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Item 7. Management’s Discussion and Analysis

2026-10-20 compared with 2025-10-22 · 175 added, 221 removed, 347 unchanged (53% of the section changed)

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Executive Overview

FactSet is a global financial digital platform and enterprise solutions provider with open and flexible technologies that deliver financial intelligence to investment professionals worldwide.

Our platform delivers expansive data, sophisticated analytics, and flexible, AI-powered technologies used by global financial professionals to power their critical investment workflows.

As of August 31, 2025, we had approximately 9,000 clients comprised of over 237,000 investment professionals, including institutional asset managers, bankers, wealth managers, asset owners, partners, hedge funds, corporate users, and private equity and venture capital professionals.

Our revenues are primarily derived from subscriptions to our multi-asset class data and solutions powered by our connected data and technology platform.

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

We also offer managed services that operate as an extension of our clients' internal teams to support data, performance, risk and reporting workflows.

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

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

Our solutions span the investment lifecycle of investment research, portfolio construction and analysis, trade execution, performance measurement, risk management and reporting.

We provide open and flexible technology offerings, including a configurable desktop and mobile platform, comprehensive data feeds, cloud-based digital solutions, and APIs.

AI is embedded across these offerings to enhance data discovery, automate routine workflows and improve the speed and accuracy of client insights.

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

All of our platforms and solutions are supported by our dedicated client service team.

FactSet is a global data and AI solutions provider to the financial markets with open and flexible technologies that deliver financial intelligence to finance professionals worldwide.

Our platform delivers expansive data, sophisticated analytics, and flexible, AI-powered technologies used by global financial professionals to power their critical investment, dealmaking and advisory workflows.

As of August 31, 2026, we had more than 9,200 clients and over 260,000 professionals using our solutions, including institutional asset managers, bankers, wealth managers, asset owners, partners, hedge fund professionals, corporate users, private equity and venture capital professionals, and market infrastructure participants.

Our revenues are primarily derived from subscriptions to our multi-asset class data and solutions that include workstations, portfolio analytics, enterprise data solutions, and AI solutions.

We also offer managed services that operate as an extension of our clients' internal teams to support data, performance, risk and reporting, and AI-enabled workflows.

We drive our business based on a detailed understanding of our clients’ workflows.

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

Our solutions for institutional buyside clients span the investment lifecycle of investment research, portfolio construction and analysis, trade execution, performance measurement, risk management and reporting.

Our banking solutions facilitate company and market research, enabling clients to perform fundamental analysis, generate ideas, and build and distribute presentations through proprietary and third-party databases with global coverage of public and private markets, granular industry metrics, and deep historical data.

Our wealth solutions support home office, advisory, and client engagement workflows, providing financial advisors with tools to monitor markets and their book of business, prospect for new clients, and generate proposals, while enhancing existing client relationships and improving firm-wide efficiency across the investment portfolio lifecycle.

We provide open and flexible data and technology offerings, including a configurable desktop and mobile platform, comprehensive data solutions, cloud-based digital solutions, APIs, and MCP servers.

AI is embedded throughout these offerings to enhance data discovery, automate routine workflows and improve the speed and accuracy of client insights.

Our platform and solutions are supported by our client success and service teams.

We operate our business through three segments:

the Americas, EMEA and Asia Pacific.

Within each segment, we offer data, products and analytical applications by firm type:

Institutional Buyside, Dealmakers, Wealth, and Partnerships and CGS.

Refer to Part I, Item 1.

Within each segment, we offer a range of products, data, managed services, and analytical applications which can be tailored to a wide range of workflows.

Part I, Item 1.

Business - Business Overview and Business Strategy and Part II, Item 8.

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Fiscal 2026 in Review

Revenues for fiscal 2025 were $2,321.7 million, an increase of 5.4% from the comparable prior year.

The growth in revenues was driven by a 4.4% increase in organic revenues, a 0.9% increase from acquisition-related revenues and a net increase of 0.1% from foreign currency exchange rate fluctuations.

Revenues increased in all our segments, primarily in the Americas.

Revenues increased primarily from workstations and to a lesser extent, CGS and front office solutions.

Revenues totaled $2,476.3 million for fiscal 2026, an increase of 6.7% compared to the prior year, driven by a corresponding 6.7% increase in organic revenues.

Revenues increased in all our segments, mainly in the Americas.

Revenues increased primarily from workstations, data solutions and, to a lesser extent, portfolio management and trading solutions.

Refer to Part II, Item 7.

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Organic ASV increased in all our segments, with the majority of the increase in the Americas.

Organic ASV growth was mainly driven by workstations, data solutions and, to a lesser extent, CGS.

Organic ASV growth was mainly driven by data solutions and, to a lesser extent, workstations and middle office solutions.

Refer to Part II, Item 7.

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Operating margin was 28.3% for fiscal 2026, compared with 32.2% for fiscal 2025.

This increase in operating margin was mainly due to growth in revenues and, when expressed as a percentage of revenues, charges related to the Sales Tax Dispute that were recorded in the prior year, partially offset by higher amortization of intangible assets in the current year.

Refer to Part II, Item 8.

Note 12, Commitments and Contingencies in the Notes to the Consolidated Financial Statements of this Annual Report on Form 10-K for more information on the Sales Tax Dispute.

Net income for fiscal 2025 was $597.0 million, an increase of 11.2% from the prior year.

Diluted earnings per common share ("Diluted EPS") for fiscal 2025 was $15.55, an increase of 11.8% compared with the prior year.

The increase in Net income and Diluted EPS was primarily driven by higher operating income and a gain from the divestiture of a business.

This decrease was primarily driven by higher operating expenses as a percentage of revenues, mainly due to an increase in employee compensation costs, primarily driven by restructuring charges, higher variable compensation costs and one-time CEO compensation costs pursuant to the terms of his employment agreement, partially offset by growth in revenues.

Net income for fiscal 2026 was $533.5 million, a decrease of 10.6% from the prior year.

Diluted earnings per common share ("Diluted EPS") for fiscal 2026 was $14.57, a decrease of 6.3% compared with the prior year.

These decreases were primarily driven by higher operating expenses, including non-recurring items, partially offset by growth in revenues.

The decrease in Diluted EPS was also partially offset by a reduction in the diluted weighted average common shares outstanding of approximately 1.8 million shares.

We returned $808.1 million to our stockholders in the form of share repurchases and dividends during fiscal 2026.

As of August 31, 2026, our client and user counts were 9,258 and 260,671, respectively.

Our employee headcount was 12,800 as of August 31, 2025, up 3.2% compared to the prior year.

This increase was driven by net headcount growth of 6.0% in the Americas and 2.6% in each of EMEA and Asia Pacific.

Our employee headcount was 12,444 as of August 31, 2026, a decrease of 2.8% compared to the prior year, primarily due to restructuring and reduced hiring, reflecting net headcount reductions of 5.5% in the Americas, 2.3% in Asia Pacific and 1.2% in EMEA.

Annual Subscription Value ("ASV")

We believe ASV reflects our ability to grow recurring revenues and generate positive cash flows, and thus serves as a 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.

– 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.

Beginning in fiscal 2025, we are reporting Organic ASV, rather than Organic ASV plus professional services, to focus on the recurring nature of our revenues.

This underscores the shift of our offerings toward providing more managed services and less project-based services.

– ASV at any point in time represents our forward-looking revenues for the next 12 months from all recurring services currently being supplied to clients.

– Organic ASV at any point in time equals our ASV excluding ASV from acquisitions and the comparable impact of dispositions and discontinued lines of business, effected within the last 12 months, and the impact of foreign currency movements.

The following table presents the calculation of Organic ASV as of August 31, 2026.

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Impact from foreign currency movements

Acquisition ASV (1 )

Organic ASV annual growth rate (1)

(1) ASV from acquisitions completed within the last 12 months.

(2) For comparability purposes, in calculating the organic ASV annual growth rate, the prior year excludes ASV from dispositions completed in the last 12 months.

As of August 31, 2025, Organic ASV was $2,370.9 million, an increase of 5.7% compared with August 31, 2024.

(1) For comparability purposes, in calculating the organic ASV annual growth rate, the prior year excludes ASV from dispositions and discontinued lines of business effected within the last 12 months.

Organic ASV increased in all our segments, with the majority of the increase in the Americas.

The increase in Organic ASV was primarily due to higher sales to existing clients and, to a lesser extent, sales to new clients and price increases to existing clients, all primarily attributable to workstations, data solutions and, to a lesser extent, CGS.

This increase was partially offset by existing client cancellations.

The increase in Organic ASV was primarily driven by data solutions and, to a lesser extent, workstations and middle office solutions.

This increase is derived from higher net sales to existing clients and, to a lesser extent, sales to new clients.

As of August 31, 2026, ASV from the Americas represented 65% of total ASV and was $1,678.2 million, an increase from $1,570.1 million as of August 31, 2025.

Americas Organic ASV was $1,541.9 million as of August 31, 2025, a 6.0% increase from the prior year.

The Organic ASV increase in the Americas was primarily driven by workstations and, to a lesser extent, data solutions.

Americas Organic ASV was also $1,678.2 million as of August 31, 2026, a 7.1% increase from the prior year.

The Organic ASV increase in the Americas was primarily driven by data solutions and workstations.

As of August 31, 2026, ASV from EMEA represented 24% of total ASV and was $620.9 million, an increase from $591.6 million as of August 31, 2025.

EMEA Organic ASV was $623.6 million as of August 31, 2026, a 5.2% increase from the prior year.

The EMEA Organic ASV increase was mainly from data solutions.

The EMEA Organic ASV increase was mainly from data solutions and, to a lesser extent, workstations.

As of August 31, 2026, ASV from Asia Pacific represented 11% of total ASV and was $266.1 million, an increase from $243.9 million as of August 31, 2025.

Asia Pacific Organic ASV was $266.4 million as of August 31, 2026, a 10.6% increase from the prior year.

The Asia Pacific Organic ASV increase was primarily driven by data solutions and workstations.

Buy-side and Sell-side Organic ASV Growth

The buy-side and sell-side Organic ASV annual growth rates as of August 31, 2025 were 5.5% and 4.3%, respectively.

Buy-side clients account for approximately 82% of our Organic ASV, consistent with the prior year, and primarily include institutional asset managers, wealth managers, asset owners, partners, hedge funds and corporate clients.

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

The Asia Pacific Organic ASV increase was primarily driven by data solutions, workstations and middle office solutions.

Client and User Additions

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9,258 8,996 2.9 %

237,324 216,381 9.7 %

Users 260,671 237,324 9.8 %

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

(2) The user count does not reflect users associated with our fiscal 2025 acquisitions.

Our total client count was 8,996 as of August 31, 2025, a net increase of 9.5% or 779 clients in the last 12 months, mainly due to an increase in corporate clients, primarily driven by clients from the Platform Group Limited ("Irwin") acquisition.

As of August 31, 2025, there were 237,324 professionals using FactSet, representing a net increase of 9.7% or 20,943 users in the last twelve months, primarily driven by an increase in wealth management users.

The user count does not reflect our fiscal 2025 acquisitions.

Our total client count increased mainly due to corporate clients and user count increased primarily due to wealth management users.

Annual ASV retention was greater than 95% of ASV as of August 31, 2026 and August 31, 2025.

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Employee Headcount

As of August 31, 2025, our net employee headcount increased by 3.2% to 12,800, compared with 12,398 employees as of August 31, 2024.

This net headcount increase was primarily in the technology and sales groups mainly driven by continued investment in our COEs, through an increase in employees based in the Philippines and India, and our Irwin and Liquid Holdings, LLC ("LiquidityBook") acquisitions.

As of August 31, 2025, compared to August 31, 2024, our net headcount growth was 6.0% in the Americas and 2.6% in each of EMEA and Asia Pacific.

As of August 31, 2026, our net employee headcount decreased by 2.8% to 12,444, compared with 12,800 employees as of August 31, 2025.

This net headcount reduction was primarily in the content operations group and was driven by restructuring and reduced hiring.

Our net headcount reduction as of August 31, 2026, compared to August 31, 2025, was 5.5% in the Americas, 2.3% in Asia Pacific and 1.2% in EMEA.

As of August 31, 2026, we had 8,652 employees located in Asia Pacific, 2,373 in the Americas and 1,419 in EMEA.

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$ 14.57 $ 15.55 (6.3) %

Revenues in fiscal 2025 were $2,321.7 million, an increase of 5.4%.

This 5.4% growth in revenues was driven by a 4.4% increase in organic revenues which totaled $2,300.2 million for fiscal 2025, a 0.9% increase from acquisition-related revenues and a net increase of 0.1% from foreign currency exchange rate fluctuations.

The growth in revenues of 6.7% was driven by a corresponding 6.7% increase in organic revenues, which totaled $2,464.6 million for fiscal 2026, and a net increase of 0.1% from foreign currency exchange rate fluctuations, partially offset by a 0.1% decrease from disposition revenues, net of acquisition revenues.

Revenues increased in all our geographic segments, primarily in the Americas.

The increase in revenues was mainly from workstations and, to a lesser extent, CGS and front office solutions.

The increase in revenues was mainly from workstations, data solutions and, to a lesser extent, portfolio management and trading solutions.

Revenues by Segment

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$ 2,476,256 $ 2,321,748 6.7 %

Revenues from the Americas increased 6.1% to $1,506.1 million in fiscal 2025, compared with $1,419.9 million in fiscal 2024.

This 6.1% growth in revenues was driven by a 4.9% increase in organic revenues and a 1.2% increase from acquisition-related revenues.

The increase in revenues was mainly driven by workstations and, to a lesser extent, front office solutions.

Revenues from EMEA increased 3.0% to $580.3 million in fiscal 2025, compared with $563.2 million in fiscal 2024.

This 3.0% growth in revenues was driven by a 2.5% increase in organic revenues, a 0.4% increase from acquisition-related revenues and a 0.1% net increase from foreign currency exchange rate fluctuations.

The increase in revenues was primarily from data solutions and middle office solutions.

Revenues from Asia Pacific increased 7.0% to $235.3 million in fiscal 2025, compared with $220.0 million in fiscal 2024.

This 7.0% was driven by a 6.3% increase in organic revenues, a 0.5% increase from acquisition-related revenues and a 0.2% net increase from foreign currency exchange rate fluctuations.

The increase in revenues was mainly driven by data solutions, workstations and, to a lesser extent, front office solutions.

The growth in revenues of 7.4% was driven by a 6.9% increase in organic revenues and a 0.5% increase from acquisition revenues, net of disposition revenues.

The increase in revenues was mainly driven by workstations, data solutions, and portfolio management and trading solutions.

The growth in revenues of 4.3% was driven by a 5.0% increase in organic revenues and a 0.5% net increase from foreign currency exchange rate fluctuations, partially offset by a 1.2% decrease related to disposition revenues, net of acquisition

The increase in revenues was primarily from data solutions and workstations, partially offset by a decrease in revenues due to the disposition.

The growth in revenue of 7.7% was driven by a 9.9% increase in organic revenues, partially offset by a 1.7% decrease related to disposition revenues, net of acquisition revenues, and a 0.5% net decrease from foreign currency exchange rate fluctuations.

The increase in revenues was mainly driven by data solutions, workstations and middle office solutions, partially offset by a decrease in revenues due to the disposition.

Operating Expenses

Principal Operating Expenses

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

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

Selling, general and administrative (" SG&A") consists 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, other employee-related expenses, internal communication costs, bad debt expense, the impact from our foreign currency forward contracts and asset impairments.

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Cost of Services

Cost of services increased 8.5% to $1,097.8 million in fiscal 2025, compared with $1,011.9 million in fiscal 2024, primarily due to an increase in amortization of intangible assets, employee compensation costs and computer-related expenses.

Cost of services, when expressed as a percentage of revenues, was 47.3% for fiscal 2025, an increase of 130 basis points compared with fiscal 2024.

This increase was primarily from higher amortization of intangible assets, mainly driven by a 100 basis point increase in amortization from our capitalized internal-use software development costs.

The increase in Cost of services was primarily due to higher employee compensation costs and, to a lesser extent, an increase in amortization of intangible assets and technology-related expenses.

When expressed as a percentage of revenues, Cost of services was 49.4% for fiscal 2026, an increase of 210 basis points compared with fiscal 2025, primarily driven by:

• Employee compensation costs increased by 100 basis points, primarily driven by restructuring charges to drive organizational efficiencies and higher annual base salaries mainly due to annual merit increases.

• Amortization of intangible assets increased by 50 basis points, mainly due to an increase in capitalized internal-use software development costs.

• Technology-related expenses increased by 40 basis points, primarily driven by higher spend in cloud-based hosting services and licensed software arrangements.

Selling, General and Administrative

SG&A expenses decreased 2.9% to $475.7 million during fiscal 2025, compared with $489.8 million in fiscal 2024.

The decrease was primarily attributable to charges related to the Sales Tax Dispute recorded in the prior year, partially offset by higher employee compensation costs and professional fees in the current year.

SG&A expenses, when expressed as a percentage of revenues, were 20.5% for fiscal 2025, a decrease of 170 basis points compared with fiscal 2024.

This decrease was primarily due to charges associated with the Sales Tax Dispute recorded in the prior year, partially offset by higher employee compensation costs and professional fees in the current year.

When expressed as a percentage of revenues:

• The charges related to the Sales Tax Dispute recorded in the prior year decreased SG&A by 240 basis points.

Refer to Part II, Item 8.

Note 12, Commitments and Contingencies in the Notes to the Consolidated Financial Statements of this Annual Report on Form 10-K for more information on the Sales Tax Dispute.

• Employee compensation costs increased by 80 basis points, mainly due to higher variable compensation costs driven by a lower bonus accrual during fiscal 2024.

• Professional fees increased by 60 basis points, mainly due to acquisition-related costs.

The increase in SG&A was primarily driven by higher employee compensation costs.

When expressed as a percentage of revenues, SG&A was 22.3% for fiscal 2026, an increase of 190 basis points compared with fiscal 2025, mainly due to:

• Employee compensation costs increased 220 basis points, primarily due to higher variable compensation costs and stock-based compensation expense mainly due to the recognition, over their respective service periods, of the one-time cash bonus and equity awards granted to our CEO pursuant to the terms of his employment agreement.

In addition, variable compensation costs increased mainly due to financial achievement against targets.

Operating Income and Operating Margin

Operating income increased 6.7% to $748.3 million in fiscal 2025, compared with $701.3 million in fiscal 2024.

This increase was primarily driven by growth in revenues and charges associated with the Sales Tax Dispute recorded in the prior year, partially offset by higher employee compensation costs and amortization of intangible assets in the current year.

Operating margin increased to 32.2% in fiscal 2025, compared with 31.8% in the prior year.

This increase was primarily driven by growth in revenues and, when expressed as a percentage of revenues, charges associated with the Sales Tax Dispute recorded in the prior year, partially offset by higher amortization of intangible assets in the current year.

Operating income decreased 6.5% to $700.0 million in fiscal 2026, compared with $748.3 million in fiscal 2025.

Operating margin decreased to 28.3% in fiscal 2026, compared with 32.2% in the prior year, primarily driven by higher operating expenses, mainly due to an increase in employee compensation costs, partially offset by growth in revenues.

The increase in employee compensation costs was primarily driven by restructuring charges, higher variable compensation costs and one-time CEO compensation costs pursuant to the terms of his employment agreement.

Operating Income by Segment

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Total Operating Income $ 699,957 $ 748,303 (6.5) %

Americas operating income increased 16.9% to $306.0 million during fiscal 2025, compared with $261.8 million from the prior year.

This increase was primarily due to growth in revenues of 6.1% and charges associated with the Sales Tax Dispute recorded in the prior year, partially offset by higher amortization of intangible assets and employee compensation costs in the current year.

• The charge related to the Sales Tax Dispute in the prior year is discussed in Part II, Item 8.

Note 12, Commitments and Contingencies in the Notes to the Consolidated Financial Statements of this Annual Report on Form 10-K.

• Amortization of intangible assets increased mainly due to higher amortization from our capitalized internal-use software development costs.

• Employee compensation costs increased primarily due to higher variable compensation costs driven by a lower bonus accrual during fiscal 2024.

EMEA operating income decreased 3.2% to $274.0 million during fiscal 2025, compared with $283.0 million from the prior year.

This decrease was primarily due to higher employee compensation costs, partially offset by growth in revenues of 3.0%.

Employee compensation costs increased primarily due to higher annual base salaries, driven by an increase in annual merit and net headcount growth of 37 employees, and, to a lesser extent, variable compensation costs mainly due to a lower bonus accrual during fiscal 2024.

Asia Pacific operating income increased 7.5% to $168.3 million during fiscal 2025, compared with $156.5 million from the prior year.

This increase was mainly due to growth in revenues of 7.0%, partially offset by higher employee compensation costs.

Employee compensation costs increased primarily due to higher annual base salaries, driven by annual merit increases and a net headcount increase of 222 employees, and higher variable compensation costs mainly due to a lower bonus accrual during fiscal 2024.

Americas operating income decreased primarily due to higher employee compensation costs and, to a lesser extent, amortization of intangible assets and technology-related expenses, partially offset by growth in revenues of 7.4%.

• Employee compensation costs increased primarily due to higher variable compensation costs, restructuring charges and an increase in stock-based compensation expense.

Variable compensation costs increased due to financial achievement against targets.

In addition, the increase in variable compensation costs and stock-based compensation expense was driven by the recognition, over their respective service periods, of the one-time cash bonus and equity awards granted to our CEO pursuant to the terms of his employment agreement.

The restructuring charges were related to driving organizational efficiencies.

• Amortization of intangible assets increased mainly due to an increase in capitalized internal-use software development costs.

• Technology-related expenses increased primarily due to higher spend in cloud-based hosting services and licensed software arrangements.

EMEA operating income decreased primarily due to higher employee compensation costs, partially offset by growth in revenues of 4.3%.

Employee compensation costs increased mainly due to higher annual base salaries, driven by annual merit increases, and restructuring charges to drive organizational efficiencies.

Asia Pacific operating income increased mainly due to growth in revenues of 7.7%, partially offset by higher employee compensation costs driven by an increase in annual base salaries, primarily from annual merit increases.

The provision for income taxes and the effective tax rate are as follows:

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Our effective tax rate for fiscal 2026 was 17.9% compared with 17.2% for fiscal 2025.

This decrease was primarily due to a lower U.S.

tax impact of foreign earnings.

This increase was primarily due to a stock-based compensation tax shortfall and the limitation on the deductibility of executive compensation, partially offset by the favorable resolution of uncertain tax positions in the U.S.

All local, federal and foreign taxes payable were paid in a timely manner, subject to normal audits of open years.

For the periods presented, our effective tax rates were lower than the applicable U.S.

corporate income tax rate.

This was primarily attributable to excess tax benefits from stock-based compensation, a lower U.S.

tax impact of foreign earnings, research and development ("R&D") tax credits and a foreign derived intangible income ("FDII") tax deduction, partially offset by our state income taxes.

For a reconciliation from the U.S.

corporate tax rate to our effective tax rates for the periods presented, refer to Part II, Item 8.

Note 8, Income Taxes in the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K.

Net Income and Diluted EPS

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Diluted EPS $ 14.57 $ 15.55 (6.3) %

The increase in Net income and Diluted EPS for fiscal 2025, compared with fiscal 2024, was primarily driven by higher operating income and a gain from the divestiture of a business.

The decrease in Net income and Diluted EPS for fiscal 2026, compared with fiscal 2025, was primarily driven by higher operating expenses, including non-recurring items, partially offset by growth in revenues.

The decrease in Diluted EPS was also partially offset by lower diluted weighted average common shares outstanding.

Non-GAAP Financial Measures

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Adjusted measures may also facilitate comparisons to our historical performance.

Organic revenues excludes the current year impact of revenues from acquisitions and dispositions completed within the past 12 months ("Acquisition revenues" and "Disposition revenues", respectively) and the current year impact from changes in foreign currency.

In addition, for our year to date comparisons, organic revenues also excludes current year revenues that were incurred prior to the first anniversary date of an acquisition.

Organic revenues equals our revenues, excluding the current year impact of revenues from acquisitions and the comparable impact of dispositions and discontinued lines of business, effected within the past 12 months ("Acquisition revenues", and disposition and discontinued lines of business together, "Disposition revenues", respectively) and the current year impact of foreign currency movements.

For acquisitions, organic revenues exclude current year revenues that were incurred prior to the first anniversary date of an acquisition.

For dispositions and discontinued lines of business, prior year organic revenues exclude the prior year comparable revenues that were incurred before the date of disposition or discontinuance.

The table below provides an unaudited reconciliation of revenues to organic revenues:

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Acquisition revenues

Disposition revenues

Currency impact

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Intangible asset amortization 76,205 73,036

Business divestiture, acquisitions and related costs

Sales Tax Dispute (1)

Executive search costs 1,675 —

Restructuring/severance 46,200 259

CEO onboarding costs (1)

Business disposition, acquisitions and related costs 8,255 17,761

India Labor Codes Reform 2,883 —

Asset impairment 887 —

Client bankruptcy charges 750 —

Litigation reserve 650 —

Sales Tax Dispute (2)

Adjusted operating income $ 855,308 $ 843,432 1.4 %

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Intangible asset amortization 58,762 54,074

Gain on business divestiture (17,205) —

Business divestiture, acquisitions and related costs

Sales Tax Dispute (1)

Executive search costs

Restructuring/severance 35,625 192

CEO onboarding costs (1)

Impairment within Other assets (4)

Business disposition, acquisitions and related costs 6,365 13,150

India Labor Codes Reform 2,223 —

Asset impairment 684 —

Client bankruptcy charges 578 —

Litigation reserve 501 —

Sales Tax Dispute (2)

Gain on business divestiture — (17,205)

Gain on sale of investments (5,015) —

Non-operating income from business disposition (604) —

Income tax items (493) 1,351

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Intangible asset amortization 1.60 1.41

Gain on business divestiture (0.45) —

Business divestiture, acquisitions and related costs

Sales Tax Dispute (1)

Executive search costs

Restructuring/severance 0.97 0.01

CEO onboarding costs (1)

Impairment within Other assets (4)

Business disposition, acquisitions and related costs 0.18 0.34

India Labor Codes Reform 0.06 —

Asset impairment 0.02 —

Client bankruptcy charges 0.02 —

Litigation reserve 0.01 —

Sales Tax Dispute (2)

Gain on business divestiture — (0.45)

Gain on sale of investments (0.14) —

Non-operating income from business disposition (0.02) —

Income tax items (0.01) 0.04

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Weighted average common shares (diluted) 36,612 38,385

(1) For fiscal 2026, these costs are related to the recognition, over their respective service periods, of one-time make-whole cash and equity awards issued to our CEO pursuant to the terms of his employment agreement.

(2) Related to a resolved matter with the Massachusetts Department of Revenue.

Refer to Note 12, Commitments and Contingencies in the Notes to the Consolidated Financial Statements included in Part II, Item 8.

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

Refer to Part II, Item 8.

Note 11, Commitments and Contingencies in the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K, for further discussion on this matter.

(3) Adjusted operating margin is calculated as Adjusted operating income divided by Revenues.

(4) Related to the impairment of an equity investment that was recorded to Other income (expense), net on the Consolidated Statements of Income.

(5) For purposes of calculating Adjusted net income and Adjusted Diluted EPS, all adjustments were taxed at an adjusted tax rate of 22.9% and 26.0% for fiscal 2026 and fiscal 2025, respectively.

(6) Primarily related to the impairment of certain equity investments and the recognition, over their respective service periods, of one-time equity awards issued to our CEO.

Liquidity and Capital Resources

As of August 31, 2025, Cash and cash equivalents were $337.7 million and restricted cash was $14.0 million, compared with Cash and cash equivalents of $423.0 million as of August 31, 2024.

As of August 31, 2026, Cash and cash equivalents were $233.3 million and restricted cash was $6.3 million, compared with Cash and cash equivalents of $337.7 million and restricted cash of $14.0 million as of August 31, 2025.

Refer to Summary of Cash Flows within this section below, for more information on cash flows during fiscal 2026 and 2025.

Our Cash and cash equivalents as of August 31, 2025 are held in numerous locations throughout the world, with $169.8 million in EMEA (with the largest balance held in the UK), $106.1 million in the Americas and the remaining $61.8 million in Asia Pacific (with the largest balance held in the Philippines).

As of August 31, 2025 , we had $486.9 million of undistributed foreign earnings of which $69.1 million are permanently reinvested.

It is our intent to permanently reinvest all foreign undistributed earnings, except in jurisdictions where earnings can be repatriated substantially free of tax.

It is not practicable to determine the deferred tax liability that would be payable if these earnings were repatriated to the U.S.

Our Cash and cash equivalents as of August 31, 2026 are held in numerous locations throughout the world, with $105.9 million in EMEA (with the largest balance held in the UK), $81.9 million in the Americas (with the largest balance held in the U.S.) and the remaining $45.5 million in Asia Pacific (with the largest balances held in the Philippines and India).

We consider a portion of the unremitted earnings of our foreign subsidiaries and outside basis differences not related to those earnings to be permanently reinvested, where applicable.

These unremitted earnings and outside basis differences could give rise to tax liabilities if ever remitted or if a foreign subsidiary was sold.

As of August 31, 2026, it is not practicable to determine the deferred tax liability associated with such earnings or basis differences.

In addition, we have not provided for deferred taxes on any outside basis differences of our domestic subsidiaries as we have the ability and intent to recover these basis differences in a tax-free manner.

Our cash flows provided by operating activities, existing cash and cash equivalents, supplemented with our 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.

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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.

We are exposed to credit risk for our cash, cash equivalents and restricted cash held in financial institutions in the event of a default, to the extent that such amounts are in excess of applicable insurance limits;

however, we do not believe our concentration of cash, cash equivalents and restricted cash presents a significant credit risk as the counterparties to the instruments consist of multiple high-quality, credit-worthy financial institutions.

Sources of Liquidity

Debt and Swap Agreements

Debt Agreements

In addition to the discussion below, refer to Part II, Item 8.

Note 10, Debt in the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K for more information on our outstanding borrowings.

2025 Credit Agreement

On April 8, 2025, we entered into a credit agreement (the "2025 Credit Agreement") and borrowed $500.0 million under a senior unsecured term loan credit facility (the "2025 Term Facility").

We used the proceeds from the 2025 Term Facility borrowing to repay the outstanding balance under the 2022 Revolving Facility (as defined below).

The 2025 Credit Agreement also provides for a $1.0 billion senior unsecured revolving credit facility (the "2025 Revolving Facility").

On April 8, 2025, we entered into a credit agreement (the "2025 Credit Agreement") under which we borrowed $500.0 million under a senior unsecured term loan credit facility (the "2025 Term Facility") and obtained a $1.0 billion senior unsecured revolving credit facility (the "2025 Revolving Facility").

The 2025 Revolving Facility, together with the 2025 Term Facility, are referred to as the "2025 Credit Facilities".

The 2025 Term Facility matures on April 8, 2028, and the 2025 Revolving Facility matures on April 8, 2030.

The 2025 Revolving Facility provides for up to $100.0 million in the form of letters of credit and up to $100.0 million in the form of swingline loans.

We may seek additional commitments of up to $1.0 billion under the 2025 Revolving Facility from lenders or other financial institutions.

The 2025 Term Facility is subject to scheduled quarterly principal payments, commencing on August 31, 2025, with each quarterly principal payment equal to 1.25% of the original principal amount of the 2025 Term Facility.

The 2025 Credit Facilities are not otherwise subject to any other mandatory repayments.

The 2025 Credit Facilities contain incremental provisions that permit us to seek additional commitments of up to $1.0 billion under the 2025 Credit Facilities from lenders or other financial institutions.

The 2025 Revolving Facility also provides for up to $100.0 million in the form of letters of credit and up to $100.0 million in the form of swingline loans.

On August 28, 2026, we entered into Amendment No.

1 (the “Amendment Agreement”) to the 2025 Credit Agreement, which primarily (a) extended the maturity date of the 2025 Term Facility from April 8, 2028 to August 28, 2029, (b) extended the maturity date of the 2025 Revolving Facility from April 8, 2030 to August 28, 2031 and increased the revolving commitments by $500.0 million to a total of $1.5 billion without reducing the capacity under the incremental facilities provisions described above, (c) removed the scheduled quarterly principal payment obligations with respect to the 2025 Term Facility and (d) removed the credit spread adjustment of 0.1% for borrowings under the 2025 Credit Facilities.

Subsequent to the Amended Agreement, the 2025 Credit Facilities are not subject to any mandatory repayments.

We may voluntarily prepay loans under the 2025 Credit Facilities at any time without premium or penalty.

Prepayments of the 2025 Term Facility shall be applied to reduce the subsequent scheduled quarterly principal payments in direct order of maturity.

During fiscal 2025, we repaid $125.0 million under the 2025 Term Facility.

This included $68.8 million to satisfy all scheduled quarterly principal payments from loan inception through maturity, eliminating any future mandatory quarterly principal payment requirements.

The remaining $56.2 million was made as a voluntary prepayment.

From the effective date of the 2025 Revolving Facility through August 31, 2025, we have had no borrowings under the 2025 Revolving Facility.

From the borrowing date through August 31, 2025, the outstanding borrowings under the 2025 Credit Facilities bore interest at a rate equal to the applicable one-month Term Secured Overnight Financing Rate ("SOFR") plus a 0.975% spread (comprised of a 0.875% interest rate margin, based on a pricing grid determined by reference to our senior unsecured non-credit enhanced long-term debt rating and our total leverage ratio, plus a 0.1% credit spread adjustment).

We pay a commitment fee on the daily unused amount of the 2025 Revolving Facility using a pricing grid based on our senior unsecured non-credit enhanced long-term debt rating and our total leverage ratio.

The commitment fee remained consistent at 0.1% through August 31, 2025.

Debt issuance costs related to the 2025 Credit Facilities were $3.4 million.

These debt issuance costs are presented in the Consolidated Balance Sheets as a direct deduction from the carrying amount of the debt liability for the 2025 Term Facility and within Other assets for the 2025 Revolving Facility.

Debt issuance costs are amortized to Interest expense in the Consolidated Statements of Income on a straight-line basis over the contractual term of the debt (which approximates the effective interest method for the 2025 Term Facility).

As of August 31, 2026, our outstanding debt under the 2025 Term Facility was $375.0 million and we had no outstanding borrowings under the 2025 Revolving Facility.

Subsequent to August 31, 2026, we borrowed $90.0 million under the 2025 Revolving Facility.

Following the Amendment Agreement and from August 28, 2026 through August 31, 2026, outstanding borrowings under the Credit Facilities bore interest at a rate equal to the applicable one-month Term SOFR plus a 0.875% interest rate margin, based on a pricing grid determined by reference to our senior unsecured non-credit enhanced long-term debt rating and our total leverage ratio.

Interest on the 2025 Credit Facilities is currently payable on the last business day of each month, in arrears.

We continue to pay a commitment fee on the daily unused amount of the 2025 Revolving Facility using a pricing grid based on our senior unsecured non-credit enhanced long-term debt rating and our total leverage ratio.

The commitment fee remained consistent at 0.1% from April 8, 2025 through August 31, 2026.

The 2025 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.

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We were in compliance with all covenants and requirements of the 2025 Credit Agreement as of August 31, 2026.

2022 Credit Agreement

On March 1, 2022, we entered into a credit agreement (the "2022 Credit Agreement") and borrowed $1.0 billion under a senior unsecured term loan credit facility (the "2022 Term Facility") and $250.0 million of the available $500.0 million under a senior unsecured revolving credit facility (the "2022 Revolving Facility").

The 2022 Revolving Facility, together with the 2022 Term Facility, are referred to as the "2022 Credit Facilities".

On January 31, 2025, we entered into a joinder agreement to our 2022 Credit Agreement pursuant to which commitments under the 2022 Revolving Facility were increased by $100.0 million, to a total of $600.0 million.

All other terms of the 2022 Credit Agreement remained unchanged.

The 2022 Term Facility, originally due to mature on March 1, 2025, was repaid in full following $125.0 million of repayments made during the six months ended February 28, 2025.

During fiscal 2025, we borrowed $305.0 million and repaid $555.0 million under the 2022 Revolving Facility.

The 2022 Credit Agreement was terminated on April 8, 2025, concurrent with entering into the 2025 Credit Agreement.

Borrowings previously outstanding under the 2022 Credit Facilities bore interest at a rate equal to the applicable one-month Term SOFR plus a spread, using a debt leverage pricing grid and a credit spread adjustment (with total spread ranging from 0.975% to 1.1% over the term of the debt).

Interest Rate Swap Agreements

We leverage interest rate swap agreements to manage our floating interest rate exposure with a fixed interest rate.

Our interest rate swap agreements are designated as cash flow hedges at inception.

2025 Swap Agreement

On April 24, 2025, we entered into an interest rate swap agreement ("2025 Swap Agreement") with a notional amount of $200.0 million to hedge a portion of our outstanding floating SOFR debt with a fixed interest rate of 4.086%.

The notional amount of the 2025 Swap Agreement declines by $50.0 million on a quarterly basis beginning May 31, 2025 and matures on February 28, 2026.

As of August 31, 2025, the notional amount of the 2025 Swap Agreement was $100.0 million.

2024 Swap Agreement

On March 1, 2024, we entered into an interest rate swap agreement ("2024 Swap Agreement") with a notional amount of $200.0 million to hedge a portion of our outstanding floating SOFR debt with a fixed interest rate of 5.145%.

The notional amount of the 2024 Swap Agreement declined by $50.0 million on a quarterly basis beginning May 31, 2024.

The 2024 Swap Agreement matured on February 28, 2025.

2022 Swap Agreement

On March 1, 2022, we entered into an interest rate swap agreement ("2022 Swap Agreement") with a notional amount of $800.0 million to hedge a portion of our outstanding floating SOFR debt with a fixed interest rate of 1.162%.

The notional amount of the 2022 Swap Agreement declined by $100.0 million on a quarterly basis beginning May 31, 2022.

The 2022 Swap Agreement matured on February 28, 2024.

Refer to Part II, Item 7A.

Quantitative and Qualitative Disclosures About Market Risk , in this Annual Report on Form 10-K, for further discussion of our exposure to interest rate risk on our outstanding floating rate debt.

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

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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 we incurred approximately $9.1 million in debt issuance costs during fiscal 2022.

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

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

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

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

On September 17, 2024, our Board of Directors approved a new share repurchase authorization of up to $300 million in aggregate, which was available during fiscal 2025.

This authorization expired upon the conclusion of fiscal 2025 and was not available for share repurchases after that date.

On June 17, 2025, our Board of Directors authorized up to $400 million for share repurchases on or after September 1, 2025 through September 30, 2026.

Refer to Part III, Item 12, Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters , of this Annual Report on Form 10-K for further discussion on our share repurchase program.

During fiscal 2025 and 2024, we paid dividends of $160.0 million and $150.7 million, respectively.

On June 17, 2025, our Board of Directors authorized up to $400 million for share repurchases on or after September 1, 2025.

On December 16, 2025, our Board of Directors approved an additional $600 million in share repurchase authority, which is available immediately with no expiration date.

The additional authorization also removed the expiration date from the June 17, 2025 authorization.

As of August 31, 2026, $356.0 million remained available under our share repurchase program.

Refer to Part II, Item 5.

Market For Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities , of this Annual Report on Form 10-K for further discussion on our share repurchase program.

In the third quarter of fiscal 2026, our Board of Directors approved a 5% increase in the regular quarterly dividend from $1.10 to $1.16 per share.

Fiscal 2025 marked the 26th consecutive fiscal year we have increased dividends on a stock split-adjusted basis, highlighting our continued commitment to returning value to our stockholders.

Fiscal 2026 marks the 27th consecutive fiscal year we have increased dividends on a stock split-adjusted basis, highlighting our continued commitment to returning value to our stockholders.

During fiscal 2026 and 2025, we paid dividends of $164.2 million and $160.0 million, respectively.

Future cash dividend payments are subject to final determination by our Board of Directors and will depend on our earnings, capital requirements, financial condition and other relevant factors.

Capital Expenditures

For the year ended August 31, 2025, capital expenditures increased by 27.0% to $108.8 million, compared with $85.7 million in fiscal 2024.

This increase was primarily due to higher capitalized costs related to the development of our internal-use software.

Our acquisitions with the most significant cash flows from fiscal 2024 through fiscal 2026 included Liquid Holdings, LLC ("LiquidityBook") and Platform Group Limited ("Irwin").

Refer to Part II, Item 8.

Note 5, Acquisitions in the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K for further discussion of these acquisitions.

Note 5, Acquisitions in the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K for further discussion on these acquisitions.

LiquidityBook

On February 7, 2025 we completed the acquisition of LiquidityBook for a purchase price of $243.2 million, net of cash acquired, and inclusive of preliminary working capital adjustments.

The purchase price includes contingent consideration of $11.9 million, which reflects the acquisition date fair value of potential future payments that are contingent upon the achievement of certain specified milestones.

On February 7, 2025, we completed the acquisition of LiquidityBook for a purchase price of $243.2 million, net of cash acquired, and inclusive of working capital adjustments.

The purchase price included contingent consideration of $11.9 million, which reflects the acquisition date fair value of potential future payments that are contingent upon the achievement of certain

specified milestones.

We finalized the purchase accounting for the LiquidityBook acquisition during the second quarter of fiscal 2026.

LiquidityBook provides cloud-native trading solutions to hedge fund, asset and wealth management, outsourced trading, and sell-side middle office clients.

LiquidityBook operates a proprietary FIX network that enables streamlined connectivity to over 200 brokers and order routing to more than 1,600 destinations across 80 markets globally.

LiquidityBook operates a proprietary FIX network that enabled, as of the acquisition date, streamlined connectivity to over 200 brokers and order routing to more than 1,600 destinations across 80 markets globally.

This acquisition adds technology-forward order management and investment book of record capabilities and enhances FactSet’s ability to serve the integrated workflow needs of clients across the portfolio life cycle.

On November 5, 2024, we completed the acquisition of Irwin for a purchase price of $120.2 million, net of cash acquired, and inclusive of working capital adjustments.

The purchase price includes contingent consideration of $9.6 million, which reflects the acquisition date fair value of potential future payments that are contingent upon the achievement of certain specified milestones.

The purchase price included contingent consideration of $9.6 million, which reflects the acquisition date fair value of potential future payments that are contingent upon the achievement of certain specified milestones.

We finalized the purchase accounting for the Irwin acquisition during the third quarter of fiscal 2025.

Irwin is a leading investor relations and capital markets platform for public companies and their advisors.

This acquisition builds on a recent successful partnership between FactSet and Irwin, and expands our ability to address the holistic workflow needs of investor relations professionals with an integrated, modern solution.

This acquisition builds on a successful partnership between FactSet and Irwin, and expands our ability to address the holistic workflow needs of investor relations professionals with an integrated, modern solution.

Contractual Obligations

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As of August 31, 2026 and 2025, we had total purchase obligations with suppliers and vendors of approximately $360 million and $352 million, respectively.

Our total purchase obligations as of August 31, 2025 and 2024 primarily related to hosting services, acquisition of data and, to a lesser extent, third-party software providers.

Our total purchase obligations as of August 31, 2026 primarily relate to the acquisition of data, hosting services, and, to a lesser extent, third-party software providers.

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

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The non-cash charges were primarily driven by depreciation and amortization.

The change in our working capital was primarily driven by cash outflows related to payments to resolve the Sales Tax Dispute, timing of vendor payments and client collections, as well as lease payments.

For fiscal 2025, net cash provided by operating activities was $726.3 million, which included net income of $597.0 million, non-cash charges of $235.0 million and a net cash outflow of $105.7 million to support our working capital requirements.

The non-cash charges were primarily driven by depreciation and amortization and, to a lesser extent, stock-based compensation expense.

The change in our working capital was primarily driven by cash outflows related to lease payments and prepaid expenses, partially offset by the timing of payments to vendors.

The non-cash charges were primarily driven by depreciation and amortization.

For fiscal 2026, net cash used in investing activities was $132.5 million.

The cash used in investing activities primarily consisted of $348.3 million of acquisition-related consideration related mainly to the Irwin and LiquidityBook transactions, $108.8 million of capital expenditures mainly driven by the capitalization of internal-use software development costs, partially offset by $58.2 million in proceeds from our investments in mutual funds.

The cash used in investing activities primarily consisted of $114.7 million of capital expenditures mainly due to the capitalization of internal-use software development costs.

For fiscal 2025, net cash used in investing activities was $392.8 million.

The cash used in investing activities was primarily related to capital expenditures of $85.7 million, mainly driven by the capitalization of internal-use software development costs and $58.6 million in investments, primarily related to the purchase of mutual funds.

The cash used in investing activities primarily consisted of $348.3 million of acquisition-related consideration related mainly to the Irwin and LiquidityBook transactions and $108.8 million of capital expenditures mainly driven by the capitalization of internal-use software development costs, partially offset by $58.2 million in proceeds from our investments in mutual funds.

For fiscal 2026, net cash used in financing activities was $799.4 million, consisting mainly of $644.0 million of share repurchases and $164.2 million of dividend payments.

For fiscal 2025, net cash used in financing activities was $407.8 million, consisting mainly of $805.0 million related primarily to the repayment of the 2022 Credit Facilities, $300.5 million of share repurchases and $160.0 million of dividend payments, partially offset by $803.4 million of proceeds from borrowings under the 2025 Term Facility and the 2022 Revolving Facility, in periods prior to its termination, and $81.7 million of proceeds from employee stock plans.

For fiscal 2024, net cash used in financing activities was $560.9 million, consisting mainly of $250.0 million related to the partial repayment of the 2022 Term Facility, $235.2 million of share repurchases and $150.7 million of dividend payments, partially offset by $91.7 million of proceeds from employee stock plans.

Free Cash Flow

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

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 stockholders, investing in our business, making strategic acquisitions, and strengthening the balance sheet.

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, may be available to pay debt obligations, make strategic acquisitions and investments, pay dividends, repurchase stock, and strengthen the balance sheet.

Free cash flow should be considered in addition to consolidated net income and net cash provided by operating activities, but should not be used as a substitute for these key measures of our performance and liquidity.

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Free cash flow $ 707,480 $ 617,454 $ 90,026

We generated free cash flow of $617.5 million during fiscal 2025, an increase of $2.8 million compared with fiscal 2024.

This increase was driven by $25.9 million in cash provided by operating activities, partially offset by higher PPE mainly from capitalized costs related to the development of our internal-use software.

Off-Balance Sheet Arrangements

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

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

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

Significant judgment is required in determining our provision for income taxes, deferred tax assets and liabilities and unrecognized tax benefits.

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The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that 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.

The second step, for those positions that meet the recognition

criteria, is to measure and recognize the largest amount of benefit that is greater than 50% likely of being realized upon effective settlement with a taxing authority.

The second step, for those positions that meet the recognition criteria, is to measure and recognize the largest amount of benefit that is greater than 50% likely of being realized upon effective settlement with a taxing authority.

As the determination of liabilities related to uncertain tax positions and associated interest and penalties requires significant estimates and assumptions, there can be no assurance that we will accurately predict the outcomes of these audits.

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We measure and recognize stock-based compensation expense for all stock-based awards and purchases of common stock under the employee stock purchase plan ("ESPP") based on their estimated grant date fair value.

We utilize a lattice-binomial option-pricing model ("binomial model") to estimate the grant date fair value for our employee stock options and the Black-Scholes model to estimate the grant date fair value for stock options granted to the members of the Board of Directors ("non-employee directors") and common stock purchased by eligible employees under our ESPP.

Both the binomial model and Black-Scholes model involve certain estimates and assumptions such as:

We use a lattice-based option-pricing model ("lattice model") to estimate the grant date fair value for our employee stock options.

For our CEO stock options with performance conditions ("PSOs"), grant date fair value was estimated using a Monte

Carlo simulation ("Monte Carlo model").

The grant date fair value for non-employee director stock options and common stock purchased by eligible employees under our ESPP is estimated using a Black-Scholes model.

The lattice model, Black-Scholes model, and Monte Carlo model each require certain estimates and assumptions, including the risk-free interest rate, expected volatility, and dividend yield.

The Black-Scholes and Monte Carlo models incorporate an assumed expected life of the award, while the lattice model derives the expected life as an output incorporating assumptions such as vesting restrictions and expected exercise patterns based on the intrinsic value of the options.

The primary assumptions and their definitions are as follows:

• Risk-free interest rate - based on the U.S.

Treasury yield curve in effect at the time of grant with maturities equal to the expected terms of the stock-based awards granted.

• Expected life - the weighted average period the stock-based awards are expected to remain outstanding.

• Expected volatility - based on a blend of historical volatility of the stock-based award's useful life and the weighted average implied volatility for call option contracts traded in the 90 days preceding the stock-based award's valuation date.

• Dividend yield - the expectation of dividend payouts based on our history.

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

• Expected life - the weighted average period the stock-based awards are expected to remain outstanding.

For our performance share units ("PSUs"), management makes quarterly assessments of the probability of achieving specified performance criteria established at the time of grant.

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We may elect to perform a qualitative analysis for the reporting units to determine whether it is more likely than not (a likelihood of more than 50%) that 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 products or 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 value or if we elect not to perform a qualitative analysis, a quantitative analysis is performed to determine whether a goodwill impairment exists.

In performing a qualitative assessment, we consider macro-economic conditions, industry and market considerations, including the competitive environment and significant changes in demand for our products or services, internal cost factors, and our own overall financial and share price performance, among other factors.

If the qualitative analysis indicates that it is more likely than not the fair value of a reporting unit is less than its carrying value, or when we elect to do so on a periodic basis, we proceed directly to a quantitative analysis to determine whether a goodwill impairment exists.

The quantitative goodwill impairment analysis is used to identify potential impairment by comparing the carrying value of a reporting unit with its fair value.

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Note 5, Acquisitions in the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K for further information.

PPE and Intangible Assets

We amortize our PPE and identifiable intangible assets over their estimated useful lives.

Intangible Assets

We amortize our identifiable intangible assets over their estimated useful lives.

Determining the useful life requires judgment and an understanding of our planned use of the asset, among other factors.

If different useful lives had been used, the resulting amortization or depreciation expense recognized may be materially different.

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

We review our PPE and intangible assets to determine if any indicators of impairment are present on a quarterly basis or whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable.

If different useful lives had been used, the resulting amortization expense recognized may be materially different.

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.

We review our intangible assets to determine if any indicators of impairment are present on a quarterly basis or whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable.

If indicators of impairment are present, the asset group is tested for impairment by comparing the carrying value to undiscounted cash flows and, if impaired, written down to fair value based on discounted cash flows.

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Refer to Part II, Item 8.

Note 6, Property, Equipment and Leasehold Improvements and Note 8, Intangible Assets in the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K for further information.

Note 7, Intangible Assets in the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K for further information.

Contingencies

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We review these accruals on a quarterly basis and adjust, as necessary, to reflect the impact of negotiations, settlements, rulings, advice of legal counsel and other current information.

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

Refer to Part II, Item 8.

Note 12, Commitments and Contingencies in the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K for more information on our contingent matters.

For more information on the accounting of our income tax contingencies, refer to Part II, Item 8.

Note 9, Income Taxes in the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K.

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

Refer to Part II, Item 8., Note 11, Commitments and Contingencies for more information on our contingent matters and Note 8, Income Taxes for information on the accounting of our income tax contingencies, in the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K.

New Accounting Pronouncements

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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