Company Quick10K Filing
Take Two
Price123.43 EPS3
Shares113 P/E41
MCap14,000 P/FCF16
Net Debt-1,285 EBIT398
TEV12,716 TEV/EBIT32
TTM 2019-12-31, in MM, except price, ratios
10-Q 2020-06-30 Filed 2020-08-04
10-K 2020-03-31 Filed 2020-05-22
10-Q 2019-12-31 Filed 2020-02-07
10-Q 2019-09-30 Filed 2019-11-08
10-Q 2019-06-30 Filed 2019-08-06
10-K 2019-03-31 Filed 2019-05-14
10-Q 2018-12-31 Filed 2019-02-06
10-Q 2018-09-30 Filed 2018-11-08
10-Q 2018-06-30 Filed 2018-08-03
10-K 2018-03-31 Filed 2018-05-17
10-Q 2017-12-31 Filed 2018-02-08
10-Q 2017-09-30 Filed 2017-11-08
10-Q 2017-06-30 Filed 2017-08-03
10-K 2017-03-31 Filed 2017-05-24
10-Q 2016-12-31 Filed 2017-02-08
10-Q 2016-09-30 Filed 2016-11-03
10-Q 2016-06-30 Filed 2016-08-05
10-K 2016-03-31 Filed 2016-05-19
10-Q 2015-12-31 Filed 2016-02-04
10-Q 2015-09-30 Filed 2015-11-06
10-Q 2015-06-30 Filed 2015-08-10
10-K 2015-03-31 Filed 2015-05-22
10-Q 2014-12-31 Filed 2015-02-06
10-Q 2014-09-30 Filed 2014-10-30
10-Q 2014-06-30 Filed 2014-08-06
10-K 2014-03-31 Filed 2014-05-14
10-Q 2013-12-31 Filed 2014-02-04
10-Q 2013-09-30 Filed 2013-10-30
10-Q 2013-06-30 Filed 2013-07-31
10-K 2013-03-31 Filed 2013-05-14
10-Q 2012-12-31 Filed 2013-02-06
10-Q 2012-09-30 Filed 2012-10-31
10-Q 2012-06-30 Filed 2012-08-01
10-K 2012-03-31 Filed 2012-05-23
10-Q 2011-12-31 Filed 2012-02-03
10-Q 2011-09-30 Filed 2011-11-08
10-Q 2011-06-30 Filed 2011-08-09
10-K 2011-03-31 Filed 2011-05-25
10-Q 2010-07-31 Filed 2010-09-03
10-Q 2010-04-30 Filed 2010-06-09
10-Q 2010-01-31 Filed 2010-03-10
8-K 2020-09-04 Other Events
8-K 2020-08-17 Enter Agreement, Regulation FD, Exhibits
8-K 2020-08-03 Earnings, Exhibits
8-K 2020-07-10 Enter Agreement
8-K 2020-05-20
8-K 2020-02-06
8-K 2020-02-04
8-K 2019-11-07
8-K 2019-09-18
8-K 2019-08-05
8-K 2019-06-20
8-K 2019-05-13
8-K 2019-02-08
8-K 2019-02-06
8-K 2018-11-07
8-K 2018-09-21
8-K 2018-08-02
8-K 2018-05-16
8-K 2018-05-14
8-K 2018-04-24
8-K 2018-02-12
8-K 2018-02-07

TTWO 10Q Quarterly Report

Part I. Financial Information
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 6. Exhibits
EX-31.1 a06302020ttwoex-31x1.htm
EX-31.2 a06302020ttwoex-31x2.htm
EX-32.1 a06302020ttwoex-32x1.htm
EX-32.2 a06302020ttwoex-32x2.htm

Take Two Earnings 2020-06-30

Balance SheetIncome StatementCash Flow
Assets, Equity
Rev, G Profit, Net Income
Ops, Inv, Fin


Table of Contents

For the quarterly period ended June 30, 2020
For the transition period from                             to                              .

Commission file number 001-34003
(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 23, 2020, there were 114,338,838 shares of the Registrant's Common Stock outstanding, net of treasury stock.

Table of Contents

(All other items in this report are inapplicable)


Table of Contents
Item 1.    Financial Statements
(in thousands, except per share amounts)
 June 30, 2020March 31, 2020
Current assets:  
Cash and cash equivalents$1,404,124  $1,357,664  
Short-term investments880,825  644,003  
Restricted cash and cash equivalents467,622  546,604  
Accounts receivable, net of allowances of $2,201 and $443 at June 30, 2020 and March 31, 2020, respectively
685,169  592,555  
Inventory19,486  19,108  
Software development costs and licenses31,714  40,316  
Deferred cost of goods sold14,281  19,598  
Prepaid expenses and other183,712  273,503  
Total current assets3,686,933  3,493,351  
Fixed assets, net128,904  131,888  
Right-of-use assets 158,018  154,284  
Software development costs and licenses, net of current portion409,962  401,778  
Goodwill389,825  386,494  
Other intangibles, net46,746  51,260  
Deferred tax assets120,892  116,676  
Long-term restricted cash and cash equivalents289,526  89,124  
Other assets138,435  123,977  
Total assets$5,369,241  $4,948,832  
Current liabilities:  
Accounts payable$56,410  $65,684  
Accrued expenses and other current liabilities1,136,628  1,169,884  
Deferred revenue928,100  777,784  
Lease liabilities27,602  25,187  
Total current liabilities2,148,740  2,038,539  
Non-current deferred revenue32,851  28,339  
Non-current lease liabilities 153,506  152,059  
Non-current software development royalties300,970  104,417  
Other long-term liabilities82,146  86,234  
Total liabilities$2,718,213  $2,409,588  
Commitments and contingencies (See Note 13)
Stockholders' equity:  
Preferred stock, $.01 par value, 5,000 shares authorized; no shares issued and outstanding at June 30, 2020 and March 31, 2020
Common stock, $.01 par value, 200,000 shares authorized; 136,689 and 135,927 shares issued and 114,268 and 113,506 outstanding at June 30, 2020 and March 31, 2020, respectively
1,367  1,359  
Additional paid-in capital2,151,774  2,134,748  
Treasury stock, at cost; 22,421 common shares at June 30, 2020 and March 31, 2020
(820,572) (820,572) 
Retained earnings1,370,590  1,282,085  
Accumulated other comprehensive loss(52,131) (58,376) 
Total stockholders' equity2,651,028  2,539,244  
Total liabilities and stockholders' equity$5,369,241  $4,948,832  
   See accompanying Notes.

Table of Contents
(in thousands, except per share amounts)
 Three Months Ended June 30,
Net revenue$831,310  $540,459  
Cost of goods sold476,689  241,469  
Gross profit354,621  298,990  
General and administrative102,173  74,833  
Selling and marketing84,779  91,821  
Research and development73,108  68,963  
Depreciation and amortization12,418  11,257  
Business reorganization  386  
Total operating expenses272,478  247,260  
Income from operations82,143  51,730  
Interest and other, net8,218  10,425  
Income before income taxes90,361  62,155  
Provision for income taxes1,856  15,875  
Net income $88,505  $46,280  
Earnings per share:  
Basic earnings per share$0.78  $0.41  
Diluted earnings per share$0.77  $0.41  
 See accompanying Notes.

Table of Contents
(in thousands)
 Three Months Ended
June 30,
Net income $88,505  $46,280  
Other comprehensive income (loss):  
Foreign currency translation adjustment4,701  (8,797) 
Cash flow hedges:
Change in unrealized gains(3,817) 202  
Reclassification to earnings(1,333) 1,083  
Tax effect on effective cash flow hedges845  (9) 
Change in fair value of effective cash flow hedge(4,305) 1,276  
Change in fair value of available for sale securities5,849  722  
Other comprehensive income (loss)6,245  (6,799) 
Comprehensive income$94,750  $39,481  
See accompanying Notes.

(in thousands)
 Three Months Ended June 30,
Operating activities:  
Net income$88,505  $46,280  
Adjustments to reconcile net income to net cash provided by operating activities:  
Amortization and impairment of software development costs and licenses57,441  30,498  
Depreciation12,298  11,134  
Amortization and impairment of intellectual property4,986  5,560  
Stock-based compensation53,411  57,432  
Other, net(2,924) 1,321  
Changes in assets and liabilities: 
Accounts receivable(91,846) 44,041  
Inventory(131) 4,029  
Software development costs and licenses(60,219) (56,968) 
Prepaid expenses and other assets80,759  (131,121) 
Deferred revenue153,525  (15,871) 
Deferred cost of goods sold5,398  15,619  
Accounts payable, accrued expenses and other liabilities144,220  96,581  
Net cash provided by operating activities445,423  108,535  
Investing activities:  
Change in bank time deposits(161,026) 133,303  
Proceeds from available-for-sale securities117,738  82,424  
Purchases of available-for-sale securities(188,372) (28,248) 
Purchases of fixed assets(8,905) (9,971) 
Purchases of long-term investments(6,900) (2,000) 
Business acquisitions  (8,715) 
Net cash (used in) provided by investing activities(247,465) 166,793  
Financing activities:  
Tax payment related to net share settlements on restricted stock awards(38,506) (52,118) 
Issuance of common stock6,503    
Net cash used in financing activities(32,003) (52,118) 
Effects of foreign currency exchange rates on cash, cash equivalents, and restricted cash and cash equivalents1,925  (3,201) 
Net change in cash, cash equivalents, and restricted cash and cash equivalents167,880  220,009  
Cash, cash equivalents, and restricted cash and cash equivalents, beginning of year1,993,392  1,391,986  
Cash, cash equivalents, and restricted cash and cash equivalents, end of period$2,161,272  $1,611,995  

See accompanying Notes.

(in thousands)
Three Months Ended June 30, 2020
 Common StockAdditional
Treasury StockRetained
Income (Loss)
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 unrealized 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  
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  

Three Months Ended June 30, 2019
 Common StockAdditional
Treasury StockRetained
Income (Loss)
Balance, March 31, 2019134,602  $1,346  $2,019,369  (22,421) $(820,572) $877,626  $(37,189) $2,040,580  
Net income—  —  —  —  —  46,280  —  46,280  
Change in cumulative foreign currency translation adjustment—  —  —  —  —  —  (8,797) (8,797) 
Change in unrealized gains on cash flow hedge, net—  —  —  —  —  —  1,276  1,276  
Net unrealized gain on available-for-sale securities, net of taxes—  —  —  —  —  —  722  722  
Stock-based compensation—  —  53,251  —  —  —  —  53,251  
Repurchased common stock—  —  —  —  —  —  —    
Issuance of restricted stock, net of forfeitures and cancellations1,339  13  (13) —  —  —  —    
Net share settlement of restricted stock awards(476) (5) (52,113) —  —  —  —  (52,118) 
Employee share purchase plan settlement62  1  5,132  —  —  —  —  5,133  
Balance, June 30, 2019135,527  $1,355  $2,025,626  (22,421) $(820,572) $923,906  $(43,988) $2,086,327  

See accompanying Notes.

Table of Contents
Notes to Condensed Consolidated Financial Statements (Unaudited)
(in thousands, except per share amounts)
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 Social Point. 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, 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, 2020.
Certain immaterial reclassifications have been made to prior period amounts to conform to the current period presentation.
Recently Adopted 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. We adopted this update effective April 1, 2020. The adoption of this standard did not have a material impact on our Condensed Consolidated Financial Statements.
Accounting for Credit Losses
In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses, which replaces the incurred loss impairment methodology in current U.S. GAAP with a methodology that will require the reflection of expected credit losses and will also require consideration of a broader range of reasonable and supportable information to determine credit loss estimates. It also eliminates the concept of other-than-temporary impairment and requires credit losses related to available-for-sale debt securities to be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. For most financial instruments, the standard will require the use of a forward-looking expected loss model rather than the incurred loss model for recognizing credit losses, which will generally result in the earlier recognition of credit losses on financial instruments. We adopted this update effective April 1, 2020 under a modified retrospective basis. No adjustment to retained earnings was recorded as a result of the adoption of this standard, which did not have a material impact on our Condensed Consolidated Financial Statements.


Recently Issued Accounting Pronouncements
Accounting for Reference Rate Reform
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides temporary optional guidance to ease potential accounting impacts associated with transitioning away from reference rates that are expected to be discontinued, such as interbank offered rates and LIBOR. The guidance includes practical expedients for contract modifications due to reference rate reform. Generally, contract modifications related to reference rate reform may be considered an event that does not require remeasurement or reassessment of a previous accounting determination at the modification date. This guidance is effective immediately and is only available through December 31, 2022. We are currently evaluating the potential impact of adopting this guidance on our Consolidated Financial Statements.
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. ASU 2019-12 is effective for fiscal years, and interim periods within those fiscal years, beginning December 15, 2020 (April 1, 2021 for the Company), with early adoption permitted. We are currently evaluating the potential impact of adopting this guidance on our Consolidated Financial Statements.


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 June 30,
Net revenue recognized:
Service and other532,050  424,385  
Product299,260  116,074  
Total net revenue$831,310  $540,459  

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 June 30,
Net revenue recognized:
Recurrent consumer spending479,405  314,858  
Full game and other351,905  225,601  
Total net revenue$831,310  $540,459  

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,
Net revenue recognized:
United States$470,490  $330,479  
International360,820  209,980  
Total net revenue$831,310  $540,459  

Net revenue by platform was as follows:
Three Months Ended June 30,
Net revenue recognized:
Console$611,685  $434,814  
PC and other219,625  105,645  
Total net revenue$831,310  $540,459  

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,
Net revenue recognized:
Digital online$726,226  $427,781  
Physical retail and other105,084  112,678  
Total net revenue$831,310  $540,459  

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, 2020 and March 31, 2020 were $960,951 and $806,123, respectively. For the three months ended June 30, 2020, 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, 2020 and 2019, $371,213 and $330,421, respectively, of revenue was recognized that was included in the deferred revenue balance at the beginning of the respective period. As of June 30, 2020, the aggregate amount of contract revenue allocated to unsatisfied performance obligations is $1,070,511, which includes our deferred revenue balances and amounts to be invoiced and recognized in future periods. We expect to recognize approximately $980,660 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, 2020 and March 31, 2020, our contract asset balances were $92,733 and $81,625, respectively, which are recorded within Prepaid expenses and other in our Condensed Consolidated Balance Sheets.

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 $2,665 and $1,670 during the three months ended June 30, 2020 and 2019, respectively. We recorded stock-based compensation expense for restricted stock units granted to ZelnickMedia, which is included in General and administrative expenses, of $6,740 and $5,545 during the three months ended June 30, 2020 and 2019, respectively.

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In connection with the 2017 Management Agreement, we have granted restricted stock units as follows:
 Three Months Ended June 30,
Time-based79  92  
Market-based(1)145  168  
IP24  28  
Recurrent Consumer Spending ("RCS")24  28  
Total—Performance-based48  56  
Total Restricted Stock Units272  316  

(1)Represents the maximum number of shares eligible to vest.
Time-based restricted stock units granted in fiscal year 2021 will vest on April 13, 2022, and those granted in fiscal year 2020 will vest on April 13, 2021, 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 2021 are eligible to vest on April 13, 2022, and those granted in fiscal year 2020 are eligible to vest on April 13, 2021, 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 2021 are eligible to vest on April 13, 2022, and those granted in fiscal year 2020 are eligible to vest on April 13, 2021, 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 588 and 613 as of June 30, 2020 and March 31, 2020, respectively. During the three months ended June 30, 2020, 297 restricted stock units previously granted to ZelnickMedia vested, and no restricted stock units were forfeited by ZelnickMedia.

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.


Table of Contents
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, 2020Quoted prices
in active
markets for
(level 1)
(level 2)
(level 3)
Balance Sheet Classification
Money market funds$498,644  $498,644  $  $  Cash and cash equivalents
Bank-time deposits213,000  213,000      Cash and cash equivalents
Commercial paper94,105    94,105    Cash and cash equivalents
Corporate bonds37,261    37,261    Cash and cash equivalents
Corporate bonds401,198    401,198    Short-term investments
Bank-time deposits352,026  352,026      Short-term investments
US Treasuries28,684  28,684      Short-term investments
Asset-backed securities1,007    1,007    Short-term investments
Commercial paper97,910    97,910    Short-term investments
Money market funds467,298  467,298      Restricted cash and cash equivalents