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Item 7. Management’s Discussion and Analysis

2025-11-07 compared with 2024-11-06 · 84 added, 91 removed, 350 unchanged (33% of the section changed)

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In fiscal 2025, our B2B scoring solutions, including the flagship FICO ® Score, continued to be the standard measure of consumer credit risk in the U.S.

The adoption of our most predictive scores, FICO ® Score 10 and 10 T, gained increased traction for non-conforming mortgages and will be implemented for conforming mortgages based on the timeline set forth by the Federal Housing Finance Agency for enterprise credit scoring requirements.

We continued the expansion of our financial inclusion initiatives through the FICO ® Educational Analytics Challenge, a program created to help promote diversity in data science, engineering, and technology at Historically Black Colleges and Universities.

Additionally, we host free Score A Better Future TM financial education workshops for students and adults from traditionally underserved communities.

Internationally, we launched a FICO Score based on Ukrainian Bureau of Credit Histories data, an innovative score to help Ukrainians gain credit access in Poland.

We also remained committed to expanding usage of the FICO ® Resilience Index, a complement to FICO Scores that more precisely predicts a borrower’s resilience to future economic disruptions, helping lenders manage latent risk.

We continued to develop alternative data scores, including trended data cash flow attributes, to help lenders identify credit borrowers with positive financial profiles that extend beyond their traditional credit reports as well as offer credit score layering leveraging UltraFICO ® Score and FICO ® Score XD to help broaden accessibility and extend financial inclusion to borrowers with limited credit history.

During fiscal 2024, the strategy for our Software segment was to continue to advance and drive growth through our platform-first, cloud delivered products.

A significant portion of our short-term opportunity remains in North America, where financial institutions are focused on digital transformation and understand the value of FICO ® Platform.

We have also expanded our FICO Platform reach both by geography and customer type in order to enable organizations to operationalize analytics, and to power customer connections and decision making at scale.

We continue to innovate and bring new capabilities to FICO Platform, demonstrating its value with new customers and expanding use cases with existing customers.

The adoption of our most predictive scores, FICO ® Score 10 and FICO ® Score 10 T, gained increased traction for non-conforming mortgages and was approved for conforming mortgages by the Federal Housing Finance Agency for enterprise credit scoring requirements.

In addition, we launched FICO® Score 10 BNPL and FICO ® Score 10 T BNPL, the first credit scores from a leading credit scoring provider to incorporate Buy Now, Pay Later (“BNPL”) data.

These innovative scores represent a significant advancement in credit scoring, accounting for the growing importance of BNPL loans in the U.S.

credit ecosystem.

Internationally, we launched a FICO Score in Kenya, which leverages TransUnion data and CreditVision variables to redefine risk management and help expand access to financial services across Kenya.

In fiscal 2025, in support of our B2C business and financial inclusion, we launched the FICO ® Score Mortgage Simulator, which is the only simulator in the market built by FICO data scientists and powered by the FICO Score algorithm.

We also introduced our Lenders Leading Financial Inclusion program that aims to expand credit access for underserved communities and we hosted free Score A Better Future ® financial education workshops for students and adults from traditionally underserved communities.

During fiscal 2025, the strategy for our Software segment continued to advance and drive growth through our platform-first products.

We expanded our FICO ® Platform reach, both by geography and customer type, with the launch of FICO ® Marketplace, enabling organizations to operationalize analytics, power customer connections, and make decisions at scale.

Marketplace offers easy access to data, artificial intelligence (“AI”) models, optimization tools, decision rulesets, and machine learning models, which deliver enterprise business outcomes from AI.

We continue to innovate and bring new capabilities to FICO Platform, demonstrating its value with new customers and expanding use cases with existing customers and partners.

We announced newly granted patents around advancing responsible AI, machine learning, and applied intelligence technology.

Additionally, we continue to expand our FICO ® Educational Analytics Challenge program that was created to empower students and help educate the next generation of data scientists.

We also continued to enhance stockholder value by returning cash to stockholders through our stock repurchase program.

During fiscal 2024, we repurchased 0.6 million shares at a total repurchase price of $833.3 million.

During fiscal 2025, we repurchased 0.8 million shares at a total repurchase price of $1.4 billion.

Highlights from Fiscal 2025

• Total revenues were $2.0 billion during fiscal 2025, a 16% increase from fiscal 2024.

• Revenues for our Scores segment were $919.7 million during fiscal 2024, a 19% increase from fiscal 2023.

• Annual Recurring Revenue for our Software segment as of September 30, 2024 was $721.2 million, an 8% increase from September 30, 2023.

• Revenues for our Scores segment were $1.2 billion during fiscal 2025, a 27% increase from fiscal 2024.

• Annual Recurring Revenue for our Software segment as of September 30, 2025 was $747.3 million, a 4% increase from September 30, 2024.

• Dollar-Based Net Retention Rate for our Software segment was 102% as of September 30, 2025.

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• Cash and cash equivalents were $134.1 million as of September 30, 2025, compared with $150.7 million as of September 30, 2024.

• We issued $1.5 billion of senior notes and used the net proceeds to repay all the outstanding balances on our term loans.

We also amended our credit agreement to increase our borrowing capacity under the unsecured revolving line of credit to $1.0 billion and extended its maturity.

Total debt balance was $3.1 billion as of September 30, 2025, compared with $2.2 billion as of September 30, 2024.

• Total share repurchases during fiscal 2024 were $833.3 million, compared with $407.3 million during fiscal 2023.

• Total share repurchases during fiscal 2025 were $1.4 billion, compared with $0.8 billion during fiscal 2024.

Key performance metrics for Software segment

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Total on-premises and SaaS software $ 32.7 $ 22.1 $ 102.4 $ 84.7

(*) We sold certain assets related to our Siron compliance business during the quarter ended December 31, 2022, and the amount above excludes this product line for the year ended September 30, 2023.

Annual Recurring Revenue (“ARR”)

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The following table summarizes our ARR for on-premises and SaaS software exiting each of the dates presented:

December 31, 2022 ( * )

March 31, 2023 June 30,

2023 March 31,

2024 June 30,

2024 September 30, 2024 December 31,

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Total 18 % 14 % 10 % 8 % 6 % 3 % 4 % 4 %

(*) We sold certain assets related to our Siron compliance business during the quarter ended December 31, 2022, and the amounts and percentages above exclude this product line at December 31, 2022.

Dollar-Based Net Retention Rate (“DBNRR”)

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The following table summarizes our DBNRR for on-premises and SaaS software exiting each of the dates presented:

December 31, 2022 (*) March 31, 2023 June 30,

2023 March 31,

2024 June 30,

2024 September 30, 2024 December 31,

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Total 114 % 112 % 108 % 106 % 105 % 102 % 103 % 102 %

(*) We sold certain assets related to our Siron compliance business during the quarter ended December 31, 2022, and the percentages above exclude this product line at December 31, 2022.

RESULTS OF OPERATIONS

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Total 100 % 100 % 100 %

Scores segment revenues increased $145.8 million in fiscal 2024 from 2023 due to an increase of $150.8 million in our business-to-business scores revenue, partially offset by a decrease of $5.0 million in our business-to-consumer revenue.

The increase in business-to-business scores revenue was primarily attributable to a higher unit price, partially offset by a decrease in volume of mortgage originations.

The decrease in business-to-consumer revenue was primarily attributable to a decrease in direct sales generated from the myFICO.com website.

Scores segment revenues increased $248.9 million in fiscal 2025 from 2024 due to an increase of $236.7 million in our business-to-business scores revenue and an increase of $12.2 million in our business-to-consumer scores revenue.

The increase in business-to-business scores revenue was primarily attributable to a higher unit price, an increase in volume of mortgage originations and a multi-year license renewal in the U.S.

recognized on our insurance score product during fiscal 2025.

The increase in business-to-consumer scores revenue was primarily attributable to an increase in royalties derived from scores sold indirectly to consumers through consumer reporting agencies.

The following table provides information about disaggregated revenue for our Software segment by revenue types:

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$ 740,145 $ 711,340 $ 640,182 $ 28,805 71,158 4 % 11 %

(1) Includes license portion of our on-premises subscription software and perpetual license, both of which are recognized when the software is made available to the customer, or at the start of the subscription.

(1) Includes license portion of our on-premises subscription software and perpetual licenses, both of which are recognized when the software is made available to the customer, or at the start of the subscription.

(2) Includes maintenance portion and usage-based fees of our on-premises subscription software, maintenance revenue on perpetual licenses, as well as SaaS revenue.

Software segment revenues increased $58.1 million in fiscal 2024 from 2023 due to a $71.2 million increase in on-premises and SaaS software revenue, partially offset by a $13.0 million decrease in services revenue.

The increase in our on-premises and SaaS software revenue was primarily attributable to an increase in revenue recognized over time largely driven by SaaS growth for our Platform products.

The decrease in professional services revenue was primarily attributable to our strategy to emphasize higher-margin software over professional services.

Software segment revenues increased $24.4 million in fiscal 2025 from 2024 due to a $28.8 million increase in on-premises and SaaS software revenue, partially offset by a $4.4 million decrease in professional services revenue.

The increase in our on-premises and SaaS software revenue was primarily attributable to an increase in revenue recognized over time largely driven by SaaS growth for our Platform products and an increase in license revenue recognized at a point in time due to a large license renewal.

Operating Expenses and Other Income (Expense), Net

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Amortization of intangible assets — 917 1,100 (917) (183) (100) % (17) %

Restructuring charges 10,922 — — 10,922 — — % — %

Gain on product line asset sale — — (1,941) — 1,941 — % (100) %

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Interest expense, net (133,647) (105,638) (95,546) (28,009) (10,092) 27 % 11 %

Other income (expense), net 14,034 6,340 (2,138) 7,694 8,478 121 % (397) %

Other income, net 11,392 14,034 6,340 (2,642) 7,694 (19) % 121 %

Income before income taxes 802,595 642,025 553,624 160,570 88,401 25 % 16 %

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Amortization of intangible assets — % — % — %

Restructuring charges 1 % — % — %

Gain on product line asset sale — % — % — %

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Interest expense, net (7) % (6) % (6) %

Other income (expense), net 1 % — % — %

Other income, net 1 % 1 % — %

Income before income taxes 40 % 38 % 36 %

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software royalty fees;

credit bureau data and processing services;

consumer reporting agency data and processing services;

third-party hosting fees related to our SaaS services;

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and outside services.

The fiscal 2024 over 2023 increase in cost of revenues of $37.2 million was primarily attributable to an $18.1 million increase in infrastructure and facilities costs, a $12.4 million increase in personnel and labor costs, a $4.3 million increase in direct materials costs, and a $2.4 million increase in outside services costs.

The increase in infrastructure and facilities costs was primarily attributable to an increase in third-party data center hosting costs, a prior year one-time reimbursement from a third-party data center provider for implementation costs previously incurred, and an increase in software royalty costs.

The increase in personnel and labor costs was primarily attributable to increased market base-pay adjustments and increased share-based compensation expense.

The increase in direct materials costs was primarily attributable to increased telecommunications expenses to support FICO ® Customer Communications Services revenue.

The increase in outside services costs was primarily attributable to increased consulting costs.

The fiscal 2025 over 2024 increase in cost of revenues of $5.5 million was primarily attributable to an $8.7 million increase in infrastructure and facilities costs, partially offset by a $2.1 million decrease in outside services costs and a $1.4 million decrease in personnel and labor costs.

The increase in infrastructure and facilities costs was primarily attributable to an increase in third-party data center hosting costs and an increase in depreciation on data center computer hardware.

The decrease in outside services costs was primarily attributable to decreased third-party contractor costs.

The decrease in personnel and labor costs was primarily attributable to decreased incentive expense.

Cost of revenues as a percentage of revenues decreased to 18 % during fiscal 2025 from 20% during fiscal 2024, primarily due to increased sales of our higher-margin Scores products.

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Research and development expenses include personnel and related overhead costs incurred in the development of new products and services, including research of mathematical and statistical models and development of new versions of Software products.

The fiscal 2024 over 2023 increase in research and development expenses of $12.0 million was primarily attributable to an $8.2 million increase in personnel and labor costs, as a result of increases in share-based compensation expense, headcount, and incentive expense, a $2.4 million increase in infrastructure and facilities costs primarily attributable to increased third-party data center hosting costs, and a $1.8 million increase in consulting costs.

The fiscal 2025 over 2024 increase in research and development expenses of $16.4 million was primarily attributable to a $6.9 million increase in infrastructure and facilities costs, a $5.7 million increase in outside services costs, and a $3.8 million increase in personnel and labor costs.

The increase in infrastructure and facilities costs was primarily attributable to increased third-party data center hosting costs and third-party SaaS services costs.

The increase in outside services costs was primarily attributable to increased third-party contractor costs.

The increase in personnel and labor costs was primarily attributable to increased headcount.

Research and development expenses as a percentage of revenues decreased to 9% during fiscal 2025 from 10% during fiscal 2024.

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and business development expenses.

The fiscal 2024 over 2023 increase in selling, general and administrative expenses of $62.3 million was primarily attributable to a $38.6 million increase in personnel and labor costs, a $6.0 million increase in outside services costs, a $5.5 million increase in advertising and other promotional costs, a $4.9 million increase in non-income tax costs, a $3.7 million increase in travel costs, and a $2.6 million increase in infrastructure and facilities costs.

The increase in personnel and labor costs was primarily attributable to increased share-based compensation expense, increased headcount, market base-pay adjustments, increased fringe benefit costs related to our supplemental retirement and savings plan, and increased incentive expense.

The increase in outside services costs was primarily attributable to increased legal and consulting expenses.

The increase in advertising and other promotional expenses was primarily attributable to increased costs for advertising campaigns and corporate events.

The increase in non-income tax costs was primarily attributable to a tax law change related to transfer pricing effective in fiscal 2024 that impacted a non-U.S.

The fiscal 2025 over 2024 increase in selling, general and administrative expenses of $50.2 million was primarily attributable to a $23.7 million increase in personnel and labor costs, a $22.4 million increase in advertising and other promotional costs, and a $3 .3 million increase in travel costs.

The increase in personnel and labor costs was primarily attributable to increased headcount, market base-pay adjustments, commission expense, and share-based compensation expense, partially offset by decreased fringe benefit costs related to our supplemental retirement and savings plan.

The increase in advertising and other promotional costs was primarily attributable to increased costs for advertising campaigns and corporate events.

The increase in travel costs was primarily attributable to promotional and corporate events.

The increase in infrastructure and facilities costs was primarily attributable to the impact of a favorable adjustment in the prior year from the termination of an office lease.

Selling, general and administrative expenses as a percentage of revenues increased to 27% during fiscal 2024 from 26% during fiscal 2023.

Amortization of Intangible Assets

Amortization of intangible assets consists of expense related to intangible assets recorded in connection with our acquisitions.

Our finite-lived intangible assets, consisting primarily of completed technology and customer contracts and relationships, are amortized using the straight-line method over periods ranging from five to ten years.

Amortization expense was $0.9 million and $1.1 million for fiscal 2024 and 2023, respectively.

Gain on Product Line Asset Sale

The $1.9 million gain on product line asset sale during fiscal 2023 was attributable to the sale of certain assets related to our Siron compliance business.

Selling, general and administrative expenses as a percentage of revenues decreased to 26 % during fiscal 2025 from 27% during fiscal 2024.

Restructuring Charges

During the fourth quarter of fiscal 2025, we incurred charges of $10.9 million in employee separation costs due to the elimination of 226 positions throughout the Company.

Cash payments for all the employee separation costs will be paid by the end of our fiscal 2026.

Interest Expense, Net

Interest expense includes interest on the senior notes issued in December 2021, December 2019, and May 2018, as well as interest and credit agreement fees on the revolving line of credit and term loans.

Interest expense includes interest on the senior notes issued in May 2025, December 2021, December 2019, and May 2018, as well as interest and credit agreement fees on the revolving line of credit and term loans.

On our consolidated statements of income and comprehensive income, interest expense is netted with interest income, which is derived primarily from the investment of funds in excess of our immediate operating requirements.

The fiscal 2024 from 2023 increase in net interest expense of $10.1 million was primarily attributable to a higher average interest rate and higher average outstanding balance of borrowings under our credit agreement during fiscal 2024.

Other Income (Expense), Net

Other income (expense), net consists primarily of unrealized investment gains/losses and realized gains/losses on certain investments classified as trading securities, exchange rate gains/losses resulting from remeasurement of foreign-currency-denominated receivable and cash balances held by our various reporting entities into their respective functional currencies at period-end market rates, net of the impact of offsetting foreign currency forward contracts, and other non-operating items.

The fiscal 2024 over 2023 increase in other income, net of $7.7 million was primarily attributable to an increase in net unrealized and realized gains on investments classified as trading securities in our supplemental retirement and savings plan and a decrease in foreign currency exchange losses.

The fiscal 2025 over 2024 increase in net interest expense of $28.0 million was primarily attributable to the $1.5 billion of 2025 Senior Notes (as defined below), partially offset by a lower average outstanding balance and a lower average interest rate on borrowings under our credit agreement during fiscal 2025.

Other Income, Net

Other income, net consists primarily of unrealized investment gains/losses and realized gains/losses on marketable securities classified as trading securities, exchange rate gains/losses resulting from remeasurement of foreign-currency-denominated receivable and cash balances held by our various reporting entities into their respective functional currencies at period-end market rates, net of the impact of offsetting foreign currency forward contracts, and other non-operating items.

The fiscal 2025 over 2024 decrease in other income, net of $2.6 million was primarily attributable to a decrease in net unrealized gains on investments classified as trading securities in our supplemental retirement and savings plan, partially offset by an increase in net exchange rate gains resulting from remeasurement of foreign-currency-denominated receivable and cash balances held by our various reporting entities into their respective functional currencies at period-end market rates, net of the impact of offsetting foreign currency forward contracts.

Provision for Income Taxes

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Software 247,694 257,529 241,191 (9,835) 16,338 (4) % 7 %

Unallocated corporate expenses (186,898) (156,426) (142,647) (30,472) (13,779) 19 % 10 %

Total segment operating income 1,273,937 1,070,883 922,262 203,054 148,621 19 % 16 %

Unallocated corporate expenses (181,498) (186,898) (156,426) 5,400 (30,472) (3) % 19 %

Unallocated share-based compensation (156,667) (149,439) (123,847) (7,228) (25,592) 5 % 21 %

Unallocated amortization expense — (917) (1,100) 917 183 (100) % (17) %

Unallocated restructuring charges (10,922) — — (10,922) — — % — %

Gain on product line asset sale — — 1,941 — (1,941) — % (100) %

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Segment operating income $ 247,694 $ 257,529 $ 241,191 30 % 32 % 33 %

The fiscal 2024 over 2023 increase in operating income of $90.8 million was primarily attributable to a $204.0 million increase in segment revenues, partially offset by a $55.3 million increase in segment operating expenses, a $30.5 million increase in corporate expenses, and a $25.6 million increase in share-based compensation cost.

At the segment level, the $118.1 million increase in segment operating income was the result of a $132.3 million increase in our Scores segment operating income and a $16.3 million increase in our Software segment operating income, partially offset by a $30.5 million increase in corporate expenses.

The fiscal 2025 over 2024 increase in operating income of $191.2 million was primarily attributable to a $273.3 million increase in segment revenues and a $5.4 million decrease in corporate expenses, partially offset by a $70.2 million increase in segment operating expenses, a $10.9 million increase in restructuring charges, and a $7.2 million increase in share-based compensation cost.

At the segment level, the $203.1 million increase in segment operating income was the result of a $212.9 million increase in our Scores segment operating income, partially offset by a $9.8 million decrease in our Software segment operating income.

The $212.9 million increase in our Scores segment operating income was attributable to a $248.9 million increase in segment revenue, partially offset by a $36.0 million increase in segment operating expenses.

Segment operating income as a percentage of segment revenue for Scores was 88%, consistent with fiscal 2024.

The $16.3 million increase in our Software segment operating income was attributable to a $58.1 million increase in segment revenue, partially offset by a $41.8 million increase in segment operating expenses.

Segment operating income as a percentage of segment revenue for Software decreased to 32% from 33%, primarily attributable to a prior year one-time reimbursement from a third-party data center provider for implementation costs previously incurred, partially offset by a decrease in sales of our lower-margin professional services.

The $9.8 million decrease in our Software segment operating income was attributable to a $34.2 million increase in segment operating expenses, partially offset by a $24.4 million increase in segment revenue.

Segment operating income as a percentage of segment revenue for Software decreased to 30% from 32%, primarily attributable to the increases in third-party data center hosting costs and in personnel and labor costs.

CAPITAL RESOURCES AND LIQUIDITY

As of September 30, 2025, we had $134.1 million in cash and cash equivalents, which included $118.8 million held by our foreign subsidiaries.

We believe our cash and cash equivalents balances, including those held by our foreign subsidiaries, as well as available borrowings from our $600 million revolving line of credit and anticipated cash flows from operating activities, will be sufficient to fund our working and other capital requirements for at least the next 12 months and thereafter for the foreseeable future, including the $15.0 million principal payments on the $300 Million Term Loan (as defined below) due over the next 12 months.

Under our current financing arrangements, we have no other significant debt obligations maturing over the next twelve months.

We believe our cash and cash equivalents balances, including those held by our foreign subsidiaries, as well as available borrowings from our $1.0 billion revolving line of credit and anticipated cash flows from operating activities, will be sufficient to fund our working and other capital requirements for at least the next 12 months and thereafter for the foreseeable future, including the $400.0 million principal payment on the 2018 Senior Notes (as defined below) due over the next 12 months.

Under our current financing arrangements, we have no other significant debt obligations maturing over the next 12 months.

For jurisdictions outside the U.S.

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Net cash provided by operating activities totaled $778.8 million in fiscal 2025 compared to $633.0 million in fiscal 2024.

The $164.1 million increase was attributable to an $83.4 million increase in net income, a $43.0 million increase that resulted from timing of receipts and payments in our ordinary course of business, and a $37.7 million increase in non-cash items.

The $145.8 million increase was attributable to a $139.1 million increase in net income, a $4.8 million increase in non-cash items, and a $1.9 million increase that resulted from timing of receipts and payments in our ordinary course of business.

Cash Flows from Investing Activities

Net cash used in investing activities totaled $43.7 million in fiscal 2025 compared to $28.0 million in fiscal 2024.

The $12.0 million increase was attributable to a $16.7 million increase in capitalized internal-use software costs and a $4.6 million increase in purchases of property and equipment, partially offset by a $6.1 million decrease in cash transferred, net of proceeds, from a product line asset sale and a $3.2 million increase in proceeds from sales, net of purchases, of marketable securities.

The $15.7 million increase was attributable to a $13.8 million increase in capitalized internal-use software costs and a $1.9 million decrease in proceeds from sales, net of purchases, of marketable securities.

Cash Flows from Financing Activities

Net cash used in financing activities totaled $750.3 million in fiscal 2025 compared to $592.9 million in fiscal 2024.

The $137.9 million increase was primarily attributable to a $416.2 million increase in repurchases of common stock and a $62.5 million increase in taxes paid related to net share settlement of equity awards, partially offset by a $340.0 million increase in proceeds, net of payments, on our revolving line of credit and term loans.

The $157.4 million increase was primarily attributable to a $988.8 million increase in payments, net of proceeds, on our revolving line of credit and term loans, a $592.8 million increase in repurchases of common stock, a $65.4 million increase in taxes paid related to net share settlement of equity awards, and a $16.5 million increase in debt issuance costs, partially offset by the proceeds from the issuance of our $1.5 billion 2025 Senior Notes (as defined below).

Repurchases of Common Stock

In January 2024, our Board of Directors approved a stock repurchase program (the “January 2024 program”), replacing our previously authorized October 2022 stock repurchase program, which was terminated prior to its expiration.

The January 2024 program was open-ended and authorized repurchases of shares of our common stock from time to time up to an aggregate cost of $500.0 million in the open market or in negotiated transactions.

In July 2024, our Board of Directors approved a new stock repurchase program (the “July 2024 program”), replacing the January 2024 program, which was terminated prior to its expiration and under which $29.6 million was remaining for repurchase at the time of termination.

The July 2024 program is open-ended and authorizes repurchases of shares of our common stock from time to time up to an aggregate cost of $1.0 billion in the open market or in negotiated transactions.

The July 2024 program remains in effect until the total authorized amount is expended or until further action by our Board of Directors.

As of September 30, 2024, we had $760.5 million remaining under the July 2024 program.

During fiscal 2024 and 2023, we expended $833.3 million and $407.3 million, respectively, under the July 2024 program and previously authorized stock repurchase programs, as applicable.

In July 2024, our Board approved a stock repurchase program (the “July 2024 program”), replacing our previously authorized January 2024 stock repurchase program, which was terminated prior to its expiration.

The July 2024 program was open-ended and authorized repurchases of shares of our common stock from time to time up to an aggregate cost of $1.0 billion in the open market or in negotiated transactions.

In June 2025, our Board approved a new stock repurchase program (the “June 2025 program”), replacing the July 2024 program, which was terminated prior to its expiration.

The June 2025 program is open-ended and authorizes repurchases of shares of our common stock from time to time up to an aggregate cost of $1.0 billion in the open market or in negotiated transactions.

The June 2025 program remains in effect until the total authorized amount is expended or until further action by our Board.

As of September 30, 2025, we had $343.6 million remaining under the June 2025 program.

During fiscal 2025 and 2024, we expended $1.4 billion and $0.8 billion, respectively, under the June 2025 program and previously authorized stock repurchase programs, as applicable.

Revolving Line of Credit and Term Loans

We have a $600 million unsecured revolving line of credit and a $300 million unsecured term loan (the “$300 Million Term Loan”) with a syndicate of banks that mature on August 19, 2026.

Borrowings under the revolving line of credit and the $300 Million Term Loan can be used for working capital and general corporate purposes and may also be used for the refinancing of existing debt, acquisitions, and the repurchase of our common stock.

The $300 Million Term Loan requires principal payments in consecutive quarterly installments of $3.75 million on the last business day of each quarter.

Interest rates on amounts borrowed under the revolving line of credit and the $300 Million Term Loan are based on (i) an adjusted base rate, which is the greatest of (a) the prime rate, (b) the Federal Funds rate plus 0.5%, and (c) one-month adjusted term Secured Overnight Financing Rate (“SOFR”) plus 1%, plus, in each case, an applicable margin, or (ii) an adjusted term SOFR plus an applicable margin (or, if such rate is no longer available, a successor benchmark rate determined in accordance with the terms of the credit agreement) .

Adjusted term SOFR is defined as term SOFR for the relevant interest period plus a SOFR adjustment of 0.10% per annum.

On May 13, 2025, we amended our credit agreement with a syndicate of banks, increasing our borrowing capacity under the unsecured revolving line of credit from $600 million to $1.0 billion and extending its maturity to May 13, 2030.

Also on May 13, 2025, we repaid in full and terminated the $300 million unsecured term loan (the “$300 Million Term Loan”) and the $450 million unsecured term loan (the “$450 Million Term Loan”) outstanding under our credit agreement, utilizing proceeds from the issuance of the 2025 Senior Notes (as defined below).

Borrowings under the revolving line of credit can be used for working capital and general corporate purposes and may also be used for the refinancing of existing debt, acquisitions, and the repurchase of our common stock.

Interest rates on amounts borrowed under the revolving line of credit are based on (i) an adjusted base rate, which is the greatest of (a) the prime rate, (b) the Federal Funds rate plus 0.5%, and (c) the Daily Simple Secured Overnight Financing Rate (“SOFR”) plus 1%, plus, in each case, an applicable margin, (ii) the Daily Simple SOFR plus an applicable margin (or, if such rate is no longer available, a successor benchmark rate determined in accordance with the terms of the credit agreement), or (iii) term SOFR (without a credit spread adjustment) plus an applicable margin (or, if such rate is no longer available, a successor benchmark rate determined in accordance with the terms of the credit agreement).

The applicable margin for base rate borrowings and for SOFR borrowings is determined based on our consolidated leverage ratio.

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In addition, we must pay certain credit facility fees.

The revolving line of credit and the $300 Million Term Loan contain certain restrictive covenants including a maximum consolidated leverage ratio of 3.5 to 1.0, subject to a step up to 4.0 to 1.0 following certain permitted acquisitions and subject to certain conditions, and a minimum interest coverage ratio of 3.0 to 1.0.

The credit agreement also contains other covenants typical of unsecured credit facilities.

On June 13, 2024, we amended our credit agreement to provide for the issuance of a new $450 million unsecured term loan (the “$450 Million Term Loan”) with a syndicate of banks, increasing the total capacity of the credit agreement to $1.35 billion.

The $450 Million Term Loan is subject to the same interest rate provisions and covenants as the revolving line of credit and the $300 Million Term Loan, and matures on August 19, 2026.

We have no obligation to make scheduled principal payments on the $450 Million Term Loan prior to the maturity date, but may prepay the $450 Million Term Loan, without premium or penalty, in whole or in part.

As of September 30, 2024, we had $210.0 million in borrowings outstanding under the revolving line of credit at a weighted-average interest rate of 6.396%, $258.8 million in outstanding balance of the $300 Million Term Loan at an interest rate of 6.344%, and $450.0 million in outstanding balance of the $450 Million Term Loan at an interest rate of 6.281%.

We were in compliance with all financial covenants under the credit agreement as of September 30, 2024.

The credit agreement contains certain restrictive covenants including a maximum consolidated leverage ratio of 3.5 to 1.0, subject to a step up to 4.0 to 1.0 following certain permitted acquisitions and subject to certain conditions, and contains other covenants typical of an unsecured credit facility.

As of September 30, 2025, we had $275.0 million in borrowings outstanding under the revolving line of credit at a weighted-average interest rate of 5.423% and we were in compliance with all financial covenants under the credit agreement.

On May 8, 2018, we issued $400 million of senior notes in a private offering to qualified institutional investors (the “2018 Senior Notes”).

2 unchanged sentences

The 2019 Senior Notes require interest payments semi-annually at a rate of 4.00% per annum and will mature on June 15, 2028.

On December 17, 2021, we issued $550 million of additional senior notes of the same class as the 2019 Senior Notes in a private offering to qualified institutional investors (the “2021 Senior Notes,” and collectively with the 2018 Senior Notes and the 2019 Senior Notes, the “Senior Notes”).

The 2021 Senior Notes require interest payments semi-annually at a rate of 4.00% per annum and will mature on June 15, 2028, the same date as the 2019 Senior Notes.

On May 13, 2025, we issued $1.5 billion of senior notes in a private offering to qualified institutional investors (the “2025 Senior Notes,” and collectively with the 2018 Senior Notes, the 2019 Senior Notes and the 2021 Senior Notes, the “Senior Notes”).

The 2025 Senior Notes require interest payments semi-annually at a rate of 6.00% per annum and will mature on May 15, 2033.

The indentures for the Senior Notes contain certain covenants typical of unsecured obligations.

7 unchanged sentences

$ 400,000 $ — $ 900,000 $ — $ — $ 1,500,000 $ 2,800,000

Revolving line of credit and term loans (1)

Revolving line of credit (1)

— — — — 275,000 — 275,000

7 unchanged sentences

Total commitments $ 634,467 $ 157,187 $ 1,037,052 $ 96,142 $ 367,190 $ 1,772,191 $ 4,083,734

(1) Represents the unpaid principal payments due under the Senior Notes, revolving line of credit, and term loans.

(1) Represents the unpaid principal payments due under the Senior Notes and revolving line of credit.

(2) Represents purchase obligations primarily consisting of commitments to purchase certain services.

17 unchanged sentences

For the periods presented, we have not experienced significant changes to our estimates and judgments related to variable consideration in our contracts.

For our professional services, significant judgment may be required to determine the timing of satisfaction of a performance obligation in certain professional services contracts with a fixed consideration, in which we measure progress using an input method based on labor hours expended.

In order to estimate the total hours of the project, we make assumptions about labor utilization, efficiency of processes, the customer’s specification and IT environment, among others.

For certain complex projects, due to the risks and uncertainties inherent with the estimation process and factors relating to the assumptions, actual progress may differ due to the change in estimated total hours.

Adjustments to estimates are made in the period in which the facts requiring such revisions become known and, accordingly, recognized revenues are subject to revisions as the contract progresses to completion.

For the periods presented, we have not experienced significant changes to our estimates and judgments related to the timing of satisfaction of our professional services.

Our contracts with customers often include promises to transfer multiple products and services to a customer.

63 unchanged sentences

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