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Item 7. Management’s Discussion and Analysis

2025-08-05 compared with 2024-08-06 · 104 added, 167 removed, 418 unchanged (39% of the section changed)

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These statements are based on management’s expectations and assumptions and are subject to risks and uncertainties that may cause actual results to differ materially from those expressed.

Our actual results, performance or achievements may differ materially from the results discussed in this Item 7 because of various factors, including those set forth elsewhere herein.

Our actual results, performance or achievements may differ materially from the results discussed in this Item 7.

because of various factors, including those set forth elsewhere herein.

See “Forward-Looking Statements” and “Risk Factors” included in Part 1 of this Annual Report on Form 10-K.

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DESCRIPTION OF THE COMPANY AND BUSINESS SEGMENTS

Broadridge, a Delaware corporation and a part of the S&P 500 ® Index, is a global financial technology leader providing investor communications and technology-driven solutions to banks, broker-dealers, asset and wealth managers, public companies, investors and mutual funds.

Broadridge, a Delaware corporation, is a global financial technology leader providing investor communications and technology-driven solutions to banks, broker-dealers, asset and wealth managers, public companies, investors, and mutual funds.

Our services include investor communications, securities processing, data and analytics, and customer communications solutions.

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Our businesses operate in two reportable segments:

Investor Communication Solutions and Global Technology and Operations.

Assets acquired and liabilities assumed in business combinations are recorded on the Company’s Consolidated Balance Sheets as of the respective acquisition date based upon the estimated fair values at such date.

The results of operations of the business acquired by the Company are included in the Company’s Consolidated Statements of Earnings since the respective date of acquisition.

The excess of the purchase price over the estimated fair values of the underlying assets acquired and liabilities assumed is allocated to Goodwill.

Fiscal Year 2024 Acquisition:

AdvisorTarget

In May 2024, the Company acquired AdvisorTarget, a market leader in providing asset management and wealth management firms with data products to help power digital marketing, sales and engagement programs targeting financial advisors.

AdvisorTarget is included in the Company’s ICS reportable segment.

The aggregate purchase price included $34.3 million in cash, $1.0 million in deferred payments, $1.6 million for the settlement of a preexisting relationship, and contingent consideration with a maximum potential pay-out of $30.5 million.

The contingent consideration is payable through fiscal year 2028 upon the achievement by the acquired business of certain defined revenue targets.

Net tangible liabilities assumed in the transaction were $3.1 million, and contingent liabilities incurred were valued at $14.0 million.

This acquisition resulted in $41.8 million of Goodwill, which is tax deductible.

Intangible assets acquired, which totaled $12.1 million, consist primarily of software technology and customer relationships, which are being amortized over a five-year life.

Investor Communication Solutions (“ICS”) and Global Technology and Operations (“GTO”).

We frequently review our businesses to ensure we have the necessary assets to execute our strategy.

We expect to acquire businesses when we identify a compelling strategic need, such as a product, service or technology that helps meet client demand, a way to achieve business scale that enables competition and operational efficiency, or similar considerations.

The results of operations for acquired businesses are included in our consolidated results from the respective dates of acquisition.

Acquisitions of Businesses

In November 2024, the Company acquired SIS to provide wealth management, capital markets, and information technology solutions in Canada.

SIS is included in the Company’s GTO reportable segment.

Our discussions with the Canadian Competition Bureau are ongoing.

In July 2024, the Company acquired CompSci, a provider of cloud-based financial technology software for the preparation and processing of SEC filings for public companies and funds.

CompSci is included in the Company’s ICS reportable segment.

We acquired these businesses for an aggregate purchase price of $193.5 million.

Announced Acquisition

Kyndryl Securities Industry Services (“Kyndryl SIS”)

In May 2024, Broadridge announced the proposed acquisition of Kyndryl SIS to provide wealth management, capital markets, and information technology solutions to the Canadian financial services industry, expanding our product offerings in our Global Technology and Operations segment.

The total purchase price is approximately $200 million.

The acquisition is subject to customary closing conditions, including regulatory approvals.

In July 2025, Broadridge announced the proposed acquisition of Acolin Group Holdco Limited (“Acolin”).

Acolin is a European provider of cross-border fund distribution and regulatory services.

The total purchase price is approximately $70 million plus an additional contingent consideration liability.

The acquisition is expected to close in the first half of Broadridge’s 2026 fiscal year, subject to customary closing conditions, including regulatory approvals.

Acolin will be included in the Company’s ICS reportable segment.

Please refer to Note 6, “Acquisitions” to our Consolidated Financial Statements under Item 8.

of Part II of this Annual Report on Form 10-K for a more detailed discussion.

BASIS OF PRESENTATION

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The results of operations reported for the periods presented are not necessarily indicative of the results of operations for subsequent periods.

Beginning with the first quarter of fiscal year 2023, the Company changed reporting for segment revenues, segment earnings (loss) before income taxes, and segment amortization of acquired intangibles and purchased intellectual property to reflect the impact of actual foreign exchange rates applicable to the individual periods presented.

The presentation of these metrics for the prior periods provided in this Form 10-K has been changed to conform to the current period presentation.

Total consolidated revenues and earnings before income taxes were not impacted.

Please refer to Note 3, “Revenue Recognition” and Note 21, “Financial Data by Segment” to our Consolidated Financial Statements under Item 8 of Part II of this Annual Report on Form 10-K.

Processing and distributing proxy materials and annual reports to investors comprises a large portion of our Investor Communication Solutions business.

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A change in the assessment of the outcomes of such matters could materially impact our Consolidated Financial Statements.

The Company has estimated foreign net operating loss carryforwards of approximately $46.2 million as of June 30, 2024 of which $7.3 million are subject to expiration in the June 30, 2026 through June 30, 2043 period.

The remaining $38.8 million of carryforwards has an indefinite utilization period.

The Company has estimated foreign net operating loss carryforwards of approximately $48.7 million as of June 30, 2025 of which $6.9 million are subject to expiration in the June 30, 2035 through June 30, 2043 period, and of which $41.7 million has an indefinite utilization period.

In addition, the Company has estimated U.S.

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These performance indicators include Revenue and Recurring revenue as well as not generally accepted accounting principles measures (“Non-GAAP”) of Adjusted Operating income, Adjusted Net earnings, Adjusted earnings per share, Free Cash flow, Recurring revenue growth constant currency, and Closed sales.

In addition, management focuses on select operating metrics specific to Broadridge of Record Growth and Internal Trade Growth, as defined below.

In addition, management focuses on select operating metrics specific to Broadridge of Position Growth and Internal Trade Growth, as defined below.

Refer to the section “Explanation and Reconciliation of the Company’s Use of Non-GAAP Financial Measures” for a reconciliation of Adjusted Operating income, Adjusted Net earnings, Adjusted earnings per share, Free Cash flow, and Recurring revenue growth constant currency to the most directly comparable GAAP measures, and an explanation for why these Non-GAAP metrics provide useful information to investors and how management uses these Non-GAAP metrics for operational and financial decision-making.

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Revenues and Recurring revenue are useful metrics for investors in understanding how management measures and evaluates the Company’s ongoing operational performance.

See “Results of Operations” as well as Note 2, “Summary of Significant Accounting Policies” and Note 3, “Revenue Recognition” to our Consolidated Financial Statements under Item 8 of Part II of this Annual Report on Form 10-K.

Record Growth and Internal Trade Growth

The Company uses select operating metrics specific to Broadridge of Record Growth and Internal Trade Growth in evaluating its business results and identifying trends affecting its business.

Record Growth is comprised of stock record growth and interim record growth.

Stock record growth (also referred to as “SRG” or “equity position growth”) measures the estimated annual change in positions eligible for equity proxy materials.

Interim record growth (also referred to as “IRG” or “mutual fund/ETF position growth”) measures the estimated change in mutual fund and exchange traded fund positions eligible for interim communications.

See “Results of Operations” as well as Note 2, “Summary of Significant Accounting Policies” and Note 3, “Revenue Recognition” to our Consolidated Financial Statements under Item 8.

of Part II of this Annual Report on Form 10-K.

Position Growth and Internal Trade Growth

The Company uses select operating metrics specific to Broadridge of Position Growth and Internal Trade Growth in evaluating its business results and identifying trends affecting its business.

Position Growth is comprised of “equity position growth” and “mutual fund/ETF position growth.” Equity position growth measures the estimated annual change in positions eligible for equity proxy materials.

Beginning in the fourth quarter of fiscal year 2025, the Company began presenting information on “equity revenue position growth.” Equity revenue position growth excludes small or fractional equity positions for which the Company does not recognize revenue (“non-revenue positions”).

Prior period comparative information for this metric is not available.

Mutual fund/ETF position growth measures the estimated change in mutual fund and exchange traded fund positions eligible for interim communications.

These metrics are calculated from equity proxy and mutual fund/ETF position data reported to Broadridge for the same issuers or funds in both the current and prior year periods.

Internal Trade Growth represents the estimated change in daily average trade volumes for Broadridge securities processing clients whose contracts are linked to trade volumes and who were on Broadridge’s trading platforms in both the current and prior year periods.

Record Growth and Internal Trade Growth are useful non-financial metrics for investors in understanding how management measures and evaluates Broadridge’s ongoing operational performance within its Investor Communication Solutions and Global Technology and Operations reportable segments, respectively.

Position Growth and Internal Trade Growth are useful non-financial metrics for investors in understanding how management measures and evaluates Broadridge’s ongoing operational performance within its Investor Communication Solutions and Global Technology and Operations reportable segments, respectively.

The key performance indicators for the fiscal years ended June 30, 2025, and 2024, are as follows:

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Years Ended June 30,

Record Growth

Equity positions (Stock records) 6 % 9 %

Mutual fund / ETF positions (Interim records) 3 % 8 %

Position Growth

Equity positions 16 % 6 %

Equity revenue positions 12 % N/A

Mutual fund / ETF positions 7 % 3 %

Internal Trade Growth 13 % 13 %

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“Amortization of Acquired Intangibles and Purchased Intellectual Property” and “Acquisition and Integration Costs” represent certain non-cash amortization expenses associated with acquired intangible assets and purchased intellectual property assets, as well as certain transaction and integration costs associated with the Company’s acquisition activities, respectively.

“Restructuring and Other Related Costs” represent costs associated with the Company’s Corporate Restructuring Initiative to exit and/or realign some of our businesses, streamline the Company’s management structure, reallocate work to lower cost locations, and reduce headcount in deprioritized areas.

“Litigation Settlement Charges” represents reserves established during the third and fourth quarter of 2024 related to the settlement of claims.

“Russia-Related Exit Costs” are direct and incremental costs associated with the Company’s wind down of business activities in Russia in response to Russia’s invasion of Ukraine, including relocation-related expenses of impacted associates.

“Net New Business” refers to recurring revenue from Closed sales for the initial twelve-month contract period after which the client goes live with the Company’s service(s), less recurring revenue from client losses.

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During fiscal year 2025, mutual fund proxy revenues were 75% higher than the prior fiscal year.

During fiscal year 2023, mutual fund proxy revenues were 51% lower than the prior fiscal year.

During fiscal year 2024, mutual fund proxy revenues were 66% higher than the prior fiscal year.

Although it is difficult to forecast the levels of event-driven activity, we expect that the portion of revenues derived from mutual fund proxy activity may continue to experience volatility in the future.

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• Recurring revenues increased $285.4 million, or 7%, to $4,507.9 million.

Recurring revenue growth constant currency (Non-GAAP) was 6%, driven by Net New Business and Internal Growth in both ICS and GTO.

• Event-driven revenues increased $74.2 million, or 35%, driven by higher mutual fund proxy, equity proxy contests and corporate action activity.

• Distribution revenues increased $135.9 million, or 7%, driven by the impact of postage rate increases of approximately $116.3 million, as well as higher event-driven mailings .

Recurring revenue growth constant currency (Non-GAAP) was 7%, driven primarily by organic growth in ICS and GTO and acquisitions in GTO.

• Event-driven revenues increased $34.0 million, or 12%, driven by a higher volume of mutual fund communications partially offset by a lower level of equity proxy contest activity.

• Distribution revenues increased $63.0 million, or 3%, driven by the postage rate increase of approximately $114 million partially offset by lower mail volumes .

Total operating expenses.

Operating expenses increased $365.2 million, or 7%, to $5,489.7 million from $5,124.5 million primarily as a result of the increase in Cost of revenues:

• Cost of revenues - The increase of $297.4 million primarily reflecting the impact of higher postage and distribution expenses in our ICS segment of $116.3 million, higher amortization and depreciation expense in our GTO segment of $62.8 million, higher Restructuring and Other Related costs of $42.6 million, and Litigation Settlement Charges of $18.4 million primarily for the settlement of litigation claims.

• Selling, general and administrative expenses - The increase of $67.8 million was primarily driven by higher compensation related expenses of $65.4 million.

Operating expenses increased $210.9 million, or 4%, to $5,700.6 million from $5,489.7 million:

• Cost of revenues - The increase of $179.5 million primarily reflects higher expenses related to the SIS acquisition, the impact of higher postage and distribution costs in our ICS segment of approximately $58 million, and higher expenses related to higher revenues.

• Selling, general and administrative expenses - The increase of $31.4 million was primarily driven by higher technology-related investments.

Interest expense, net.

Interest expense, net, was $138.1 million, an increase of $2.6 million from $135.5 million in the fiscal year ended June 30, 2023 as the impact of higher interest rates was partially offset by a decrease in average borrowings.

Interest expense, net, was $122.7 million, a decrease of $15.4 million, or 11%, from $138.1 million in the fiscal year ended June 30, 2024.

The decrease was primarily due to lower average borrowings rates.

Other non-operating expenses, net.

Other non-operating expenses, net for the fiscal year ended June 30, 2025 was $7.1 million, compared to $1.7 million for the fiscal year ended June 30, 2024.

The decreased expense of $4.3 million was primarily driven by improved performance on investments associated with our retirement plans and other investments compared to the prior year period.

Provision for income taxes .

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• Effective tax rate for the fiscal year ended June 30, 2024 - 20.4%.

The decrease in the effective tax rate for the fiscal year ended June 30, 2024 compared to the fiscal year ended June 30, 2023 was driven by an increase in discrete tax benefits relative to pre-tax income.

The higher excess tax benefit related to equity compensation contributed to the increase in total discrete tax benefits.

The increase in the effective tax rate for the fiscal year ended June 30, 2025 compared to the fiscal year ended June 30, 2024 was primarily driven by an increase in pre-tax income and lower tax benefits from statutory tax incentives, which was partially offset by an increase in discrete tax benefits.

ANALYSIS OF REPORTABLE SEGMENTS

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(1) Investor Communication Solutions and (2) Global Technology and Operations.

The primary component of “Other” are certain gains, losses, corporate overhead expenses and non-operating expenses that have not been allocated to the reportable segments, such as interest expense.

The primary components of “Corporate and Other” are certain gains, losses, centrally managed activities, and non-operating expenses that have not been allocated to the reportable segments, such as interest expense.

Certain corporate expenses, as well as certain centrally managed expenses, are allocated based upon budgeted amounts in a reasonable manner.

Because the Company compensates the management of its various businesses on, among other factors, segment profit, the Company may elect to record certain segment-related operating and non-operating expense items in Other rather than reflect such items in segment profit.

Because the Company compensates the management of its various businesses on, among other factors, segment profit, the Company may elect to record certain segment-related operating and non-operating expense items in Corporate and Other rather than reflect such items in segment profit.

Years Ended June 30,

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Global Technology and Operations 201.4 173.3 28.0 16

Other (246.3) (200.5) (45.8) 23

Corporate and Other (196.7) (246.3) 49.7 (20)

Total $ 1,058.7 $ 877.4 $ 181.4 21

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Net New Business Internal Growth Acquisitions Foreign Exchange Total

Recurring revenue Growth Drivers 3pts 2pts 0pts 0pts 5 %

Recurring revenue Growth Drivers 5pts 1pt 0pts 0pts 6 %

For the fiscal year ended June 30, 2025:

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◦ Regulatory rose 7% and 7%, respectively, driven by equity position growth of 16% and mutual fund/ETF position growth of 7%.

◦ Data-Driven Fund Solutions rose 8% and 7%, respectively, driven by growth in our retirement and workplace products, as well as data and analytics solutions.

◦ Issuer rose 7% and 7%, respectively, driven by growth in our registered shareholder solutions and disclosure solutions.

◦ Customer Communications rose 1% and 2%, respectively, driven by growth in digital communications, partially offset by flat growth in print revenues.

• Event-driven revenues increased $74.2 million, or 35% driven by higher mutual fund proxy, equity proxy contests, and corporate action communications.

• Distribution revenues increased $135.9 million, or 7%, driven by the postage rate increase of approximately $116.3 million, as well as higher event-driven mailings.

• Earnings before income taxes increased $138.9 million, or 17%, primarily from higher Recurring revenue and higher event-driven revenue.

Operating expenses rose 5%, or $183.4 million, to $3,907.5 million primarily driven by higher distribution expenses, as well as higher technology and selling expenses.

◦ Data-Driven Fund Solutions rose 6% and 5%, respectively, driven primarily by growth in our global distribution insights and retirement and workplace products.

◦ Issuer rose 5% and 5%, respectively, driven by growth in shareholder engagement solutions and disclosure solutions products.

◦ Customer Communications rose 5% and 5%, respectively, driven by growth in digital communications and print revenues.

• Event-driven revenues increased $34.0 million, or 12% driven by a higher volume of mutual fund communications partially offset by a lower level of equity proxy contest activity.

• Distribution revenues increased $63.0 million, or 3%, driven by the postage rate increase of approximately $114 million partially offset by lower mail volumes .

• Earnings before income taxes increased $103.7 million, or 11%, primarily from higher Recurring and Event-driven revenues.

Operating expenses rose 4%, or $151.5 million, to $4,059.0 million driven by the impact of the postage rate increase and higher volume related expenses.

• Pre-tax margins increased by 1.0 percentage points to 20.6% from 19.6%.

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Fiscal Year 2025 Compared to Fiscal Year 2024

Revenues increased $123.7 million to $1,648.9 million from $1,525.2 million, and earnings before income taxes decreased $10.6 million to $173.3 million from $183.9 million.

Revenues increased $127.2 million to $1,776.1 million from $1,648.9 million, and earnings before income taxes increased $28.0 million to $201.4 million from $173.3 million.

Years Ended June 30,

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Net New Business Internal Growth Acquisitions Foreign Exchange Total

Recurring revenue Growth Drivers 4pts 3pts 0pts 0pts 8 %

Recurring revenue Growth Drivers 1pt 3pts 4pts -1pt 8 %

For the fiscal year ended June 30, 2025:

• Recurring revenues increased $127.2 million, or 8%, to $1,776.1 million.

Recurring revenue growth constant currency (Non-GAAP) was 8%, all organic, driven by Net New Business and Internal Growth.

Recurring revenue growth constant currency (Non-GAAP) was 8%, driven by 4pts of organic growth and 4pts from the acquisition of SIS.

• By product line, Recurring revenue growth and Recurring revenue growth constant currency (Non-GAAP) were as follows:

◦ Capital markets rose 9% and 8%, respectively, driven by Net New Business and Internal Growth, which benefited from higher trading volumes.

◦ Wealth and investment management rose 7% and 7%, respectively, driven by Net New Business and Internal Growth.

• Earnings before income taxes decreased $10.6 million, as higher revenues were more than offset by higher expenses, including an increase in amortization and depreciation expenses of $62.8 million.

• Pre-tax margins decreased by 1.6 percentage points to 10.5% from 12.1%.

Loss before income taxes was $246.3 million for the fiscal year ended June 30, 2024, an increase of $45.8 million, or 23%, compared to $200.5 million for the fiscal year ended June 30, 2023.

The increased loss before income taxes was primarily due to $42.6 million of higher Restructuring and Other Related Costs related to the Corporate Restructuring Initiative and Litigation Settlement Charges of $18.4 million , partially offset by the absence of the prior year Russia-Related Exit Costs of $10.9 million.

◦ Capital markets rose 6% and 6%, respectively, driven by revenue from new sales and Internal Growth.

Internal Growth benefited from higher trading volumes.

◦ Wealth and investment management rose 10% and 12%, respectively, driven by 10pts from the SIS acquisition and 1pt of Organic growth.

Organic growth was negatively impacted by 4pts as a result of the loss of a large client during the prior year period.

• Earnings before income taxes increased $28.0 million, as higher revenues more than offset higher expenses, including the impact of the SIS acquisition.

• Pre-tax margins increased by 0.8 percentage points to 11.3% from 10.5%.

Corporate and Other

Loss before income taxes was $196.7 million for the fiscal year ended June 30, 2025, a decrease of $49.7 million, or 20%, compared to $246.3 million for the fiscal year ended June 30, 2024.

The decreased loss before income taxes was due to lower Restructuring and Other Related Costs, a decline in litigation expense of $18.4 million, and a decline in Interest expense, net of $15.4 million.

Explanation and Reconciliation of the Company’s Use of Non-GAAP Financial Measures

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Management uses these Non-GAAP financial measures to, among other things, evaluate our ongoing operations and for internal planning and forecasting purposes.

In addition, and as a consequence of the importance of these Non-GAAP financial measures in managing our business, the Company’s Compensation Committee of the Board of Directors incorporates Non-GAAP financial measures in the evaluation process for determining management compensation.

In addition, and as a consequence of the importance of these Non-GAAP financial measures in managing our business, the Company’s Compensation Committee of the Board incorporates Non-GAAP financial measures in the evaluation process for determining management compensation.

Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted Net Earnings and Adjusted Earnings Per Share

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(ii) Acquisition and Integration Costs, which represent certain transaction and integration costs associated with the Company’s acquisition activities.

(iii) Restructuring and Other Related Costs, which represent costs associated with the Company’s Corporate Restructuring Initiative to exit and/or realign some of our businesses, streamline the Company’s management structure, reallocate work to lower cost locations, and reduce headcount in deprioritized areas.

Refer to Note 13, “Payables and Accrued Expenses” for further details on the Company’s Corporate Restructuring Initiative.

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Refer to Note 19, “Contractual Commitments, Contingencies and Off-Balance Sheet Arrangements” for further details.

(v) Russia-Related Exit Costs, which are direct and incremental costs associated with the Company’s wind down of business activities in Russia in response to Russia’s invasion of Ukraine, including relocation-related expenses of impacted associates.

We exclude Acquisition and Integration Costs, Restructuring and Other Related Costs, Litigation Settlement Charges, and Russia-Related Exit Costs from our Adjusted Operating income (as applicable) and other adjusted earnings measures because excluding such information provides us with an understanding of the results from the primary operations of our business and enhances comparability across fiscal reporting periods, as these items are not reflective of our underlying operations or performance.

We exclude Acquisition and Integration Costs, Restructuring and Other Related Costs and Litigation Settlement Charges from our Adjusted Operating income (as applicable) and other adjusted earnings measures because excluding such information provides us with an understanding of the results from the primary operations of our business and enhances comparability across fiscal reporting periods, as these items are not reflective of our underlying operations or performance.

We also exclude the impact of Amortization of Acquired Intangibles and Purchased Intellectual Property, as these non-cash amounts are significantly impacted by the timing and size of individual acquisitions and do not factor into the Company's capital allocation decisions, management compensation metrics or multi-year objectives.

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Litigation Settlement Charges — 18.4

Russia-Related Exit Costs (b) — 12.1

Adjusted Operating income (Non-GAAP) $ 1,410.9 $ 1,302.8

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Litigation Settlement Charges — 18.4

Russia-Related Exit Costs (b) — 10.9

Subtotal of adjustments 222.3 285.6

Tax impact of adjustments (c) (62.6) (57.5)

Tax impact of adjustments (b) (50.4) (62.6)

Adjusted Net earnings (Non-GAAP) $ 1,011.5 $ 921.2

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Litigation Settlement Charges — 0.15

Russia-Related Exit Costs — 0.09

Subtotal of adjustments 1.88 2.40

Tax impact of adjustments (c) (0.53) (0.48)

Tax impact of adjustments (b) (0.43) (0.53)

Adjusted earnings per share (Non-GAAP) $ 8.55 $ 7.73

(a) Restructuring and Other Related Costs for the fiscal year ended June 30, 2024 includes $56.0 million of severance and professional services costs directly related to the Corporate Restructuring Initiative and a $7.0 million asset impairment charge as a result of the exit of a business in connection with the Corporate Restructuring Initiative.

Restructuring and Other Related Costs for the fiscal year ended June 30, 2023 includes $20.4 million of severance costs.

Refer to Note 13, “Payables and Accrued Expenses” to our Consolidated Financial Statements under Item 8 of Part II of this Annual Report on Form 10-K for a more detailed discussion.

(b) Russia-Related Exit Costs were $10.9 million for the fiscal year ended June 30, 2023, comprised of $12.1 million of operating expenses, offset by a gain of $1.2 million in non-operating income for the fiscal year ended June 30, 2023.

(c) Calculated using the GAAP effective tax rate, adjusted to exclude $12.9 million of excess tax benefits (“ETB”) associated with stock-based compensation for the fiscal year ended June 30, 2024, and $10.4 million of ETB associated with stock-based compensation for the fiscal year ended June 30, 2023.

(a) Restructuring and Other Related Costs for the fiscal year ended June 30, 2025 consists of severance and other costs related to the closure of substantially all operations of a production facility.

Costs incurred are not reflected in segment profit and are recorded within Corporate and Other.

The total estimated pre-tax costs for actions and associated costs related to the closure are approximately $20 million to $25 million and are expected to be completed by the end of the second quarter of fiscal year 2026.

Restructuring and Other Related Costs for the fiscal year ended June 30, 2024 includes $56.0 million of severance and professional services costs directly related to the Corporate Restructuring Initiative and a $7.0 million asset impairment charge as a result of the exit of a business in connection with the Corporate Restructuring Initiative.

Refer to Note 13, “Payables and Accrued Expenses” to our Consolidated Financial Statements under Item 8.

of Part II of this Annual Report on Form 10-K for a more detailed discussion.

(b) Calculated using the GAAP effective tax rate, adjusted to exclude $20.5 million of excess tax benefits (“ETB”) associated with stock-based compensation for the fiscal year ended June 30, 2025, and $12.9 million of ETB associated with stock-based compensation for the fiscal year ended June 30, 2024.

For purposes of calculating the Adjusted earnings per share, the same adjustments were made on a per share basis.

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Current portion of long-term debt

Fiscal 2021 Term Loans (a) May 2024 $ — $ — $ 1,178.5 $ — $ —

Fiscal 2016 Senior Notes (a) June 2026 $ 500.0 $ 499.3 $ — $ — $ 494.1

Total $ 500.0 $ 499.3 $ — $ — $ 494.1

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Fiscal 2025 Revolving Credit Facility:

dollar tranche April 2026 $ — $ — $ — $ 1,100.0 $ —

Multicurrency tranche April 2026 — — — 400.0 —

dollar tranche December 2029 $ — $ — $ — $ 1,000.0 $ —

Multicurrency tranche December 2029 133.5 133.5 — 366.5 133.5

Total Revolving Credit Facility $ 133.5 $ 133.5 $ — $ 1,366.5 $ 133.5

Fiscal 2024 Amended Term Loan (a) August 2026 $ 1,120.0 $ 1,117.9 $ — $ — $ 1,120.0

Fiscal 2016 Senior Notes June 2026 $ 500.0 $ 498.7 $ 498.0 $ — $ 480.4

Fiscal 2024 Amended Term Loan August 2026 $ 880.0 $ 879.1 $ 1,117.9 $ — $ 880.0

Fiscal 2016 Senior Notes (a) June 2026 $ — $ — $ 498.7 $ — $ —

Fiscal 2020 Senior Notes December 2029 750.0 746.0 745.1 — 702.8

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Total debt $ 3,263.5 $ 3,252.3 $ 3,355.1 $ 1,366.5 $ 3,101.8

(a) The Fiscal 2021 Term Loans were reclassified from Current portion of long-term debt to Long-term debt in the first quarter of fiscal year 2024 upon amendment of the loan, to reflect the remaining maturity of more than one year.

(a) The Fiscal 2016 Senior Notes were reclassified from Long-term debt to Current portion of long-term debt in the fourth quarter of fiscal year 2025 to reflect the remaining maturity of less than one year.

Future principal payments on the Company’s outstanding debt are as follows:

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(in millions) $ 500.0 $ 880.0 $ — $ — $ 883.5 $ 1,000.0 $ 3,263.5

The Company has a $1.5 billion five-year revolving credit facility (as amended on December 23, 2021 and May 23, 2023, the “Fiscal 2021 Revolving Credit Facility”), which is comprised of a $1.1 billion U.S.

dollar tranche and a $400.0 million multicurrency tranche.

Under the Fiscal 2021 Revolving Credit Facility, revolving loans denominated in U.S.

Dollars, Canadian Dollars, Euro, Swedish Kronor, and Yen initially bear interest at Adjusted Term SOFR, CDOR, EURIBOR, TIBOR and STIBOR, respectively, plus 1.100% (subject to step-ups to 1.175% and step-downs to 0.805% based on public debt ratings) and revolving loans denominated in Sterling bears interest at SONIA plus 1.1326% per annum (subject to step-ups to 1.2076% and step-downs to 0.8376% based on ratings).

The Fiscal 2021 Revolving Credit Facility also has an annual facility fee equal to 15.0 basis points on the entire facility (subject to step-ups to 20.0 basis points and step-downs to 7.0 basis points based on ratings).

On May 23, 2023, we amended the interest rate index from LIBOR to Adjusted Term SOFR.

All other terms remained unchanged.

In March 2021, the Company entered into an amended and restated term credit agreement (as amended on December 23, 2021 and May 23, 2023, “Term Credit Agreement”), providing for term loan commitments in an aggregate principal amount of $2.55 billion, comprised of a $1.0 billion tranche (“Tranche 1”) and a $1.55 billion tranche (“Tranche 2,” together with Tranche 1, the “Fiscal 2021 Term Loans”).

The Tranche 1 Loans were repaid in full in May 2021.

The Tranche 2 Loans was to mature in May 2024.

The proceeds of the Fiscal 2021 Term Loans were used by the Company to solely finance the Itiviti acquisition and pay certain fees and expenses in connection therewith.

On May 23, 2023, we amended the interest rate index from LIBOR to Adjusted SOFR.

All other terms remained unchanged.

Interest on the outstanding portion of the Fiscal 2021 Term Loans bore interest at Adjusted Term SOFR plus 1.000% per annum (subject to step-ups to Adjusted Term SOFR plus 1.250% or a step-down to SOFR plus 0.750% based on ratings).

On August 17, 2023, the Company amended and restated the Term Credit Agreement (the “Amended and Restated Term Credit Agreement”), providing for term loan commitment in an aggregate principal amount of $1.3 billion, replacing the Tranche 2 Loan of the Fiscal 2021 Term Loans (the “Fiscal 2024 Amended Term Loan”).

The Fiscal 2024 Amended Term Loan will mature in August 2026 on the third anniversary of the amended Funding Date of August 17, 2023.

The Fiscal 2024 Amended Term Loan bears interest at Adjusted Term SOFR plus 1.250% per annum (subject to a step-up to Adjusted Term SOFR plus 1.375% or step-downs to Adjusted Term SOFR plus 1.125% and Adjusted Term SOFR plus 1.000%, in each case, based on ratings).

In June 2016, the Company completed an offering of $500.0 million in aggregate principal amount of senior notes (the “Fiscal 2016 Senior Notes”).

Interest on the Fiscal 2016 Senior Notes is payable semiannually on June 27 and December 27 of each year based on a fixed per annum rate equal to 3.40%.

In December 2019, the Company completed an offering of $750.0 million in aggregate principal amount of senior notes (the “Fiscal 2020 Senior Notes”).

Interest on the Fiscal 2020 Senior Notes is payable semiannually on June 1 and December 1 of each year based on a fixed per annum rate equal to 2.90%.

In May 2021, the Company completed an offering of $1 billion in aggregate principal amount of senior notes (the “Fiscal 2021 Senior Notes”).

Interest on the Fiscal 2021 Senior Notes is payable semi-annually in arrears on May 1 and November 1 of each year based on a fixed per annum rate equal to 2.60%.

The Fiscal 2025 Revolving Credit Facility, Fiscal 2024 Amended Term Loans, Fiscal 2016 Senior Notes, Fiscal 2020 Senior Notes and Fiscal 2021 Senior Notes are senior unsecured obligations of the Company and are ranked equally in right of payment.

Please refer to Note 14, “Borrowings” to our Consolidated Financial Statements under Item 8 of Part II of this Annual Report on Form 10-K for a more detailed discussion.

Please refer to Note 14, “Borrowings” to our Consolidated Financial Statements under Item 8.

of Part II of this Annual Report on Form 10-K for a more detailed discussion.

Fiscal Year 2025 Compared to Fiscal Year 2024

11 unchanged sentences

Free cash flow (Non-GAAP) $ 1,056.4 $ 943.2 $ 113.1

The increase in cash from operating activities of $232.9 million for the twelve months ended June 30, 2024, as compared to the twelve months ended June 30, 2023, was due to an increase in Net earnings of $67.5 million, a decrease in cash used for client-related platform implementation and development costs of $300.8 million included in the change in Other non-current assets, and an increase in Accounts payable of $156.7 million from prior fiscal year, combined with a decrease of $87.6 million for the twelve months ended June 30, 2023.

This was partially offset by a decrease in collections of advanced client billings of $280.0 million included in the change in Contract liabilities, a decrease in the change in net Accounts receivable of $57.0 million due to billings exceeding collections relative to prior year, and an increase in cash used for income taxes of $60.0 million related to the reduction in deductible client-related platform implementation and development costs combined with the increase in pre-tax income.

The decrease in cash from investing activities of $67.6 million primarily reflects an increase in cash used for capital expenditures of $37.8 million and an increase in cash used for acquisitions of $34.3 million.

The decrease in cash from financing activities of $140.8 million primarily reflects an increase in cash used for stock buybacks of $461.0 million partially offset by an increase in net borrowings of $325.0 million.

The increase in cash from operating activities of $115.0 million for the fiscal year ended June 30, 2025, as compared to the fiscal year ended June 30, 2024, was due to an increase in Net earnings of $141.4 million, an increase in cash provided from Accounts receivable of $69.1 million driven by higher cash collections relative to billings, an increase in the non-cash adjustments of $167.1 million, primarily related to a decrease in Deferred income taxes of $114.5 million and a decrease in cash used for client-related implementation costs of $25.2 million included in Other non-current assets.

This was primarily offset by an increase in cash used for Accounts Payable and accrued expenses of $283.1 million, inclusive of an increase in taxes paid.

The decrease in cash from investing activities of $168.2 million primarily reflects an increase in cash used for acquisitions of $159.2 million and cash used in software purchases and capitalized internal use software of $15.5 million.

The increase in cash from financing activities of $254.8 million primarily reflects a decrease in cash used for stock buybacks of $350.5 million partially offset by a decrease in net borrowings of $44.4 million and an increase in dividends paid of $34.1 million.

The Company, headquartered in the U.S., is routinely examined by the IRS and is also routinely examined by the tax authorities in the U.S.

7 unchanged sentences

The Company sponsors a Supplemental Officer Retirement Plan (the “SORP”), a Supplemental Executive Retirement Plan (the “SERP”), an Executive Retiree Health Insurance Plan, and certain non-US benefits-related plans.

Please refer to Note 17, “Employee Benefit Plans” to our Consolidated Financial Statements under Item 8 of Part II of this Annual Report on Form 10-K for a discussion on the Company’s Employee Benefit Plans.

Please refer to Note 17, “Employee Benefit Plans” to our Consolidated Financial Statements under Item 8.

of Part II of this Annual Report on Form 10-K for a discussion on the Company’s Employee Benefit Plans.

Contractual Obligations

12 unchanged sentences

(1) These amounts represent the principal repayments of Long-term debt and are included on our Consolidated Balance Sheets.

See Note 14, “Borrowings” to our Consolidated Financial Statements under Item 8 of Part II of this Annual Report on Form 10-K for additional information about our Borrowings and related matters.

See Note 14, “Borrowings” to our Consolidated Financial Statements under Item 8.

of Part II of this Annual Report on Form 10-K for additional information about our Borrowings and related matters.

(2) Includes estimated future interest payments on our long-term debt and interest and facility fee on the revolving credit facility.

10 unchanged sentences

The Company is unable to make reasonably reliable estimates related to the timing of the remaining gross unrecognized tax benefit liability of $100.6 million (inclusive of interest).

See Note 18, “Income Taxes” to our Consolidated Financial Statements under Item 8 of Part II of this Annual Report on Form 10-K for further detail.

See Note 18, “Income Taxes” to our Consolidated Financial Statements under Item 8.

of Part II of this Annual Report on Form 10-K for further detail.

(7) Certain post-employment benefit obligations reported in our Consolidated Balance Sheets in the amount of $83.5 million as of June 30, 2025 were not included in the table above due to the uncertainty of the timing of these future payments.

Data Center Agreements

The Company is a party to an Amended and Restated IT Services Agreement with Kyndryl, Inc.

(“Kyndryl”), an entity formed by IBM’s spin-off of its managed infrastructure services business, under which Kyndryl provides certain aspects of the Company’s information technology infrastructure, including supporting its mainframe, midrange, network and data center operations, as well as providing disaster recovery services.

The Amended and Restated IT Services Agreement expires on June 30, 2027, however the Company may renew the agreement for up to one additional 12-month period.

Fixed minimum commitments remaining under the Amended and Restated IT Services Agreement at June 30, 2024 are $ 113.4 million through June 30, 2027, the final year of the Amended and Restated IT Services Agreement.

The Company is a party to an information technology agreement for private cloud services (the “Private Cloud Agreement”) under which Kyndryl operates, manages and supports the Company’s private cloud global distributed platforms and products, and operates and manages certain Company networks.

The Private Cloud Agreement expires on March 31, 2030.

Fixed minimum commitments remaining under the Private Cloud Agreement at June 30, 2024 are $ 106.3 million through March 31, 2030, the final year of the contract.

The following table summarizes the capitalized costs related to data center agreements as of June 30, 2024:

Amended and Restated IT Services Agreement Other Total

(in millions)

Capitalized costs, beginning balance $ 63.0 $ 7.7 $ 70.7

Capitalized costs incurred — — —

Impact of foreign currency exchange — — —

Total capitalized costs, ending balance 63.0 7.7 70.7

Total accumulated amortization ( 53.2 ) ( 6.1 ) ( 59.3 )

Net Deferred Costs

$ 9.8 $ 1.6 $ 11.4

Cloud Services Resale Agreement

On December 31, 2021, the Company and Presidio Networked Solutions LLC (“Presidio”), a reseller of services of Amazon Web Services, Inc.

and its affiliates (collectively, “AWS”), entered into an Order Form and AWS Private Pricing Addendum, dated December 31, 2021 (the “Order Form”), to the Cloud Services Resale Agreement, dated December 15, 2017, as amended (together with the Order Form, the “AWS Cloud Agreement”), whereby Presidio will resell to the Company certain public cloud infrastructure and related services provided by AWS for the operation, management and support of the Company’s cloud global distributed platforms and products.

The AWS Cloud Agreement expires on December 31, 2026.

Fixed minimum commitments remaining under the AWS Cloud Agreement at June 30, 2024 are $ 136.1 million in the aggregate through December 31, 2026.

The Company has an equity method investment that is a variable interest in a variable interest entity.

The Company is not the primary beneficiary and therefore does not consolidate the investee.

The Company’s potential maximum loss exposure related to its unconsolidated investment in this variable interest entity totaled $34.3 million as of June 30, 2024, which represents the carrying value of the Company's investment.

In addition, as of June 30, 2024, the Company also has a future commitment to fund $ 0.4 million to one of the Company’s other investees.

Other Commercial Agreements

Certain of the Company’s subsidiaries established unsecured, uncommitted lines of credit with banks.

There were no outstanding borrowings under these lines of credit at June 30, 2024.

Off-balance Sheet Arrangements

It is not our business practice to enter into off-balance sheet arrangements.

However, we are exposed to market risk from changes in foreign currency exchange rates that could impact our financial position, results of operations, and cash flows.

We manage our exposure to these market risks through regular operating and financing activities and, when deemed appropriate, through the use of derivative financial instruments.

In January 2022, we executed a series of cross-currency swap derivative contracts with an aggregate notional amount of EUR 880 million which are designated as net investment hedges to hedge a portion of our net investment in our subsidiaries whose functional currency is the Euro.

The cross-currency swap derivative contracts are agreements to pay fixed-rate interest in Euros and receive fixed-rate interest in U.S.

Dollars, thereby effectively converting a portion of our U.S.

Dollar denominated fixed-rate debt into Euro denominated fixed-rate debt.

The cross-currency swaps mature in May 2031 to coincide with the maturity of the Fiscal 2021 Senior Notes.

Accordingly, foreign currency transaction gains or losses on the qualifying net investment hedge instruments are recorded as foreign currency translation within other comprehensive income (loss), net in the Consolidated Statements of Comprehensive Income and will remain in Accumulated other comprehensive income (loss) in the Consolidated Balance Sheets until the sale or complete liquidation of the underlying foreign subsidiary.

At June 30, 2024, our position on the cross-currency swaps was an asset of $59.9 million, and is recorded as part of Other non-current assets on the Consolidated Balance Sheets with the offsetting amount recorded as part of Accumulated other comprehensive income (loss), net of tax.

We have elected the spot method of accounting whereby the net interest savings from the cross-currency swaps is recognized as a reduction in interest expense in our Consolidated Statements of Earnings.

In connection with the acquisition of Itiviti, in May 2021 we settled a forward treasury lock agreement that was designated as a cash flow hedge, for a pre-tax loss of $11.0 million, after which the final settlement loss is being amortized into Interest expense, net ratably over the ten year term of the Fiscal 2021 Senior Notes.

The expected amount of the existing loss that will be amortized into earnings before income taxes within the next twelve months is approximately $1.1 million.

In the normal course of business, we also enter into contracts in which it makes representations and warranties that relate to the performance of our products and services.

We do not expect any material losses related to such representations and warranties, or collateral arrangements.

Please refer to Note 19, “Contractual Commitments, Contingencies, and Off-Balance Sheet Arrangements” to our Consolidated Financial Statements under Item 8.

of Part II of this Annual Report on Form 10-K for a more detailed discussion of the Company’s contractual obligations.

Recently Issued Accounting Pronouncements

Please refer to Note 2, “Summary of Significant Accounting Policies” to our Consolidated Financial Statements under Item 8 of Part II of this Annual Report on Form 10-K for a discussion on the impact of the adoption of new accounting pronouncements.

Please refer to Note 2, “Summary of Significant Accounting Policies” to our Consolidated Financial Statements under Item 8.

of Part II of this Annual Report on Form 10-K for a discussion on the impact of the adoption of new accounting pronouncements.

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-K

Item 7. Management’s Discussion and Analysis