What changed in this filing

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Item 1. Financial Statements

2025-05-02 compared with 2025-01-31 · 177 added, 80 removed, 464 unchanged (36% of the section changed)

3 unchanged sentences

Three Months Ended

Six Months Ended

(in millions, except per share data) 2025 2024 2025 2024

11 unchanged sentences

Amortization of intangible assets 112.5 84.6 225.1 170.4

Impairment of intangible assets

24.4 — 24.4 —

General, administrative and other 182.8 195.1 368.0 327.1

6 unchanged sentences

Expenses of consolidated investment products ( 11.5 ) ( 5.9 ) ( 18.8 ) ( 11.8 )

Other income, net 94.2 124.7

Other income (expenses), net ( 102.9 ) 108.8 ( 8.7 ) 233.5

Income before taxes 42.7 238.1 355.9 569.3

13 unchanged sentences

(in millions) Three Months Ended

March 31, Six Months Ended

2025 2024 2025 2024

Net Income $ 11.6 $ 175.3 $ 243.7 $ 431.6

2 unchanged sentences

Net unrealized gains (losses) on defined benefit plans, net of tax ( 3.1 ) 0.5 ( 2.8 ) 0.4

Net unrealized gains on investments, net of tax — 0.1 — 0.1

Total other comprehensive income (loss) 25.4 ( 28.9 ) ( 79.4 ) 30.1

8 unchanged sentences

CONSOLIDATED BALANCE SHEETS

(in millions, except share and per share data) December 31,

(in millions, except share and per share data) March 31,

2025 September 30,

1 unchanged sentence

Receivables 1,453.2 1,479.1

Investments (including $ 806.9 and $ 838.0 at fair value at December 31, 2024 and September 30, 2024)

Investments (including $ 636.4 and $ 838.0 at fair value at March 31, 2025 and September 30, 2024)

2,229.4 2,338.4

24 unchanged sentences

Common stock, $ 0.10 par value, 1,000,000,000 shares authorized;

523,967,899 and 523,596,548 shares issued and outstanding at December 31, 2024 and September 30, 2024

525,404,160 and 523,596,548 shares issued and outstanding at March 31, 2025 and September 30, 2024

Capital in excess of par

18 unchanged sentences

(in millions)

for the three months ended

December 31, 2024 Shares Amount

for the six months ended

March 31, 2025 Shares Amount

Balance at October 1, 2024 523.6 $ 52.4 $ 947.6 $ 11,927.6 $ ( 419.5 ) $ 12,508.1 $ 734.9 $ 13,243.0

13 unchanged sentences

Balance at December 31, 2024 524.0 $ 52.4 $ 1,014.9 $ 11,919.1 $ ( 524.3 ) $ 12,462.1 $ 771.6 $ 13,233.7

Net income 151.4 151.4 18.6 170.0

Other comprehensive income 25.4 25.4 25.4

Dividends declared on common stock ($ 0.32 per share)

( 173.5 ) ( 173.5 ) ( 173.5 )

Repurchase of common stock ( 0.5 ) ( 0.1 ) ( 9.9 ) — ( 10.0 ) ( 10.0 )

Issuance of common stock 1.9 0.2 44.7 44.9 44.9

Stock-based compensation 12.7 12.7 12.7

Net subscriptions and other 38.4 38.4

Net deconsolidation of investment products ( 13.5 ) ( 13.5 )

Adjustment to fair value of redeemable noncontrolling interests ( 167.0 ) ( 167.0 ) ( 167.0 )

Balance at March 31, 2025 525.4 $ 52.5 $ 1,062.4 $ 11,730.0 $ ( 498.9 ) $ 12,346.0 $ 815.1 $ 13,161.1

See Notes to Consolidated Financial Statements.

Franklin Resources, Inc.

6 unchanged sentences

(in millions)

for the three months ended

December 31, 2023 Shares Amount

for the six months ended

March 31, 2024 Shares Amount

Balance at October 1, 2023 495.9 $ 49.6 $ — $ 12,376.6 $ ( 509.3 ) $ 11,916.9 $ 630.9 $ 12,547.8

10 unchanged sentences

Balance at December 31, 2023 494.7 $ 49.5 $ — $ 12,402.4 $ ( 450.3 ) $ 12,001.6 $ 636.0 $ 12,637.6

Net income 124.2 124.2 8.3 132.5

Other comprehensive loss ( 28.9 ) ( 28.9 ) ( 28.9 )

Dividends declared on common stock ($ 0.31 per share)

( 169.3 ) ( 169.3 ) ( 169.3 )

Repurchase of common stock ( 0.4 ) ( 0.1 ) ( 11.6 ) — ( 11.7 ) ( 11.7 )

Issuance of common stock 0.3 — 10.7 10.7 10.7

Stock-based compensation 86.3 86.3 86.3

31.6 3.2 936.9 940.1 25.8 965.9

Net subscriptions and other 63.1 63.1

Net deconsolidation of investment products ( 12.6 ) ( 12.6 )

Adjustment to fair value of redeemable noncontrolling interests

( 91.9 ) ( 91.9 ) ( 91.9 )

Balance at March 31, 2024 526.2 $ 52.6 $ 1,022.3 $ 12,265.4 $ ( 479.2 ) $ 12,861.1 $ 720.6 $ 13,581.7

See Notes to Consolidated Financial Statements.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended

Six Months Ended

(in millions) 2025 2024

5 unchanged sentences

Amortization of intangible assets 225.1 170.4

Impairment of intangible assets

Net losses (gains) on investments 10.3 ( 41.6 )

Losses (income) from investments in equity method investees 7.6 ( 56.9 )

Net (gains) losses on investments of consolidated investment products ( 87.2 ) 66.0

Income from investments in equity method investees ( 15.5 ) ( 81.3 )

Net losses (gains) on investments of consolidated investment products 101.8 ( 3.0 )

Net purchase of investments by consolidated investment products ( 230.7 ) ( 232.2 )

2 unchanged sentences

Changes in operating assets and liabilities:

Decrease (increase) in receivables and other assets 10.2 ( 36.7 )

Increase in receivables and other assets ( 48.2 ) ( 55.1 )

Decrease in investments, net 3.3 10.0

Decrease in accrued compensation and benefits ( 488.0 ) ( 316.0 )

Increase in income taxes payable 55.0 107.9

Decrease in income taxes payable ( 266.3 ) ( 177.2 )

Increase (decrease) in accounts payable, accrued expenses and other liabilities ( 33.8 ) 22.6

Increase (decrease) in accounts payable and accrued expenses of consolidated investment products ( 47.3 ) 1.0

Decrease in accounts payable and accrued expenses of consolidated investment products ( 40.3 ) ( 103.7 )

Net cash used in operating activities ( 195.3 ) ( 115.3 )

4 unchanged sentences

Additions of property and equipment, net ( 109.3 ) ( 61.2 )

Acquisitions, net of cash acquired (including $ 281.4 in cash and cash equivalents of consolidated investment products in fiscal year 2024)

Payments of deferred consideration liability — ( 60.8 )

Net deconsolidation of investment products ( 5.1 ) ( 10.5 )

Net (deconsolidation) consolidation of investment products ( 4.1 ) 15.1

Net cash used in investing activities ( 1,020.6 ) ( 410.8 )

4 unchanged sentences

[Table continued from previous page]

Three Months Ended

Six Months Ended

(in millions) 2025 2024

Issuance of common stock $ 10.2 $ 7.3

Dividends paid on common stock ( 339.4 ) ( 321.4 )

Repurchase of common stock ( 15.8 ) ( 70.5 )

Proceeds from debt

Payment on debt ( 400.0 ) —

Proceeds from repurchase agreement 41.2 —

4 unchanged sentences

Noncontrolling interests 147.6 67.7

Net cash provided by (used in) financing activities 87.9 ( 159.0 )

Net cash provided by financing activities 380.3 232.1

Effect of exchange rate changes on cash and cash equivalents ( 34.2 ) 15.9

9 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024

March 31, 2025

Note 1 – Basis of Presentation

17 unchanged sentences

(in millions, except per share data) Three Months Ended

Six Months Ended

2025 2024 2025 2024

Net income attributable to Franklin Resources, Inc.

1 unchanged sentence

allocation of earnings to participating nonvested stock and stock unit awards

14.3 7.2 29.7 16.3

Net Income Available to Common Stockholders $ 137.1 $ 117.0 $ 285.3 $ 359.2

1 unchanged sentence

Dilutive effect of nonparticipating nonvested stock unit awards

0.8 0.8 0.7 0.8

Weighted-Average Shares Outstanding – Diluted 519.9 519.2 519.0 503.4

2 unchanged sentences

Diluted 0.26 0.23 0.55 0.71

There were no nonparticipating nonvested stock unit awards excluded from the calculation of diluted earnings per share because their effect would have been antidilutive for the three months ended December 31, 2024 and such awards were insignificant for the three months ended December 31, 2023.

There were no nonparticipating nonvested stock unit awards excluded from the calculation of diluted earnings per share because their effect would have been antidilutive for the three and six months ended March 31, 2025 and such awards were insignificant for the three and six months ended March 31, 2024.

Note 4 – Revenues

3 unchanged sentences

Luxembourg Total

for the three months ended December 31, 2024

for the three months ended March 31, 2025

Investment management fees

9 unchanged sentences

Luxembourg Total

for the three months ended December 31, 2023

for the six months ended March 31, 2025

Investment management fees

6 unchanged sentences

$ 3,292.8 $ 638.5 $ 159.8 $ 122.5 $ 149.4 $ 4,363.0

(in millions) United States Luxembourg Asia-Pacific Americas

States Europe,

Luxembourg Total

for the three months ended March 31, 2024

Investment management fees

$ 1,285.5 $ 222.2 $ 69.9 $ 63.2 $ 73.1 $ 1,713.9

Sales and distribution fees

256.3 87.1 5.0 9.9 — 358.3

Shareholder servicing fees

59.4 7.9 0.7 — — 68.0

9.4 0.2 3.0 — — 12.6

$ 1,610.6 $ 317.4 $ 78.6 $ 73.1 $ 73.1 $ 2,152.8

(in millions) United States Luxembourg Asia-Pacific Americas

States Europe,

Luxembourg Total

for the six months ended March 31, 2024

Investment management fees

$ 2,546.1 $ 413.9 $ 138.4 $ 114.7 $ 153.0 $ 3,366.1

Sales and distribution fees

462.0 163.6 9.6 19.5 — 654.7

Shareholder servicing fees

83.6 15.5 1.3 0.1 — 100.5

18.4 0.7 3.2 — 0.3 22.6

$ 3,110.1 $ 593.7 $ 152.5 $ 134.3 $ 153.3 $ 4,143.9

Operating revenues are attributed to geographic areas based on the locations of the subsidiaries that provide the services, which may differ from the regions in which the related investment products are sold.

Revenues earned from sponsored funds were 83 % of the Company’s total operating revenues for the three months ended December 31, 2024 and 2023.

Revenues earned from sponsored funds were 83 % of the Company’s total operating revenues for the three and six months ended March 31, 2025 and March 31, 2024.

Note 5 – Investments

2 unchanged sentences

Investments consisted of the following:

(in millions) December 31,

(in millions) March 31,

2025 September 30,

8 unchanged sentences

The Company has entered into repurchase agreements with a third-party financing company for certain investments held by the Company.

As of December 31, 2024 and September 30, 2024, other liabilities includes repurchase agreements of $ 116.5 million and $ 111.4 million with investments of $ 122.5 million and $ 121.7 million in carrying value pledged as collateral.

As of March 31, 2025 and September 30, 2024, other liabilities includes repurchase agreements of $ 119.9 million and $ 111.4 million with investments of $ 124.1 million and $ 121.7 million in carrying value pledged as collateral.

The repurchase agreements have contractual maturity dates ranging between 2030 to 2038.

5 unchanged sentences

Expedient Total

as of December 31, 2024

as of March 31, 2025

Investments, at fair value

6 unchanged sentences

Total Liabilities Measured at Fair Value $ 116.6 $ — $ 27.5 $ — $ 144.1

As of March 31, 2025, there were $ 39.7 million of other investments which were adjusted to fair value on a nonrecurring basis and excluded from the table above.

(in millions) Level 1 Level 2 Level 3 NAV as a

11 unchanged sentences

These investments were as follows:

(in millions) December 31,

(in millions) March 31,

2025 September 30,

6 unchanged sentences

1 The investments are expected to be returned through distributions over the life of the funds as a result of liquidations of the funds’ underlying assets.

Investments with known liquidation periods have an expected weighted-average life of 1.9 years at December 31, 2024 and September 30, 2024.

Investments with known liquidation periods have an expected weighted-average life of 2.1 years and 1.9 years at March 31, 2025 and September 30, 2024.

2 Investments are redeemable on a semi-monthly, monthly and quarterly basis.

1 unchanged sentence

(in millions) Fair Value

Level December 31, 2024 September 30, 2024

Level March 31, 2025 September 30, 2024

Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value

7 unchanged sentences

Note 7 – Consolidated Investment Products

CIPs consist of mutual and other investment funds, limited partnerships and similar structures and CLOs, all of which are sponsored by the Company, and include both voting interest entities and variable interest entities (“VIEs”).

The Company had 75 CIPs, including 22 CLOs, as of December 31, 2024 and 77 CIPs, including 22 CLOs, as of September 30, 2024.

CIPs consist of mutual and other investment funds, limited partnerships and similar structures and collateralized loan obligations (“CLOs”), all of which are sponsored by the Company, and include both voting interest entities and variable interest entities (“VIEs”).

The Company had 73 CIPs, including 21 CLOs, as of March 31, 2025 and 77 CIPs, including 22 CLOs, as of September 30, 2024.

The balances related to CIPs included in the Company’s consolidated balance sheets were as follows:

(in millions) December 31,

(in millions) March 31,

2025 September 30,

14 unchanged sentences

$ 12,810.0 $ 12,351.8

The CIPs did not have a significant impact on net income attributable to the Company during the three months ended December 31, 2024 and 2023.

The consolidation of CIPs did not have a significant impact on net income attributable to the Company during the three and six months ended March 31, 2025 and 2024.

The Company has no right to the CIPs’ assets, other than its direct equity investments in them and investment management and other fees earned from them.

5 unchanged sentences

Expedient Total

as of December 31, 2024

as of March 31, 2025

Cash and cash equivalents of CLOs $ 537.9 $ — $ — $ — $ 537.9

11 unchanged sentences

Total Assets Measured at Fair Value $ 994.0 $ 10,217.1 $ 550.6 $ 187.1 $ 11,948.8

Investments for which fair value was estimated using reported NAV as a practical expedient consist of a redeemable U.S.

equity fund, a redeemable global hedge fund and nonredeemable private debt funds.

Investments for which fair value was estimated using reported NAV as a practical expedient consist of nonredeemable private debt and equity funds, a redeemable global hedge fund and a redeemable U.S.

These investments were as follows:

(in millions) December 31,

(in millions) March 31,

2025 September 30,

6 unchanged sentences

2 Investments are redeemable on a monthly basis and liquidation periods are unknown.

3 Of the total unfunded commitments, the Company was contractually obligated to fund $ 9.9 million based on its ownership percentage in the CIPs, at December 31, 2024 and September 30, 2024.

3 As of March 31, 2025, there were no investments with unfunded commitments.

Of the total unfunded commitments, the Company was contractually obligated to fund $ 9.9 million based on its ownership percentage in the CIPs, at September 30, 2024.

Changes in Level 3 assets were as follows:

(in millions) Equity and Debt

for the three months ended December 31, 2024

for the three months ended March 31, 2025

Balance at January 1, 2025 $ 573.5

Gains included in investment and other income (losses) of consolidated investment products, net 2.3

Purchases 10.9

Transfers into Level 3 0.2

Transfers out of Level 3 ( 39.2 )

Balance at March 31, 2025 $ 545.0

Change in unrealized losses included in net income relating to assets held at March 31, 2025 $ ( 17.1 )

(in millions) Equity and Debt

for the six months ended March 31, 2025

Balance at October 1, 2024 $ 550.1

2 unchanged sentences

Net consolidations 3.8

Balance at December 31, 2024 $ 573.5

Change in unrealized gains included in net income relating to assets held at December 31, 2024 $ 22.3

Transfers into Level 3 0.2

Transfers out of Level 3 ( 39.2 )

Balance at March 31, 2025 $ 545.0

Change in unrealized gains included in net income relating to assets held at March 31, 2025 $ 2.8

(in millions) Equity and Debt

Securities Loans Total

for the three months ended December 31, 2023

for the three months ended March 31, 2024

Balance at January 1, 2024 $ 551.5

Losses included in investment and other income of consolidated investment products, net ( 0.1 )

Purchases 22.8

Net deconsolidations ( 12.5 )

Balance at March 31, 2024 $ 591.0

Change in unrealized gains included in net income relating to assets held at March 31, 2024 $ —

(in millions) Equity and Debt

for the six months ended March 31, 2024

Balance at October 1, 2023 $ 584.9

Losses included in investment and other income (losses) of consolidated investment products, net ( 38.1 ) — ( 38.1 )

Losses included in investment and other income of consolidated investment products, net ( 38.2 )

Purchases 26.6

( 0.2 ) — ( 0.2 )

Net deconsolidations ( 12.5 )

Transfers into Level 3 1.1

Balance at December 31, 2023 $ 551.5 $ 0.6 $ 552.1

Change in unrealized losses included in net income relating to assets held at December 31, 2023 $ ( 37.8 ) $ — $ ( 37.8 )

Balance at March 31, 2024 $ 591.0

Change in unrealized losses included in net income relating to assets held at March 31, 2024 $ ( 37.6 )

Valuation techniques and significant unobservable inputs used in Level 3 fair value measurements were as follows:

(in millions)

as of December 31, 2024 Fair Value Valuation Technique Significant Unobservable Inputs Range (Weighted Average 1 )

Equity and debt securities $ 302.2 Market comparable companies Enterprise value/ Revenue multiple 1.4 – 28.7 ( 11.0 )

as of March 31, 2025 Fair Value Valuation Technique Significant Unobservable Inputs Range (Weighted Average 1 )

Equity and debt securities $ 260.5 Market pricing Private sale pricing $ 0.37 –$ 1,850.00 ($ 162.84 ) per share

Discount for lack of marketability 10.0 %– 50.0 % ( 22.2 %)

219.1 Market pricing Private sale pricing $ 0.01 –$ 1,120.00 ($ 82.93 ) per share

234.5 Market comparable companies Enterprise value/ Revenue multiple 1.3 – 27.3 ( 10.4 )

Discount for lack of marketability 8.2 %– 11.6 % ( 10.9 %)

39.9 Discounted cash flow Discount rate 6.8 %– 7.1 % ( 6.9 %)

10.1 Option pricing model Volatility 40.8 %– 101.7 % ( 46.6 %)

Discount for lack of marketability 10.3 %– 21.1 % ( 11.3 %)

(in millions)

7 unchanged sentences

1 Based on the relative fair value of the instruments.

If the relevant significant inputs used in the market-based valuations, other than discount for lack of marketability, were independently higher (lower) as of December 31, 2024, the resulting fair value of the assets would be higher (lower).

If the relevant significant inputs used in the discounted cash flow, as well as the discount for lack of marketability used in the market-based valuations, were independently higher (lower) as of December 31, 2024, the resulting fair value of the assets would be lower (higher).

If the relevant significant inputs used in the market-based valuations, other than discount for lack of marketability, were independently higher (lower) as of March 31, 2025, the resulting fair value of the assets would be higher (lower).

If the relevant significant inputs used in the discounted cash flow, as well as the discount for lack of marketability used in the market-based valuations, were independently higher (lower) as of March 31, 2025, the resulting fair value of the assets would be lower (higher).

Financial instruments of CIPs that were not measured at fair value were as follows:

(in millions) Fair Value

Level December 31, 2024 September 30, 2024

Level March 31, 2025 September 30, 2024

Value Estimated

8 unchanged sentences

1 Substantially all was Level 2.

Debt of CLOs totaled $ 9,055.3 million and $ 9,341.5 million at December 31, 2024 and September 30, 2024.

The debt had fixed and floating interest rates ranging from 2.39 % to 13.68 % with a weighted-average effective interest rate of 7.30 % at December 31, 2024, and from 2.39 % to 13.73 % with a weighted-average effective interest rate of 7.36 % at September 30, 2024.

Debt of CLOs totaled $ 9,532.3 million and $ 9,341.5 million at March 31, 2025 and September 30, 2024.

The debt had fixed and floating interest rates ranging from 2.39 % to 13.04 % with a weighted-average effective interest rate of 6.58 % at March 31, 2025, and from 2.39 % to 13.73 % with a weighted-average effective interest rate of 7.36 % at September 30, 2024.

The floating rates were based on the Secured Overnight Financing Rate.

The contractual maturities for the debt of CLOs at December 31, 2024 were as follows:

The contractual maturities for the debt of CLOs at March 31, 2025 were as follows:

(in millions)

5 unchanged sentences

The unpaid principal balance and fair value of the investments of CLOs were as follows:

(in millions) December 31,

(in millions) March 31,

2025 September 30,

2 unchanged sentences

Fair Value $ 9,490.7 $ 9,352.1

Investments 90 days or more past due were immaterial at December 31, 2024 and September 30, 2024.

The Company recognized $ 11.7 million and $ 20.8 million of net gains during the three months ended December 31, 2024 and 2023, related to its own economic interests in the CLOs.

The aggregate principal amount due of the debt of CLOs was $ 9,015.0 million and $ 9,282.8 million at December 31, 2024 and September 30, 2024.

Investments 90 days or more past due were immaterial at March 31, 2025 and September 30, 2024.

The Company recognized $ 15.6 million and $ 27.3 million of net gains during the three and six months ended March 31, 2025 and $ 9.7 million and $ 30.5 million of net gains during the three and six months ended March 31, 2024, related to its own economic interests in the CLOs.

The aggregate principal related to the debt of CLOs was $ 9,481.7 million and $ 9,282.8 million at March 31, 2025 and September 30, 2024.

Note 8 – Redeemable Noncontrolling Interests

2 unchanged sentences

CIPs Minority Interests Total CIPs Minority Interests Total

for the three months ended December 31,

for the three months ended March 31,

Balance at beginning of period $ 1,466.5 $ 639.5 $ 2,106.0 $ 555.3 $ 523.2 $ 1,078.5

2 unchanged sentences

Net consolidations (deconsolidations) ( 52.5 ) — ( 52.5 ) 43.8 — 43.8

— — — 20.2 — 20.2

Adjustment to fair value — 167.0 167.0 — 91.9 91.9

Balance at End of Period $ 1,196.1 $ 820.8 $ 2,016.9 $ 643.5 $ 610.4 $ 1,253.9

(in millions) 2025 2024

CIPs Minority Interests Total CIPs Minority Interests Total

for the six months ended March 31,

Balance at beginning of period $ 687.8 $ 634.0 $ 1,321.8 $ 580.1 $ 446.0 $ 1,026.1

Net income (loss) ( 128.5 ) 19.7 ( 108.8 ) 29.8 22.5 52.3

Net subscriptions (distributions) and other 125.1 1.6 126.7 29.6 ( 15.9 ) 13.7

Net consolidations (deconsolidations) 511.7 — 511.7 ( 16.2 ) — ( 16.2 )

— — — 20.2 — 20.2

Adjustment to fair value — 165.5 165.5 — 157.8 157.8

Balance at End of Period $ 1,196.1 $ 820.8 $ 2,016.9 $ 643.5 $ 610.4 $ 1,253.9

Note 9 – Nonconsolidated Variable Interest Entities

1 unchanged sentence

The Company’s maximum exposure to loss from these VIEs consists of equity investments, investment management and other fee receivables as follows:

(in millions) December 31,

(in millions) March 31,

2025 September 30,

4 unchanged sentences

As it has done in the past, the Company also may voluntarily elect to provide its sponsored funds with additional direct or indirect financial support based on its business objectives.

The Company did not provide financial or other support to its sponsored funds assessed as VIEs during the three months ended December 31, 2024 or fiscal year 2024.

The Company did not provide financial or other support to its sponsored funds assessed as VIEs during the six months ended March 31, 2025 or fiscal year 2024.

Note 10 – Commitments and Contingencies

1 unchanged sentence

India Credit Fund Closure Matters .

During the three months ended December 31, 2024, there were no significant changes from the disclosure in the Form 10‑K for the fiscal year ended September 30, 2024.

During the six months ended March 31, 2025, there were no significant changes from the disclosure in the Form 10‑K for the fiscal year ended September 30, 2024.

Western Asset Management Investigations.

10 unchanged sentences

Blockchain Litigation.

The Company, two of its subsidiaries, the Company’s CEO, and an individual employee (collectively the “Defendants”) are named as defendants in litigation pending in the United States District Court for the Northern District of California.

The action was filed in November 2021 by Blockchain Innovation, LLC (the “Plaintiff”) and relates to a startup entity in which the Company subsidiary Defendant previously owned all voting shares.

The Plaintiff asserts it acquired the assets of the startup entity and claims that the Defendants improperly wound down the startup and misappropriated its intellectual property.

The action asserts claims for alleged breaches of fiduciary duties, aiding and abetting breaches of fiduciary duty, breach of contract, and misappropriation of trade secrets.

The Plaintiff is seeking various forms of relief, including, among other things, compensatory damages, punitive and exemplary damages, and an injunction including to prevent the Defendants from using any allegedly misappropriated trade secrets and technology.

The trial is scheduled to begin in March 2025.

The Defendants believe the claims are without merit and are vigorously defending against the action.

The Company cannot predict the outcome of this lawsuit and is unable to estimate any reasonably possible loss or range of loss (including with respect to indemnification of the individual Defendants) that may potentially result if the Plaintiff were to prevail on any of its claims.

The Company, two of its subsidiaries, the Company’s CEO, and an individual employee were named as defendants in litigation filed by Blockchain Innovation, LLC.

The parties reached an agreement to resolve this previously-disclosed matter, pursuant to which the action is expected to be dismissed.

The resolution of this matter did not have a material impact on the consolidated financial statements.

Other Litigation and Regulatory Matters.

1 unchanged sentence

Management is of the opinion that the ultimate resolution of such claims will not materially affect the Company’s business, financial position, results of operations or liquidity.

In management’s opinion, an adequate accrual has been made as of December 31, 2024 to provide for any probable losses that may arise from such matters for which the Company could reasonably estimate an amount.

In management’s opinion, an adequate accrual has been made as of March 31, 2025 to provide for any probable losses that may arise from such matters for which the Company could reasonably estimate an amount.

Indemnifications and Guarantees

4 unchanged sentences

Future payments for claims against the Company under these indemnities or guarantees could negatively impact the Company’s financial condition.

In management’s opinion, no material loss was deemed probable or reasonably possible pursuant to such indemnification agreements and/or guarantees as of December 31, 2024.

In management’s opinion, no material loss was deemed probable or reasonably possible pursuant to such indemnification agreements and/or guarantees as of March 31, 2025.

Other Commitments and Contingencies

At December 31, 2024, there were no other material changes in the other commitments and contingencies as reported in the Company’s Annual Report on Form 10-K for fiscal year 2024.

At March 31, 2025, there were no other material changes in the other commitments and contingencies as reported in the Company’s Annual Report on Form 10-K for fiscal year 2024.

Note 11 – Stock-Based Compensation

4 unchanged sentences

Shares Weighted-

for the three months ended December 31, 2024

for the six months ended March 31, 2025

Nonvested balance at October 1, 2024 16,594 3,314 19,908 $ 24.03

2 unchanged sentences

Forfeited/canceled ( 315 ) ( 189 ) ( 504 ) 24.01

Nonvested Balance at December 31, 2024 23,656 3,245 26,901 $ 22.98

Total unrecognized compensation expense related to nonvested stock and stock unit awards was $ 310.4 million at December 31, 2024.

Nonvested Balance at March 31, 2025 22,169 3,128 25,297 $ 22.65

Total unrecognized compensation expense related to nonvested stock and stock unit awards was $ 259.1 million at March 31, 2025.

This expense is expected to be recognized over a remaining weighted-average vesting period of 1.9 years.

2 unchanged sentences

Three Months Ended

Six Months Ended

(in millions) 2025 2024 2025 2024

1 unchanged sentence

Gains (losses) on investments, net 46.8 ( 18.5 ) ( 10.3 ) 41.6

Income (losses) from investments in equity method investees ( 7.6 ) 56.9

Income from investments in equity method investees 23.1 24.4 15.5 81.3

Gains (losses) on derivatives, net ( 1.1 ) ( 6.4 ) 5.5 ( 14.6 )

Rental income 10.9 10.9 22.1 21.7

Foreign currency exchange gains (losses), net 14.5 ( 7.4 )

Foreign currency exchange (losses) gains, net ( 7.5 ) ( 1.3 ) 7.0 ( 8.7 )

Other, net 2.5 5.4 2.3 11.6

Investment and other income, net $ 94.1 $ 52.5 $ 104.6 $ 225.7

Net gains (losses) recognized on equity securities measured at fair value and trading debt securities that were held by the Company were $( 87.2 ) million for the three months ended December 31, 2024 and $ 68.5 million for the three months ended December 31, 2023.

Net gains (losses) recognized on equity securities measured at fair value and trading debt securities that were held by the Company were $ 82.7 million and $( 1.0 ) million for the three and six months ended March 31, 2025 and $ 9.5 million and $ 86.1 million for the three and six months ended March 31, 2024.

Note 13 - Subsequent Event

On April 30, 2025, the Company entered into an Amended and Restated Revolving Credit Agreement (the “Amended and Restated Credit Agreement”) with a five year term and $ 1.1 billion of aggregate available borrowings.

As of April 30, 2025, the $ 300.0 million of borrowings outstanding under the Company’s prior credit facility were transferred to the Amended and Restated Credit Agreement.

For additional information please see Part II.

Other Information - Entry into Amended and Restated Revolving Credit Agreement.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements