended September 30, 2019 as compared to the prior year period.

Operating Expenses



(thousands of dollars)	2019		% of net revenue		2018		% of net revenue		Increase/ (decrease)		% Increase/ (decrease)
Selling and marketing	$	149,566	17.4	%	$	94,165	19.1	%	$	55,401	58.8	%
General and administrative	76,659		8.9	%	67,320		13.7	%	9,339		13.9	%
Research and development	76,197		8.9	%	60,565		12.3	%	15,632		25.8	%
Depreciation and amortization	12,024		1.4	%	9,751		2.0	%	2,273		23.3	%
Business reorganization	327		—	%	—		—	%	327		100.0	%
Total operating expenses(1)	$	314,773	36.7	%	$	231,801	47.1	%	$	82,972	35.8	%

_______________________________________________________________________________


(1)	Includes stock-based compensation expense, which was allocated as follows (in thousands):



	2019		2018
Selling and marketing	$	3,744	$	4,874
General and administrative	13,576		12,926
Research and development	10,615		4,854

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Changes in foreign currency exchange rates decreased total operating expenses by $3.6 million for the three months ended September 30, 2019, as compared to the prior year period.

Selling and marketing

Selling and marketing expenses increased by $55.4 million for the three months ended September 30, 2019, as compared to the prior year period, due primarily to higher advertising expenses for Borderlands 3, which released in September 2019, and Grand Theft Auto Online. The increase was also due to higher personnel expenses due to increased headcount.

General and administrative

General and administrative expenses increased by $9.3 million for the three months ended September 30, 2019, as compared to the prior year period, due to increases in (i) personnel expenses for additional headcount and (ii) IT-related expenses for cloud-based services.

General and administrative expenses for the three months ended September 30, 2019 and 2018 included occupancy expense (primarily rent, utilities and office expenses) of $6.1 million and $5.4 million, respectively, related to our development studios.

Research and development

Research and development expenses increased by $15.6 million for the three months ended September 30, 2019, as compared to the prior year period, due primarily to increases in (i) personnel expenses for additional headcount and (ii) production and development expenses for titles for which technological feasibility has not been established.

Depreciation and Amortization

Depreciation and amortization expenses increased by $2.3 million for the three months ended September 30, 2019 as compared to the prior year period, due primarily to IT infrastructure.

Business reorganization

During the three months ended September 30, 2019, business reorganization expense increased $0.3 million as a result of updating estimates for our 2018 Plan with no corresponding expense in the prior year period.

Interest and other, net

Interest and other, net was income of $8.1 million for the three months ended September 30, 2019, as compared to $5.0 million for the prior year period. The change was due primarily to higher interest income due to the nature of our investments, higher invested balances, and the rise in interest rates on those investments.

Provision for Income Taxes

The provision for income taxes for the three months ended September 30, 2019 is based on our projected annual effective tax rate for fiscal year 2020, adjusted for specific items that are required to be recognized in the period in which they are incurred. The provision for income taxes was $11.1 million for the three months ended September 30, 2019 as compared to a provision for income taxes of $5.6 million for the prior year period.

When compared to the statutory rate of 21.0%, the effective tax rate of 13.3% for the three months ended September 30, 2019 was primarily due to tax benefits of $3.2 million as a result of tax credits anticipated to be utilized and $1.4 million due to a geographic mix of earnings.

In the prior year period, when compared to our statutory rate of 21%, the effective tax rate of 18.1% for the three months ended September 30, 2018 was primarily due to a tax benefit of $5.1 million as a result of changes in our valuation allowance relating to temporary items and tax carryforwards anticipated to be utilized, a tax benefit of $2.2 million as a result of tax credits anticipated to be utilized, and a net tax benefit of $1.4 million for excess tax benefits from employee stock compensation, offset by a tax provision of $6.1 million due to the geographic mix of earnings. To a lesser extent, our rate was also affected by the Tax Cuts and Jobs Act due to a net tax provision of $1.0 million.

The change in the effective tax rate, when compared to the prior year period's effective tax rate, is due primarily to increased benefits from our geographic mix in earnings offset by decreased benefits from changes in our valuation allowance.

We anticipate that additional excess tax benefits or shortfalls from employee stock compensation, tax credits, and changes in our geographic mix of earnings could have a significant impact on our effective tax rate in the future. In addition, we are regularly examined by domestic and foreign taxing authorities. Examinations may result in tax assessments in excess of amounts claimed

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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 and/or the expiration of the statute of limitations could have an impact on our effective tax rate in future periods.

The accounting for share-based compensation will increase or decrease our effective tax rate based on the difference between our share-based compensation expense and the deductions taken on our tax return, which depends on the stock price at the time of the employee award vesting. Since we recognize excess tax benefits on a discrete basis, we anticipate that our effective tax rate will vary from quarter to quarter depending on our stock price in each period.

In addition, on June 21, 2018, the U.S. Supreme Court issued its decision in South Dakota v. Wayfair, which overturned previous case law that precluded states from requiring retailers to collect sales tax on sales made to in-state customers unless the retailer had physical presence in the state. Although this case is limited to sales tax collection obligations, we continue to monitor the potential impact of this decision on our state income tax footprint.

Net income and earnings per share

For the three months ended September 30, 2019, net income was $71.8 million, as compared to $25.4 million in the prior year period. Diluted earnings per share for the three months ended September 30, 2019, was $0.63, as compared to diluted earnings per share of $0.22 in the prior year period. Diluted weighted average shares of 114.1 million were 2.0 million shares lower as compared to the prior year period, due primarily to share repurchases in the last three quarters of fiscal year 2019. See Note 11 to our Condensed Consolidated Financial Statements for additional information regarding earnings per share.

Six Months Ended September 30, 2019 Compared to September 30, 2018



(thousands of dollars)	2019		%		2018		%		Increase/ (decrease)		% Increase/ (decrease)
Net revenue	$	1,398,300	100.0	%	$	880,649	100.0	%	$	517,651	58.8	%
Software development costs and royalties(1)	320,437		22.9	%	72,436		8.2	%	248,001		342.4	%
Internal royalties	172,880		12.4	%	135,280		15.4	%	37,600		27.8	%
Product costs	134,203		9.6	%	94,026		10.7	%	40,177		42.7	%
Licenses	82,197		5.9	%	64,503		7.3	%	17,694		27.4	%
Cost of goods sold	709,717		50.8	%	366,245		41.6	%	343,472		93.8	%
Gross profit	$	688,583	49.2	%	$	514,404	58.4	%	$	174,179	33.9	%


(1)	Includes $58,630 and $11,658 of stock-based compensation expense in 2019 and 2018, respectively, in software development costs and royalties.

For the six months ended September 30, 2019, net revenue increased by $517.7 million as compared to the prior year period. The increase was due to (i) $255.4 million in net revenue from Borderlands 3, which released in September 2019, (ii) $157.4 million in net revenue from Red Dead Redemption 2, which released in October 2018, and (iii) an increase of $86.2 million from our NBA 2K franchise. These increases were offset by a decrease of $51.9 million in net revenue from Grand Theft Auto V and Grand Theft Auto Online.

Net revenue from console games increased by $419.7 million and accounted for 77.7% of our total net revenue for the six months ended September 30, 2019, as compared to 75.7% for the prior year period. The increase was due to an increase in net revenue from Borderlands 3, Red Dead Redemption 2, and our NBA 2K franchise, partially offset by a decrease in net revenue from Grand Theft Auto V. Net revenue from PC and other increased by $98.0 million and accounted for 22.3% of our total net revenue for the six months ended September 30, 2019, as compared to 24.3% for the prior year period. The increase was due to net revenue from Borderlands 3.

Net revenue from digital online channels increased by $370.1 million and accounted for 74.6% of our total net revenue for the six months ended September 30, 2019, as compared to 76.5% for the prior year period. The increase was due to an increase in net revenue from Borderlands 3, our NBA 2K franchise, and Red Dead Redemption 2, partially offset by a decrease in net revenue from Grand Theft Auto Online. Net revenue from physical retail and other channels increased by $147.5 million and accounted for 25.4% of our total net revenues for the six months ended September 30, 2019, as compared to 23.5% for the same period in the prior year period. The increase was due to net revenue from Borderlands 3 and Red Dead Redemption 2, partially offset by a decrease in net revenue from Grand Theft Auto V and our NBA 2K franchise.

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Recurrent consumer spending is generated from ongoing consumer engagement and includes revenue from virtual currency, add-on content, and in-game purchases. Net revenue from recurrent consumer spending increased by $151.7 million and accounted for 45.3% of net revenue for the six months ended September 30, 2019, as compared to 54.7% of net revenue for the prior year period. The increase was due to an increase in net revenue from our NBA 2K franchise, our Borderlands franchise, and Red Dead Redemption 2 and Red Dead Online, partially offset by a decrease in net revenue from Grand Theft Auto Online. Net revenue from full game and other increased by $366.0 million and accounted for 54.7% of net revenue for the six months ended September 30, 2019 as compared to 45.3% of net revenue for the prior year period. The increase was due to net revenue from Borderlands 3 and Red Dead Redemption 2, partially offset by a decrease in net revenue from Grand Theft Auto V and our NBA 2K franchise.

Gross profit as a percentage of net revenue for the six months ended September 30, 2019 was 49.2% as compared to 58.4% for the prior year period. The decrease in gross profit as a percentage of net revenue was due to higher royalties and amortization of capitalized software costs as a percentage of net revenue due primarily to the timing of releases.

Net revenue earned outside of the United States increased by $193.2 million, and accounted for 41.0% of our total net revenue for the six months ended September 30, 2019, as compared to 43.1% in the prior year period. The increase in net revenue outside of the United States was due to net revenue from Borderlands 3 and Red Dead Redemption 2. Changes in foreign currency exchange rates decreased net revenue by $7.8 million and decreased gross profit by $2.7 million for the six months ended September 30, 2019 as compared to the prior year period.

Operating Expenses



(thousands of dollars)	2019		% of net revenue		2018			% of net revenue		Increase/ (decrease)		% Increase/ (decrease)
Selling and marketing	$	241,387	17.3	%	$	152,471		17.3	%	$	88,916	58.3	%
General and administrative	151,492		10.8	%	135,055			15.3	%	16,437		12.2	%
Research and development	145,160		10.4	%	111,277			12.6	%	33,883		30.4	%
Depreciation and amortization	23,281		1.7	%	19,011			2.2	%	4,270		22.5	%
Business reorganization	713		0.1	%	(242		)	—	%	955		(394.6	)%
Total operating expenses (1)	$	562,033	40.2	%	$	417,572		47.4	%	$	144,461	34.6	%


(1)	Includes stock-based compensation expense, which was allocated as follows (in thousands):



	2019		2018
General and administrative	$	27,143	$	24,444
Selling and marketing	10,220		9,648
Research and development	17,206		9,191

Changes in foreign currency exchange rates decreased total operating expenses by $7.0 million for the six months ended September 30, 2019, as compared to the prior year period.

Selling and marketing

Selling and marketing expenses increased by $88.9 million for the six months ended September 30, 2019, as compared to the prior year period, due primarily to higher advertising expenses for Borderlands 3, Grand Theft Auto Online, and Red Dead Online. The increase was also due to higher personnel expenses due to increased headcount.

General and administrative

General and administrative expenses increased by $16.4 million for the six months ended September 30, 2019, as compared to the prior year period, due to increases in personnel expenses for additional headcount and IT related expenses for cloud-based service and IT infrastructure.

General and administrative expenses for the six months ended September 30, 2019 and 2018 included occupancy expense (primarily rent, utilities and office expenses) of $12.4 million and $10.8 million, respectively, related to our development studios.

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Research and development

Research and development expenses increased by $33.9 million for the six months ended September 30, 2019, as compared to the prior year period, due primarily to increases in (i) production and development expenses for titles for which technological feasibility has not been established and (ii) personnel expenses due to increased headcount.

Depreciation and Amortization

Depreciation and amortization expenses for the six months ended September 30, 2019 increased by $4.3 million, as compared to the prior year period, due primarily to IT infrastructure.

Business reorganization

During the six months ended September 30, 2019, business reorganization expense increased $1.0 million due to updating estimates for our 2018 Plan resulting in expense in the current year period as compared to a benefit in the prior year period.

Interest and other, net

Interest and other, net was income of $18.5 million for the six months ended September 30, 2019, as compared to an income of $11.6 million for the prior year period. The change was due primarily to higher interest income due to the nature of our investments, higher invested balances, and the rise in interest rates on those investments.

Provision for Income Taxes

The provision for income taxes for the six months ended September 30, 2019 is based on our projected annual effective tax rate for fiscal year 2020, adjusted for specific items that are required to be recognized in the period in which they are incurred. The provision for income taxes was $26.9 million for the six months ended September 30, 2019 as compared to a provision from income taxes of $11.3 million for the prior year period.

When compared to the statutory rate of 21.0%, the effective tax rate of 18.6% for the six months ended September 30, 2019 was due primarily to a tax benefit of $11.7 million from changes in unrecognized tax benefits due to audit settlements, a benefit of $6.0 million as a result of tax credits anticipated to be utilized, and a benefit of $3.2 million from our geographic mix of earnings. To a lesser extent the rate was also affected by excess tax benefits from employee stock-based compensation. These benefits were partially offset by a tax expense of $19.8 million from the reversal of net deferred tax benefits relating to the Altera case, discussed below.

In the prior year period, when compared to our blended statutory rate of 21%, the effective tax rate of 10.5% for the six months ended September 30, 2018 was primarily due to a tax benefit of $10.6 million as a result of changes in our valuation allowance relating to temporary items and tax carryforwards anticipated to be utilized, a tax benefit of $8.8 million as a result of tax credits anticipated to be utilized, and a net tax benefit of $6.9 million for excess tax benefits from employee stock compensation, offset by a tax provision of $10.6 million due to the geographic mix of earnings. To a lesser extent, our rate was also affected by the Tax Cuts and Jobs Act due to a net tax provision of $3.4 million.

The change in the effective tax rate, when compared to the prior year period's effective tax rate, is due primarily to increased tax expense relating to the Altera case, discussed below, decreased benefits from changes in our valuation allowance relating to temporary items and tax carryforwards anticipated to be utilized, decreased excess tax benefits from employee stock-based compensation partially offset by increased geographic mix of earnings and increased discrete tax benefits recorded from changes in unrecognized tax benefits primarily due to expiration in statute of limitations.

We anticipate that additional excess tax benefits from employee stock compensation, tax credits, and changes in our geographic mix of earnings could have a significant impact on our effective tax rate in the future. In addition, we are regularly examined by domestic and foreign taxing authorities. Examinations may result in tax assessments in excess of amounts claimed and the payment of additional taxes. We believe our tax positions comply with applicable tax law, and that we have adequately provided for reasonably foreseeable tax assessments. It is possible that settlement of audits and/or the expiration of the statute of limitations could have an impact on our effective tax rate in future periods.

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February 2016, the U.S. Internal Revenue Service appealed the decision to the U.S. Court of Appeals for the Ninth Circuit. On June 7, 2019, the Ninth Circuit reversed the 2015 decision of the U.S. Tax Court. As a result of this decision, we are no longer reflecting a net tax benefit within our financial statements related to the removal of stock-based compensation from our intercompany cost-sharing arrangement. During the six months ended September 30, 2019, we removed the deferred tax asset and a deferred tax liability associated with this matter, resulting in a cumulative net discrete income tax expense of $19.8 million. On July 22, 2019, the taxpayer in the Altera Corp. case requested a rehearing before the full Ninth Circuit and may subsequently appeal from the Ninth Circuit to the Supreme Court. As a result, the final outcome of the case is uncertain. We will continue to monitor ongoing developments of this matter and potential impacts to our financial statements.

On June 21, 2018, the U.S. Supreme Court issued its decision in South Dakota v. Wayfair, which overturned previous case law that precluded states from requiring retailers to collect and remit sales tax on sales made to in-state customers unless the retailer had physical presence in the state. Although this case is limited to sales tax collection obligations, we continue to monitor the potential impact of this decision on our state income tax footprint.

Net income and earnings per share

For the six months ended September 30, 2019, net income was $118.1 million, as compared to net income of $97.1 million in the prior year period. For the six months ended September 30, 2019, diluted earnings per share was $1.04 as compared to diluted earnings per share of $0.84 in the prior year period. Diluted weighted average shares of 114 million were 1.9 million shares lower as compared to the prior year period, due primarily to share repurchases in the last three quarters of fiscal year 2019. See Note 11 to our Condensed Consolidated Financial Statements for additional information regarding earnings per share.

Liquidity and Capital Resources

Our primary cash requirements have been to fund (i) the development, manufacturing, and marketing of our published products, (ii) working capital, (iii) acquisitions, and (iv) capital expenditures. We expect to rely on cash and cash equivalents as well as on short-term investments, funds provided by our operating activities, and our Credit Agreement to satisfy our working capital needs.

Short-term Investments

As of September 30, 2019, we had $742.6 million of short-term investments, which are highly liquid in nature and represent an investment of cash that is available for current operations. From time to time, we may purchase additional short-term investments depending on future market conditions and liquidity needs.

Credit Agreement

On February 8, 2019, we entered into an unsecured Credit Agreement (the “Credit Agreement”). The Credit Agreement runs through February 8, 2024. The Credit Agreement provides for an unsecured five-year revolving credit facility with commitments of $200 million, including sublimits for (i) the issuance of letters of credit in an aggregate face amount of up to $25 million and (ii) borrowings and letters of credit denominated in Pounds Sterling, Euros and Canadian Dollars in an aggregate principal amount of up to $25 million. In addition, the Credit Agreement contains uncommitted incremental capacity permitting the incurrence of up to an additional $250 million in term loans or revolving credit facilities.

Loans under the Credit Agreement will bear interest at a rate of (a) 0.250% to 0.750% above a certain base rate (5.50% at September 30, 2019) or (b) 1.125% to 1.750% above LIBOR (approximately 2.02% at September 30, 2019), which rates are determined by reference to our consolidated total net leverage ratio.

As of September 30, 2019, there was $198.3 million available to borrow under the Credit Agreement and we had $1.7 million of letters of credit outstanding. At September 30, 2019, we had no outstanding borrowings under the Credit Agreement.

The Credit Agreement also includes, among other terms and conditions, maximum leverage ratio, minimum cash reserves and, in certain circumstances, minimum interest coverage ratio financial covenants, as well as limitations on the Company’s and each of its subsidiaries’ ability to: create, incur, assume or be liable for indebtedness; dispose of assets outside the ordinary course; acquire, merge or consolidate with or into another person or entity; create, incur or allow any lien on any of its property; make investments; or pay dividends or make distributions, in each case subject to certain exceptions. In addition, the Credit Agreement provides for certain events of default such as nonpayment of principal and interest when due thereunder, breaches of representations and warranties, noncompliance with covenants, acts of insolvency and default on indebtedness held by third parties (subject to certain limitations and cure periods).

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Financial Condition

We are subject to credit risks, particularly if any of our receivables represent a limited number of customers or are concentrated in foreign markets. If we are unable to collect our accounts receivable as they become due, it could adversely affect our liquidity and working capital position.

Generally, we have been able to collect our accounts receivable in the ordinary course of business. We do not hold any collateral to secure payment from customers. We have trade credit insurance on the majority of our customers to mitigate accounts receivable risk.

A majority of our trade receivables are derived from sales to major retailers and distributors. Our five largest customers accounted for 74.8% and 75.4% of net revenue during the three months ended September 30, 2019 and 2018, respectively. As of September 30, 2019 and March 31, 2019, five customers accounted for 66.0% and 66.6% of our gross accounts receivable, respectively. Customers that individually accounted for more than 10% of our gross accounts receivable balance comprised 50% and 55.8% of such balances at September 30, 2019 and March 31, 2019, respectively. We had two customers who accounted for 31.4% and 18.7% of our gross accounts receivable as of September 30, 2019, respectively, and two customers who accounted for 40.1% and 15.7% of our gross accounts receivable as of March 31, 2019, respectively. Based upon performing ongoing credit evaluations, maintaining trade credit insurance on a majority of our customers and our past collection experience, we believe that the receivable balances from these largest customers do not represent a significant credit risk, although we actively monitor each customer's credit worthiness and economic conditions that may affect our customers' business and access to capital. We are monitoring the current global economic conditions, including credit markets and other factors as it relates to our customers in order to manage the risk of uncollectible accounts receivable.

We believe our current cash and cash equivalents, short-term investments and projected cash flows from operations, along with availability under our Credit Agreement will provide us with sufficient liquidity to satisfy our cash requirements for working capital, capital expenditures and commitments on both a short-term and long-term basis.

As of September 30, 2019, the amount of cash and cash equivalents held outside of the U.S. by our foreign subsidiaries was $187.7 million. These balances are dispersed across various locations around the world. We believe that such dispersion meets the business and liquidity needs of our foreign affiliates. In addition, we expect for the foreseeable future to have the ability to generate sufficient cash domestically to support ongoing operations.

Our Board of Directors has authorized the repurchase of up to 14,218 shares of our common stock. Under this program, we may purchase shares from time to time through a variety of methods, including in the open market or through privately negotiated transactions, in accordance with applicable securities laws. Repurchases are subject to the availability of stock, prevailing market conditions, the trading price of the stock, our financial performance and other conditions. The program may be suspended or discontinued at any time for any reason.

During the three months ended September 30, 2019, we did not make any repurchases of our common stock in the open market. We have repurchased a total of 10,400 shares of our common stock under the program, and as of September 30, 2019, 3,818 shares of our common stock remain available for repurchase under the share repurchase program.

Our changes in cash flows were as follows:



	Six Months Ended September 30,
(thousands of dollars)	2019			2018
Net cash provided by (used in) operating activities	$	144,158		$	(206,035	)
Net cash (used in) provided by investing activities	(36,200		)	19,689
Net cash used in financing activities	(61,478		)	(217,467		)
Effects of foreign currency exchange rates on cash and cash equivalents	(8,063		)	(9,464		)
Net change in cash, cash equivalents, and restricted cash	$	38,417		$	(413,277	)

At September 30, 2019, we had $1,430.4 million of cash and cash equivalents and restricted cash, compared to $1,392.0 million at March 31, 2019. The increase was due to Net cash provided by operating activities from sales of our products, partially offset by the timing of payments. This net increase was partially offset by (1) Net cash used in financing activities, which was primarily for tax payments related to net share settlements of our restricted stock awards and (2) Net cash used in investing activities primarily related to the purchases of fixed assets and business acquisitions.

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Contractual Obligations and Commitments

Legal and Other Proceedings: We are, or may become, subject to demands and claims (including intellectual property 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 statements. 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.

Off-Balance Sheet Arrangements

As of September 30, 2019 and March 31, 2019, we did not have any material relationships with unconsolidated entities or financial parties, such as entities often referred to as structured finance or variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. As such, we are not exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in such relationships.

International Operations

Net revenue earned outside of the United States is principally generated by our operations in Europe, Asia, Australia, Canada and Latin America. For the three months ended September 30, 2019 and 2018, 42.3% and 43.3%, respectively, and for the six months ended September 30, 2019 and 2018, 41.0% and 43.1%, respectively, of our net revenue was earned outside of the United States. We are subject to risks inherent in foreign trade, including increased credit risks, tariffs and duties, fluctuations in foreign currency exchange rates, shipping delays and international political, regulatory and economic developments, all of which can have a significant effect on our operating results.

Fluctuations in Quarterly Operating Results and Seasonality

We have experienced fluctuations in quarterly and annual operating results as a result of the timing of the introduction of new titles; variations in sales of titles developed for particular platforms; market acceptance of our titles; development and promotional expenses relating to the introduction of new titles; sequels or enhancements of existing titles; projected and actual changes in platforms; the timing and success of title introductions by our competitors; product returns; changes in pricing policies by us and our competitors; the accuracy of retailers' forecasts of consumer demand; the size and timing of acquisitions; the timing of orders from major customers; and order cancellations and delays in product shipment. Sales of our products are also seasonal, with peak shipments typically occurring in the fourth calendar quarter as a result of increased demand for products during the holiday season. For certain of our software products, we allocate a portion of the amount to be recognized as revenue over an estimated service period, which generally ranges from 9 to 15 months. As a result, the quarter in which we generate the highest net sales volume may be different from the quarter in which we recognize the highest amount of net revenues. Quarterly comparisons of operating results are not necessarily indicative of future operating results.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market risk is the potential loss arising from fluctuations in market rates and prices. Our market risk exposures primarily include fluctuations in interest rates and foreign currency exchange rates.

Interest Rate Risk

Our exposure to fluctuations in interest rates relates primarily to our short-term investment portfolio and variable rate debt under the Credit Agreement.

We seek to manage our interest rate risk by maintaining a short-term investment portfolio that includes corporate bonds with high credit quality and maturities less than two years. Since short-term investments mature relatively quickly and can be reinvested at the then-current market rates, interest income on a portfolio consisting of short-term securities is more subject to market fluctuations than a portfolio of longer-term maturities. However, the fair value of a short-term portfolio is less sensitive to market fluctuations than a portfolio of longer-term securities. We do not currently use derivative financial instruments in our short-term investment portfolio. Our investments are held for purposes other than trading.

As of September 30, 2019, we had $742.6 million of short-term investments, which included $361.6 million of available-for-sale securities. The available-for-sale securities were recorded at fair market value with unrealized gains or losses resulting from changes in fair value reported as a separate component of accumulated other comprehensive income (loss), net of tax, in

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stockholders' equity. We also had $762.0 million of cash and cash equivalents that are comprised primarily of money market funds and bank-time deposits. We determined that, based on the composition of our investment portfolio, there was no material interest rate risk exposure to our Condensed Consolidated Financial Statements or liquidity as of September 30, 2019.

Historically, fluctuations in interest rates have not had a significant effect on our operating results. Under our Credit Agreement, outstanding balances bear interest at our election of (a) 0.250% to 0.750% above a certain base rate (5.50% at September 30, 2019), or (b) 1.125% to 1.750% above the LIBOR rate (approximately 2.02% at September 30, 2019), with the margin rate subject to the achievement of certain average liquidity levels. Changes in market rates may affect our future interest expense if there is an outstanding balance on our line of credit.

Foreign Currency Exchange Rate Risk

We transact business in foreign currencies and are exposed to risks resulting from fluctuations in foreign currency exchange rates. Accounts relating to foreign operations are translated into United States dollars using prevailing exchange rates at the relevant period end. Translation adjustments are included as a separate component of stockholders' equity. For the three months ended September 30, 2019 and 2018, our foreign currency translation adjustment was a loss of $12.6 million and a gain of $2.5 million, respectively, and for the six months ended September 30, 2019 and 2018, we recognized a foreign currency translation adjustment loss of $21.4 million and a loss of $24.3 million, respectively. For the three months ended September 30, 2019 and 2018, we recognized a foreign currency exchange transaction loss of $1.7 million and a loss of $0.9 million, respectively, and for the six months ended September 30, 2019 and 2018, we recognized a foreign currency exchange transaction loss of $2.7 million and a gain of $0.6 million, respectively, included in interest and other, net in our Condensed Consolidated Statements of Operations.

Balance Sheet Hedging Activities

We use foreign currency forward contracts to mitigate foreign currency exchange rate risk associated with non-functional currency denominated cash balances and intercompany funding loans, non-functional currency denominated accounts receivable and non-functional currency denominated accounts payable. These transactions are not designated as hedging instruments and are accounted for as derivatives whereby the fair value of the contracts is reported as either assets or liabilities on our Condensed Consolidated Balance Sheets, and gains and losses resulting from changes in the fair value are reported in Interest and other, net, in our Condensed Consolidated Statements of Operations. We do not enter into derivative financial contracts for speculative or trading purposes. At September 30, 2019, we had $211.7 million of forward contracts outstanding to sell foreign currencies in exchange for U.S. dollars and $40.5 million of forward contracts outstanding to buy foreign currencies in exchange for U.S. dollars, all of which have maturities of less than one year. At March 31, 2019, we had $116.6 million of forward contracts outstanding to sell foreign currencies in exchange for U.S. dollars and $87.8 million of forward contracts outstanding to buy foreign currencies in exchange for U.S. dollars, all of which have maturities of less than one year. For the three months ended September 30, 2019 and 2018, we recorded a gain of $2.2 million and a loss of $0.2 million, respectively, and for the six months ended September 30, 2019 and 2018, we recorded a loss of $1.1 million and a gain of $2.2 million, respectively. As of September 30, 2019, the fair value of these outstanding forward contracts was an immaterial gain and was included in Prepaid expenses and other, and, as of March 31, 2019, the fair value of outstanding forward contracts was an immaterial loss and was included in Accrued expenses and other current liabilities. The fair value of these outstanding forward contracts is estimated based on the prevailing exchange rates of the various hedged currencies as of the end of the period.

Our hedging programs are designed to reduce, but do not entirely eliminate, the effect of currency exchange rate movements. We believe the counterparties to these foreign currency forward contracts are creditworthy multinational commercial banks and that the risk of counterparty nonperformance is not material. Notwithstanding our efforts to mitigate some foreign currency exchange rate risks, there can be no assurance that our hedging activities will adequately protect us against the risks associated with foreign currency fluctuations. For the three months ended September 30, 2019, 42.3% of our revenue was generated outside the United States. Using sensitivity analysis, a hypothetical 10% increase in the value of the U.S. dollar against all currencies would decrease revenues by 4.2%, while a hypothetical 10% decrease in the value of the U.S. dollar against all currencies would increase revenues by 4.2%. In our opinion, a substantial portion of this fluctuation would be offset by cost of goods sold and operating expenses incurred in local currency.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Based on an evaluation under the supervision and with the participation of management, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures as defined in rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended ("Exchange Act") were effective as of the end of the period covered by this report to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange

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Commission rules and forms and (ii) accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended September 30, 2019, which were identified in connection with management's evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Inherent limitations to any system of disclosure controls and procedures include, but are not limited to, the possibility of human error and the circumvention or overriding of such controls by one or more persons. In addition, we have designed our system of controls based on certain assumptions, which we believe are reasonable, about the likelihood of future events, and our system of controls may therefore not achieve its desired objectives under all possible future events.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We are, or may become, subject to demands and claims (including intellectual property 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 statements. 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.

Item 1A. Risk Factors

There have been no material changes to the Risk Factors disclosed in Item 1A of our Annual Report on Form 10-K for the fiscal year ended March 31, 2019.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

Share Repurchase Program—In January 2013, our Board of Directors authorized the repurchase of up to 7,500 shares of our common stock. On May 13, 2015, our Board of Directors approved an increase of 6,718 shares to our share repurchase program, increasing the total number of shares that we are permitted to repurchase to 14,218 shares of our common stock. The authorizations permit us to purchase shares from time to time through a variety of methods, including in the open market or through privately negotiated transactions, in accordance with applicable securities laws. Repurchases are subject to the availability of stock, prevailing market conditions, the trading price of the stock, our financial performance and other conditions. The program may be suspended or discontinued at any time for any reason. During the three months ended September 30, 2019, we did not make any repurchases of our common stock in the open market. As of September 30, 2019, we have repurchased a total of 10,400 shares of our common stock under this program and 3,818 shares of common stock remain available for repurchase under our share repurchase program. The table below details the share repurchases made by us during the three months ended September 30, 2019:



Period	Shares purchased	Average price per share		Total number of shares purchased as part of publicly announced plans or programs	Maximum number of shares that may yet be purchased under the repurchase program
July 1-31, 2019	—	$	—	—	3,818
August 1-31, 2019	—	$	—	—	3,818
September 1-30, 2019	—	$	—	—	3,818

_______________________________________________________________________________

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Item 6. Exhibits



Exhibits:
31.1		Chief Executive Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Chief Financial Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1		Chief Executive Officer Certification pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2		Chief Financial Officer Certification pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS		The Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH		Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Taxonomy Calculation Linkbase Document
101.LAB		Inline XBRL Taxonomy Label Linkbase Document
101.PRE		Inline XBRL Taxonomy Presentation Linkbase Document
101.DEF		Inline XBRL Taxonomy Extension Definition Document

* Portions of this exhibit have been redacted in compliance with Regulation S-K Item 601(b)(10).

________________________________________________________________________________________________________________________________

Attached as Exhibit 101 to this report are the following formatted in Inline XBRL (Extensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets at September 30, 2019 and March 31, 2019, (ii) Condensed Consolidated Statements of Operations for the three and six months ended September 30, 2019 and 2018, (iii) Condensed Consolidated Statements of Comprehensive Income for the three and six months ended September 30, 2019 and 2018, (iv) Condensed Consolidated Statements of Cash Flows for the three months ended September 30, 2019 and 2018, (v) Condensed Consolidated Statements of Stockholders' Equity for the three and six months ended September 30, 2019 and 2018; and (vi) Notes to Condensed Consolidated Financial Statements (Unaudited).

________________________________________________________________________________________________________________________________

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



		TAKE-TWO INTERACTIVE SOFTWARE, INC. (Registrant)
Date:	November 7, 2019	By:	/s/ STRAUSS ZELNICK
			Strauss Zelnick Chairman and Chief Executive Officer (Principal Executive Officer)

Date:	November 7, 2019	By:	/s/ LAINIE GOLDSTEIN
			Lainie Goldstein Chief Financial Officer (Principal Financial Officer)


(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and


(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

LEASES FUTURE UNDISCOUNTED LEASE PAYMENTS (Details) $ in Thousands	Sep. 30, 2019 USD ($)
Leases [Abstract]
Remaining 2020	$ 13,251
2021	30,046
2022	28,497
2023	24,311
2024	17,073
Thereafter	58,581
Total future lease payments	171,759
Less imputed interest	(30,697)
Total lease liabilities	$ 141,062

DEBT - CREDIT AGREEMENT (Details) - USD ($)		3 Months Ended		6 Months Ended
DEBT - CREDIT AGREEMENT (Details) - USD ($)	Feb. 08, 2019	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Mar. 31, 2019
Credit Agreement
Credit Agreement
Debt term	5 years
Maximum borrowing capacity	$ 200,000,000
Amount of additional borrowings by which maximum borrowing capacity may be increased	250,000,000
Available borrowings		$ 198,336,000		$ 198,336,000		$ 198,336,000
Outstanding letters of credit		1,664,000		1,664,000		$ 1,664,000
Interest expense and fees		$ 84,000	$ 111,000	$ 166,000	$ 221,000
Letter of Credit
Credit Agreement
Maximum borrowing capacity	$ 25,000,000
New Credit Agreement \| Base rate
Credit Agreement
Interest rate at end of period		5.50%		5.50%
New Credit Agreement \| Base rate \| Minimum
Credit Agreement
Interest rate added to base rate	0.25%
New Credit Agreement \| Base rate \| Maximum
Credit Agreement
Interest rate added to base rate	0.75%
New Credit Agreement \| LIBOR
Credit Agreement
Interest rate at end of period		2.02%		2.02%
New Credit Agreement \| LIBOR \| Minimum
Credit Agreement
Interest rate added to base rate	1.125%
New Credit Agreement \| LIBOR \| Maximum
Credit Agreement
Interest rate added to base rate	1.75%

BUSINESS REORGANIZATION (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
BUSINESS REORGANIZATION (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Restructuring Cost and Reserve [Line Items]
Restructuring charges	$ 327	$ 0	$ 713	$ (242)
Fiscal 2018 Plan
Restructuring Cost and Reserve [Line Items]
Restructuring charges	327		713
Fiscal 2018 Plan \| Accrued Expenses and Other Current Liabilities
Restructuring Cost and Reserve [Line Items]
Restructuring reserve	3,869		3,869
Fiscal 2018 Plan \| Other long-term liabilities
Restructuring Cost and Reserve [Line Items]
Restructuring reserve	$ 3,116		$ 3,116

COMMITMENTS AND CONTINGENCIES	6 Months Ended
COMMITMENTS AND CONTINGENCIES	Sep. 30, 2019
Commitments and Contingencies Disclosure [Abstract]
COMMITMENTS AND CONTINGENCIES	COMMITMENTS AND CONTINGENCIES We have entered into various agreements in the ordinary course of business that require substantial cash commitments over the next several years. Other than agreements entered into in the ordinary course of business and in addition to the agreements requiring known cash commitments as reported in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended March 31, 2019, we did not have any significant changes to our commitments since March 31, 2019. Legal and Other Proceedings We are, or may become, subject to demands and claims (including intellectual property 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.

SHORT-TERM INVESTMENTS (Contracted Maturities) (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Mar. 31, 2019
Debt Securities, Available-for-sale, Maturity, Amortized Cost, Rolling Maturity [Abstract]
Amortized cost, Due in 1 year or less	$ 637,405
Amortized cost, Due in 1-2 years	103,896
Cost or Amortized Cost	741,301	$ 743,892
Debt Securities, Available-for-sale, Maturity, Fair Value, Rolling Maturity [Abstract]
Fair value, Due in 1 year or less	638,236
Fair value, Due in 1-2 years	104,377
Total fair value	$ 742,613	$ 744,485

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Apr. 01, 2019	Mar. 31, 2019
Liabilities, Current [Abstract]
Software development royalties	$ 897,304		$ 713,201
Licenses	82,354		56,221
Refund liability	73,278		65,853
Compensation and benefits	68,640		73,695
Marketing and promotions	45,365		42,390
Other	84,255		84,335
Accrued expenses and other current liabilities	$ 1,251,196	$ 1,032,719	$ 1,035,695

BUSINESS REORGANIZATION	6 Months Ended
BUSINESS REORGANIZATION	Sep. 30, 2019
Restructuring and Related Activities [Abstract]
BUSINESS REORGANIZATION	BUSINESS REORGANIZATION In the first quarter of fiscal year 2018, we announced and initiated actions to implement a strategic reorganization at one of our labels (the "2018 Plan"). In connection with this initiative, we recorded business reorganization expense of $327 and $713 during the three and six months ended September 30, 2019, respectively, due to updating estimates for employee separation costs and did not make any payments related to these reorganization activities. As of September 30, 2019, $3,869 remained accrued for in Accrued expenses and other current liabilities and $3,116 in Other non-current liabilities. Although we may record additional expense or benefit in future periods to true-up estimates, we do not expect to incur additional reorganization costs in connection with the 2018 Plan.

COVER PAGE - shares	6 Months Ended
COVER PAGE - shares	Sep. 30, 2019	Oct. 28, 2019
Cover page.
Entity Registrant Name	TAKE-TWO INTERACTIVE SOFTWARE, INC.
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Sep. 30, 2019
Entity File Number	001-34003
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	51-0350842
Entity Address, Address Line One	110 West 44th Street
Entity Address, City or Town	New York
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	10036
City Area Code	646
Local Phone Number	536-2842
Title of 12(b) Security	Common Stock, $.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		113,346,942
Entity Central Index Key	0000946581
Amendment Flag	false
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--03-31

SOFTWARE DEVELOPMENT COSTS AND LICENSES (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Mar. 31, 2019
Finite-Lived Intangible Assets [Line Items]
Software development costs and licenses, Current	$ 62,328	$ 28,880
Software development costs and licenses, Non-current	527,622	603,436
Software development costs, internally developed
Finite-Lived Intangible Assets [Line Items]
Software development costs and licenses, Current	40,292	14,809
Software development costs and licenses, Non-current	417,113	434,712
Software development costs, externally developed
Finite-Lived Intangible Assets [Line Items]
Software development costs and licenses, Current	10,690	3,655
Software development costs and licenses, Non-current	108,077	168,381
Licenses
Finite-Lived Intangible Assets [Line Items]
Software development costs and licenses, Current	11,346	10,416
Software development costs and licenses, Non-current	$ 2,432	$ 343

SHORT-TERM INVESTMENTS (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Mar. 31, 2019
Debt Securities, Available-for-sale [Line Items]
Cost or Amortized Cost	$ 741,301	$ 743,892
Gross Unrealized Gain	1,329	769
Gross Unrealized Losses	(17)	(176)
Fair Value	742,613	744,485
Bank-time deposits
Debt Securities, Available-for-sale [Line Items]
Cost or Amortized Cost	381,000	387,720
Gross Unrealized Gain	0	0
Gross Unrealized Losses	0	0
Fair Value	381,000	387,720
Corporate bonds
Debt Securities, Available-for-sale [Line Items]
Cost or Amortized Cost	272,758	295,526
Gross Unrealized Gain	1,286	742
Gross Unrealized Losses	(17)	(127)
Fair Value	274,027	296,141
US Treasuries
Debt Securities, Available-for-sale [Line Items]
Cost or Amortized Cost	28,898	55,656
Gross Unrealized Gain	43	27
Gross Unrealized Losses	0	(49)
Fair Value	28,941	55,634
Commercial paper
Debt Securities, Available-for-sale [Line Items]
Cost or Amortized Cost	58,645	4,990
Gross Unrealized Gain	0
Gross Unrealized Losses	0
Fair Value	$ 58,645	$ 4,990

EARNINGS PER SHARE ("EPS") (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended			6 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2019	Sep. 30, 2018
Computation of Basic earnings per share:
Net income	$ 71,815	$ 25,367	$ 25,367	$ 118,095	$ 97,060
Weighted average shares outstanding—basic	113,117	113,735		112,869	113,339
Basic earnings per share (in dollars per share)	$ 0.63	$ 0.22		$ 1.05	$ 0.86
Computation of Diluted earnings per share:
Net income	$ 71,815	$ 25,367	$ 25,367	$ 118,095	$ 97,060
Weighted average shares outstanding—basic	113,117	113,735		112,869	113,339
Add: dilutive effect of common stock equivalents (in shares)	960	2,360		1,056	2,462
Weighted average common shares outstanding—diluted	114,077	116,095		113,925	115,801
Diluted earnings per share (in dollars per share)	$ 0.63	$ 0.22		$ 1.04	$ 0.84

INCOME TAXES (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
INCOME TAXES (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Income Tax Disclosure [Abstract]
Provision for income taxes	$ 11,059	$ 5,594	$ 26,934	$ 11,348
Effective rate	13.30%		18.60%
Effective income tax rate reconciliation, tax settlement amount			$ 11,749
Income tax rate reconciliation, tax credit	$ 3,209		6,026
Tax benefits, geographic mix of earnings	$ 1,402		3,170
Valuation allowance, increase			$ 19,826

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Balance Sheet) (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Apr. 01, 2019	Mar. 31, 2019
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Prepaid expenses and other	$ 218,673	$ 185,896	$ 186,688
Right-of-use assets	119,313	118,799	0
Accrued expenses and other current liabilities	1,251,196	1,032,719	1,035,695
Lease liabilities	22,273	18,937	0
Non-current lease liabilities	118,789	122,041	0
Other long-term liabilities	$ 198,953	$ 209,638	229,633
Previously Reported
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Prepaid expenses and other			186,688
Right-of-use assets			0
Accrued expenses and other current liabilities			1,035,695
Lease liabilities			0
Non-current lease liabilities			0
Other long-term liabilities			229,633
Adjustments
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Prepaid expenses and other			(792)
Right-of-use assets			118,799
Accrued expenses and other current liabilities			(2,976)
Lease liabilities			18,937
Non-current lease liabilities			122,041
Other long-term liabilities			$ (19,995)

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock	Additional Paid-in Capital	Treasury Stock	Retained Earnings	Accumulated Other Comprehensive Income (Loss)	Convertible Senior Notes 1.00 Percent Due in 2018	Convertible Senior Notes 1.00 Percent Due in 2018 Common Stock	Convertible Senior Notes 1.00 Percent Due in 2018 Additional Paid-in Capital
Beginning balance (in shares) at Mar. 31, 2018		132,743
Beginning balance, treasury stock (in shares) at Mar. 31, 2018				(18,705)
Beginning balance at Mar. 31, 2018	$ 1,488,970	$ 1,327	$ 1,888,039	$ (458,180)	$ 73,516	$ (15,732)
Increase (Decrease) in Stockholders' Equity
Net income	97,060				97,060
Change in cumulative foreign currency translation adjustment	(24,335)
Change in cumulative foreign currency translation adjustment	(28,989)					(28,989)
Change in unrealized gains on cash flow hedge, net	1,979					1,979
Net unrealized gain on available-for-sale securities, net of taxes	890					890
Stock-based compensation	118,956		118,956
Repurchased common stock (in shares)				(1,597)
Repurchased common stock	(153,500)			$ (153,500)
Issuance of restricted stock, net of forfeitures and cancellations (in shares)		1,532
Issuance of restricted stock, net of forfeitures and cancellations		$ 15	(15)
Conversion of 1.00% Convertible Notes Due 2018 (in shares)								378
Conversion of 1.00% Convertible Notes Due 2018							$ 8,113	$ 4	$ 8,109
Net share settlement of restricted stock awards (in shares)		(547)
Net share settlement of restricted stock awards	(63,966)	$ (5)	(63,961)
Ending balance (in shares) at Sep. 30, 2018		134,106
Ending balance, treasury stock (in shares) at Sep. 30, 2018				(20,302)
Ending balance at Sep. 30, 2018	1,944,439	$ 1,341	1,951,128	$ (611,680)	640,849	(37,199)
Beginning balance (in shares) at Jun. 30, 2018		133,811
Beginning balance, treasury stock (in shares) at Jun. 30, 2018				(20,302)
Beginning balance at Jun. 30, 2018	1,852,205	$ 1,338	1,888,080	$ (611,680)	615,482	(41,015)
Increase (Decrease) in Stockholders' Equity
Net income	25,367
Change in cumulative foreign currency translation adjustment	2,482
Net unrealized gain on available-for-sale securities, net of taxes	481
Ending balance (in shares) at Sep. 30, 2018		134,106
Ending balance, treasury stock (in shares) at Sep. 30, 2018				(20,302)
Ending balance at Sep. 30, 2018	$ 1,944,439	$ 1,341	1,951,128	$ (611,680)	640,849	(37,199)
Beginning balance (in shares) at Mar. 31, 2019		134,602
Beginning balance, treasury stock (in shares) at Mar. 31, 2019	(22,421)			(22,421)
Beginning balance at Mar. 31, 2019	$ 2,040,580	$ 1,346	2,019,369	$ (820,572)	877,626	(37,189)
Increase (Decrease) in Stockholders' Equity
Net income	118,095				118,095
Change in cumulative foreign currency translation adjustment	(21,364)					(21,364)
Change in unrealized gains on cash flow hedge, net	3,371					3,371
Net unrealized gain on available-for-sale securities, net of taxes	720					720
Stock-based compensation	96,706		96,706
Issuance of restricted stock, net of forfeitures and cancellations (in shares)		1,503
Issuance of restricted stock, net of forfeitures and cancellations		$ 15	(15)
Net share settlement of restricted stock awards (in shares)		(551)
Net share settlement of restricted stock awards	(61,478)	$ (6)	(61,472)
Employee share purchase plan settlement (in shares)		62
Employee share purchase plan settlement	$ 5,133	$ 1	5,132
Ending balance (in shares) at Sep. 30, 2019		135,616
Ending balance, treasury stock (in shares) at Sep. 30, 2019	(22,421)			(22,421)
Ending balance at Sep. 30, 2019	$ 2,181,763	$ 1,356	2,059,720	$ (820,572)	995,721	(54,462)
Beginning balance (in shares) at Jun. 30, 2019		135,527
Beginning balance, treasury stock (in shares) at Jun. 30, 2019				(22,421)
Beginning balance at Jun. 30, 2019	2,086,327	$ 1,355	2,025,626	$ (820,572)	923,906	(43,988)
Increase (Decrease) in Stockholders' Equity
Net income	71,815				71,815
Change in cumulative foreign currency translation adjustment	(12,567)					(12,567)
Change in unrealized gains on cash flow hedge, net	2,095					2,095
Net unrealized gain on available-for-sale securities, net of taxes	(2)					(2)
Stock-based compensation	43,455		43,455
Issuance of restricted stock, net of forfeitures and cancellations (in shares)		164
Issuance of restricted stock, net of forfeitures and cancellations		$ 2	(2)
Net share settlement of restricted stock awards (in shares)		(75)
Net share settlement of restricted stock awards	$ (9,360)	$ (1)	(9,359)
Ending balance (in shares) at Sep. 30, 2019		135,616
Ending balance, treasury stock (in shares) at Sep. 30, 2019	(22,421)			(22,421)
Ending balance at Sep. 30, 2019	$ 2,181,763	$ 1,356	$ 2,059,720	$ (820,572)	$ 995,721	$ (54,462)

Label	Element	Value
Other Comprehensive Income (Loss), Cash Flow Hedge, Unrealized Gain (Loss), Net	ttwo_OtherComprehensiveIncomeLossCashFlowHedgeUnrealizedGainLossNet	$ 854,000
Stock Issued During Period, Value, Conversion of Convertible Securities, Net of Adjustments	us-gaap_StockIssuedDuringPeriodValueConversionOfConvertibleSecuritiesNetOfAdjustments	5,182,000
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	474,926,000
Stock Issued During Period, Value, Restricted Stock Award Settlement	ttwo_StockIssuedDuringPeriodValueRestrictedStockAwardSettlement	5,564,000
Adjustments to Additional Paid in Capital, Share-based Compensation, Requisite Service Period Recognition	us-gaap_AdjustmentsToAdditionalPaidInCapitalSharebasedCompensationRequisiteServicePeriodRecognitionValue	63,433,000
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax, Portion Attributable to Parent Plus Impact of Adoption	ttwo_OtherComprehensiveIncomeLossForeignCurrencyTransactionandTranslationAdjustmentNetofTaxPortionAttributabletoParentPlusImpactofAdoption	$ 2,481,000
Common Stock [Member]
Stock Issued During Period, Shares, Restricted Stock Award, Net of Forfeitures	us-gaap_StockIssuedDuringPeriodSharesRestrictedStockAwardNetOfForfeitures	94,000
Stock Issued During Period, Shares, Restricted Stock Award Settlement	ttwo_StockIssuedDuringPeriodSharesRestrictedStockAwardSettlement	40,000
Stock Issued During Period, Value, Restricted Stock Award, Net of Forfeitures	us-gaap_StockIssuedDuringPeriodValueRestrictedStockAwardNetOfForfeitures	$ 1,000
Stock Issued During Period, Value, Conversion of Convertible Securities, Net of Adjustments	us-gaap_StockIssuedDuringPeriodValueConversionOfConvertibleSecuritiesNetOfAdjustments	$ 2,000
Stock Issued During Period, Shares, Conversion of Convertible Securities	us-gaap_StockIssuedDuringPeriodSharesConversionOfConvertibleSecurities	241,000
Retained Earnings [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	$ 470,273,000
Net Income (Loss) Attributable to Parent	us-gaap_NetIncomeLoss	25,367,000
AOCI Attributable to Parent [Member]
Other Comprehensive Income (Loss), Cash Flow Hedge, Unrealized Gain (Loss), Net	ttwo_OtherComprehensiveIncomeLossCashFlowHedgeUnrealizedGainLossNet	854,000
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	4,653,000
Other Comprehensive Income (Loss), Securities, Available-for-sale, Adjustment, after Tax	us-gaap_OtherComprehensiveIncomeLossAvailableForSaleSecuritiesAdjustmentNetOfTax	481,000
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax, Portion Attributable to Parent Plus Impact of Adoption	ttwo_OtherComprehensiveIncomeLossForeignCurrencyTransactionandTranslationAdjustmentNetofTaxPortionAttributabletoParentPlusImpactofAdoption	2,481,000
Additional Paid-in Capital [Member]
Stock Issued During Period, Value, Restricted Stock Award, Net of Forfeitures	us-gaap_StockIssuedDuringPeriodValueRestrictedStockAwardNetOfForfeitures	(1,000)
Stock Issued During Period, Value, Conversion of Convertible Securities, Net of Adjustments	us-gaap_StockIssuedDuringPeriodValueConversionOfConvertibleSecuritiesNetOfAdjustments	5,180,000
Stock Issued During Period, Value, Restricted Stock Award Settlement	ttwo_StockIssuedDuringPeriodValueRestrictedStockAwardSettlement	5,564,000
Adjustments to Additional Paid in Capital, Share-based Compensation, Requisite Service Period Recognition	us-gaap_AdjustmentsToAdditionalPaidInCapitalSharebasedCompensationRequisiteServicePeriodRecognitionValue	$ 63,433,000

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2019	Mar. 31, 2019
Statement of Financial Position [Abstract]
Accounts receivable, allowances	$ 442	$ 995
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	200,000,000	200,000,000
Common stock, shares issued	135,616,000	134,602,000
Common stock, shares outstanding	113,195,000	112,181,000
Treasury stock, shares	22,421,000	22,421,000

MANAGEMENT AGREEMENT (Details) - USD ($) shares in Thousands, $ in Thousands	1 Months Ended	3 Months Ended		6 Months Ended
	Nov. 30, 2017	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Mar. 31, 2019
Restricted stock units
Management Agreement
Stock-based compensation expense for non-employee awards		$ 5,956	$ 5,682	$ 11,501	$ 10,199
2017 Management Agreement \| Restricted stock units \| Maximum
Management Agreement
Vesting requirement for market-based restricted stock				75th
2017 Management Agreement \| Restricted stock awards
Management Agreement
Vested (in shares)		209
Forfeited (in shares)		20
Zelnick Media Corporation
Management Agreement
Consulting expense benefit		$ 1,705	$ 1,705	$ 3,375	$ 3,410
Zelnick Media Corporation \| 2017 Management Agreement
Management Agreement
Annual management fee	$ 3,100
Zelnick Media Corporation \| 2017 Management Agreement \| Maximum
Management Agreement
Bonus per fiscal year based on the achievement of certain performance thresholds	$ 7,440
Zelnick Media Corporation \| 2017 Management Agreement \| Performance-based restricted units
Management Agreement
Measurement period				2 years
Percentage of grants earned				50.00%
Zelnick Media Corporation \| 2017 Management Agreement \| Market-based restricted stock
Management Agreement
Measurement period				2 years
Vesting requirement for market-based restricted stock				50th
Zelnick Media Corporation \| 2017 Management Agreement \| Restricted stock units
Management Agreement
Unvested portion of the shares of restricted stock granted (in shares)		613		613		526
Zelnick Media Corporation \| 2014 Management Agreement \| Time-based restricted units
Management Agreement
Granted (in shares)				92	86
Zelnick Media Corporation \| 2014 Management Agreement \| Market-based restricted units
Management Agreement
Granted (in shares)				168	158
Zelnick Media Corporation \| 2014 Management Agreement \| Performance-based restricted units
Management Agreement
Granted (in shares)				56	53
Zelnick Media Corporation \| 2014 Management Agreement \| IP
Management Agreement
Granted (in shares)				28	27
Zelnick Media Corporation \| 2014 Management Agreement \| Recurrent Consumer Spending (RCS)
Management Agreement
Granted (in shares)				28	26
Zelnick Media Corporation \| 2014 Management Agreement \| Restricted stock units
Management Agreement
Granted (in shares)				316	297

ACCUMULATED OTHER COMPREHENSIVE LOSS (Details) - USD ($) $ in Thousands	6 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Changes in accumulated other comprehensive loss
Balance	$ (37,189)	$ (15,732)
Other comprehensive income (loss) before reclassifications	(13,865)	(14,391)
Amounts reclassified from accumulated other comprehensive loss	(3,408)	(7,076)
Balance	(54,462)	(37,199)
Foreign currency translation adjustments
Changes in accumulated other comprehensive loss
Balance	(33,090)	(4,287)
Other comprehensive income (loss) before reclassifications	(21,364)	(24,335)
Amounts reclassified from accumulated other comprehensive loss	0	0
Balance	(54,454)	(28,622)
Unrealized gain (loss) on forward contracts
Changes in accumulated other comprehensive loss
Balance	600	600
Other comprehensive income (loss) before reclassifications	0	0
Amounts reclassified from accumulated other comprehensive loss	0	0
Balance	600	600
Unrealized gain (loss) on cross-currency swap
Changes in accumulated other comprehensive loss
Balance	(5,285)	(10,191)
Other comprehensive income (loss) before reclassifications	6,779	9,054
Amounts reclassified from accumulated other comprehensive loss	(3,408)	(7,076)
Balance	(1,914)	(8,213)
Unrealized gain (loss) on available-for- sales securities
Changes in accumulated other comprehensive loss
Balance	586	(1,854)
Other comprehensive income (loss) before reclassifications	720	890
Amounts reclassified from accumulated other comprehensive loss	0	0
Balance	$ 1,306	$ (964)

LEASES OPERATING LEASES (Details) $ in Thousands	3 Months Ended	6 Months Ended
LEASES OPERATING LEASES (Details) $ in Thousands	Sep. 30, 2019 USD ($)	Sep. 30, 2019 USD ($)
Lease costs
Operating lease costs	$ 6,555	$ 13,563
Short term lease costs	$ 682	1,355
Supplemental operating cash flow information
Cash paid for amounts included in the measurement of lease liabilities		13,216
ROU assets obtained in exchange for lease obligations		$ 11,625
Weighted Average Lease terms and discount rates
Remaining lease term	8 years	8 years
Discount rate	5.00%	5.00%

EARNINGS PER SHARE ("EPS") (Narrative) (Details) - Restricted stock shares in Thousands	6 Months Ended
	Sep. 30, 2019 shares
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Restricted stock awards, vested (in shares)	1,501
Restricted stock awards, granted (in shares)	716
Restricted stock awards, canceled (in shares)	66

LEASES NARRATIVE (Details)	Sep. 30, 2019
Minimum
Lessee, Lease, Description [Line Items]
Operating lease contract term	1 year
Operating lease renewal term	1 year
Maximum
Lessee, Lease, Description [Line Items]
Operating lease contract term	13 years
Operating lease renewal term	5 years

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Operating activities:
Net income	$ 118,095	$ 97,060
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Amortization and impairment of software development costs and licenses	72,505	20,269
Depreciation	23,037	18,753
Amortization and impairment of intellectual property	10,627	12,272
Stock-based compensation	113,199	54,941
Other, net	4,325	(1,614)
Changes in assets and liabilities:
Accounts receivable	(463,019)	(233,236)
Inventory	(12,064)	(25,925)
Software development costs and licenses	(51,932)	(133,008)
Prepaid expenses and other assets	(131,055)	(6,681)
Deferred revenue	66,148	12,601
Deferred cost of goods sold	15,287	6,867
Accounts payable, accrued expenses and other liabilities	379,005	(28,334)
Net cash provided by (used in) operating activities	144,158	(206,035)
Investing activities:
Change in bank time deposits	6,720	33,604
Proceeds from available-for-sale securities	137,071	114,266
Purchases of available-for-sale securities	(141,244)	(95,888)
Purchases of fixed assets	(25,532)	(29,144)
Purchase of long-term investment	(4,500)	0
Business acquisitions	(8,715)	(3,149)
Net cash (used in) provided by investing activities	(36,200)	19,689
Financing activities:
Tax payment related to net share settlements on restricted stock awards	(61,478)	(63,967)
Repurchase of common stock	0	(153,500)
Net cash used in financing activities	(61,478)	(217,467)
Effects of foreign currency exchange rates on cash and cash equivalents	(8,063)	(9,464)
Net change in cash, cash equivalents, and restricted cash	38,417	(413,277)
Cash, cash equivalents, and restricted cash, beginning of year	1,391,986	1,246,371
Cash, cash equivalents, and restricted cash, end of period	$ 1,430,403	$ 833,094

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2019	Mar. 31, 2019
Current assets:
Cash and cash equivalents	$ 762,032	$ 826,525
Short-term investments	742,613	744,485
Restricted cash and cash equivalents	668,371	565,461
Accounts receivable, net of allowances of $442 and $995 at September 30, 2019 and March 31, 2019, respectively	858,597	395,729
Inventory	39,293	28,200
Software development costs and licenses	62,328	28,880
Deferred cost of goods sold	36,426	51,867
Prepaid expenses and other	218,673	186,688
Total current assets	3,388,333	2,827,835
Fixed assets, net	129,168	127,882
Right-of-use assets	119,313	0
Software development costs and licenses, net of current portion	527,622	603,436
Deferred cost of goods sold, net of current portion	479	1,028
Goodwill	383,778	381,717
Other intangibles, net	61,159	73,115
Deferred tax assets	110,167	134,732
Other assets	95,092	93,320
Total assets	4,815,111	4,243,065
Current liabilities:
Accounts payable	114,946	72,797
Accrued expenses and other current liabilities	1,251,196	1,035,695
Deferred revenue	901,813	843,302
Lease liabilities	22,273	0
Total current liabilities	2,290,228	1,951,794
Non-current deferred revenue	25,378	21,058
Non-current lease liabilities	118,789	0
Other long-term liabilities	198,953	229,633
Total liabilities	2,633,348	2,202,485
Commitments and contingencies (See Note 13)
Stockholders' equity:
Preferred stock, $.01 par value, 5,000 shares authorized; no shares issued and outstanding at September 30, 2019 and March 31, 2019	0	0
Common stock, $.01 par value, 200,000 shares authorized; 135,616 and 134,602 shares issued and 113,195 and 112,181 outstanding at September 30, 2019 and March 31, 2019, respectively	1,356	1,346
Additional paid-in capital	2,059,720	2,019,369
Treasury stock, at cost; 22,421 common shares at September 30, 2019 and March 31, 2019	(820,572)	(820,572)
Retained earnings	995,721	877,626
Accumulated other comprehensive loss	(54,462)	(37,189)
Total stockholders' equity	2,181,763	2,040,580
Total stockholders' equity	$ 4,815,111	$ 4,243,065

INCOME TAXES	6 Months Ended
INCOME TAXES	Sep. 30, 2019
Income Tax Disclosure [Abstract]
INCOME TAXES	INCOME TAXES The provision for income taxes for the three months ended September 30, 2019 is based on our projected annual effective tax rate for fiscal year 2020, adjusted for specific items that are required to be recognized in the period in which they are incurred. The provision for income taxes was $11,059 for the three months ended September 30, 2019 as compared to $5,594 for the prior year period. When compared to the statutory rate of 21%, the effective tax rate of 13.3% for the three months ended September 30, 2019 was primarily due to tax benefits of $3,209 as a result of tax credits anticipated to be utilized and $1,402 due to geographic mix of earnings. The provision for income taxes for the six months ended September 30, 2019 is based on our projected annual effective tax rate for fiscal year 2020, adjusted for specific items that are required to be recognized in the period in which they are incurred. The provision for income taxes was $26,934 for the six months ended September 30, 2019 as compared to $11,348 for the prior year period. When compared to the statutory rate of 21%, the effective tax rate of 18.6% for the six months ended September 30, 2019 was primarily due to a tax benefit of $11,749 from changes in unrecognized tax benefits due to audit settlements, a benefit of $6,026 as a result of tax credits anticipated to be utilized, and a benefit of $3,170 from our geographic mix of earnings. To a lesser extent the rate was also affected by excess tax benefits from employee stock-based compensation. These benefits were partially offset by a tax expense of $19,826 from the reversal of net deferred tax benefits relating to the Altera case, discussed below. On July 27, 2015, the U.S. Tax Court issued an opinion in Altera Corp. v. Commissioner, which concluded that related parties in an intercompany cost-sharing arrangement are not required to share costs related to stock-based compensation. In February 2016, the U.S. Internal Revenue Service appealed the decision to the U.S Court of Appeals for the Ninth Circuit. On June 7, 2019, the Ninth Circuit reversed the 2015 decision of the U.S. Tax Court. As a result of this decision, we are no longer reflecting a net tax benefit within our financial statements related to the removal of stock-based compensation from our intercompany cost-sharing arrangement. During the six months ended September 30, 2019, we removed the deferred tax asset and a deferred tax liability associated with this matter from our financial statements, resulting in a cumulative net discrete income tax expense of $19,826. On July 22, 2019, the taxpayer requested a rehearing before the full Ninth Circuit and may subsequently appeal from the Ninth Circuit to the U.S. Supreme Court. As a result, the final outcome of the case is uncertain. We will continue to monitor ongoing developments of this matter and potential impacts to our financial statements. In addition, on June 21, 2018, the U.S. Supreme Court issued its decision in South Dakota v. Wayfair, which overturned previous case law that precluded states from requiring retailers to collect and remit sales and use tax collection on sales made to in-state customers unless the retailer had physical presence in the state. Although this case is limited to sales tax collection obligations, we continue to monitor the potential impact of this decision on our state income tax footprint. 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.

INVENTORY (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Mar. 31, 2019
Inventory Disclosure [Abstract]
Finished products	$ 34,408	$ 24,847
Parts and supplies	4,885	3,353
Inventory	39,293	28,200
Estimated product returns included in inventory	$ 347	$ 491

FAIR VALUE MEASUREMENTS - ASSETS MEASURED AT FAIR VALUE (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Mar. 31, 2019
Assets measured at fair value on a recurring basis
Short-term investments	$ 742,613	$ 744,485
Restricted cash and cash equivalents	661,397	565,461
Total recurring fair value measurements, net	1,850,247	1,766,768
Cross-currency swap
Assets measured at fair value on a recurring basis
Prepaid expenses and other	6,683	791
Foreign currency forward contracts
Assets measured at fair value on a recurring basis
Foreign currency forward contracts	(168)	(423)
Bank-time deposits
Assets measured at fair value on a recurring basis
Short-term investments	381,000	387,720
Commercial paper
Assets measured at fair value on a recurring basis
Short-term investments	58,645	4,990
Corporate bonds
Assets measured at fair value on a recurring basis
Short-term investments	274,027	296,141
US Treasuries
Assets measured at fair value on a recurring basis
Short-term investments	28,941	55,634
Money market funds
Assets measured at fair value on a recurring basis
Cash and cash equivalents	320,146	389,936
Bank-time deposits
Assets measured at fair value on a recurring basis
Cash and cash equivalents	10,333
Commercial paper
Assets measured at fair value on a recurring basis
Cash and cash equivalents	104,612	39,246
Corporate bonds
Assets measured at fair value on a recurring basis
Cash and cash equivalents	2,565
US Treasuries
Assets measured at fair value on a recurring basis
Cash and cash equivalents		25,449
Quoted prices in active markets for identical assets (level 1)
Assets measured at fair value on a recurring basis
Restricted cash and cash equivalents	661,397	565,461
Total recurring fair value measurements, net	1,401,817	1,424,200
Quoted prices in active markets for identical assets (level 1) \| Cross-currency swap
Assets measured at fair value on a recurring basis
Prepaid expenses and other	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
Foreign currency forward contracts	0	0
Quoted prices in active markets for identical assets (level 1) \| Bank-time deposits
Assets measured at fair value on a recurring basis
Short-term investments	381,000	387,720
Quoted prices in active markets for identical assets (level 1) \| Commercial paper
Assets measured at fair value on a recurring basis
Short-term investments	0	0
Quoted prices in active markets for identical assets (level 1) \| Corporate bonds
Assets measured at fair value on a recurring basis
Short-term investments	0	0
Quoted prices in active markets for identical assets (level 1) \| US Treasuries
Assets measured at fair value on a recurring basis
Short-term investments	28,941	55,634
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	320,146	389,936
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	10,333
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	0
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
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		25,449
Significant other observable inputs (level 2)
Assets measured at fair value on a recurring basis
Restricted cash and cash equivalents	0	0
Total recurring fair value measurements, net	446,364	340,745
Significant other observable inputs (level 2) \| Cross-currency swap
Assets measured at fair value on a recurring basis
Prepaid expenses and other	6,683	791
Significant other observable inputs (level 2) \| Foreign currency forward contracts
Assets measured at fair value on a recurring basis
Foreign currency forward contracts	(168)	(423)
Significant other observable inputs (level 2) \| Bank-time deposits
Assets measured at fair value on a recurring basis
Short-term investments	0	0
Significant other observable inputs (level 2) \| Commercial paper
Assets measured at fair value on a recurring basis
Short-term investments	58,645	4,990
Significant other observable inputs (level 2) \| Corporate bonds
Assets measured at fair value on a recurring basis
Short-term investments	274,027	296,141
Significant other observable inputs (level 2) \| US Treasuries
Assets measured at fair value on a recurring basis
Short-term investments	0	0
Significant other observable inputs (level 2) \| Money market funds
Assets measured at fair value on a recurring basis
Cash and cash equivalents	0	0
Significant other observable inputs (level 2) \| Bank-time deposits
Assets measured at fair value on a recurring basis
Cash and cash equivalents	0
Significant other observable inputs (level 2) \| Commercial paper
Assets measured at fair value on a recurring basis
Cash and cash equivalents	104,612	39,246
Significant other observable inputs (level 2) \| Corporate bonds
Assets measured at fair value on a recurring basis
Cash and cash equivalents	2,565
Significant other observable inputs (level 2) \| US Treasuries
Assets measured at fair value on a recurring basis
Cash and cash equivalents		0
Significant unobservable inputs (level 3)
Assets measured at fair value on a recurring basis
Restricted cash and cash equivalents	0	0
Total recurring fair value measurements, net	2,066	1,823
Significant unobservable inputs (level 3) \| Cross-currency swap
Assets measured at fair value on a recurring basis
Prepaid expenses and other	0	0
Significant unobservable inputs (level 3) \| Foreign currency forward contracts
Assets measured at fair value on a recurring basis
Foreign currency forward contracts	0	0
Significant unobservable inputs (level 3) \| Bank-time deposits
Assets measured at fair value on a recurring basis
Short-term investments	0	0
Significant unobservable inputs (level 3) \| Commercial paper
Assets measured at fair value on a recurring basis
Short-term investments	0	0
Significant unobservable inputs (level 3) \| Corporate bonds
Assets measured at fair value on a recurring basis
Short-term investments	0	0
Significant unobservable inputs (level 3) \| US Treasuries
Assets measured at fair value on a recurring basis
Short-term investments	0	0
Significant unobservable inputs (level 3) \| Money market funds
Assets measured at fair value on a recurring basis
Cash and cash equivalents	0	0
Significant unobservable inputs (level 3) \| Bank-time deposits
Assets measured at fair value on a recurring basis
Cash and cash equivalents	0
Significant unobservable inputs (level 3) \| Commercial paper
Assets measured at fair value on a recurring basis
Cash and cash equivalents	0	0
Significant unobservable inputs (level 3) \| Corporate bonds
Assets measured at fair value on a recurring basis
Cash and cash equivalents	0
Significant unobservable inputs (level 3) \| US Treasuries
Assets measured at fair value on a recurring basis
Cash and cash equivalents		0
Other assets
Assets measured at fair value on a recurring basis
Private equity	2,066	1,823
Other assets \| Quoted prices in active markets for identical assets (level 1)
Assets measured at fair value on a recurring basis
Private equity	0	0
Other assets \| Significant other observable inputs (level 2)
Assets measured at fair value on a recurring basis
Private equity	0	0
Other assets \| Significant unobservable inputs (level 3)
Assets measured at fair value on a recurring basis
Private equity	$ 2,066	$ 1,823