MARRIOTT INTERNATIONAL INC /MD/ 10-Q

Item 1 . Financial Statements MARRIOTT INTERNATIONAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in millions, except per share amounts) (Unaudited) Three Months Ended March 31, 2026 March 31, 2025 REVENUES Franchise fees $ 872 $ 746 Base management fees 339 325 Incentive management fees 222 204 Gross fee revenues 1,433 1,275 Contract investment amortization ( 35 ) ( 28 ) Net fee revenues 1,398 1,247 Owned, leased, and other revenue 412 361 Cost reimbursement revenue 4,844 4,655 6,654 6,263 OPERATING COSTS AND EXPENSES Owned, leased, and other expense (1) 377 332 Depreciation, amortization, and other 54 51 General and administrative (1) 219 209 Restructuring and merger-related charges, and other 4 1 Reimbursed expenses 4,936 4,722 5,590 5,315 OPERATING INCOME 1,064 948 Gains (losses) and other income, net 3 ( 2 ) Interest expense ( 214 ) ( 192 ) Interest income 10 9 Equity in (losses) earnings ( 5 ) 1 INCOME BEFORE INCOME TAXES 858 764 Provision for income taxes ( 210 ) ( 99 ) NET INCOME $ 648 $ 665 EARNINGS PER SHARE Earnings per share – basic $ 2.44 $ 2.40 Earnings per share – diluted $ 2.43 $ 2.39 (1) The 2025 first quarter reflects the reclassification of $ 36 million of other expenses previously reported under the “General, administrative, and other” caption to the “Owned, leased, and other expense” caption of our Income Statements to conform to our current presentation. See Notes to Condensed Consolidated Financial Statements. 3 Table of Contents MARRIOTT INTERNATIONAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in millions) (Unaudited) Three Months Ended March 31, 2026 March 31, 2025 Net income $ 648 $ 665 Other comprehensive (loss) income Foreign currency translation adjustments ( 81 ) 112 Other adjustments, net of tax 8 ( 11 ) Total other comprehensive (loss) income, net of tax ( 73 ) 101 Comprehensive income $ 575 $ 766 See Notes to Condensed Consolidated Financial Statements. 4 Table of Contents MARRIOTT INTERNATIONAL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in millions) (Unaudited) March 31, 2026 December 31, 2025 ASSETS Current assets Cash and equivalents $ 454 $ 358 Accounts and notes receivable, net 3,090 2,909 Prepaid expenses and other 370 317 3,914 3,584 Property and equipment, net 1,962 1,954 Intangible assets Brands 6,176 6,207 Contract acquisition costs and other 4,189 4,129 Goodwill 8,873 8,907 19,238 19,243 Equity method investments 304 298 Notes receivable, net 151 151 Deferred tax assets 549 570 Operating lease assets 940 941 Other noncurrent assets 799 799 $ 27,857 $ 27,540 LIABILITIES AND STOCKHOLDERS’ DEFICIT Current liabilities Current portion of long-term debt $ 1,210 $ 1,209 Accounts payable 763 814 Accrued payroll and benefits 1,256 1,438 Liability for guest loyalty program 3,517 3,497 Accrued expenses and other 1,770 1,440 8,516 8,398 Long-term debt 15,320 14,995 Liability for guest loyalty program 4,681 4,495 Deferred tax liabilities 90 79 Deferred revenue 1,219 1,200 Operating lease liabilities 876 879 Other noncurrent liabilities 1,247 1,265 Stockholders’ deficit Class A Common Stock 5 5 Additional paid-in-capital 6,311 6,352 Retained earnings 18,884 18,414 Treasury stock, at cost ( 28,577 ) ( 27,900 ) Accumulated other comprehensive loss ( 715 ) ( 642 ) ( 4,092 ) ( 3,771 ) $ 27,857 $ 27,540 See Notes to Condensed Consolidated Financial Statements. 5 Table of Contents MARRIOTT INTERNATIONAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) (Unaudited) Three Months Ended March 31, 2026 March 31, 2025 OPERATING ACTIVITIES Net income $ 648 $ 665 Adjustments to reconcile to cash provided by operating activities: Depreciation, amortization, and other (including depreciation and amortization classified in reimbursed expenses) 162 136 Stock-based compensation 57 52 Income taxes 95 26 Liability for guest loyalty program 206 183 Contract acquisition costs ( 109 ) ( 131 ) Restructuring and merger-related charges, and other 2 ( 19 ) Working capital changes ( 363 ) ( 325 ) Other 160 60 Net cash provided by operating activities 858 647 INVESTING ACTIVITIES Capital and technology expenditures ( 130 ) ( 135 ) Dispositions 2 — Loan advances ( 13 ) ( 12 ) Loan collections 3 5 Other ( 11 ) ( 1 ) Net cash used in investing activities ( 149 ) ( 143 ) FINANCING ACTIVITIES Commercial paper/Credit Facility, net ( 1,085 ) ( 1,002 ) Issuance of long-term debt 1,425 1,960 Repayment of long-term debt ( 3 ) ( 352 ) Issuance of Class A Common Stock 53 45 Dividends paid ( 178 ) ( 174 ) Purchase of treasury stock ( 700 ) ( 751 ) Stock-based compensation withholding taxes ( 124 ) ( 109 ) Net cash used in financing activities ( 612 ) ( 383 ) INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH 97 121 CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, beginning of period (1) 371 425 CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, end of period (1) $ 468 $ 546 (1) The 2026 amounts include beginning restricted cash of $ 13 million at December 31, 2025, and ending restricted cash of $ 14 million at March 31, 2026, which we present in the “Prepaid expenses and other” and “Other noncurrent assets” captions of our Balance Sheets. See Notes to Condensed Consolidated Financial Statements. 6 Table of Contents MARRIOTT INTERNATIONAL, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE 1. BASIS OF PRESENTATION The condensed consolidated financial statements present the results of operations, financial position, and cash flows of Marriott International, Inc. and its consolidated subsidiaries (referred to in this report as “we,” “us,” “Marriott,” or the “Company”). In order to make this report easier to read, we also refer throughout to (1) our Condensed Consolidated Financial Statements as our “Financial Statements,” (2) our Condensed Consolidated Statements of Income as our “Income Statements,” (3) our Condensed Consolidated Balance Sheets as our “Balance Sheets,” (4) our Condensed Consolidated Statements of Cash Flows as our “Statements of Cash Flows,” (5) our properties, brands, or markets in the United States and Canada as “U.S. & Canada,” and (6) our properties, brands, or markets in our Europe, Middle East & Africa, Greater China, Asia Pacific excluding China, and Caribbean & Latin America regions, as “International.” References throughout to numbered “Notes” refer to these Notes to Condensed Consolidated Financial Statements, unless otherwise stated. In addition, we use the term “hotel owners” throughout this report to refer, collectively, to owners of hotels and other lodging offerings operating in our system pursuant to franchise agreements, management agreements, license agreements, or similar arrangements, and we use the term “hotels in our system” to refer to hotels and other lodging offerings operating in our system pursuant to such arrangements, as well as hotels that we own or lease. The terms “hotel owners” and “hotels in our system” exclude Homes & Villas by Marriott Bonvoy SM (which we also exclude from our property and room count), timeshare, residential, and The Ritz-Carlton Yacht Collection ® . These Financial Statements have not been audited. We have condensed or omitted certain information and disclosures normally included in financial statements presented in accordance with U.S. generally accepted accounting principles (“GAAP”). The Financial Statements in this report should be read in conjunction with the consolidated financial statements and notes thereto in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (“2025 Form 10-K”). Certain terms not otherwise defined in this Form 10-Q have the meanings specified in our 2025 Form 10-K. Preparation of financial statements that conform with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements, the reported amounts of revenues and expenses during the reporting periods, and the disclosures of contingent liabilities. Accordingly, ultimate results could differ from those estimates. The accompanying Financial Statements reflect all normal and recurring adjustments necessary to present fairly our financial position as of March 31, 2026 and December 31, 2025 and the results of our operations and cash flows for the three months ended March 31, 2026 and March 31, 2025. Interim results may not be indicative of fiscal year performance because of seasonal and short-term variations. We have eliminated all material intercompany transactions and balances between entities consolidated in these Financial Statements and reclassified certain prior period amounts to conform to our current period presentation. New Accounting Standards Not Yet Adopted Accounting Standards Update (“ASU”) 2025-06 - “Targeted Improvements to the Accounting for Internal-Use Software” (Topic 350). ASU 2025-06 eliminates references to software development project stages and revises the criteria that must be met to begin capitalizing internal-use software costs. The standard permits entities to adopt the guidance using a prospective, retrospective, or modified transition approach and becomes effective for us beginning January 1, 2028, with early adoption permitted. We are currently assessing the potential impact that ASU 2025-06 will have on our financial statements and disclosures. 7 Table of Contents NOTE 2. EARNINGS PER SHARE The table below illustrates the reconciliation of the earnings and number of shares used in our calculations of basic and diluted earnings per share, the latter of which uses the treasury stock method to calculate the dilutive effect of the Company’s potential common stock: Three Months Ended (in millions, except per share amounts) March 31, 2026 March 31, 2025 Computation of Basic Earnings Per Share Net income $ 648 $ 665 Shares for basic earnings per share 266.1 276.9 Basic earnings per share $ 2.44 $ 2.40 Computation of Diluted Earnings Per Share Net income $ 648 $ 665 Shares for basic earnings per share 266.1 276.9 Effect of dilutive securities Stock-based compensation 0.7 0.8 Shares for diluted earnings per share 266.8 277.7 Diluted earnings per share $ 2.43 $ 2.39 NOTE 3. STOCK-BASED COMPENSATION We granted 0.5 million restricted stock units (“RSUs”) during the 2026 first quarter to certain executives and other employees, and those units vest generally over three or four years in equal annual installments commencing one year after the grant date. We also granted 0.1 million performance-based RSUs (“PSUs”) in the 2026 first quarter to certain executives and other senior-level employees, which are earned subject to continued employment and the satisfaction of certain performance and market conditions based on the degree of achievement of pre-established targets for 2028 adjusted EBITDA performance and relative total stockholder return over the 2026 to 2028 performance period. RSUs, including PSUs, granted in the 2026 first quarter had a weighted average grant-date fair value of $ 346 per unit. We recorded stock-based compensation expense for RSUs and PSUs of $ 46 million in the 2026 first quarter and $ 43 million in the 2025 first quarter. Deferred compensation costs for unvested awards for RSUs and PSUs totaled $ 332 million at March 31, 2026. NOTE 4. INCOME TAXES Our effective tax rate increased to 24.5 percent for the 2026 first quarter compared to 13.0 percent for the 2025 first quarter, primarily due to the prior year release of tax reserves. We paid cash for income taxes, net of refunds, of $ 115 million in the 2026 first quarter and $ 73 million in the 2025 first quarter. 8 Table of Contents NOTE 5. COMMITMENTS AND CONTINGENCIES Guarantees We present the maximum potential amount of our future guarantee fundings and the carrying amount of our liability for our debt service, operating profit, and other guarantees for which we are the primary obligor at March 31, 2026 in the following table: (in millions) Guarantee Type Maximum Potential Amount of Future Fundings Recorded Liability for Guarantees Debt service $ 62 $ 6 Operating profit 140 83 Other 21 6 $ 223 $ 95 Our maximum potential guarantees listed in the preceding table include $ 70 million of operating profit guarantees that will not be in effect until the underlying properties open and we begin to operate the properties or certain other events occur. Starwood Data Security Incident Description of Event On November 30, 2018, we announced a data security incident involving unauthorized access to the Starwood Hotels & Resorts Worldwide, LLC, formerly known as Starwood Hotels & Resorts Worldwide, Inc. (“Starwood”), reservations database (the “Data Security Incident”). We discontinued use of the Starwood reservations database for business operations at the end of 2018. Litigation, Claims, and Government Investigations Following our announcement of the Data Security Incident, approximately 100 lawsuits were filed by consumers and others against us in U.S. federal, U.S. state and Canadian courts related to the incident. The plaintiffs in these cases, who generally purport to represent various classes of consumers, generally claim to have been harmed by alleged actions and/or omissions by the Company in connection with the Data Security Incident and assert a variety of common law and statutory claims seeking monetary damages, injunctive relief, costs and attorneys’ fees, and other related relief. The U.S. cases were consolidated in the U.S. District Court for the District of Maryland (the “District Court”), pursuant to orders of the U.S. Judicial Panel on Multidistrict Litigation (the “MDL”). In 2025, the U.S. Court of Appeals for the Fourth Circuit reversed the District Court’s certification of a class of consumer plaintiffs for the second time, and some plaintiffs subsequently filed lawsuits in New York state court on an individual basis, alleging violations of New York statutory law and seeking monetary damages, attorneys’ fees, and other related relief. We are progressing in our mediation discussions with the U.S. consumer plaintiffs, and we believe it is probable that we will incur losses in relation to these cases. As of March 31, 2026, we have recorded an accrual for an estimated loss contingency related to these matters, which is not material to our Financial Statements. The Canadian cases remain pending. We dispute the allegations in these lawsuits and are vigorously defending against such claims. In addition, most inquiries and investigations by U.S. federal, U.S. state and foreign governmental authorities have been resolved or no longer appear to be active. While we believe it is reasonably possible that we may incur losses in excess of the amounts recorded associated with the above-described lawsuits or regulatory investigations related to the Data Security Incident, it is not possible to reasonably estimate the amount of such losses or range of loss in excess of the amounts recorded that might result from adverse judgments, settlements, or other resolution of these proceedings based on: (1) in the case of the above-described lawsuits, the current stage of these proceedings, the absence of specificity as to alleged damages, the uncertainty as to the certification of a class or classes and the size of any certified class, and the lack of resolution of significant factual and legal issues, and (2) uncertainty regarding regulatory inquiries or investigations. 9 Table of Contents Other Legal Proceedings We have been and are currently party to other legal proceedings involving claims that we infringe the intellectual property rights of others. At this time, we do not expect these proceedings to have a material impact on the Company’s business, financial condition, results of operations, or cash flows. NOTE 6. LONG-TERM DEBT We provide detail on our long-term debt balances, net of discounts, premiums, and debt issuance costs, in the following table as of March 31, 2026 and year-end 2025: ($ in millions) Interest Rate Effective Interest Rate Face Amount Balance as of March 31, 2026 Balance as of December 31, 2025 Senior Notes (in order of maturity): Series R Notes, maturing June 15, 2026 3.1 % 3.3 % $ 750 $ 750 $ 749 Series LL Notes, maturing September 15, 2026 5.5 % 5.9 % 450 449 449 Series TT Notes, maturing July 15, 2027 4.2 % 4.5 % 400 398 398 Series JJ Notes, maturing October 15, 2027 5.0 % 5.4 % 1,000 994 994 Series X Notes, maturing April 15, 2028 4.0 % 4.2 % 450 448 448 Series MM Notes, maturing October 15, 2028 5.6 % 5.9 % 700 695 694 Series AA Notes, maturing December 1, 2028 4.7 % 4.8 % 300 299 299 Series KK Notes, maturing April 15, 2029 4.9 % 5.3 % 800 791 790 Series NN Notes, maturing May 15, 2029 4.9 % 5.3 % 500 494 493 Series PP Notes, maturing March 15, 2030 4.8 % 5.0 % 500 496 496 Series FF Notes, maturing June 15, 2030 4.6 % 4.8 % 1,000 993 992 Series HH Notes, maturing April 15, 2031 2.9 % 3.0 % 1,100 1,094 1,094 Series UU Notes, maturing October 15, 2031 4.5 % 4.9 % 500 491 491 Series RR Notes, maturing April 15, 2032 5.1 % 5.4 % 500 493 493 Series GG Notes, maturing October 15, 2032 3.5 % 3.7 % 1,000 991 990 Series WW Notes, maturing May 1, 2033 4.5 % 4.8 % 600 590 — Series II Notes, maturing October 15, 2033 2.8 % 2.8 % 700 695 695 Series OO Notes, maturing May 15, 2034 5.3 % 5.6 % 1,000 982 982 Series W Notes, maturing October 1, 2034 4.5 % 4.1 % 278 286 287 Series QQ Notes, maturing March 15, 2035 5.4 % 5.5 % 1,000 987 987 Series VV Notes, maturing October 15, 2035 5.3 % 5.5 % 600 586 588 Series SS Notes, maturing April 15, 2037 5.5 % 5.7 % 1,500 1,473 1,475 Series XX Notes, maturing May 1, 2038 5.1 % 5.3 % 850 825 — Commercial paper 90 1,177 Credit Facility — — Finance lease obligations 117 120 Other 23 23 $ 16,530 $ 16,204 Less current portion ( 1,210 ) ( 1,209 ) $ 15,320 $ 14,995 We paid cash for interest, net of amounts capitalized, of $ 77 million in the 2026 first quarter and $ 87 million in the 2025 first quarter. We are party to a $ 4.5 billion multicurrency revolving credit agreement (as amended, the “Credit Facility”). Available borrowings under the Credit Facility support our commercial paper program and general corporate needs. U.S. dollar borrowings under the Credit Facility bear interest at SOFR (the Secured Overnight Financing Rate) plus a spread based on our public debt rating. We also pay quarterly fees on the Credit Facility at a rate based on our public debt rating. We classify outstanding borrowings under the Credit Facility and outstanding commercial paper borrowings (which generally have short-term maturities of 45 days or less) as long-term based on our ability and intent to refinance the outstanding borrowings on a long-term basis. The Credit Facility expires on December 14, 10 Table of Contents 2027. In February 2026, we issued $ 600 million aggregate principal amount of 4.500 percent Series WW Notes due May 1, 2033 (the “Series WW Notes”) and $ 850 million aggregate principal amount of 5.100 percent Series XX Notes due May 1, 2038 (the “Series XX Notes”). We will pay interest on the Series WW Notes and Series XX Notes in May and November of each year, commencing in November 2026. In connection with the offering, we entered into interest rate swap agreements, which have the economic effect of converting $ 350 million of the Series XX Notes into floating rate debt with a variable interest rate of SOFR plus approximately 1.33 percent, and an additional $ 150 million of the Series XX Notes into floating rate debt with a variable interest rate of SOFR plus approximately 1.35 percent. Net proceeds from the offering of the Series WW Notes and Series XX Notes were approximately $ 1.425 billion, after deducting the underwriting discount and expenses, and were made available for general corporate purposes, including working capital, capital expenditures, acquisitions, stock repurchases, or repayment of outstanding indebtedness. We determine the fair value of our Senior Notes using quoted market prices, which are directly observable Level 1 inputs. As of March 31, 2026 and year-end 2025, the fair value of our noncurrent Senior Notes was $ 15,005 million (carrying amount of $ 15,101 million) and $ 13,836 million (carrying amount of $ 13,686 million), respectively. The carrying amount of our commercial paper borrowings approximates fair value due to their short maturity and because they bear interest at a market rate. See the “Fair Value Measurements” caption of Note 2 and Note 12 of our 2025 Form 10-K for more information on the input levels we use in determining fair value. NOTE 7. PLANNED DISPOSITION In the 2026 second quarter, a U.S. & Canada hotel met the accounting criteria to be designated as an asset held for sale. We determined that the carrying amount of the hotel exceeded its fair value less costs to sell, based on a purchase and sale agreement with a third-party buyer. Consequently, we expect to record an impairment charge of approximately $ 65 million to $ 70 million in the “Depreciation, amortization, and other” caption of our Income Statements in the 2026 second quarter. We expect to sell the hotel later in the 2026 second quarter, and we expect to continue to operate the hotel under a long-term management agreement. NOTE 8. ACCUMULATED OTHER COMPREHENSIVE LOSS AND STOCKHOLDERS’ DEFICIT The following tables detail the accumulated other comprehensive loss activity for the 2026 first quarter and 2025 first quarter: (in millions) Foreign Currency Translation Adjustments Other Adjustments Accumulated Other Comprehensive Loss Balance at year-end 2025 $ ( 649 ) $ 7 $ ( 642 ) Other comprehensive (loss) income (1) ( 81 ) 8 ( 73 ) Balance at March 31, 2026 $ ( 730 ) $ 15 $ ( 715 ) (in millions) Foreign Currency Translation Adjustments Other Adjustments Accumulated Other Comprehensive Loss Balance at year-end 2024 $ ( 1,091 ) $ 28 $ ( 1,063 ) Other comprehensive income (loss) (1) 112 ( 11 ) 101 Balance at March 31, 2025 $ ( 979 ) $ 17 $ ( 962 ) (1) Other comprehensive (loss) income includes intra-entity foreign currency transactions that are of a long-term investment nature, which resulted in gains of $ 17 million for the 2026 first quarter and losses of $ 19 million for the 2025 first quarter. 11 Table of Contents The following tables detail the changes in common shares outstanding and stockholders’ deficit for the 2026 first quarter and 2025 first quarter: (in millions, except per share amounts) Common Shares Outstanding Total Class A Common Stock Additional Paid-in-Capital Retained Earnings Treasury Stock, at Cost Accumulated Other Comprehensive Loss 265.9 Balance at year-end 2025 $ ( 3,771 ) $ 5 $ 6,352 $ 18,414 $ ( 27,900 ) $ ( 642 ) — Net income 648 — — 648 — — — Other comprehensive loss ( 73 ) — — — — ( 73 ) — Dividends ($ 0.67 per share) ( 178 ) — — ( 178 ) — — 0.9 Stock-based compensation plans ( 14 ) — ( 41 ) — 27 — ( 2.1 ) Purchase of treasury stock ( 704 ) — — — ( 704 ) — 264.7 Balance at March 31, 2026 $ ( 4,092 ) $ 5 $ 6,311 $ 18,884 $ ( 28,577 ) $ ( 715 ) Common Shares Outstanding Total Class A Common Stock Additional Paid-in-Capital Retained Earnings Treasury Stock, at Cost Accumulated Other Comprehensive Loss 276.7 Balance at year-end 2024 $ ( 2,992 ) $ 5 $ 6,179 $ 16,531 $ ( 24,644 ) $ ( 1,063 ) — Net income 665 — — 665 — — — Other comprehensive income 101 — — — — 101 — Dividends ($ 0.63 per share) ( 174 ) — — ( 174 ) — — 1.1 Stock-based compensation plans ( 13 ) — ( 44 ) — 31 — ( 2.8 ) Purchase of treasury stock ( 755 ) — — — ( 755 ) — 275.0 Balance at March 31, 2025 $ ( 3,168 ) $ 5 $ 6,135 $ 17,022 $ ( 25,368 ) $ ( 962 ) NOTE 9. CONTRACTS WITH CUSTOMERS Our current and noncurrent liability for guest loyalty program increased by $ 206 million, to $ 8,198 million at March 31, 2026, from $ 7,992 million at December 31, 2025, primarily reflecting points earned by members. The increase was partially offset by $ 870 million of revenue recognized in the 2026 first quarter, that was deferred as of December 31, 2025. Our allowance for credit losses was $ 213 million at March 31, 2026 and $ 212 million at December 31, 2025. NOTE 10. BUSINESS SEGMENTS We discuss our operations in the following four reportable business segments: (1) U.S. & Canada, (2) Europe, Middle East & Africa (“EMEA”), (3) Greater China, and (4) Asia Pacific excluding China (“APEC”). Our Caribbean & Latin America (“CALA”) operating segment does not meet the applicable accounting criteria for separate disclosure as a reportable business segment, and as such, we include its results in “Unallocated corporate and other.” Our President and Chief Executive Officer, who is our “chief operating decision maker” (“CODM”), evaluates the performance of our operating segments using “segment profits,” which is based largely on the results of the segment without allocating corporate expenses, income taxes, indirect general and administrative expenses, or restructuring and merger-related charges, and other expenses. We assign gains and losses, equity in earnings or losses, and direct general and administrative expenses to each of our segments. “Unallocated corporate and other” includes a portion of our revenues (such as fees we receive from our credit card programs and timeshare licensing agreements), revenues and expenses for our Loyalty Program, indirect general and administrative expenses, restructuring and merger-related charges, and other expenses, equity in earnings or losses, and other gains or losses that we do not allocate to our segments, as well as results of our CALA operating segment. Our CODM uses segment profits to allocate resources (including employees and investment spending) to each segment, primarily as part of the annual budget process. Our CODM reviews budget-to-actual variances on a quarterly basis to assess segment performance. Additionally, our CODM uses segment profits to compare the results of each segment with one another and in the determination of compensation for segment leadership. 12 Table of Contents Our CODM monitors assets for the consolidated Company but does not use assets by operating segment when assessing performance or making operating segment resource allocations. Segment Revenues, Expenses, and Profits The following tables present our revenues (disaggregated by segment and major revenue stream), segment expenses, and segment profits for the 2026 first quarter and 2025 first quarter: Three Months Ended March 31, 2026 (in millions) U.S. & Canada EMEA Greater China APEC Gross fee revenues $ 773 $ 132 $ 69 $ 104 Contract investment amortization ( 21 ) ( 5 ) ( 1 ) ( 2 ) Net fee revenues 752 127 68 102 Owned, leased, and other revenue 140 116 8 39 Cost reimbursement revenue 4,063 264 76 146 Total reportable segment revenue 4,955 507 152 287 Less: Owned, leased, and other expense 121 120 10 41 Depreciation, amortization, and other 24 10 3 2 General and administrative 30 27 12 16 Reimbursed expenses 4,134 279 84 155 Other segment items (primarily non-operating income and expenses) — ( 1 ) ( 2 ) 2 Total reportable segment profit $ 646 $ 72 $ 45 $ 71 Three Months Ended March 31, 2025 (in millions) U.S. & Canada EMEA Greater China APEC Gross fee revenues $ 709 $ 118 $ 60 $ 98 Contract investment amortization ( 20 ) ( 4 ) — ( 1 ) Net fee revenues 689 114 60 97 Owned, leased, and other revenue 120 114 7 35 Cost reimbursement revenue 3,889 286 69 131 Total reportable segment revenue 4,698 514 136 263 Less: Owned, leased, and other expense 110 115 8 32 Depreciation, amortization, and other 27 10 2 2 General and administrative 30 25 12 14 Reimbursed expenses 3,888 288 70 133 Other segment items (primarily non-operating income and expenses) ( 1 ) 2 ( 1 ) 2 Total reportable segment profit $ 644 $ 74 $ 45 $ 80 The following table presents reconciliations of our total reportable segment revenue and profit to consolidated revenue and income before income taxes for the 2026 first quarter and 2025 first quarter: Three Months Ended (in millions) March 31, 2026 March 31, 2025 Reconciliation of revenue Total reportable segment revenue $ 5,901 $ 5,611 Unallocated corporate and other 753 652 Consolidated revenue $ 6,654 $ 6,263 Reconciliation of income before income taxes Total reportable segment profit $ 834 $ 843 Unallocated corporate and other 228 104 Interest expense, net of interest income ( 204 ) ( 183 ) Consolidated income before income taxes $ 858 $ 764 13 Table of Contents