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Table of Contents
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 June 30, 2021
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 YorkNew York(Zip Code)
 (Address of principal executive offices)
Registrant's Telephone Number, Including Area Code: (646536-2842
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbolName of each exchange on which registered
Common Stock, $.01 par valueTTWONASDAQ 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 filerýAccelerated fileroNon-accelerated fileroSmaller reporting companyEmerging 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 July 22, 2021, there were 116,518,331 shares of the Registrant's Common Stock outstanding, net of treasury stock.




Table of Contents
INDEX


(All other items in this report are inapplicable)

1


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)
 June 30, 2021March 31, 2021
(Unaudited)
ASSETS  
Current assets:  
Cash and cash equivalents$1,400,876 $1,422,884 
Short-term investments1,135,188 1,308,692 
Restricted cash and cash equivalents653,069 538,822 
Accounts receivable, net of allowances of $350 and $350 at June 30, 2021 and March 31, 2021, respectively
487,171 552,762 
Inventory11,491 17,742 
Software development costs and licenses14,620 43,443 
Deferred cost of goods sold10,820 15,524 
Prepaid expenses and other300,377 320,646 
Total current assets4,013,612 4,220,515 
Fixed assets, net224,880 149,364 
Right-of-use assets 163,464 164,763 
Software development costs and licenses, net of current portion607,207 490,892 
Goodwill645,591 535,306 
Other intangibles, net305,707 121,591 
Deferred tax assets78,383 90,206 
Long-term restricted cash and cash equivalents103,433 98,541 
Other assets171,978 157,040 
Total assets$6,314,255 $6,028,218 
LIABILITIES AND EQUITY  
Current liabilities:  
Accounts payable$67,136 $71,001 
Accrued expenses and other current liabilities1,242,312 1,204,090 
Deferred revenue824,520 928,029 
Lease liabilities31,361 31,595 
Total current liabilities2,165,329 2,234,715 
Non-current deferred revenue51,318 37,302 
Non-current lease liabilities 156,951 159,671 
Non-current software development royalties111,652 110,127 
Other long-term liabilities197,698 154,511 
Total liabilities$2,682,948 $2,696,326 
Commitments and contingencies (See Note 13)
Equity:  
Take-Two Interactive Software, Inc. stockholders' equity
Preferred stock, $.01 par value, 5,000 shares authorized; no shares issued and outstanding at June 30, 2021 and March 31, 2021
  
Common stock, $.01 par value, 200,000 shares authorized; 138,846 and 137,584 shares issued and 116,425 and 115,163 outstanding at June 30, 2021 and March 31, 2021, respectively
1,389 1,376 
Additional paid-in capital2,417,658 2,288,781 
Treasury stock, at cost; 22,421 common shares at June 30, 2021 and March 31, 2021
(820,572)(820,572)
Retained earnings2,023,227 1,870,971 
Accumulated other comprehensive loss(2,770)(8,664)
Total Take-Two Interactive Software, Inc. stockholders' equity3,618,932 3,331,892 
Non-controlling interest (See Note 15)
12,375  
Total equity$3,631,307 $3,331,892 
Total liabilities and equity$6,314,255 $6,028,218 
   See accompanying Notes.
2


Table of Contents
TAKE-TWO INTERACTIVE SOFTWARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(in thousands, except per share amounts)
 Three Months Ended June 30,
 20212020
Net revenue$813,346 $831,310 
Cost of goods sold329,715 476,689 
Gross profit483,631 354,621 
General and administrative104,447 102,173 
Selling and marketing103,854 84,779 
Research and development92,294 73,108 
Depreciation and amortization12,465 12,418 
Business reorganization97  
Total operating expenses313,157 272,478 
Income from operations170,474 82,143 
Interest and other, net(1,027)8,218 
Gain on long-term investments, net1,997  
Income before income taxes171,444 90,361 
Provision for income taxes19,188 1,856 
Net income $152,256 $88,505 
Earnings per share:  
Basic earnings per share$1.32 $0.78 
Diluted earnings per share$1.30 $0.77 
 See accompanying Notes.
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TAKE-TWO INTERACTIVE SOFTWARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
(in thousands)
 Three Months Ended
June 30,
 20212020
Net income $152,256 $88,505 
Other comprehensive income:  
Foreign currency translation adjustment6,132 4,701 
Cash flow hedges:
Change in unrealized gains (3,817)
Reclassification to earnings (1,333)
Tax effect on effective cash flow hedges 845 
Change in fair value of effective cash flow hedge (4,305)
Change in fair value of available for sale securities(238)5,849 
Other comprehensive income 5,894 6,245 
Comprehensive income$158,150 $94,750 
   
See accompanying Notes.
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TAKE-TWO INTERACTIVE SOFTWARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(in thousands)
 Three Months Ended June 30,
 20212020
Operating activities:  
Net income$152,256 $88,505 
Adjustments to reconcile net income to net cash provided by operating activities:  
Amortization and impairment of software development costs and licenses24,511 57,441 
Depreciation12,464 12,298 
Amortization and impairment of intellectual property15,215 4,986 
Stock-based compensation49,050 53,411 
Other, net13,802 (2,924)
Changes in assets and liabilities: 
Accounts receivable74,681 (91,846)
Inventory6,336 (131)
Software development costs and licenses(85,887)(60,219)
Prepaid expenses and other assets17,622 80,759 
Deferred revenue(94,660)153,525 
Deferred cost of goods sold4,850 5,398 
Accounts payable, accrued expenses and other liabilities(41,998)144,220 
Net cash provided by operating activities148,242 445,423 
Investing activities:  
Change in bank time deposits311,893 (161,026)
Proceeds from available-for-sale securities161,151 117,738 
Purchases of available-for-sale securities(302,485)(188,372)
Purchases of fixed assets(86,433)(8,905)
Purchases of long-term investments(96)(6,900)
Business acquisitions(97,887) 
Net cash used in investing activities(13,857)(247,465)
Financing activities:  
Tax payment related to net share settlements on restricted stock awards(48,261)(38,506)
Issuance of common stock9,230 6,503 
Net cash used in financing activities(39,031)(32,003)
Effects of foreign currency exchange rates on cash, cash equivalents, and restricted cash and cash equivalents1,777 1,925 
Net change in cash, cash equivalents, and restricted cash and cash equivalents97,131 167,880 
Cash, cash equivalents, and restricted cash and cash equivalents, beginning of year (1)2,060,247 1,993,392 
Cash, cash equivalents, and restricted cash and cash equivalents, end of period (1)$2,157,378 $2,161,272 
(1) Cash, cash equivalents and restricted cash and cash equivalents shown on our Condensed Consolidated Statements of Cash Flow includes amounts in the Cash and cash equivalents, Restricted cash and cash equivalents, and Long-term restricted cash and cash equivalents on our Condensed Consolidated Balance Sheet.

See accompanying Notes.
5


TAKE-TWO INTERACTIVE SOFTWARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Unaudited)
(in thousands)

Three Months Ended June 30, 2021
Take-Two Interactive Software, Inc. stockholders
 Common StockAdditional
Paid-in
Capital
Treasury StockRetained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Non-controlling interest
Total
Equity
 SharesAmountSharesAmount
Balance, March 31, 2021137,584 $1,376 $2,288,781 (22,421)$(820,572)$1,870,971 $(8,664)$ $3,331,892 
Net income— — — — — 152,256 — — 152,256 
Change in cumulative foreign currency translation adjustment— — — — — — 6,132 — 6,132 
Net unrealized gain on available-for-sale securities, net of taxes— — — — — — (238)— (238)
Stock-based compensation— — 73,767 — — — — — 73,767 
Issuance of restricted stock, net of forfeitures and cancellations943 9 (9)— — — — —  
Net share settlement of restricted stock awards(266)(2)(48,259)— — — — — (48,261)
Employee share purchase plan settlement70 1 9,229 — — — — — 9,230 
Issuance of shares related to Nordeus acquisition515 5 94,149 — — — — — 94,154 
Call option related to Nordeus Acquisition— — — — — — — 12,375 12,375 
Balance, June 30, 2021138,846 $1,389 $2,417,658 (22,421)$(820,572)$2,023,227 $(2,770)$12,375 $3,631,307 

Three Months Ended June 30, 2020
 Common StockAdditional
Paid-in
Capital
Treasury StockRetained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Total
Stockholders'
Equity
 SharesAmountSharesAmount
Balance, March 31, 2020135,927 $1,359 $2,134,748 (22,421)$(820,572)$1,282,085 $(58,376)$2,539,244 
Net income— — — — — 88,505 — 88,505 
Change in cumulative foreign currency translation adjustment— — — — — — 4,701 4,701 
Change in gains on cash flow hedge, net— — — — — — (4,305)(4,305)
Net unrealized gain on available-for-sale securities, net of taxes— — — — — — 5,849 5,849 
Stock-based compensation— — 49,037 — — — — 49,037 
Repurchased common stock— — — — — — — — 
Issuance of restricted stock, net of forfeitures and cancellations979 10 (10)— — — —  
Net share settlement of restricted stock awards(282)(3)(38,503)— — — — (38,506)
Employee share purchase plan settlement65 1 6,502 — — — — 6,503 
Balance, June 30, 2020136,689 $1,367 $2,151,774 (22,421)$(820,572)$1,370,590 $(52,131)$2,651,028 

See accompanying Notes.
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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 principally through Rockstar Games, 2K, Private Division, and T2 Mobile Games, which includes Socialpoint, Playdots, and Nordeus. Our products are designed for console systems, including but not limited to, Sony's PlayStation®4 ("PS4") and PlayStation 5 ("PS5"), Microsoft's Xbox One® ("Xbox One") and Xbox Series X|S ("Xbox Series X|S"), and Nintendo's Switch™ ("Switch"), personal computers ("PC"), and mobile including smart phones and tablets ("Mobile"), and are delivered through physical retail, digital download, online platforms, and cloud streaming services.
Basis of Presentation
The accompanying Condensed Consolidated Financial Statements are unaudited and include the accounts of the Company and its wholly-owned subsidiaries and, in our opinion, reflect all normal and recurring adjustments necessary for the fair presentation of our financial position, results of operations, and cash flows. Interim results may not be indicative of the results that may be expected for the full fiscal year. All intercompany accounts and transactions have been eliminated in consolidation. The preparation of these Condensed Consolidated Financial Statements in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") requires management to make estimates and assumptions that affect the amounts reported in these Condensed Consolidated Financial Statements and accompanying notes. As permitted under U.S. GAAP, interim accounting for certain expenses, including income taxes, are based on full year assumptions when appropriate. Actual results could differ materially from those estimates, including as a result of the COVID-19 pandemic, which may affect economic conditions in a number of different ways and result in uncertainty and risk.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been omitted pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"), although we believe that the disclosures are adequate to make the information presented not misleading. These Condensed Consolidated Financial Statements and accompanying notes should be read in conjunction with our annual Consolidated Financial Statements and the notes thereto, included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2021.
Certain immaterial reclassifications have been made to prior period amounts to conform to the current period presentation.
Recently Adopted Accounting Pronouncements
Accounting for Income Taxes
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which enhances and simplifies various aspects of the income tax accounting guidance, including requirements such as tax basis step-up in goodwill obtained in a transaction that is not a business combination, ownership changes in investments, and interim-period accounting for enacted changes in tax law. We adopted this update effective April 1, 2021. The adoption of this standard did not have a material impact on our Condensed Consolidated Financial Statements.

2. REVENUE FROM CONTRACTS WITH CUSTOMERS

Disaggregation of revenue
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.
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).
7


Net revenue by product revenue and service and other was as follows:
Three Months Ended June 30,
20212020
Net revenue recognized:
Service and other$633,638 $532,050 
Product179,708 299,260 
Total net revenue$813,346 $831,310 

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.

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.
Net revenue by full game and other revenue and recurrent consumer spending was as follows:
Three Months Ended June 30,
20212020
Net revenue recognized:
Recurrent consumer spending$572,266 $496,853 
Full game and other241,080 334,457 
Total net revenue$813,346 $831,310 

Geography
We attribute net revenue to geographic regions based on software product destination. Net revenue by geographic region was as follows:
Three Months Ended June 30,
20212020
Net revenue recognized:
United States$493,186 $470,490 
International320,160 360,820 
Total net revenue$813,346 $831,310 

Platform
Net revenue by platform was as follows:
Three Months Ended June 30,
20212020
Net revenue recognized:
Console$602,443 $611,685 
PC and other128,645 165,260 
Mobile82,258 54,365 
Total net revenue$813,346 $831,310 

8


Distribution channel

Our products are delivered through digital online services (digital download, online platforms, and cloud streaming) and physical retail and other. Net revenue by distribution channel was as follows:
Three Months Ended June 30,
20212020
Net revenue recognized:
Digital online$740,806 $735,576 
Physical retail and other72,540 95,734 
Total net revenue$813,346 $831,310 

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 June 30, 2021 and March 31, 2021 were $875,838 and $965,331, respectively. For the three months ended June 30, 2021, 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 June 30, 2021 and 2020, $463,241 and $371,213, respectively, of revenue was recognized that was included in the deferred revenue balance at the beginning of the respective period. As of June 30, 2021, the aggregate amount of contract revenue allocated to unsatisfied performance obligations is $998,074, which includes our deferred revenue balances and amounts to be invoiced and recognized in future periods. We expect to recognize approximately $878,756 of this balance as revenue over the next 12 months, and the remainder thereafter. This balance does not include an estimate for variable consideration arising from sales-based royalty license revenue in excess of the contractual minimum guarantee.
As of June 30, 2021 and March 31, 2021, our contract asset balances were $103,772 and $105,554, 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 to the Company through March 31, 2024. The 2017 Management Agreement became effective January 1, 2018. As part of the 2017 Management Agreement, Strauss Zelnick, the President of ZelnickMedia, 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 $2,665 during the three months ended June 30, 2021 and 2020, respectively. We recorded stock-based compensation expense for restricted stock units granted to ZelnickMedia, which is included in General and administrative expenses, of $7,218 and $6,740 during the three months ended June 30, 2021 and 2020, respectively.
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In connection with the 2017 Management Agreement, we have granted restricted stock units to ZelnickMedia as follows:
 Three Months Ended June 30,
 20212020
Time-based51 79 
Market-based(1)93 145 
Performance-based(1)  
IP16 24 
Recurrent Consumer Spending ("RCS")16 24 
Total—Performance-based32 48 
Total Restricted Stock Units176 272 
______________________________________________________________________________
(1)Represents the maximum number of shares eligible to vest.
Time-based restricted stock units granted in fiscal year 2022 will vest on April 13, 2023, and those granted in fiscal year 2021 will vest on April 13, 2022, 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 2022 are eligible to vest on April 13, 2023, and those granted in fiscal year 2021 are eligible to vest on April 13, 2022, 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 2022 are eligible to vest on April 13, 2023, and those granted in fiscal year 2021 are eligible to vest on April 13, 2022, 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 449 and 588 as of June 30, 2021 and March 31, 2021, respectively. During the three months ended June 30, 2021, 315 restricted stock units previously granted to ZelnickMedia vested, and no restricted stock units were forfeited by ZelnickMedia.

4. FAIR VALUE MEASUREMENTS
Recurring fair value measurements
The carrying amounts of our financial instruments, including cash and cash equivalents, restricted cash and cash equivalents, accounts receivable, prepaid expenses and other, accounts payable, and accrued expenses and other current liabilities, approximate fair value because of their short maturities.
We follow a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of "observable inputs" and minimize the use of "unobservable inputs." The three levels of inputs used to measure fair value are as follows:
Level 1—Quoted prices in active markets for identical assets or liabilities.

Level 2—Observable inputs other than quoted prices included in Level 1, such as quoted prices for markets that are not active or other inputs that are observable or can be corroborated by observable market data.
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Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies, and similar techniques that use significant unobservable inputs.
The table below segregates all assets and liabilities that are measured at fair value on a recurring basis (which is measured at least annually) into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date.
 June 30, 2021Quoted 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$633,114 $633,114 $ $ Cash and cash equivalents
Bank-time deposits382,000 382,000   Cash and cash equivalents
Commercial paper17,980  17,980  Cash and cash equivalents
US Agencies5,000  5,000  Cash and cash equivalents
Corporate bonds1,001  1,001  Cash and cash equivalents
Corporate bonds661,790  661,790  Short-term investments
Bank-time deposits266,869 266,869   Short-term investments
US Treasuries55,489 55,489   Short-term investments
Asset-backed securities229  229  Short-term investments
Commercial paper150,811  150,811  Short-term investments
Money market funds642,912 642,912   Restricted cash and cash equivalents
Bank-time deposits557 557   Restricted cash and cash equivalents
Money market funds103,433 103,433   Long-term restricted cash and cash equivalents
Private equity9,670   9,670 Other assets
Foreign currency forward contracts(161) (161) Accrued expenses and other current liabilities
Contingent earn-out consideration(28,294)  (28,294)Accrued expenses and other current liabilities
Contingent earn-out consideration (50,370)  (50,370)Other long-term liabilities
Total recurring fair value measurements, net$2,852,030 $2,084,374 $836,650 $(68,994)
 
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 March 31, 2021Quoted 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$837,614 $837,614 $ $ Cash and cash equivalents
Bank-time deposits95,000 95,000   Cash and cash equivalents
Commercial paper100,105  100,105  Cash and cash equivalents
Corporate bonds    Cash and cash equivalents
Money market funds528,659 528,659   Restricted cash and cash equivalents
Bank-time deposits563 563   Restricted cash and cash equivalents
Corporate bonds521,224  521,224  Short-term investments
Bank-time deposits578,762 578,762   Short-term investments
US Treasuries60,086 60,086   Short-term investments
Commercial paper148,150  148,150  Short-term investments
Asset-backed securities470  470  Short-term investments
Money market funds98,541 98,541   Long-term restricted cash and cash equivalents
Private equity7,578   7,578 Other assets
Foreign currency forward contracts$(125)$ $(125)$ Accrued expenses and other current liabilities
Total recurring fair value measurements, net$2,976,627 $2,199,225 $769,824 $7,578 
In connection with the Nordeus acquisition (see Note 15 - Acquisitions), we recorded $78,664 as the initial fair value of contingent earn-out consideration. Due to the timing of the acquisition, the preliminary initial fair value was estimated using a simplified approach that had a limited number of scenarios and inputs, including projected financial information and relevant discount rates, which are considered significant unobservable Level 3 inputs. Subsequently, we will finalize our initial fair value using several scenarios and additional inputs, including market volatility.
We did not have any transfers between Level 1 and Level 2 fair value measurements, nor did we have any transfers into or out of Level 3 during the three months ended June 30, 2021.
Nonrecurring fair value measurements

We hold equity investments in certain unconsolidated entities without a readily determinable fair value. These strategic investments represent less than a 20% ownership interest in each of the privately-held affiliates, and we do not maintain significant influence over or control of the entities. We have elected the practical expedient in Topic 321, Investments-Equity Securities, to measure these investments at cost less any impairment, adjusted for observable price changes, if any. Based on these considerations, we estimate that the carrying value of the acquired shares represents the fair value of the investment. At June 30, 2021, we held $20,000 of such investments in Other assets within our Condensed Consolidated Balance Sheet.

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5. SHORT-TERM INVESTMENTS
Our Short-term investments consisted of the following:
 June 30, 2021
  Gross
Unrealized
 
 Cost or
Amortized Cost
GainsLossesFair Value
Short-term investments    
Bank time deposits$266,869 $ $ $266,869 
Available-for-sale securities:    
Corporate bonds661,327 713 (250)661,790 
US Treasuries 55,463 26  55,489 
Asset-backed securities229   229 
Commercial paper150,811   150,811 
Total Short-term investments$1,134,699 $739 $(250)$1,135,188 
 
 March 31, 2021
  Gross
Unrealized
 Cost or
Amortized Cost
GainsLossesFair Value
Short-term investments    
Bank time deposits$578,762 $ $ $578,762 
Available-for-sale securities:    
Corporate bonds520,486 994 (256)521,224 
US Treasuries60,029 57  60,086 
Asset-backed securities469 1  470 
Commercial paper148,149 1  148,150 
Total Short-term investments$1,307,895 $1,053 $(256)$1,308,692 
The following table summarizes the contracted maturities of our short-term investments at June 30, 2021:
 June 30, 2021
 Amortized
Cost
Fair
Value
Short-term investments  
Due in 1 year or less$892,200 $892,781 
Due in 1 - 2 years242,499 242,407 
Total Short-term investments$1,134,699 $1,135,188 

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.
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Foreign currency forward contracts
The following table shows the gross notional amounts of foreign currency forward contracts:
June 30, 2021March 31, 2021
Forward contracts to sell foreign currencies$64,463 $140,510 
Forward contracts to purchase foreign currencies105,830 92,123 
For the three months ended June 30, 2021 and 2020, we recorded a loss of $1,828 and a loss of $2,657, 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.

7. INVENTORY
Inventory balances by category were as follows:
 June 30, 2021March 31, 2021
Finished products$10,693 $16,941 
Parts and supplies798 801 
Inventory$11,491 $17,742 
Estimated product returns included in Inventory at June 30, 2021 and March 31, 2021 were $220 and $186, respectively.

8. SOFTWARE DEVELOPMENT COSTS AND LICENSES
Details of our capitalized software development costs and licenses were as follows:
 June 30, 2021March 31, 2021
 CurrentNon-currentCurrentNon-current
Software development costs, internally developed$7,055 $504,520 $22,225 $412,919 
Software development costs, externally developed3,014 95,966 7,349 75,086 
Licenses4,551 6,721 13,869 2,887 
Software development costs and licenses$14,620 $607,207 $43,443 $490,892 
During the three months ended June 30, 2021 and 2020, we recorded $