What changed in this filing

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Item 7. Management’s Discussion and Analysis

2022-10-21 compared with 2021-10-22 · 434 added, 361 removed, 231 unchanged (77% of the section changed)

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Risk Factors of this Annual Report on Form 10-K.

MD&A is designed to provide a reader of our financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity and certain other factors that may affect our future results.

Our MD&A is designed to provide a reader of our financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity and certain other factors that may affect our future results.

Our MD&A is presented in the following sections:

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FactSet Research Systems Inc.

and its wholly-owned subsidiaries (collectively, "we," "our," "us," the "Company" or "FactSet") is a global financial data and analytics company with open and flexible technology and a purpose to drive the investment community to see more, think bigger, and do their best work.

Our strategy is to become the leading open content and financial analytics platform in the industry that delivers differentiated advantage for our clients’ success.

For over 40 years, the FactSet platform has delivered expansive data, sophisticated analytics, and flexible technology that global financial professionals need to power their critical investment workflows.

Over 160,000 asset managers and owners, bankers, wealth managers, corporate firms, including private equity and venture capital firms, and others use our personalized solutions to identify opportunities, explore ideas, and gain a competitive advantage, in areas spanning investment research, portfolio construction and analysis, trade execution, performance measurement, risk management, and reporting across the investment lifecycle.

We provide financial data and market intelligence on securities, companies and industries to enable our clients to research investment ideas, as well as offering them the capabilities to analyze, monitor and manage their portfolios.

We combine dedicated client service with open and flexible technology offerings, such as a configurable desktop and mobile platform, comprehensive data feeds, cloud-based digital solutions, and application programming interfaces ("APIs").

Our revenue is primarily derived from subscriptions to our products and services such as workstations, portfolio analytics, and market data.

We advance our industry by comprehensively understanding our clients’ workflows, solving their most complex challenges, and helping them achieve their goals.

By providing them with the leading open content and analytics platform, an expansive universe of concorded data they can trust, next-generation workflow support designed to help them grow and see their next best action, and the industry’s most committed service specialists, FactSet puts our clients in a position to outperform.

We are focused on growing our business through three reportable segments ("segments"):

and its wholly-owned subsidiaries (collectively, "we," "our," "us," the "Company" or "FactSet") is a global financial data and analytics company with an open and flexible digital platform that drives the investment community to see more, think bigger and do its best work.

Our strategy is to build the leading open content and analytics platform to deliver a differentiated advantage for our clients’ success.

For over 40 years, the FactSet platform has delivered expansive data, sophisticated analytics and flexible technology used by global financial professionals to power their critical investment workflows.

As of August 31, 2022, we had more than 7,500 clients comprised of approximately 180,000 investment professionals, including asset managers, bankers, wealth managers, asset owners, channel partners, hedge funds, corporate users, private equity and venture capital professionals.

Our on- and off-platform solutions span the investment lifecycle to include investment research, portfolio construction and analysis, trade execution, performance measurement, risk management and reporting.

Our revenues are primarily derived from subscriptions to our multi-asset class data and solutions powered by our content refinery.

Our products and services include workstations, portfolio analytics and enterprise solutions.

We provide financial data and market intelligence on securities, companies, industries and people to enable our clients to research investment ideas, as well as to analyze, monitor and manage their portfolios.

We combine dedicated client service with open and flexible technology offerings, including a configurable desktop and mobile platform, comprehensive data feeds, cloud-based digital solutions and APIs.

Our CGS business supports security master files relied on by the investment industry for critical front, middle and back office functions.

We drive our business based on our detailed understanding of our clients’ workflows, which helps us to solve their most complex challenges.

We provide them with an open digital platform, connected and reliable data, next-generation workflow solutions and highly committed service specialists.

We operate our business through three segments:

the Americas, EMEA and Asia Pacific.

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of this Annual Report on Form 10-K for further discussion.

Within each of our segments, we primarily deliver insight and information through our three workflow solutions:

For each of our segments, we execute our strategy through our three workflow solutions:

Research & Advisory;

Analytics & Trading;

and Content & Technology ("CTS").

Business Strategy

Client needs and market dynamics continue to evolve at an accelerated pace with an increasing demand for differentiated, personalized, and connected data, an ongoing shift to multi-asset class investing, and cost rationalization as the shift from active to passive investing continues.

Clients are seeking new cloud-based solutions that enable self-service and automation, open and flexible systems, and increased efficiencies when integrating and managing data as part of their own broader digital transformations.

FactSet’s strategy focuses on building the leading open content and analytics platform that delivers differentiated advantages for our clients’ success – in keeping with our purpose of enabling the investment community to see more, think bigger and do their best work.

We want to be the trusted partner of choice for clients, to anticipate their needs and provide them with the most innovative solutions to make them more efficient.

This includes transforming the way our clients discover, decide, and act on an opportunity using our digital platform;

purposefully increasing our pace and speed to market by streamlining how we work;

and investing in our future workforce.

To execute on our strategy, we plan on the following:

As the needs of our clients evolve, they seek personalized and connected data, tools for multi-asset class investing and reduced costs.

Clients are also seeking cloud-based solutions, open and flexible systems and increased efficiencies to support their digital transformations.

Our strategy is to build the leading open content and analytics platform to deliver differentiated advantages for our clients’ success.

To execute this strategy, we plan on:

• Growing our digital platform :

Scaling up our Content Refinery by providing the most comprehensive and connected inventory of industry, proprietary, and third-party data for the financial community, including granular data for key industry verticals, private companies, wealth, and environmental social and governance ("ESG").

Driving next-generation workflow solutions by creating personalized and integrated solutions to streamline workflows which includes solutions for asset managers, asset owners, sell side, wealth and corporate clients.

Our goal is to deliver tangible efficiencies to our clients by connecting data and analytics with a cloud based eco-system, enabling them to manage work more effectively through an integrated investment lifecycle.

We are scaling up our content refinery to offer a comprehensive and connected inventory of industry, proprietary and third-party data for the financial community.

This data includes granular data for key industry verticals, private companies, wealth management, real-time data, and environmental, social and governance data ("ESG").

We are driving personalized workflow solutions for financial professionals, including asset managers, bankers, wealth managers, asset owners, channel partners, hedge funds, corporate users and private equity and venture capital professionals.

We offer an open ecosystem with solutions and content that is accessible and flexible through a myriad of delivery methods.

Our goal is to deliver cloud-based data and analytics to our clients, enabling them to more efficiently manage their workflows.

• Delivering execution excellence :

Building a more agile and digital first-minded organization that increases the speed of our product creation and go-to-market strategy.

To capitalize on market trends and give our clients innovative tools, we plan to release new products built on a cloud-based digital foundation as well as migrating our existing data and applications to the cloud.

Additionally, we expect to rationalize our existing product portfolio to reinvest in higher return products.

We are building an agile organization that accelerates product creation and content collection.

We offer new products designed for delivery via the cloud, making them highly efficient for our clients.

We will continue to employ technology to accelerate the pace of content collection and drive expertise in complex data sets such as private companies, ESG and deep sector.

Additionally, we are improving our price realization through consistent packaging and internal governance.

• Driving a growth mindset :

Recruiting, training and empowering a diverse and operationally efficient workforce to drive sustainable growth.

To drive a more performance-based culture, we are investing in talent who can create leading technological solutions, efficiently execute our go-to-market strategy and achieve our growth targets.

At the center of our strategy is the relentless focus on our clients and their FactSet experience.

We want to be a trusted partner and service provider, offering hyper-personalized digital products for clients to research ideas, uncover relevant insights, and leverage cognitive computing to help get the most out of their data and analytics.

Additionally, we continually evaluate business opportunities such as acquisitions and partnerships to help us expand our capabilities and competitive differentiators across the investment portfolio lifecycle.

We are focused on growing our global business in three segments:

To drive sustainable growth, we are recruiting, training and empowering a diverse and operationally efficient workforce.

As a performance-based culture, we are investing in talent that can create leading technological solutions and efficiently execute our strategy.

We use partnerships and acquisitions to accelerate our growth in strategic areas.

Our strategy centers on relentless focus on our clients and their FactSet experience.

We aim to be a trusted partner and service provider, offering personalized digital products powered by cognitive computing to research ideas and uncover relevant insights.

Additionally, we continually evaluate business opportunities such as partnerships and acquisitions to increase our capabilities and competitive differentiation.

We are focused on growing our global business through three segments:

the Americas, EMEA and Asia Pacific.

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Fiscal 2022 Year in Review

Revenue for the fiscal year 2021 was $1.6 billion, an increase of 6.5% from the prior year.

Revenue increased across our operating segments, primarily in the Americas, followed by EMEA and Asia Pacific, supported by increased revenue from each of our workflow solutions, mainly in Analytics & Trading, followed by CTS and Wealth.

Revenue also grew due to the benefit from our annual price increase.

The revenue growth of 6.5% was primarily attributed to organic revenue growth, which excludes the effects of acquisitions and dispositions completed in the last 12 months, changes in foreign currency rates in all periods presented and the deferred revenue fair value adjustments from purchase accounting (Refer to Results of Operations, Non-GAAP Financial Measures in this MD&A for further discussion on organic revenue).

Operating income increased 7.8% and diluted earnings per share ("EPS") increased 7.4% compared with the prior year.

This increase in operating income and EPS was primarily driven by revenue growth of 6.5%, a decrease in non-compensatory employee related expenses, an impairment of an investment that occurred in fiscal 2020 and a decrease in professional fees.

This increase was partially offset by higher spend in employee compensation, including stock-based compensation and

increased computer-related expenses.

Additionally, EPS benefited from a reduction in interest expense and diluted weighted average shares outstanding compared with the prior year period.

Revenues for the fiscal year 2022 was $1.8 billion, an increase of 15.9% from the prior year.

Revenues increased across our operating segments, primarily in the Americas, followed by EMEA and Asia Pacific, supported by increased revenues from each of our workflow solutions, mainly in CTS, followed by Research & Advisory and Analytics and Trading and our annual price increase.

Organic revenues contributed to 9.8% of the growth during fiscal 2022, compared with the prior year period.

Refer to Part II, Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations, Non-GAAP Financial Measures of this Annual Report on Form 10-K for a reconciliation between revenues and organic revenues.

As of August 31, 2022, organic annual subscription value ("Organic ASV") plus Professional Services totaled $1.8 billion, an increase of 9.3% over the prior year.

Organic ASV increased across all our segments, with the majority of the increase related to the Americas, followed by EMEA and Asia Pacific, supported by increases in our workflow solutions, mainly Research & Advisory and Analytics & Trading, followed by CTS.

Refer to Part II, Item 7.

Management's Discussion and Analysis of

Financial Condition and Results of Operations, Annual Subscription Value of this Annual Report on Form 10-K for the definitions of Organic ASV and Organic ASV plus Professional Services.

Operating income for the fiscal year 2022 increased 0.3%, compared with the prior year period.

Operating margin decreased in fiscal 2022 to 25.8%, compared with 29.8% for fiscal 2021.

Operating margin decreased primarily due to impairment charges related to vacating certain leased office space and higher amortization of intangible assets, primarily from the CGS acquisition, partially offset by growth in revenues and lower employee compensation expense, when expressed as a percentage of revenue.

Diluted earnings per share ("EPS") decreased 1.1% compared with the prior year.

Our clients and users reached new highs of 7,538 and 179,982, respectively, in fiscal 2022.

Over the last 12 months, we returned $382.6 million to stockholders in the form of share repurchases and dividends.

We returned $144.6 million to stockholders in the form of share repurchases and dividends paid during fiscal 2022.

As of August 31, 2022, our employee count was 11,203, up 2.9% in the past 12 months, due primarily to an increase in net new employees of 4.5% in Asia Pacific and 2.1% in EMEA, partially offset by a decrease of 1.6% in the Americas.

Of our total employees, as of August 31, 2021, 7,080 were located in Asia Pacific, 2,439 were located in the Americas and 1,373 were located in EMEA.

Our centers of excellence, located in India, the Philippines, and Latvia, primarily focus on content collection that benefits all our segments.

We garnered multiple awards during fiscal 2021, with honors spanning multiple workflows, including research, risk, performance, trading, and wealth management.

Our expanding suite of datasets stood out, most notably in the ESG and alternative categories, for its depth and innovation in delivery mechanisms.

We were recognized by over thirty industry awards and rankings reports, including winning three categories in WatersTechnology’s 2021 Inside Market Data & Inside Reference Data awards:

best alternative data provider, best ESG data provider, and best overall data or service provider for 2021.

Client Service / Customer Success

Our client service teams are a critical component of our comprehensive value proposition, and include a versatile group of financial data and modeling experts, with extensive knowledge of financial markets and FactSet solutions.

Our client service teams take a consultative approach to understand our clients’ challenges and objectives to strategically leverage our workflow solutions and deliver support of the highest standard.

Our clients have continuous access to our support desk, trained to respond to both project and technical support questions.

A client-centric approach is foundational to our ongoing achievements, therefore client satisfaction is critical to how we measure our success.

According to our global client satisfaction survey, greater than 94% of respondents were satisfied or very satisfied with our support.

We believe that these strong relationships help ensure continued high rates of retention and account expansion.

We garnered multiple awards in 2022, with honors spanning multiple workflows, including research, risk, performance, trading and wealth management.

We were recognized by over thirty industry awards and rankings reports, including winning four categories in WatersTechnology’s 2022 Inside Market Data & Inside Reference Data awards, Snowflake Marketplace Partner of the Year and Waters Rankings 2022 Best Data Analytic Provider.

CUSIP Global Services Acquisition

On December 24, 2021, we entered into a definitive agreement to acquire CGS, previously operated by S&P Global Inc.

on behalf of the American Bankers Association ("ABA"), for $1.932 billion in cash, inclusive of working capital adjustments.

The acquisition was completed on March 1, 2022.

CGS manages a database of 60 different data elements uniquely identifying more than 50 million global financial instruments.

It is the foundation for security master files relied on by critical front, middle and back office functions.

CGS is the exclusive provider of Committee on Uniform Security Identification Procedures ("CUSIP") and CUSIP International Number System ("CINS") identifiers globally and also acts as the official numbering agency for International Securities Identification Number ("ISIN") identifiers in the United States.

We believe that the CGS acquisition will significantly expand our critical role in the global capital markets.

Revenues from CGS are recognized based on geographic business activities in accordance with how our operating segments are currently aligned.

CGS functions as part of CTS.

The purchase price for the CGS acquisition was financed from the net proceeds of the issuance of the Senior Notes and borrowings under the 2022 Credit Facilities.

Refer to Note 6, Acquisitions and Note 12, Debt for more information on these defined terms as well as our acquisition of CGS, the Senior Notes and the 2022 Credit Facilities.

COVID-19 Update

A novel strain of coronavirus, now known as COVID-19 ("COVID-19"), was first reported in December 2019, and it has since extensively impacted the global health and economic environment, with the World Health Organization characterizing COVID-19 as a pandemic on March 11, 2020.

In response to the COVID-19 pandemic, we implemented a business continuity plan with a dedicated incident management team to respond quickly and provide ongoing guidance so that we could continue offering our clients uninterrupted products, services and support while also protecting our employees.

We believe these actions have been successful and that the pandemic, and our responses, have not significantly affected the financial results for our 2021 fiscal year.

A novel strain of coronavirus, now known as COVID-19 ("COVID-19"), was first reported in December 2019, with the World Health Organization characterizing COVID-19 as a pandemic on March 11, 2020.

In r esponse to the COVID-19 pandemic, we implemented a business continuity plan with a dedicated incident management team to respond quickly and provide ongoing guidance so that we could continue offering our clients uninterrupted products, services and support while also protecting our employees.

We believe these actions have been successful and that the pandemic, and our responses, have not significantly affected our financial results during fiscal 2022 .

At the outset of the pandemic, we required the vast majority of our employees at our offices across the globe (including our corporate headquarters) to work remotely and implemented global travel restrictions for our employees.

Since that time, we have begun to re-open many of our offices globally, utilizing a three-phased approach to provide flexibility for employees wishing to work from our offices with a focus on social distancing and safety while acting consistently with applicable local regulations.

We anticipate that the ability to open offices will vary significantly from region to region based on a number of factors, including the availability of COVID-19 vaccines and the spread of COVID-19 variants.

We have worked with local organizations to procure vaccines for our employees and encouraged them to get vaccinated.

Our offices will not re-open fully until local authorities permit us to do so and our own criteria and conditions to ensure employee health and safety are satisfied.

Since that time, we have re-opened our offices globally with a focus on safety, while acting consistently with applicable local regulations.

As of August 31, 2022, there have been minimal interruptions in our ability to provide our products, services and support to our clients.

Working remotely has had relatively little impact on the productivity of our employees, including our ability to gather content.

We continue to work closely with our clients to provide consistent access to our products and services and have remained flexible to achieve client priorities.

Based on our success in working in a remote environment during the COVID-19 pandemic, we expect to implement a new work standard under which employees in many of our locations, where permitted by local laws and regulations, and where the role permits, will have the opportunity to choose between different work arrangements.

These include working either in a hybrid arrangement, where an employee can split time between working from the office and working from a pre-approved remote location, or a fully remote arrangement, where an employee can work entirely from a pre-approved remote location.

Our revenue, earnings, and ASV are relatively stable and predictable as a result of our subscription-based business model.

To date, the COVID-19 pandemic has not had a material negative impact on our revenue, earnings or ASV.

We incurred additional expenses at the start of the COVID-19 pandemic, particularly relating to equipment to enable our employees to support our clients while working remotely, which were not material to our fiscal 2021 results.

As we have continued to work in remote and hybrid environments, reductions in discretionary spending, particularly travel and entertainment, have more than offset any related increased expenses.

Given our transition to our new work standard, we anticipate that many of these expense reductions will continue going forward, as we incur less travel and entertainment spending than we did pre-pandemic and seek to reduce our spending on office space that is no longer necessary in our new work environment.

Refer to Item 1A.

Risk Factors of this Annual Report on Form 10-K for further discussion of the potential impact of the COVID-19 pandemic on our business.

Based on our success working in a remote environment during the COVID-19 pandemic, we have implemented a new work standard under which employees in many of our locations, where permitted by local laws and regulations, and where the role permits, have the opportunity to choose between different work arrangements.

These include working in a hybrid arrangement, where an employee can split time between working from the office and working from a pre-approved remote location, or a fully remote arrangement, where an employee can work entirely from a pre-approved remote location.

Our revenues, earnings and ASV are relatively stable and predictable as a result of our subscription-based business model.

To date, the COVID-19 pandemic has not had a material negative impact on our revenues, earnings or ASV.

As we continue to work in remote and hybrid environments, reductions in discretionary spending, particularly travel and entertainment, have more than offset any related increased expenses.

Given our transition to our new work standard, we anticipate that many of these

expense reductions will continue going forward, including incurring less travel and entertainment spending than we did pre-pandemic.

We also reassessed our real estate footprint in light of these new work arrangements and have exited office space that we believe will no longer be necessary.

For the year ended as of August 31, 2022, we recognized $62.2 million in impairment charges related to vacating certain leased office space to resize our real estate footprint for the hybrid work environment.

While we will continue to evaluate our real estate needs, we expect that this initiative is largely complete, and we do not currently anticipate additional similar ly-sized real estate impairment charges as part of the reduction of our real estate footprint.

Refer to Part I, Item 1.

Business, Human Capital Management, How We Work and Item 1A.

Risk Factors, Operational Risks of this Annual Report on Form 10-K for further discussion of the potential impact of the COVID-19 pandemic on our business.

Ukraine/Russia Conflict

As the ongoing military conflict between Russia and Ukraine continues, we are closely monitoring the current and potential impact on our business, our people and our clients.

We have taken all necessary steps to ensure compliance with all applicable regulatory restrictions on international trade and financial transactions.

We have discontinued all commercial operations and delivery of products and services to clients inside Russia;

have terminated all contracts with vendors in Russia;

and have suspended all new business, trials and prospecting activities in Russia.

Total revenues associated with clients in Russia were not material to our consolidated financial results, and termination of Russian vendors has not had a material impact on our business or client relationships.

We have no offices in Russia or Ukraine, and none of our employees or contractors has been directly impacted by the crisis.

We are monitoring the regional and global ramifications of the events in the area, are in close contact with our office in Latvia, and are reviewing our business continuity plans to ensure that we are prepared in the event this office is impacted.

Our cybersecurity teams are ready to respond in the event of any attempted systems compromise.

Annual Subscription Value ("ASV")

As of August 31, 2021, organic annual subscription value ("organic ASV") plus Professional Services totaled $1.7 billion, an increase of 7.2% over August 31, 2020.

Organic ASV increased across all our geographic segments with the majority of the increase related to the Americas, followed by EMEA and Asia Pacific.

We believe ASV reflects our ability to grow recurring revenue and generate positive cash flow and is the key indicator of the successful execution of our business strategy.

– "ASV" at any point in time represents our forward-looking revenue for the next 12 months from all subscription services currently being supplied to client, excluding revenues from Professional Services.

We believe ASV reflects our ability to grow recurring revenues and generate positive cash flow and is the key indicator of the successful execution of our business strategy.

– "ASV" at any point in time represents our forward-looking revenues for the next 12 months from all subscription services currently being supplied to clients, excluding revenues from Professional Services.

– "Organic ASV" at any point in time equals our ASV excluding ASV from acquisitions and dispositions completed within the last 12 months and the effects of foreign currency movements on the current year period.

– "Professional Services" are revenues derived from project-based consulting and implementation.

– "Professional Services" are revenues derived from project-based consulting and implementation, annualized over the past 12 months.

– "Organic ASV plus Professional Services" at any point in time equals the sum of Organic ASV and Professional Services.

Organic ASV plus Professional Service

The following table presents the calculation the calculation of Organic ASV plus Professional Services as of August 31, 2021.

Organic ASV plus Professional Services

The following table presents the calculation of Organic ASV plus Professional Services as of August 31, 2022.

With proper notice provided as contractually required, our clients can add to, delete portions of, or terminate service, subject to certain limitations.

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Organic ASV plus Professional Services growth rate 9.3 %

(1) Includes $24.1 million in Professional Services fees as of August 31, 2021.

(1) Includes $24.0 million in Professional Services as of August 31, 2022.

(2) The impact from foreign currency movements.

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As of August 31, 2022, Organic ASV plus Professional Services was $1.8 billion, an increase of 9.3% compared with August 31, 2021.

The increase in year-over-year Organic ASV was largely attributed to existing clients, followed by new client sales and existing client price increases, partially offset by existing client cancellations.

The increase in year-over-year Organic ASV was largely attributable to increased sales to existing clients, followed by new client sales and existing client price increases, partially offset by existing client cancellations.

Organic ASV increased across all our geographic segments with the majority of the increase related to the Americas, followed by EMEA and Asia Pacific.

This increase was driven by additional sales in our workflow solutions, primarily in Research, followed by Analytics & Trading and CTS.

Sales increased in Research mainly due to higher demand for our workstations.

Sales increased in Analytics & Trading mainly from our portfolio analytics, portfolio reporting, performance and reporting, front office, and risk and quantitative solutions.

CTS sales increased primarily due to core and premium content sets, specifically related to company financial data and data management solutions.

As of August 31, 2021, ASV from the Americas was $1,039.4 million, an increase from $956.6 million as of August 31, 2020.

This increase was driven by additional sales in our workflow solutions, primarily in Research & Advisory and Analytics & Trading, followed by CTS.

Sales increased in Research & Advisory mainly due to higher demand for our workstations.

Sales increased in Analytics & Trading mainly from our performance and reporting products, portfolio analytics solutions and portfolio and benchmark services.

CTS sales increased primarily due to purchases of company financial data, such as fundamentals, estimates and ownership, along with data management solutions to empower data connectivity.

As of August 31, 2022, ASV from the Americas represented 64% of total ASV and was $1,262.4 million, an increase from $1,039.4 million as of August 31, 2021.

Americas Organic ASV increased to $1,135.3 million as of August 31, 2022, a 9.3% increase compared with August 31, 2021.

As of August 31, 2021, ASV from EMEA was $450.0 million, an increase from $426.0 million as of August 31, 2020.

EMEA organic ASV increased to $451.3 million as of August 31, 2021, a 5.6% increase compared with August 31, 2020.

As of August 31, 2021, Asia Pacific ASV was $174.7 million, an increase from $156.5 million as of August 31, 2020.

As of August 31, 2022, ASV from EMEA equaled 26% of total ASV and was $515.3 million, an increase from $450.0 million as of August 31, 2021.

EMEA Organic ASV increased to $486.0 million as of August 31, 2022, an 8.4% increase compared with August 31, 2021.

As of August 31, 2022, ASV from Asia Pacific comprised 10% of total ASV and was $200.4 million, an increase from $174.7 million as of August 31, 2021.

Asia Pacific Organic ASV increased to $191.7 million as of August 31, 2022, a 12.0% increase compared with August 31, 2021.

The increase in organic ASV across all our geographic segments was largely attributed to increased sales to existing clients, followed by new client sales and existing client price increases, partially offset by existing client cancellations.

The increased organic ASV in the Americas was primarily driven by increased sales for Research, followed by higher sales of Analytics & Trading and CTS.

The EMEA organic ASV increase was mainly driven by higher sales of CTS followed by Analytics & Trading.

The Asia Pacific organic ASV increase was primarily due to increased sales of Research, Analytics & Trading, and CTS.

The increased Organic ASV in the Americas was primarily driven by increased sales of Research & Advisory and Analytics & Trading.

The EMEA organic ASV increase was mainly driven by higher sales of Research & Advisory, Analytics & Trading and CTS.

The Asia Pacific organic ASV increase was primarily due to increased sales of Analytics & Trading and Research & Advisory.

Buy-side and Sell-side Organic ASV Growth

Buy-side and sell-side Organic ASV growth rates at August 31, 2021, compared with August 31, 2020, were 6.5% and 12.0%, respectively.

Buy-side clients account for approximately 83% of our Organic ASV, consistent with the prior year period, and primarily include asset managers, asset owners, wealth managers, hedge funds and corporate firms.

The buy-side and sell-side Organic ASV growth rates at August 31, 2022, compared with August 31, 2021, were 8.5% and 13.8%, respectively.

Buy-side clients account for approximately 83% of our organic ASV, consistent with the prior year period, and primarily include asset managers, wealth managers, asset owners, channel partners, hedge funds and corporate firms.

The remainder of our Organic ASV is derived from sell-side firms and primarily include broker-dealers, banking and advisory, private equity and venture capital firms.

Client and User Additions

The table below presents our total clients and users:

As of and for the

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7,538 6,453 16.8 %

160,932 141,136 14.0 %

Users 179,982 160,932 11.8 %

(1) The client count includes clients with ASV of $10,000 and above.

(2) In the second quarter of fiscal 2021, we revised our user count methodology to include users across all our products, including workstations, StreetAccount and other workflow solutions.

The prior year user count was adjusted to reflect this change for comparison purposes.

Our client count includes clients with ASV of $10,000 and above.

Our total client count was 6,453 as of August 31, 2021, a net increase of 9.8%, or 578 clients in the last 12 months, mainly due to an increase in corporate and wealth management clients and third-party data providers.

The client count increase was mainly driven by demand for our integrated content and workflow solutions, which are further enhanced by our continued investment in product innovation.

As part of our long-term growth strategy, we continue to focus on expanding and cultivating relationships with our existing client base through sales of workstations, applications, services and content.

Our total client count was 7,538 as of August 31, 2022, a net increase of 16.8%, or 1,085 clients in the last 12 months, mainly due to an increase in corporate clients, wealth management clients, and private equity and venture capital firms.

We believe this increase is primarily due to our continued focus on our on- and off-platform workflow-focused solutions, connected content and client-focused services.

As of August 31, 2022, there were 179,982 professionals using FactSet, representing a net increase of 11.8%, or 19,050 users, in the last 12 months, primarily driven by an increase in wealth advisory professionals from our wealth management clients, as well as an increase in sell-side users from our banking clients.

The increase in users was mainly due to a new wealth management client, improvement in our client retention and increased new hiring at our banking clients.

The increase in users was mainly due to new wealth management clients, improvement in our client retention and increased new hiring at our banking clients.

Annual ASV retention was greater than 95% of ASV for the period ended August 31, 2022 and August 31, 2021.

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Employee Headcount

As of August 31, 2021, our employee headcount was 10,892, up 3.9% in the past 12 months, due primarily to an increase in net new employees of 6.6% in Asia Pacific and 0.7% in EMEA, partially offset by a decrease of 1.5% in the Americas.

employee headcount at August 31, 2021, 7,080 were located in Asia Pacific, 2,439 were located in the Americas and 1,373 were located in EMEA.

As of August 31, 2022, our employee headcount was 11,203, an increase of 2.9% compared with 10,892 employees as of August 31, 2021.

This growth in headcount was due to an increase in net new employees of 4.5% in Asia Pacific and 2.1% in EMEA, partially offset by a decrease of 1.6% in the Americas.

At August 31, 2022, 7,401 employees were located in Asia Pacific, 2,400 in the Americas and 1,402 in EMEA.

Results of Operations

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Years ended August 31,

(in thousands, except per share data) 2021 2020 $ Change % Change

Revenue $ 1,591,445 $ 1,494,111 $ 97,334 6.5 %

(in thousands, except share and per share data) 2022 2021 $ Change % Change

Revenues $ 1,843,892 $ 1,591,445 $ 252,447 15.9 %

Cost of services 871,106 786,400 84,706 10.8 %

Selling, general and administrative 433,032 331,004 102,028 30.8 %

Asset impairments 64,272 — 64,272 N/M

Operating income $ 475,482 $ 474,041 $ 1,441 0.3 %

Net income $ 396,917 $ 399,590 $ (2,673) (0.7) %

Diluted earnings per common share $ 10.36 $ 9.65 $ 0.71 7.4 %

Diluted weighted average common shares 38,736 38,570

Revenue increased 6.5% to $1.6 billion in fiscal 2021, compared with $1.5 billion from the same period in the prior year.

The increase in revenue was largely attributed to increased sales to existing clients, followed by new client sales and existing client price increases, partially offset by existing client cancellations.

Revenue increased across all our segments, primarily from the Americas, followed by EMEA and Asia Pacific, driven by increased revenue in all our workflow solutions, mainly in Analytics & Trading, CTS, and Research, compared with the prior year.

Organic revenue increased to $1.6 billion for the fiscal year ended 2021, a 6.3% increase over the prior year period.

Diluted earnings per common share $ 10.25 $ 10.36 $ (0.11) (1.1) %

Revenues in fiscal 2022 was $1.8 billion, an increase of 15.9% compared to the prior year.

This increase in revenues was largely attributed to increased sales to existing clients, new client sales and existing client price increases, partially offset by existing client cancellations.

Revenues increased across all our segments, primarily from the Americas, followed by EMEA and Asia Pacific, driven by increased revenues in all our workflow solutions, mainly in CTS, followed by Research & Advisory and Analytics & Trading, compared with the prior year.

Organic revenues increased to $1.7 billion for the fiscal year ended 2022, a 9.8% increase over the prior year period.

Refer to Item 7.

Results of Operations, Non-GAAP Financial Measures in the MD&A of this Annual Report on Form 10-K for further discussion on organic revenue).

The revenue growth of 6.5% was composed of organic revenue growth of 6.3%, a 30 basis point increase from foreign currency exchange rate fluctuations, partially offset by a 10 basis point decrease from deferred revenue fair value adjustments from purchase accounting and acquisition-related revenue.

Revenue by Segment

Management's Discussion and Analysis of Financial Condition and Results of Operations, Non-GAAP Financial Measures of this Annual Report on Form 10-K for further discussion on organic revenues.

The growth in revenues of 15.9% was reflective of organic revenues growth of 9.8% and a 6.6% increase primarily due to the impact of acquisition-related revenues, partially offset by a 0.5% decrease from foreign currency exchange rate fluctuations.

Revenues by Segment

The following table summarizes our revenues by segment for the periods described:

Years ended August 31,

1 unchanged sentence

Americas $ 1,173,946 $ 1,008,046 $ 165,900 16.5 %

% of revenue 63.3 % 63.2 %

% of revenues 63.7 % 63.3 %

$ 484,279 $ 427,700 $ 56,579 13.2 %

% of revenue 26.9 % 27.2 %

% of revenues 26.3 % 26.9 %

$ 185,667 $ 155,699 $ 29,968 19.2 %

% of revenue 9.8 % 9.6 %

Consolidated Revenue $ 1,591,445 $ 1,494,111 $ 97,334 6.5 %

Americas revenue increased 6.8% to $1,008.0 million in fiscal 2021, compared with $943.6 million from the same period in the prior year.

This revenue growth was mainly due to increased sales in all of our workflow solutions, primarily in Analytics & Trading and CTS.

The revenue growth of 6.8% was due to

organic revenue growth of 6.3% and a 50 basis point increase in acquisition-related revenue and deferred revenue fair value adjustments from purchase accounting.

EMEA revenue increased 5.2% to $427.7 million in fiscal 2021, compared with $406.5 million from the same period in the prior year.

This revenue growth was mainly due to increased sales in all of our workflow solutions, primarily in CTS and Analytics & Trading.

The revenue growth of 5.2% was driven by organic revenue growth of 3.7%, a 110 basis point increase from foreign currency exchange rate fluctuations and a 40 basis point increase from deferred revenue fair value adjustments from purchase accounting.

Asia Pacific revenue increased 8.2% to $155.7 million in fiscal 2021, compared with $144.0 million from the same period in the prior year.

The revenue growth was mainly due to increased sales in all of our workflow solutions, primarily in Analytics & Trading.

The revenue growth of 8.2% was due mainly to organic revenue growth of 8.0% and a 20 basis point increase from foreign currency exchange rate fluctuations.

Revenue by Workflow Solution

Revenue increased 6.5% for fiscal 2021, compared with the same period in the prior, primarily driven by Analytics & Trading and CTS.

The increase in Analytics & Trading was mainly driven by increased sales in our portfolio reporting, portfolio analytics, risk and quantitative solutions and performance and reporting.

CTS sales increased primarily due to core and premium content sets, specifically related to company financial data and data management solutions.

% of revenues 10.0 % 9.8 %

Consolidated Revenues $ 1,843,892 $ 1,591,445 $ 252,447 15.9 %

Americas revenues increased 16.5% to $1,173.9 million in fiscal 2022, compared with $1,008.0 million from the same period a year ago.

The increased revenues were mainly due to increased sales in all of our workflow solutions, primarily in CTS, followed by Research & Advisory and Analytics & Trading.

The revenues growth of 16.5% was due to organic revenues growth of 8.6% and a 7.9% increase due to the impact of acquisition-related revenues.

EMEA revenues increased 13.2% to $484.3 million in fiscal 2022, compared with $427.7 million from the same period in the prior year.

This revenues growth was mainly due to increased sales in all of our workflow solutions, primarily in CTS, followed by Research & Advisory and Analytics & Trading.

The EMEA revenues growth of 13.2% was driven by organic revenues growth of 10.0% and a 4.2% increase due to the impact of acquisition-related revenues, partially offset by a 1.0% decrease from foreign currency exchange rate fluctuations.

Asia Pacific revenues increased 19.2% to $185.7 million in fiscal 2022, compared with $155.7 million from the same period in the prior year.

This revenues growth was mainly due to increased sales in all of our workflow solutions, primarily in CTS, followed by Research & Advisory and Analytics & Trading.

The Asia Pacific revenues growth of 19.2% was due mainly to organic revenues growth of 17.2% and a 4.3% increase in acquisition-related revenues, partially offset by a 2.3% decrease from foreign currency exchange rate fluctuations.

Revenues by Workflow Solution

The growth in revenues of 15.9% for fiscal 2022, compared with the same period a year ago, was due to growth in revenues across our segments supported by increased revenues from our workflow solutions, primarily from CTS, followed by Research & Advisory and Analytics & Trading.

The increase in CTS revenues was driven mainly by CUSIP related data licensing and issuance revenues and sales of company financial data, such as fundamentals, estimates and ownership.

The increase in Research & Advisory revenues was driven mainly by higher demand for our workstations.

The increase in revenues from Analytics & Trading was primarily due to increased demand for our performance and reporting products and portfolio analytics solutions.

Operating Expenses

Principal Operating Costs and Expenses

Cost of services is mainly comprised of employee compensation costs and also includes costs primarily related to data costs, computer-related expenses, amortization of identifiable intangible assets, royalty fees, client-related communication costs and computer depreciation.

Selling, general and administrative (" SG&A") consist primarily of employee compensation costs and also includes expenses related to occupancy costs, professional fees, depreciation of furniture and fixtures, amortization of leasehold improvements, travel and entertainment expenses, marketing costs, non-compensatory employee expenses, internal communication costs and bad debt expense.

Employee compensation costs are a major component of both our cost of services and SG&A.

These expenses primarily include costs related to salaries, incentive compensation and sales commissions, stock-based compensation, benefits, employment taxes, and any applicable restructuring costs.

We assign employee compensation costs between costs of services and SG&A based on the roles and activities associated with each employee.

We categorize employees within the content collection, consulting, product development, software and systems engineering groups as cost of services personnel.

Employees included in our sales department and those that serve in various other support departments, including marketing, business development, finance, legal, human resources and administrative services, are classified as SG&A.

Asset impairments consist primarily of expenses recognized when the carrying amount of an asset exceeds its fair value.

The following table summarizes the components of our total operating expenses and operating margin for the periods described:

(in thousands) Years ended August 31,

1 unchanged sentence

Cost of services $ 871,106 $ 786,400 $ 84,706 10.8 %

Selling, general and administrative ("SG&A") 331,004 359,005 (28,001) (7.8) %

SG&A 433,032 331,004 102,028 30.8 %

Asset impairments 64,272 — $ 64,272 N/M

Total operating expenses $ 1,368,410 $ 1,117,404 $ 251,006 22.5 %

1 unchanged sentence

Operating Margin 25.8 % 29.8 % (13.4) %

Cost of Services

Cost of services increased 13.1% to $786.4 million in fiscal 2021 compared with $695.4 from the same period in the prior year.

Cost of services, expressed as a percentage of revenue, was 49.4% during fiscal 2021, an increase of 290 basis points over the prior year period.

This increase was primarily due to an increase in employee compensation costs, including stock-based compensation, and computer-related expenses.

Employee compensation costs increased 150 basis points mainly due to higher annual base salaries and a net increase in employee headcount of 408 employees, with the majority of the compensation from new employee headcount included in cost of services, an increase in year-over-year variable compensation, and an increase in stock based compensation expense.

Computer-related expenses increased by 150 basis points, primarily due to increased technology investments related to our migration to cloud-based hosting services, licensed software arrangements, and a 30 basis point increase in the amortization of intangibles, due to a higher investment in capitalized software that has been placed into service.

This increase was partially offset by increased capitalization of compensation costs related to development of our internal-use software projects, as well as a shift in headcount to lower cost locations.

Cost of S ervices

Cost of services increased 10.8% to $871.1 million in fiscal 2022 compared with $786.4 million in the same period a year ago, primarily due to an increase in amortization of intangible assets, computer-related expenses, royalty fees, data costs and employee compensation expense.

Cost of services, when expressed as a percentage of revenues, was 47.2% during fiscal 2022, a decrease of 220 basis points over the prior year period.

This decrease was primarily due to lower employee compensation costs, computer depreciation and data costs, partially offset by higher amortization of intangible assets, royalty fees and computer-related expenses.

• Employee compensation costs decreased 430 basis points primarily due to a reduction in salaries related to a shift from high to low cost locations, an increase in stock-based compensation expense and an increase in year-over-year variable compensation, partially offset by a net increase in employee headcount of 120 employees

• Computer depreciation expense decreased by 40 basis points as certain network equipment was fully depreciated during fiscal 2022, with less replacement equipment needed due to our migration to cloud-based hosting services.

• Data costs decreased by 30 basis points due to revenue growth outpacing the cost of content.

• Amortization of intangible assets increased 140 basis points mainly due to increased amortization related to acquired intangible assets, primarily from the CGS acquisition, and increased amortization from capitalized internal-use software.

• Royalty fees increased cost of services 90 basis points due to contracts acquired in connection with the acquisition of CGS.

• Computer-related expenses increased 60 basis points due to increased spend from our migration to cloud-based hosting services and licensed software arrangements.

Selling, General and Administrative

Selling, general and administrative ("SG&A") expenses decreased 7.8% to $331.0 million during fiscal 2021, compared with $359.0 million from the same period in the prior year.

SG&A expenses, expressed as a percentage of revenue, were 20.8% in fiscal 2021, a decrease of 320 basis points over the prior year period.

This decrease was primarily due to a decrease in non-

compensatory employee related expenses, an impairment on an investment in a company in fiscal 2020, and a decrease in professional fees, partially offset by increased compensations costs.

Non-compensatory employee-related expenses, inclusive of travel, entertainment and office expenses, decreased 150 basis points, mainly due to restrictions and impacts related to the COVID-19 pandemic, as most employees continued to work from home.

The prior year investment impairmen t res ulted in a 110 basis point decrease in the current year.

Professional fees decreased 50 basis points, primarily due to the completion of certain projects to support our technology plan and business transformation activities and lower tax consulting and accounting fees, compared with the prior year period.

The decrease was partially offset by an increase in employee compensation costs of 70 basis points, primarily driven by higher annual base salaries and a net increase in employee headcount, as well as higher variable compensation expense.

SG&A expenses increased 30.8% to $433.0 million during fiscal 2022, compared with $331.0 million from the same period a year ago, primarily due to higher employee compensation expense and professional fees.

SG&A expenses, expressed as a percentage of revenues, were 23.5% in fiscal 2022, an increase of 270 basis points over the prior year period.

This increase was primarily due to higher professional fees and employee compensation expense.

• Professional fees increased 80 basis points, primarily driven by costs incurred in connection with the acquisition of CGS.

• Employee compensation expense increased 70 basis points, primarily due to increased variable compensation, a net increase in SG&A employee headcount of 191, increased stock-based compensation expense and higher annual base salaries.

• Occupancy costs decreased 60 basis points mainly driven by vacating leased office space resulting in the recognition of asset impairment charges of our lease right-of-use ("ROU") asset during fiscal 2022.

This impairment accelerated the recognition of lease expense, thereby reducing occupancy costs recorded over the remaining lease terms.

Asset Impairments

Asset impairments incurred during fiscal 2022 were $64.3 million, or 3.5% when expressed as a percentage of revenues.

This asset impairment charge included $62.2 million related to our lease ROU assets and property, equipment and leasehold improvements associated with vacating certain leased office space to resize our real estate footprint for the hybrid work environment.

We fully impaired our lease ROU assets for locations we vacated, with no intention to sublease.

For locations we intend to sublease, we recognized an impairment when the estimated fair value of the lease ROU asset was less than its carrying value.

Substantially all the property, equipment and leasehold improvements associated with the vacated lease office space was fully impaired as there are no expected future cash flows for these items.

Operating Income and Operating Margin

Operating income increased 0.3% to $475.5 million in fiscal 2022, compared with $474.0 million in the prior year.

Operating income increased primarily due to revenue growth, inclusive of our annual price increase, a reduction in non-compensatory employee related expenses, a prior year investment impairment, decreased professional fees and occupancy costs, partially offset by an increase in employee compensation costs, including stock-based compensation, and computer-related expenses.

Operating income was negatively impacted by movements in foreign currency exchange rates on a year-over-year basis.

Our operating margin increased in fiscal 2021 to 29.8%, compared with 29.4% for fiscal 2020.

Operating margin increased primarily due to a decrease in non-compensatory employee related expenses, a prior year investment impairment, decreased professional fees and occupancy costs, partially offset by higher employee compensation costs and computer-related expenses.

This increase was primarily due to growth in revenues of 15.9%, largely offset by higher operating expenses due mainly to impairment charges related to vacating certain leased office space and higher employee compensation expense, amortization of intangible assets, computer-related expenses, professional fees and data costs.

Foreign currency exchange rate fluctuations, net of hedge activity, decreased operating income by $3.1 million.

Operating margin decreased in fiscal 2022 to 25.8%, compared with 29.8% for fiscal 2021.

Operating margin decreased primarily due to impairment charges related to vacating certain leased office space and higher amortization of intangible assets, royalty fees, professional fees and computer-related expenses, when expressed as a percentage of revenues, partially offset by growth in revenues and lower employee compensation expense, occupancy costs, computer depreciation and data costs, when expressed as a percentage of revenues.

Operating Income by Segment

Our internal financial reporting structure is based on three reportable segments, the Americas , EMEA and Asia Pacific.

Our internal financial reporting structure is based on three segments:

the Americas;

and Asia Pacific.

Refer to Note 18, Segment Information , for further discussion regarding our segments.

The following table summarizes our operating income by segment for the periods described:

Years ended August 31,

4 unchanged sentences

Total Operating Income $ 475,482 $ 474,041 $ 1,441 0.3 %

Americas operating income increased 19.9% to $218.2 million during fiscal 2021, compared with $182.0 million from the prior year.

The increase was primarily due to revenue growth of 6.8%, inclusive of our annual price increase, a reduction in non-compensatory employee related expenses, a prior year investment impairment and lower professional fees, partially offset by an increase in employee compensation expense and computer-related expenses.

Non-compensatory employee related expenses, inclusive of travel, entertainment and office expenses, decreased mainly due to restrictions and impacts related to the COVID-19 pandemic.

Professional fees decreased, primarily due to the completion of certain projects to support our technology plan and business transformation activities, as well as lower tax consulting fees, compared with the prior year period.

The expense decreases were partially offset by higher employee compensation expense, mainly due to increased annual base salaries, an increase in year-over-year variable compensation, partially offset by higher capitalization of compensation costs related to development of our internal-use software projects, and increases in computer-related expenses, due to increased technology investments, including costs from cloud-based hosting and licensed software arrangements.

Additionally, amortization of intangible assets increased, primarily due to a higher investment in capitalized software that has been placed into service.

EMEA operating income decreased 3.4% to $159.7 million during fiscal 2021, compared with $165.3 million from the prior year.

The decrease in EMEA operating income was primarily due to an increase in employee compensation costs, bad debt expense, and amortization of intangibles, partially offset by revenue growth of 5.2%, inclusive of our annual price increase and a reduction in non-compensatory employee related expenses.

Operating income was negatively impacted by movements in foreign currency exchange rates on a year-over-year basis.

Employee compensation increased primarily due to a net increase in employee headcount over the past 12 months, increased annual base salaries, higher variable compensation and higher vacation expense.

Non-compensatory employee related expenses, inclusive of travel, entertainment and office expenses, decreased, mainly due to restrictions and impacts related to the COVID-19 pandemic, partially offset by investment in technology to allow employees to work from home.

Americas operating income decreased 27.1% to $159.1 million during fiscal 2022, compared with $218.2 million from the prior year.

This decrease is primarily due to asset impairments, higher employee compensation expense, amortization of intangible assets, computer-related expenses, professional fees, and royalty fees, partially offset by growth in revenues of 16.5%.

• Asset impairments include $62.2 million related to our lease ROU assets and property, equipment and leasehold improvements associated with vacating certain leased office space to resize our real estate footprint for the hybrid work environment.

• Employee compensation expense increased primarily due to increased variable compensation, higher stock compensation expense and an increase in annual base salary, partially offset by a decrease in net employee headcount of 39.

• Amortization of intangible assets primarily increased due to amortization related to acquired intangible assets primarily from the CGS acquisition and increased amortization from capitalized internal-use software.

• Computer-related expenses increased primarily due to increased spend from our migration to cloud-based hosting services and licensed software arrangements.

• Professional fees increased primarily due to costs incurred in connection with the acquisition of CGS.

• Royalty fees increased due to contracts acquired in connection with the acquisition of CGS.

EMEA operating income increased 22.9% to $196.2 million during fiscal 2022, compared with $159.7 million from the prior year.

This increase was primarily due to growth in revenues of 13.2%, a decrease in amortization of intangible assets and a decrease in bad debt expense, partially offset by asset impairments.

Amortization of intangible assets decreased as certain acquired intangible assets were fully amortized during fiscal 2022.

The asset impairments related to vacating certain leased office space to resize our real estate footprint for the hybrid work environment and impacted both our lease ROU assets and property, equipment and leasehold improvements balances.

Asia Pacific operating income increased 24.9% to $120.1 million during fiscal 2022, compared with $96.2 million from the prior year.

The increase in Asia Pacific operating income was mainly due to revenue growth of 8.2%, inclusive of our annual price increase, and a reduction in non-compensatory employee related expenses, partially offset by an increase in employee compensation costs.

Operating income was favorably impacted by movements in foreign currency exchange rates on a year-over-year basis.

Non-compensatory employee related expenses, inclusive of travel, entertainment and office expenses, decreased, mainly due to restrictions and impacts related to the COVID-19 pandemic, partially offset by investments in technology to allow employees to work from home.

Employee compensation increased mainly due to a 6.6% increase in our Asia Pacific workforce in the last 12 months and increased annual base salaries.

Income Taxes, Net Income and Diluted Earnings per Share

The increase in Asia Pacific operating income was mainly due to growth in revenues of 19.2%, partially offset by an increase in employee compensation expense.

Employee compensation expense increased mainly due to higher annual base salaries due to a net increase in employee headcount of 321 and increased variable compensation.

Years ended August 31,

(in thousands) 2022 2021 $ Change % Change

Income before income taxes $ 443,594 $ 467,617 (24,023) (5.1) %

Provision for income taxes $ 46,677 $ 68,027 $ (21,350) (31.4) %

Effective tax rate 10.5 % 14.5 % (27.7) %

Our effective tax rate is based on recurring factors and non-recurring events, including the taxation of foreign income.

Our effective tax rate will vary based on, among other things, changes in levels of foreign income, as well as discrete and other non-recurring events that may not be predictable.

Our effective tax rate is lower than the applicable U.S.

corporate income tax rate for fiscal 2022 driven mainly by research and development ("R&D") tax credits, a foreign derived intangible income ("FDII") deduction and a tax benefit from the exercise of stock options.

The fiscal 2022 provision for income taxes decreased 31.4% to $46.7 million, compared with $68.0 million in fiscal 2021.

This decrease was primarily driven by lower pretax income and $11.7 million in higher tax benefits from the exercise of stock options for fiscal 2022, compared with the prior year period.

Net Income and Diluted Earnings per Share

Years ended August 31,

(in thousands, except for per share data) 2022 2021 $ Change % Change

Net income $ 396,917 $ 399,590 $ (2,673.0) (0.7) %

Diluted weighted average common shares 38,736 38,570 $ 166 0.4 %

Diluted earnings per common share $ 10.25 $ 10.36 $ (0.11) (1.1) %

The fiscal 2021 provision for income taxes was $68.0 million, compared with $54.2 million in fiscal 2020, an increase of 25.5%.

The increase was primarily due to net changes in jurisdictional pre-tax book income in fiscal 2021, compared with the prior year.

Additionally, the increase was driven by a $4.4 million lower windfall tax benefit from stock-based compensation for fiscal 2021, compared with fiscal 2020, changes in tax rates in certain jurisdictions, and a lower benefit from finalizing prior year tax returns of $1.2 million.

The increase was partially offset by the impact of the true-up of certain foreign deferred tax balances, and higher research and development tax credits.

Net Income and Diluted Earnings per Share

Net income increased 7.1% to $399.6 million during fiscal 2021 compared with $372.9 million in fiscal 2020.

Diluted earnings per share increased 7.4% to $10.36 in fiscal 2021 compared with $9.65 in fiscal 2020.

Net income and diluted EPS increased primarily due to increased operating income and a reduction in interest expense, partially offset by an increase in the provision for income taxes.

Interest expense decreased as a result of a decrease in LIBOR compared with the prior year, which reduced the interest rate under our 2019 Revolving Credit Facility.

Refer to Note 13, Debt of the Notes to the Consolidated Financial Statements included in Item 8.

of this Annual Report on Form 10-K for more information on LIBOR and the 2019 Revolving Credit Facility.

Net income decreased 0.7% to $396.9 million and diluted EPS decreased 1.1% to $10.25 for fiscal 2022, compared with fiscal 2021.

Net income and diluted EPS decreased primarily due to an increase in operating expenses and interest expense related to our debt refinancing, partially offset by higher revenues and a reduction in the provision for income taxes, compared with the prior year period.

Diluted EPS also decreased due to a 0.2 million increase in our diluted weighted average shares outstanding.

Non-GAAP Financial Measures

To supplement the financial measures prepared in accordance with generally accepted accounting principles in the United States ("GAAP") , we use non-GAAP financial measures including organic revenue, adjusted operating margin, adjusted net income and adjusted diluted earnings per share.

To supplement the financial measures prepared in accordance with generally accepted accounting principles in the United States ("GAAP"), we use non-GAAP financial measures including organic revenues, adjusted operating income, adjusted operating margin, adjusted net income, EBITDA, adjusted EBITDA and adjusted diluted EPS.

The reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are show in the tables below.

These non-GAAP financial measures should not be considered in isolation from, as a substitute for, or superior to, financial measures reported in accordance with GAAP.

Moreover, these non-GAAP financial measures have limitations in that they do not reflect

all the items associated with the operations of the business as determined in accordance with GAAP.

Moreover, these non-GAAP financial measures have limitations in that they do not reflect all the items associated with the operations of the business as determined in

accordance with GAAP.

Other companies may calculate similarly titled non-GAAP financial measures differently that we do, limiting the usefulness of those measures for comparative purposes.

1 unchanged sentence

Adjusted measures may also facilitate comparisons to our historical performance.

The table below provides an unaudited reconciliation of revenue to adjusted revenue and organic revenue.

Organic revenues exclude revenue related to acquisitions and dispositions completed in the last 12 months, the amortization of deferred revenues' fair value adjustments from purchase accounting related to acquisitions prior to fiscal 2022, and the impacts of foreign currency movements on the current year period.

Acquisitions during fiscal 2022 were accounted for in accordance with our adoption of ASU No.

as such, the deferred revenues did not include a fair value adjustment.

Refer to Note 2, Significant Accounting Policies in the Notes to the Consolidated Financial Statements included in Item 8.

of this Annual Report on Form 10-K for more information on ASU No.

The table below provides an unaudited reconciliation of revenues to adjusted revenues and organic revenues.

Twelve Months Ended

(In thousands) 2022 2021 $ Change % Change

Revenue $ 1,591,445 $ 1,494,111 $ 97,334 6.5 %

Deferred revenue fair value adjustment (1)

Revenues $ 1,843,892 $ 1,591,445 $ 252,447 15.9 %

Deferred revenues fair value adjustment (1)

25 539 (514) (95.4) %

Adjusted revenue 1,591,984 1,498,303 93,681 6.3 %

Acquired revenue (2)

Adjusted revenues 1,843,917 1,591,984 251,933 15.8 %

Acquired revenues (2)

(103,723) — (103,723)

1 unchanged sentence

7,898 — 7,898

Organic revenue $ 1,592,337 $ 1,498,303 $ 94,034 6.3 %

(1) The amortization effect of the purchase accounting adjustment on the fair value of acquired deferred revenue.

Organic revenues $ 1,748,092 $ 1,591,984 $ 156,108 9.8 %

(1) The amortization effect of the purchase accounting adjustment related to the fair value of acquired deferred revenues.

Acquisitions during fiscal 2022 were accounted for in accordance with our adoption of ASU No.

as such, the deferred revenues did not include a fair value adjustment.

(2) Revenues from acquisitions completed within the last 12 months.

(3) The impact from foreign currency movements over the past 12 months.

The table below provides an unaudited reconciliation of operating income, operating margin, net income and diluted EPS to adjusted operating income, adjusted operating margin, adjusted net income and adjusted diluted EPS.

Twelve Months Ended

1 unchanged sentence

Operating income $ 475,482 $ 474,041 0.3 %

Deferred revenue fair value adjustment 539 4,192

Deferred revenues fair value adjustment 25 539

Real estate charges 62,205 716

Intangible asset amortization 49,122 23,257

Impairment of Investment — 16,500

Transformation costs (1)

14,113 16,478

Business acquisition costs 20,608 —

Restructuring / severance 9,975 5,028

Real estate charges 716 4,253

Contingent Liability 3,610 —

Transformation costs

Adjusted operating income $ 624,395 $ 517,694 20.6 %

3 unchanged sentences

Net income $ 396,917 $ 399,590 (0.7) %

Deferred revenue fair value adjustment 456 3,385

Deferred revenues fair value adjustment 22 456

Real estate charges 54,789 606

Intangible asset amortization 43,266 19,672

Impairment of Investment — 16,500

Transformation costs (1)

11,938 13,171

Business acquisition costs 18,151 —

Restructuring / severance 8,786 4,253

Real estate charges 606 3,399

Contingent Liability 3,180 —

Transformation costs

Income tax items

2 unchanged sentences

$ 520,279 $ 432,049 20.4 %

Net income $ 396,917 $ 399,590

Interest expense 35,697 8,200

Income taxes 46,677 68,027

Depreciation and amortization expense 86,683 64,476

EBITDA $ 565,974 $ 540,293 4.8 %

Real estate charges 62,205 —

Adjusted EBITDA (2)

$ 628,179 $ 540,293 16.3 %

Diluted earnings per common share $ 10.25 $ 10.36 (1.1) %

Deferred revenue fair value adjustment 0.01 0.10

Deferred revenues fair value adjustment — 0.01

Real estate charges 1.41 0.02

Intangible asset amortization 1.11 0.51

Impairment of Investment — 0.42

Transformation costs (1)

Business acquisition costs 0.47 —

Restructuring / severance 0.23 0.11

Real estate charges 0.02 0.08

Contingent Liability 0.08 —

Transformation costs

Income tax items

3 unchanged sentences

Weighted average common shares (Diluted) 38,736 38,570

(1) Costs primarily related to professional fees associated with the ongoing multi-year investment plan.

(2) Adjusted operating margin is calculated as adjusted operating income divided by adjusted revenue as shown in the organic revenue table above.

(3) Income tax items for the year ended August 31, 2021 reflects tax expenses primarily related to a reduction in the estimated foreign pre-tax book income as well as an increase in estimated U.S.

pre-tax book income.

This was partially offset by a benefit from the finalization of the prior year tax return.

Income tax items for the year ended August 31, 2020 includes income tax expenses primarily due to finalization of the prior year tax return.

(4) For purposes of calculating adjusted net income and adjusted diluted earnings per share, deferred revenue fair value adjustments and intangible asset amortization were taxed at the annual effective tax rates of 17.8% for fiscal 2021 and 17.7% for fiscal 2020.

(1) Adjusted operating margin is calculated as adjusted operating income divided by adjusted revenues as shown in the organic revenue table above.

(2) Adjusted EBITDA is calculated as the sum of EBITDA and non-recurring, non-cash charges.

(3) For purposes of calculating adjusted net income and adjusted diluted earnings per share, adjustments were taxed at the annual effective tax rates of 12.3% for fiscal 2022 and 17.8% for fiscal 2021.

Liquidity and Capital Resources

Our primary sources of liquidity have been our cash flows generated from our operations, existing cash and cash equivalents and, when needed, our credit capacity under our existing credit facility.

We use these sources of liquidity to, among other things, service our existing and future debt obligations, fund our working capital requirements, capital expenditures, investments, acquisitions, dividend payments and repurchases of our common stock.

Based on past performance and current expectations, we believe our liquidity, along with other financing alternatives, will provide us the necessary capital to fund these transactions and achieve our planned growth for the next 12 months and the foreseeable future.

Our cash flows provided by operating activities, existing cash and cash equivalents, supplemented with our long-term debt borrowings, have been sufficient to fund our operations while allowing us to invest in activities that support the long-term growth of our operations.

Generally, some or all of the remaining available cash flow has been used to among other things, service our existing and future debt obligations, satisfy our working capital requirements and fund our capital expenditures, investments, acquisitions, dividend payments and repurchases of our common stock.

Based on past performance and current expectations, we believe our sources of liquidity, including the available capacity under our existing revolving credit facility and other financing alternatives, will provide us the necessary capital to fund these transactions and achieve our planned growth for the next 12 months and the foreseeable future.

Sources of Liquidity

Long-Term Debt

On March 29, 2019, we entered into a credit agreement with PNC Bank, National Association ("PNC") (the "2019 Credit Agreement"), which provides for a $750.0 million revolving credit facility (the "2019 Revolving Credit Facility").

We may request borrowings under the 2019 Revolving Credit Facility until its maturity date of March 29, 2024.

The 2019 Credit Agreement also allows us, subject to certain requirements, to arrange for additional borrowings with PNC for an aggregate amount up to $500.0 million, provided that any such request for additional borrowings must be in a minimum amount of $25.0 million.

As of August 31, 2021, we have borrowed $575.0 million of the available $750.0 million provided by the 2019 Revolving Credit Facility, resulting in $175.0 million available to be withdrawn.

We are required to pay a commitment fee using a pricing grid which was 0.10% as of August 31, 2021.

This fee is based on the daily amount by which the available balance in the 2019 Revolving Credit Facility exceeds the borrowed amount.

All outstanding loan amounts are reported as Long-term debt within the Consolidated Balance Sheets at August 31, 2021 and August 31, 2020.

The principal balance is payable in full on the maturity date.

Borrowings under the loan bear interest on the outstanding principal amount at a rate equal to LIBOR plus a spread using a debt leverage pricing grid, which was 0.875% as of August 31, 2021.

The variable rate of interest on the 2019 Revolving Credit Facility can expose us to interest rate volatility due to changes in LIBOR.

To mitigate this exposure, on March 5, 2020, we entered into an interest rate swap agreement with a notional amount of $287.5 million to hedge the variable interest rate obligation on a portion of our outstanding balance under the 2019 Revolving Credit Facility.

Under the terms of the interest rate swap agreement, we will pay interest at a fixed rate of 0.7995% and receive variable interest payments based on the same one-month LIBOR utilized to calculate the interest expense from the 2019 Revolving Credit Facility.

The interest rate swap agreement matures on March 29, 2024.

There is currently a global transition, known as reference rate reform, away from referencing the LIBOR, and other interbank offered rates, and toward new reference rates.

As a result of the reference rate reform initiative, these interbank offered rates, including LIBOR are expected to be discontinued.

Refer to Note 3, Summary of Significant Accounting Policies of the Notes to the Consolidated Financial Statements included in Item 8.

of this Annual Report on Form 10-K for more information on our evaluation of reference rate reform on our Consolidated Financial Statements.

Including the effects of the interest rate swap agreemen t, the weighted average interest rate on amounts outstanding under our 2019 Revolving Credit Facility was 1.38% and 2.20% for the twelve months ended August 31, 2021 and August 31, 2020, respectively.

Interest on the outstanding balance under the 2019 Revolving Credit Facility is payable quarterly, in arrears, and on the maturity date.

The 2019 Credit Agreement contains covenants and requirements restricting certain of our activities, which are usual and customary for this type of loan.

In addition, the 2019 Credit Agreement requires that we maintain a consolidated net leverage ratio, as measured by total net funded debt/EBITDA (as defined in the 2019 Credit Agreement) below a specified level as of the end of each fiscal quarter.

We were in compliance with all the covenants and requirements within the 2019 Credit Agreement as of August 31, 2021.

Letters of Credit

From time to time, we are required to obtain letters of credit in the ordinary course of business.

Approximately $2.8 million of standby letters of credit have been issued in connection with our leased office spaces as of August 31, 2021.

These standby letters of credit utilize the same covenants included in the 2019 Credit Agreement.

Refer to Note 13, Debt of the Notes to the Consolidated Financial Statements included in Item 8.

of this Annual Report on Form 10-K for more information on these covenants.

2022 Credit Agreement

On March 1, 2022, we entered into a credit agreement (the "2022 Credit Agreement") which provides for a senior unsecured term loan credit facility in an aggregate principal amount of $1.0 billion (the "2022 Term Facility") and a senior unsecured revolving credit facility in an aggregate principal amount of $500.0 million (the "2022 Revolving Facility" and, together with the 2022 Term Facility, the "2022 Credit Facilities").

The 2022 Term Facility matures on March 1, 2025, and the 2022 Revolving Facility matures on March 1, 2027.

The 2022 Revolving Facility allows for the availability of up to $100.0 million in the form of letters of credit and up to $50.0 million in the form of swingline loans.

We may seek additional commitments under the 2022 Revolving Facility from lenders or other financial institutions up to an aggregate principal amount of $750.0 million.

On March 1, 2022, we borrowed $1.0 billion under the 2022 Term Facility and $250.0 million of the available $500.0 million under the 2022 Revolving Facility.

We are required to pay a commitment fee on the daily unused amount of the 2022 Revolving Facility using a pricing grid, which remained at 0.125% through August 31, 2022.

The commitment fee can fluctuate between 0.10% and 0.25% per annum based upon our senior unsecured non-credit enhanced long-term debt rating and our total leverage ratio.

We used these borrowings, along with the net proceeds from the issuance of the Senior Notes (as defined below) and cash on hand, to finance the consideration for the CGS acquisition, to repay borrowings under the 2019 Credit Agreement (as defined below) and to pay related transaction fees, costs and expenses.

During the third quarter of 2022, we incurred approximately $9.5 million in debt issuance costs related to the 2022 Credit Facilities.

Debt issuance costs are presented in the Consolidated Balance Sheets as a direct deduction from the carrying amount of the related debt liability.

Debt issuance costs are amortized to Interest expense, net in the Consolidated Statements of Income over the contractual term of the debt on a straight-line basis, which approximates the effective interest method.

Loans under the 2022 Term Facility are subject to scheduled amortization payments on the last day of each fiscal quarter, commencing with August 31, 2022 and ending on the last such day to occur prior to the maturity date.

Each amortization payment is equal to 1.25% of the original principal amount of the 2022 Term Facility.

Any remaining outstanding principal will be repaid in full on March 1, 2025, the maturity date of the 2022 Term Facility.

The 2022 Credit Facilities are not otherwise subject to any mandatory prepayments.

We may voluntarily prepay loans under the 2022 Credit Facilities at any time without premium or penalty.

Prepayments of the 2022 Term Facility shall be applied to reduce the subsequent scheduled amortization payments in direct order of maturity.

During fiscal 2022, we repaid $250.0 million under the 2022 Term Facility, inclusive of voluntary prepayments of $237.5 million.

The 2022 Credit Agreement provides that loans denominated in U.S.

dollars, at our option, will bear interest at either (i) the one-month Term SOFR (with a 0.1% credit spread adjustment and subject to a "zero" floor), (ii) the Daily Simple SOFR (with a 0.1% credit spread adjustment and subject to a "zero" floor) or (iii) an alternate base rate.

Under the 2022 Credit Agreement, loans denominated in Pounds Sterling will bear interest at the Daily SONIA (subject to a "zero" floor) and loans denominated in Euros will bear interest at the EURIBOR (subject to a "zero" floor), in each case, plus an applicable interest rate margin.

interest rate margin will fluctuate based upon our senior unsecured non-credit enhanced long-term debt rating and our total leverage ratio.

For fiscal 2022, the outstanding borrowings under the 2022 Credit Facilities bore interest at rates equal to the applicable one-month Term SOFR rate plus a 1.1% spread (comprised of a 1.0% interest rate margin based on a debt leverage pricing grid plus 0.1% credit spread adjustment).

The spread remained consistent through August 31, 2022.

The 2022 Credit Agreement contains usual and customary event of default provisions for facilities of this type, which are subject to usual and customary grace periods and materiality thresholds.

If an event of default occurs under the 2022 Credit Agreement, the lenders may, among other things, terminate their commitments and declare all outstanding borrowings immediately due and payable.

Refer to Note 12, Debt for further discussion of the 2022 Credit Agreement.

On March 1, 2022 we completed a public offering of $500.0 million aggregate principal amount of 2.900% Senior Notes due March 1, 2027 (the “2027 Notes”) and $500.0 million aggregate principal amount of 3.450% Senior Notes due March 1, 2032 (the “2032 Notes” and, together with the 2027 Notes, the “Senior Notes”).

The Senior Notes were issued pursuant to an indenture, dated as of March 1, 2022, by and between us and U.S.

Bank Trust Company, National Association, as trustee (the "Trustee"), as supplemented by the supplemental indenture, dated as of March 1, 2022, between us and the Trustee (the "Supplemental Indenture").

The Senior Notes were issued at an aggregate discount of $2.8 million, and during the third quarter of 2022 we incurred approximately $9.1 million in debt issuance costs related to the Senior Notes.

Debt discounts and debt issuance costs are presented in the Consolidated Balance Sheets as a net direct deduction from the carrying amount of the related debt liability.

The debt discounts and debt issuance costs are amortized to Interest expense, net in the Consolidated Statements of Income over the contractual term of the debt, leveraging the effective interest method.

The 2027 Notes and the 2032 Notes will mature on March 1, 2027 and March 1, 2032, respectively.

Interest on the Senior Notes is payable semiannually in arrears on March 1 and September 1 of each year, beginning September 1, 2022.

We may redeem the Senior Notes, in whole or in part, at any time at specified redemption prices, plus any accrued and unpaid interest.

The Senior Notes are unsecured unsubordinated obligations, and will be effectively subordinated to any of our existing and future secured obligations, to the extent of the value of the assets securing such obligations.

Upon the occurrence of a change of control triggering event (as defined in the Supplemental Indenture), we must offer to repurchase the Senior Notes at 101% of their principal amount, plus any accrued and unpaid interest.

2022 Swap Agreement

On March 1, 2022, we entered into the 2022 Swap Agreement to hedge a portion of our outstanding floating SOFR rate debt with a fixed interest rate of 1.162%.

Refer to Note 5, Derivative Instruments in the Notes to the Consolidated Financial Statements included in Item 8.

of this Annual Report on Form 10-K, for defined terms and more information on the 2022 Swap Agreement.

2019 Credit Agreement

On March 29, 2019, we entered into a credit agreement, as the borrower, with PNC Bank, National Association ("PNC"), as the administrative agent and lender (the "2019 Credit Agreement"), which provided for a $750.0 million revolving credit facility (the "2019 Revolving Credit Facility").

We borrowed $575.0 million of the available $750.0 million provided by the 2019 Revolving Credit Facility.

Borrowings under the 2019 Revolving Credit Facility bore interest on the outstanding principal amount at a rate equal to the daily LIBOR plus a spread using a debt leverage pricing grid.

Interest on the amounts outstanding under the 2019 Revolving Credit Facility was payable quarterly, in arrears, and on the maturity date.

During fiscal 2019, we incurred approximately $0.9 million in debt issuance costs related to the 2019 Credit Agreement.

These costs were capitalized as debt issuance costs and were amortized into Interest expense, net in the Consolidated Statements of Income ratably over the term of the 2019 Credit Agreement.

The 2019 Credit Agreement contained covenants and requirements restricting certain of our activities, which were usual and customary for this type of loan.

In addition, the 2019 Credit Agreement required that we maintain a consolidated net leverage ratio, as measured by total net funded debt/EBITDA (as defined in the 2019 Credit Agreement), below a specified level as of the end of each fiscal quarter.

As of March 1, 2022, we repaid in full and terminated the 2019 Credit Agreement.

Refer to Note 12, Debt in the Notes to the Consolidated Financial Statements included in Item 8.

of this Annual Report on Form 10-K for more information on the termination.

Uses of Liquidity

Returning Value to Shareholders

For the year ended August 31, 2021, we returned $382.6 million to stockholders in the form of share repurchases and dividends.

We returned $144.6 million and $382.6 million to stockholders in the form of share repurchases and dividends paid during fiscal 2022 and 2021, respectively.

During fiscal 2022 and 2021, we paid dividends of $125.9 million and $117.9 million, respectively.

Our dividends per share increased 8.5% during fiscal 2022 compared to fiscal 2021, which marked the 23rd consecutive year we have increased dividends, highlighting our continued commitment to returning value to stockholders.

Future cash dividends will depend on our earnings, capital requirements, financial condition and other factors considered relevant by us and is subject to final determination by our Board of Directors.

Share Repurchase Program

Under our share repurchase program, we may repurchase shares of our common stock from time to time in the open market and privately negotiated transactions, subject to market conditions.

In fiscal 2021, we repurchased 0.8 million shares for $264.7 million under our existing share repurchase program compared with 0.7 million shares for $199.6 million in fiscal 2020.

A total of $199.9 million remains authorized for future share repurchases as of August 31, 2021.

There is no defined number of shares to be repurchased over a specified timeframe through the life of the share repurchase program.

It is expected that share repurchases will be paid using existing and future cash generated by operations.

As of August 31, 2022, a total of $181.3 million remained authorized for future share repurchases under our share repurchase program.

There is no defined number of shares to be repurchased over a specified timeframe through the life of the program.

We may repurchase shares of our common stock under the program from time-to-time in the open market and privately negotiated transactions, subject to market conditions.

For the year ended August 31, 2022, we repurchased 46,200 shares for $18.6 million compared with 797,385 shares for $264.7 million for the year ended August 31, 2021.

Beginning in the second quarter of fiscal 2022, we suspended our share repurchase program until at least the second half of fiscal 2023, with the exception of potential minor repurchases to offset dilution from grants of equity awards or repurchases to satisfy withholding tax obligations due upon the vesting of stock-based awards.

The suspension of our share repurchase program allows us to prioritize the repayment of debt under the 2022 Credit Facilities.

Refer to Note 12, Debt for more information on the 2022 Credit Facilities.

Capital Expenditures

For the year ended August 31, 2021, capital expenditures were $61.3 million, compared with $77.6 million during the same period a year ago, a decrease of $16.3 million.

Capital expenditures decreased as the cost related to the build-out of our office space in the Philippines during the year ended August 31, 2021 was less than the cost related to the build-out of our new corporate headquarters in Norwalk, Connecticut and office space in India during the prior year period.

This decrease was partially offset by higher expenditures related to the development of capitalized internal-use software during the year ended August 31, 2021 compared with the prior year.

On August 9, 2021, our Board of Directors approved a regular quarterly dividend of $0.82 which was paid on September 16, 2021.

During fiscal 2021, the quarterly dividend increased $0.05 per share or 6.5%, which marked the 22nd consecutive year we have increased dividends, highlighting our continued commitment to returning value to stockholders.

Over the last 12 months, we have paid 117.9 million in cash dividends.

During fiscal 2021, we completed acquisitions of businesses, with the most significant cash flows related to the acquisition of Truvalue Labs, Inc.

("TVL") on November 2, 2020.

We acquired all of the outstanding shares of TVL for a purchase price of $41.9 million, subject to working capital and other adjustments.

For the year ended August 31, 2022, capital expenditures decreased by 16.6% to $51.2 million, compared with $61.3 million during the same period a year ago.

Capital expenditures decreased primarily due to costs incurred for the build-out of our office space in the Philippines during the year ended August 31, 2021, partially offset by higher expenditures related to peripherals for our office space in India during the year ended August 31, 2022.

During fiscal 2022 and 2021, we completed acquisitions of several businesses, with the most significant cash flows related to the acquisitions of CGS, Cobalt Software, Inc.

("Cobalt") and Truvalue Labs, Inc.

CUSIP Global Services

On March 1, 2022, we completed the acquisition of CGS, previously operated by S&P Global Inc.

on behalf of the ABA, for a cash purchase price of $1.932 billion, inclusive of working capital adjustments.

CGS manages a database of 60 different data elements uniquely identifying more than 50 million global financial instruments.

It is the foundation for security master files relied on by critical front, middle and back office functions.

We believe that the CGS acquisition will significantly expand our critical role in the global capital markets.

Cobalt Software, Inc.

On October 12, 2021, we acquired all of the outstanding shares of Cobalt for a purchase price of $50.0 million, net of cash acquired and inclusive of working capital adjustments.

Cobalt is a leading portfolio monitoring solutions provider for the private capital industry.

This acquisition advances our strategy to scale our data and workflow solutions through targeted investments as part of our multi-year investment plan and expands our private markets offering.

Truvalue Labs, Inc.

On November 2, 2020, we acquired all of the outstanding shares of TVL for a purchase price of $41.9 million, net of cash acquired.

TVL is a leading provider of ESG information.

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The acquisition of TVL further enhances our commitment to providing industry leading access to ESG data across our platforms.

Refer to Note 7, Acquisition, in the Notes to the Consolidated Financial Statements included in Item 8.

of this Annual Report on Form 10-K for further discussion of the TVL acquisition.

Refer to Note 6, Acquisitions , in the Notes to the Consolidated Financial Statements included in Item 8.

of this Annual Report on Form 10-K for further discussion of the CGS, Cobalt and TVL acquisitions.

Contractual Obligations

Purchase obligations represent committed payments due in future periods to our various data vendors and for other goods and services.

These purchase commitments are agreements that are enforceable and legally binding on us, and they specify all significant terms, including:

fixed or minimum quantities to be purchased;

fixed, minimum or variable price provisions;

and the approximate timing of the transaction.

As of August 31, 2021 and 2020, we had total purchase commitments with suppliers of $191.9 million and $226.0 million, respectively.

We also have contractual obligations related to our lease liabilities and outstanding debt.

Refer to Note 12, Leases and Note 13, Debt for information regarding lease commitments and outstanding debt obligations, respectively.

Our purchase obligations consist of two primary arrangements, data content and hosting services.

Data content is an integral component of the value we provide to our clients.

Purchase obligations represent our legally-binding agreements to purchase fixed or minimum quantities at determinable prices.

As of August 31, 2022 and 2021, we had total purchase obligations with suppliers of $373.9 million and $191.9 million, respectively.

Our total purchase obligations at the end of both fiscal years primarily related to hosting services and data content.

Hosting services support our technology investments related to our migration to cloud-based hosting services, the majority of which rely on third-party hosting providers.

Of the $191.9 million in purchase commitments, $84.0 million relates to hosting services and $78.7 million relates to data content.

Data content is an integral component of the value we provide to our clients.

Additional commitments relate primarily to third-party software providers.

We also have contractual obligations related to our lease liabilities and outstanding debt.

Refer to Note 11, Leases and Note 12, Debt for information regarding lease commitments and outstanding debt obligations, respectively.

Summary of Cash Flows

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Net cash used in investing activities (2,033,675) (135,992) (1,897,683) 1,395.4 %

Net cash used in financing activities (322,711) (218,075) (104,636) 48.0 %

Effect of exchange rate changes on cash and cash equivalents (263) 11,673 (11,936) (102.3) %

Net increase in cash and cash equivalents $ 96,260 $ 225,806 $ (129,546) (57.4) %

Net cash provided by/(used in) financing activities 1,339,234 (322,711) 1,661,945 (515.0) %

Effect of exchange rate changes on cash and cash equivalents (22,428) (263) (22,165) NM

Net (decrease) increase in cash and cash equivalents $ (178,592) $ 96,260 $ (274,852) (285.5) %

Cash and cash equivalents aggregated to $503.3 million as of August 31, 2022, compared with $681.9 million as of August 31, 2021.

Our cash and cash equivalents increased $96.3 million during the twelve months ended August 31, 2021, primarily due to inflows of $555.2 million from net cash provided by operating activities and $64.2 million in proceeds from the exercise of employee stock options, partially offset by cash outflows of $264.7 million in share repurchases, $117.9 million in dividend payments, $58.1 million for the acquisition of businesses and $61.3 million of capital expenditures.

Our cash and cash equivalents are held in numerous locations throughout the world, with $266.9 million within the Americas, $369.3 million within EMEA (predominantly within the UK, Germany, and France) and the remaining $45.8 million within Asia Pacific (predominantly within the Philippines and India) as of August 31, 2021.

We intend to reinvest substantially all of our accumulated undistributed foreign earnings, except in instances where repatriation would result in minimal additional tax.

As a result of the U.S.

Tax Cuts and Jobs Act ("TCJA"), we believe that the income tax impact if such earnings were repatriated would be minimal.

For fiscal 2021, net cash provided by operating activities was $555.2 million compared with $505.8 million for fiscal 2020, an increase of $49.4 million.

This increase was primarily driven by higher net income and the timing of tax payments in certain jurisdictions, partially offset by certain working capital changes, inclusive of increases in variable compensation accruals.

For fiscal 2021, net cash used in investing activities was $136.0 million, representing a $62.4 million increase from the prior year.

This increase was mainly due to the acquisition of businesses, primarily related to the acquisition of TVL for approximately $41.9 million in cash, net of cash acquired, and a $16.3 million decrease in capital expenditures.

For fiscal 2021, net cash used by financing activities was $322.7 million, representing a $104.6 million increase in cash outflows compared with the prior year.

Financing activities were impacted by a $65.1 million increase in share repurchases, a $31.3 million decrease in proceeds from employee stock plans, and an increase of $7.5 million in dividend payments.

Our cash and cash equivalents decreased $178.6 million during the twelve months ended August 31, 2022.

This decrease was primarily due to cash outflows of $1,981.6 million for the acquisition of businesses, $825.0 million of debt repayments related to the termination of the 2019 Credit Agreement and partial repayment of the 2022 Term Facility, $125.9 million in dividend payments, $51.2 million of capital expenditures and $18.6 million in share repurchases.

These cash outflows were partially offset by inflows of $2,238.4 million from the issuance of new debt related to our 2022 Credit Facilities and Senior Notes, $538.3 million from net cash provided by operating activities and $86.0 million in proceeds from the exercise of employee stock options.

Our cash and cash equivalents are held in numerous locations throughout the world, with $221.1 million in the Americas, $199.6 million in EMEA (predominantly in the UK) and the remaining $82.6 million in Asia Pacific (predominantly in the Philippines and India) as of August 31, 2022.

We are permanently reinvested in all foreign unremitted earnings, except in jurisdictions where earnings can be repatriated substantially free of tax.

For fiscal 2022, net cash provided by operating activities was $538.3 million, compared with $555.2 million for fiscal 2021, a decrease of $16.9 million.

This decrease was primarily driven by the timing of tax payments in certain jurisdictions and higher accounts receivable due to increased sales and an increase in days sales outstanding.

For fiscal 2022, net cash used in in investing activities was $2,033.7 million, compared with $136.0 million for fiscal 2021, an increase of $1,897.7 million.

This increase was primarily driven by higher spend on acquisitions of $1,923.6 million mainly related to the cash purchase of CGS for $1,931.5 million, inclusive of working capital adjustments, and the cash purchase of Cobalt for $50.0 million, net of cash acquired and inclusive of working capital adjustments, during the twelve months ended August 31, 2022, compared with the cash purchase of TVL for $41.9 million, net of cash acquired, in the prior year period.

The increase in net cash used in investing was partially offset by a decrease in net purchases of investments (net of proceeds) of $15.7 million and a decrease in capital expenditures of $10.2 million compared with the prior year period.

For fiscal 2022, net cash inflow from financing activities was $1,339.2 million, compared with a net cash outflow of $322.7 million for fiscal 2021, an increase of $1,661.9 million.

This cash inflow was mainly driven by $2,238.4 million in proceeds received from the 2022 Credit Facilities and Senior Notes, a $246.1 million reduction in repurchases of common stock, and a $21.9 million increase in proceeds from employee stock plans, partially offset by the repayment of $825.0 million of debt related to the termination of the 2019 Credit Agreement and partial repayment of the 2022 Term Facility.

Free Cash Flow

We define free cash flow, a non-GAAP financial measure, as cash provided by operating activities less purchases of property, equipment, leasehold improvements and capitalized internal use software.

We present free cash flow solely as a supplemental disclosure to provide useful information to investors about the amount of cash generated by the business after necessary capital expenditures.

We consider free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business after necessary capital expenditures.

We believe free cash flow is a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business that, after capital expenditures, can be used for strategic opportunities, including returning value to shareholders, investing in our business, making strategic acquisitions, and strengthening the balance sheet.

Free cash flow should be considered in addition to, rather than as a substitute for, consolidated net income as a measure of our performance and net cash provided by operating activities as a measure of our liquidity.

The following table reconciles our net cash provided by operating activities to free cash flow:

Years ended August 31,

(in thousands) 2021 2020

(in thousands) 2022 2021 Change

Net cash provided by operating activities $ 538,277 $ 555,226 $ (16,949)

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Free cash flow $ 487,121 $ 493,901 $ (6,780)

(1) Capital expenditures are included in net cash used in investing activities during each fiscal period reported and include property, equipment, leasehold improvements and internal-use software.

For fiscal 2021, we generated free cash flow of $493.9 million compared with $428.2 million in fiscal 2020, an increase of $65.7 million.

This increase reflects an increase of $49.4 million in cash provided by operating activities and decreases in capital expenditures of $16.3 million.

(1) Capital expenditures are included in net cash used in investing activities during each fiscal period reported and include property, equipment, leasehold improvements and capitalized internal-use software.

During fiscal 2022, we generated free cash flow of $487.1 million, compared with $493.9 million in fiscal 2021.

This decrease of $6.8 million was primarily due to a $16.9 million decrease in operating cash flows, partially offset by a $10.2 million decrease in capital expenditures.

The operating cash flows decrease was primarily driven by the timing of tax payments in certain jurisdictions and an increase in days sales outstanding.

Capital expenditures decreased primarily due to costs incurred for the build-out of our office space in the Philippines during fiscal 2021, partially offset by higher peripherals for our office space primarily in India during fiscal 2022.

Off-Balance Sheet Arrangements

At August 31, 2022 and 2021, we had no off-balance sheet financing or other arrangements with unconsolidated entities or financial partnerships (such as entities often referred to as structured finance or special purpose entities) established for purposes of facilitating off-balance sheet financing other debt arrangements, or other contractually limited purposes.

Foreign Currency

Foreign Currency Exposure

Certain wholly-owned subsidiaries, primarily within the EMEA and Asia Pacific segments, where approximately 78% of our employees are located, are exposed to volatility in currency exchange rates through translation of the foreign subsidiaries' net assets or liabilities from their respective functional currencies into U.S.

dollars, using an end of period exchange rate.

The net translation gains and losses are recorded in accumulated other comprehensive loss as a component of stockholders’ equity.

During fiscal 2021, foreign currency movements decreased operating income by $5.4 million, compared with a $5.0 million increase to operating income in the prior year.

To mitigate the foreign currency exposure, we entered into a series of forward contracts to hedge a portion of our British Pound Sterling, Euro, Indian Rupee, and Philippine Peso exposures ranging from 25% to 75% over their respective hedged periods as of August 31, 2021.

As we operate globally, we are exposed to the risk that our financial condition, results of operations and cash flows could be impacted by changes in foreign currency exchange rates.

To mitigate this foreign currency exposure, we entered into a series of forward contracts to hedge a portion of our foreign currency exposures related to the British Pound Sterling, Euro, Indian Rupee, and Philippine Peso ranging from 25% to 75% over their respective hedged periods as of August 31, 2022.

During fiscal 2022, foreign currency exchange rate fluctuations, net of hedge activity, decreased operating income by $3.1 million, compared with a $5.4 million decrease to operating income in the prior year.

The current foreign currency forward contracts are set to mature at various points between the first quarter of fiscal 2023 through the fourth quarter of fiscal 2023.

As of August 31, 2021, the gross notional value of foreign currency forward contracts to purchase Philippine Pesos and Indian Rupees with U.S.

dollars was ₱1.4 billion and Rs2.6 billion, respectively.

The gross notional value of foreign currency forward contracts to purchase U.S.

dollars with Euros and British Pound Sterling was €33.8 million and £37.7 million, respectively.

A loss on foreign currency forward contracts of $5.0 million was recorded into operating income during fiscal 2021, compared with a loss of $1.6 million in fiscal 2020.

A loss on foreign currency forward contracts of $7.9 million was recorded into operating income during fiscal 2022, compared with a gain of $5.0 million in fiscal 2021.

The following table summarizes the gross notional value of foreign currency forward contracts to purchase British Pound Sterling, Euros, Indian Rupees and Philippine Pesos with U.S.

August 31, 2022 August 31, 2021

(in thousands) Local Currency Amount Notional Contract Amount (USD) Local Currency Amount Notional Contract Amount (USD)

British Pound Sterling £ 44,200 $ 55,567 £ 37,700 $ 51,754

Euro € 37,500 40,679 € 33,800 40,674

Indian Rupee Rs 2,667,928 33,600 Rs 2,585,198 33,800

Philippine Peso ₱ 1,462,060 27,000 ₱ 1,414,928 28,500

Total $ 156,846 $ 154,728

Critical Accounting Estimates

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We base our estimates on historical experience and other assumptions that we believe to be reasonable at the time the Consolidated Financial Statements are prepared and, as such, they may ultimately differ materially from actual results.

We describe our significant accounting policies in Note 3, Summary of Significant Accounting Policies in the Notes to the Consolidated Financial Statements included in Item 8.

We describe our significant accounting policies in Note 2, Significant Accounting Policies in the Notes to the Consolidated Financial Statements included in Item 8.

of this Annual Report on Form 10-K.

Management has discussed the development and selection of these critical accounting estimates with the Audit Committee of our Board of Directors.

We disclose the development and selection of our critical accounting estimates with the Audit Committee of our Board of Directors.

The critical accounting estimates and judgments that we believe to have the most significant impacts to our Consolidated Financial Statements are described below.

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Our tax provision is an estimate based on our understanding of laws in federal, state and foreign tax jurisdictions.

These laws can be complicated and are difficult to apply to

any business.

These laws can be complicated and are difficult to apply to any business.

The tax laws also require us to allocate our taxable income to many jurisdictions based on subjective allocation methodologies and information collection processes.

Our effective tax rates differ from the statutory rate primarily due to the impact of state taxes, foreign operations, research and development ("R&D") and other tax credits, tax audit settlements, incentive-stock options and the foreign derived intangible income ("FDII") deduction.

Our annual effective tax rate was 14.5%, 12.7% and 16.4% in fiscal 2021, 2020 and 2019, respectively.

Our effective tax rates differ from the statutory rate primarily due to the impact of state taxes, foreign operations, research and development ("R&D") and other tax credits, tax audit settlements, the tax benefit from stock option exercises and the foreign derived intangible income ("FDII") tax deduction.

Our provision for income taxes is subject to volatility and could be adversely impacted by numerous factors such as changes in tax laws, regulations, or accounting principles, including accounting for uncertain tax positions or interpretations of them.

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There can be no assurance that the outcomes from these continuous examinations will not have an adverse impact on our operating results and financial condition.

To account for unrecognized tax benefits, we first determine whether it is more-likely-than-not (defined as a likelihood of more than fifty percent) that a tax position will be sustained based on its technical merits as of the reporting date.

To account for unrecognized tax benefits, we first determine whether it is more likely than not (defined as a likelihood of more than 50%) that a tax position will be sustained based on its technical merits as of the reporting date.

A tax position that meets this more likely than not threshold is then measured and recognized at the largest amount of benefit that is greater than fifty percent likely to be realized upon effective settlement with a taxing authority.

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We do not currently anticipate that the total amounts of unrecognized tax benefits will significantly change within the next 12 months.

We classify the liability for unrecognized tax benefits as Taxes Payable (non-current) and to the extent that we anticipate payment of cash within one year, the benefit will be classified as Taxes Payable (current).

Additionally, we accrue interest on all tax exposures for which reserves have been established consistent with jurisdictional tax laws.

We accrue interest on all tax exposures for which reserves have been established consistent with jurisdictional tax laws.

This interest is classified as income tax expense in the financial statements.

As of August 31, 2021 , we had gross unrecognized tax benefits totaling $14.9 million, including $1.3 million of accrued interest, recorded as Taxes Payable (non-current) within the Consolidated Balance Sheets.

Refer to Note 10, Income Taxes in the Notes to the Consolidated Financial Statements included in Item 8.

of this Annual Report on Form 10-K for further information.

Performance-based Equity Awards

Performance-based equity awards require management to make assumptions regarding the likelihood of achieving performance targets.

Stock-based Compensation

We measure compensation expense for all stock-based awards made to our employees and board of directors ("non-employees") using the Black-Scholes model or the lattice-binomial-option pricing model to estimate the grant-date fair value.

Both models involve certain estimates and subjective assumptions regarding our stock price volatility, the expected life of the award, the term selected for the risk-free rate, and the exp ected dividend yield.

The binomial model also incorporates market conditions, vesting restrictions and exercise patterns.

Our performance-based equity awards require management to make assumptions regarding the probability of achieving the relevant performance condition, which is reviewed on a quarterly basis.

The number of performance-based awards that vest will be predicated on achieving performance levels during the measurement period subsequent to the date of grant.

Dependent on the financial performance levels attained, a percentage of the performance-based awards will vest to the grantees.

However, there is no current guarantee that such awards will vest in whole or in part.

We estimate expected forfeitures of equity awards at the date of grant and recognize compensation expense only for those awards expected to vest.

The forfeiture assumption is revised if actual forfeitures differ from those estimates.

The assumptions we use to calculate and account for stock-based compensation awards represent management's best estimates, which involve inherent uncertainties.

As a result, if we revise our assumptions and estimates, our stock-based compensation expense could differ from amounts recorded.

Refer to Note 16 , Stock-Based Compensation in the Notes to the Consolidated Financial Statements included in Item 8.

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Goodwill is not amortized as it is estimated to have an indefinite life.

We review our goodwill for impairment annually during the fourth quarter of each fiscal year and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of any one of our reporting units below its respective carrying amount.

We may elect to perform a qualitative analysis for the reporting units to determine whether it is more likely than not the fair value of the reporting unit is greater than its carrying value.

We test our goodwill for impairment annually during the fourth quarter of each fiscal year and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of any one of our reporting units below its respective carrying amount.

We may elect to perform a qualitative analysis for the reporting units to determine whether it is more likely (a likelihood of more than 50%) than not the fair value of the reporting unit is less than its carrying value.

In performing a qualitative assessment, we consider such factors as macro-economic conditions, industry and market conditions in which we operate, including the competitive environment and significant changes in demand for our services.

We also consider the share price both in absolute terms and in relation to peer companies.

If the qualitative analysis indicates that it is more likely than not the fair value of a reporting unit is less than its

carrying amount or if we elect not to perform a qualitative analysis, a quantitative analysis is performed to determine whether a goodwill impairment exists.

The quantitative goodwill impairment analysis is used to identify potential impairment by comparing the fair value of a reporting unit with its carrying amount using an income approach, along with other relevant market information, derived from a discounted cash flow model to estimate the fair value of our reporting units.

If the qualitative analysis indicates that it is more likely than not the fair value of a reporting unit is less than its carrying amount or if we elect not to perform a qualitative analysis, a quantitative analysis is performed to determine whether a goodwill impairment exists.

The quantitative goodwill impairment analysis is used to identify potential impairment by comparing the carrying amount of a reporting unit with its fair value, by applying the income approach, utilizing the discounted cash flow method, along with other relevant market information.

An impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, if any, would be recognized.

The loss recognized would not exceed total amount of goodwill allocated to that reporting unit.

We completed our annual goodwill impairment test during the fourth quarter of fiscal 2021.

We determined, after performing a qualitative review of each reporting unit, that it is more likely than not that the fair value of each reporting unit substantially exceeds their respective carrying amounts.

Accordingly, there was no indication of impairment and a quantitative goodwill impairment test was not performed.

Our identifiable intangible assets consist of acquired content databases, client relationships, software technology, and trade names resulting from acquisitions, which have been fully integrated into our operations, as well as internal-use software.

We amortize intangible assets over their estimated useful lives, which are evaluated quarterly to determine whether events and circumstances warrant a revision to the remaining period of amortization.

The weighted average useful life of our identifiable intangible assets at August 31, 2021 was 9.1 years.

The loss recognized would not exceed the total amount of goodwill allocated to that reporting unit.

Our identifiable intangible assets are classified as an ABA business process, client relationships, software technology, developed technology, acquired databases, data content, and trade names resulting from acquisitions or capitalization of costs related to on-premises internal-use software.

We amortize intangible assets over their estimated useful lives, which are evaluated annually to determine whether events and circumstances warrant a revision to the remaining period of amortization.

If the estimate of the remaining useful life is changed, the remaining carrying amount of the intangible asset is amortized prospectively over that revised remaining useful life.

There were no material adjustments to the useful lives of intangible assets subject to amortization during any of the periods presented.

These intangible assets had no assigned residual values as of August 31, 2021 and 2020.

Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable.

Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition.

Measurement of any impairment loss for intangible assets that management expects to hold, and use is based on the amount the carrying value exceeds the fair value of the asset, which may be based on estimated future cash flows (discounted).

No indicators of impairment of intangible assets has been identified during any of the periods presented.

Our ongoing consideration of recoverability could result in impairment charges in the future, which could adversely affect our results of operations.

The carrying value of intangible assets as of August 31, 2021 and 2020 was $135.0 million and $121.1 million, respectively.

Intangible assets are tested for impairment qualitatively on a quarterly basis.

An impairment is recognized if the carrying amount is not recoverable and exceeds the fair value of the asset.

Recoverability is determined by comparing the carrying amount of the intangible asset to the estimated undiscounted future cash flows expected to be generated by the asset.

Significant judgment is involved in determining the assumptions used in estimating future cash flows.

If it is determined that the intangible asset is not recoverable, the impairment loss would be calculated based on the excess of the carrying amount of the intangible asset over its fair value.

Refer to Note 8, Goodwill and Note 9, Intangible Assets in the Notes to the Consolidated Financial Statements included in Item 8.

of this Annual Report on Form 10-K for further details.

Business Combinations

We account for business combinations using the purchase method of accounting.

The acquisition purchase price is allocated to the underlying identified, tangible and intangible assets and liabilities assumed, based on their respective estimated fair values on the acquisition date.

The excess of the purchase consideration over the fair values of the identified assets and liabilities is recorded as goodwill and assigned to one or more reporting units.

The amounts and useful lives assigned to acquisition-related tangible and intangible assets impact the amount and timing of future amortization expense.

Determining the fair value of assets acquired and liabilities assumed and the expected useful life, requires management’s judgment and often involves the use of significant estimates and assumptions, including assumptions with respect to future cash inflows and outflows, discount rates, asset lives and market multiples, among other items.

Acquisition-related expenses and restructuring costs, if any, are recognized separately from the business combination and are expensed as incurred.

Long-lived Assets

Long-lived assets, comprised of property, equipment and leasehold improvements and lease right-of-use ("ROU") assets are evaluated for impairment whenever events or changes in circumstances indicate the carrying value of the assets may not be recoverable.

We perform a qualitative review on a quarterly basis of our long-lived assets, comprised of property, equipment and leasehold improvements.

In evaluating long-lived assets for recoverability, we use our best estimate of future cash flows (undiscounted and excluding interest charges).

If the estimated future cash flows are less than the carrying value of the asset, an impairment loss is recognized to the extent that such asset's carrying value exceeds its fair value, based on the most appropriate valuation technique, including discounted cash flows.

In determining indicators for impairment, we take various factors into account, including, but not limited to, a significant decline in our expected future cash flows;

changes in expected useful life;

unanticipated competition;

slower growth rates, ongoing maintenance and improvements of the assets, or changes in the usage or operating performance.

In determining indicators for impairment, we take various factors into account, including, but not limited to, a significant decline in our expected future cash flows, changes in expected useful life, unanticipated competition, slower growth rates, ongoing maintenance and improvements of the assets, or changes in the usage or operating performance.

A significant amount of judgment is involved in determining if an indicator of impairment has occurred and in calculating the inputs to the impairment calculation such as estimates related to future cash flows and asset fair values, forecasting asset useful lives and selecting the discount rate that reflects the risk inherent in future cash flows.

If actual results are not consistent with our estimates and assumptions included in our impairment assessment, we may be exposed to losses that could be material.

There have been no long-lived asset impairment charges and no change to our impairment assessment methodology for each of the last three years.

The carrying value of long-lived assets was $131.4 million as of August 31, 2021 and $133.1 million as of August 31, 2020.

Refer to Note 7, Property, Equipment and Leasehold Improvements in the Notes to the Consolidated Financial Statements included in Item 8.

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Contingencies

We are subject to various legal proceedings, claims and litigation that have arisen in the ordinary course of business, which involve inherent uncertainties including, but not limited to, employment matters, and commercial and intellectual property litigation.

Assessing the probability of loss for such contingencies and determining how to accrue the appropriate liabilities

requires judgment.

We are subject to various legal proceedings, claims and litigation that have arisen in the ordinary course of business, which involve inherent uncertainties.

Assessing the probability of loss for such contingencies and determining how to accrue the appropriate liabilities requires judgment.

If actual results differ from our assessments, our financial position, results of operations, or cash flows would be affected.

Business Combinations

We account for business combinations using the purchase method of accounting.

The excess of the purchase consideration over the fair values of the identified assets and liabilities is recorded as goodwill and assigned to one or more reporting units.

The amounts and useful lives assigned to acquisition-related tangible and intangible assets impact the amount and timing of future amortization expense.

Acquisition-related expenses and restructuring costs, if any, are recognized separately from the business combination and are expensed as incurred.

New Accounting Pronouncements

Refer to Note 3, Summary of Significant Accounting Policies in the Notes to the Consolidated Financial Statements included in Item 8.

of this Annual Report on Form 10-K for a full description of recent accounting pronouncements, including the expected dates of adoption, which we include here by reference.

Refer to Note 2, Significant Accounting Policies in the Notes to the Consolidated Financial Statements included in Item 8.

of this Annual Report on Form 10-K for a full description of recent accounting pronouncements, including the expected dates of adoption.

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