Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion of our financial condition and results of operations should be read together with our condensed consolidated financial statements and the related notes, included in Part I, Item 1, "Financial Statements," within this Quarterly Report, and the audited consolidated financial statements included in Part II, Item 8, "Financial Statements and Supplementary Data," of our 2023 Annual Report.

Certain statements made in this section constitute "forward-looking statements," which are subject to numerous risks and uncertainties. Our actual results of operations may differ materially from those expressed or implied by these forward-looking statements as a result of many factors, including those set forth in the section titled “Cautionary Note Regarding Forward-Looking Statements” and Part II, Item 1A, "Risk Factors," within this Quarterly Report.

Overview

We are a global leader in designing, marketing, and distributing innovative footwear, apparel, and accessories developed for both everyday casual lifestyle use and high-performance activities. We market our products primarily under five proprietary brands: UGG, HOKA, Teva, Sanuk, and Koolaburra. We believe our products are distinctive and appeal to a broad demographic. We sell our products through quality domestic and international retailers, international distributors, and directly to our global consumers through our DTC business, which is comprised of our e-commerce websites and retail stores. We seek to differentiate our brands and products by offering diverse lines that emphasize authenticity, functionality, quality, and comfort, and products tailored to a variety of activities, seasons, and demographic groups. All of our products are manufactured by independent manufacturers.

Financial Highlights

Consolidated financial performance highlights for the three months ended June 30, 2023, compared to the prior period, were as follows:

• Net sales increased 10.0% to $675,791.

**◦**Channel

▪Wholesale channel net sales decreased 0.9% to $425,421.

▪DTC channel net sales increased 35.3% to $250,370.

**◦**Geography

▪Domestic net sales increased 9.1% to $419,535.

▪International net sales increased 11.4% to $256,256.

• Gross margin increased 330 basis points to 51.3%.

• Income from operations increased 25.5% to $70,736.

• Diluted earnings per share increased 45.5% to $2.41 per share.

Trends and Uncertainties Impacting Our Business and Industry

We expect our business and industry will continue to be impacted by several important trends and uncertainties, including the following:

Supply Chain

• In the prior fiscal year, to support our growing business, we expanded our network of global warehouses and DCs, including our 3PLs, while diversifying and increasing the number of third-party manufacturers we engage, which will result in higher associated costs in the current fiscal year. We expect to continue to invest in and build upon these infrastructure capabilities to continue meeting customer and end consumer demand, which may result in higher costs in future periods.

Brand and Omni-Channel Strategy

• We remain focused on increasing consumer adoption of the HOKA brand, which has continued to positively impact our financial results and seasonality trends. Our efforts to drive HOKA brand performance are primarily focused on launching innovative product offerings and global marketing campaigns to drive brand awareness, further expanding the HOKA brand presence through our DTC channel, and distribution management.

• Our ongoing marketplace strategies in Europe and Asia have continued to drive UGG brand awareness and consumer acquisition by building brand acceptance through localized marketing investments.

• Our long-term growth strategy remains focused on building our DTC channel to represent an increased portion of our total net sales, and prioritizing consumer acquisition and experience to sustain strong demand and market positions for our brands.

Refer to Part I, Item 1A, “Risk Factors,” of our 2023 Annual Report for detailed information on the risks and uncertainties that may cause our actual results to differ materially from our expectations.

Reportable Operating Segment Overview

Our six reportable operating segments include the worldwide wholesale operations of the UGG brand, HOKA brand, Teva brand, Sanuk brand, and Other brands, as well as DTC. Information reported to the CODM, who is our CEO, President, and PEO, is organized into these reportable operating segments and is consistent with how the CODM evaluates our performance and allocates resources.

UGG Brand. The UGG brand is one of the most iconic and recognized brands in our industry, which highlights our successful track record of building niche brands into lifestyle and fashion market leaders. With loyal consumers around the world, the UGG brand has proven to be a highly resilient line of premium footwear, apparel, and accessories with expanded product offerings and a growing global audience that appeals to a broad demographic.

HOKA Brand**.** The HOKA brand is an authentic premium line of year-round performance footwear that offers enhanced cushioning and inherent stability with minimal weight, apparel, and accessories. Originally designed for ultra-runners, the brand now appeals to world champions, taste makers, and everyday athletes. Strong marketing has fueled both domestic and international sales growth of the HOKA brand, which has quickly become a leading brand within run and outdoor specialty wholesale accounts and is growing within selective key accounts. As a result, the HOKA brand is bolstering its net sales, which continue to increase as a percentage of our aggregate net sales.

Teva Brand**.** The Teva brand created the very first sport sandal when it was founded in the Grand Canyon in 1984. Since then, the Teva brand has grown into a multi-category modern outdoor lifestyle brand offering a range of performance, casual, and trail lifestyle products, and has emerged as a leader in footwear sustainability observed through recent growth fueled by young and diverse consumers passionate for the outdoors and the planet.

Sanuk Brand**.** The Sanuk brand originated in Southern California surf culture and has emerged into a lifestyle brand with a presence in the relaxed casual shoe and sandal categories with a focus on innovation in comfort and sustainability. The Sanuk brand’s use of unexpected materials and unconventional constructions, combined with its fun and playful branding, are key elements of the brand's identity.

Other Brands**.** Other brands consist primarily of the Koolaburra brand. The Koolaburra brand is a casual footwear fashion line using plush materials and is intended to target the value-oriented consumer to complement the UGG brand offering.

Refer to the “Reportable Operating Segment Overview,” in Part II, Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations,” of our 2023 Annual Report for further discussion of our outlook on consumer demand drivers for our UGG, HOKA, Teva, Sanuk, and Other brands products.

Direct-to-Consumer**.** Our DTC business encompasses all our brands and is comprised of our e-commerce business and retail stores that are intertwined and interdependent in an omni-channel marketplace. We believe many of our consumers interact with both our retail stores and websites before making purchasing decisions in store and online.

Our net sales related to the businesses and stores outlined below are recorded in our DTC reportable operating segment, except for the net sales for partner retail stores, which are recorded in each respective brand's wholesale reportable operating segment, as applicable.

*•*E-Commerce Business. Our global e-commerce business provides us with an opportunity to directly engage with and communicate a consistent brand message to consumers that is in line with our brands’ promises, promotes awareness of key brand initiatives, offers targeted information to specific consumer demographics, and drives consumers to our retail stores.

• Retail Business. Our global Company-owned mono-branded retail stores are predominantly UGG brand concept stores and outlet stores, as well as new openings of HOKA brand stores.

• Flagship Stores. Primarily located in major tourist locations, these are premium mono-branded concept stores in key markets designed to showcase UGG and HOKA brand products. Flagship stores provide broader product offerings and generate greater traffic that enhance our interaction with consumers and increase brand loyalty.

*•*Shop-in-Shop Stores (SIS). Concept stores for which we own the inventory and that are operated by us or non-employees within a department store, which we lease from the store owner by paying a percentage of SIS store sales.

*•*Partner Retail Stores. Represent UGG and HOKA mono-branded stores which are wholly owned and operated by third parties and not included in the total count of our global Company-owned retail stores.

Use of Non-GAAP Financial Measures

Throughout this Quarterly Report we provide certain financial information on a constant currency basis, excluding the effect of foreign currency exchange rate fluctuations, which we disclose in addition to certain financial measures calculated and presented in accordance with US GAAP. We provide these non-GAAP financial measures to provide information that may assist investors in understanding our results of operations and assessing our prospects for future performance. However, the information presented on a constant currency basis, as we present such information, may not necessarily be comparable to similarly titled information, presented by other companies, and may not be appropriate measures for comparing our performance relative to other companies. For example, to calculate our constant currency information, we calculate the current period financial information using the foreign currency exchange rates that were in effect during the previous comparable period, excluding the effects of foreign currency exchange rate hedges and remeasurements in the condensed consolidated financial statements. Further, we report comparable DTC sales on a constant currency basis for DTC operations that were open throughout the current and prior reporting periods, and we may adjust prior reporting periods to conform to current year accounting policies. These non-GAAP financial measures are not intended to represent and should not be considered more meaningful measures than, or alternatives to, measures of financial or operating performance as determined in accordance with US GAAP. Constant currency measures should not be considered in isolation as an alternative to US dollar measures that reflect current period foreign currency exchange rates or to other financial or operating measures presented in accordance with US GAAP. We believe evaluating certain financial and operating measures on a constant currency basis is important as it excludes the impact of foreign currency exchange rate fluctuations that are not indicative of our core results of operations and are largely outside of our control.

Seasonality

Our business is seasonal, with the highest percentage of UGG and Koolaburra brand net sales occurring in the quarters ending September 30th and December 31st and the highest percentage of Teva and Sanuk brand net sales occurring in the quarters ending March 31st and June 30th. Net sales for the HOKA brand occur more evenly throughout the year, reflecting the brand's year-round performance product offerings. Due to the magnitude of the UGG brand relative to our other brands, our aggregate net sales in the quarters ending September 30th and December 31st have historically significantly exceeded our aggregate net sales in the quarters ending March 31st and June 30th. However, as we continue to take steps to diversify and expand our product offerings by creating more year-round styles, and as net sales of the HOKA brand continue to increase as a percentage of our aggregate net sales, we have seen and expect to continue to see the impact from seasonality decrease over time.

Results of Operations

Three Months Ended June 30, 2023, Compared to Three Months Ended June 30, 2022. Results of operations were as follows:

			Three Months Ended June 30,
			2023												2022												Change
			Amount						%						Amount						%						Amount						%
Net sales			$	675,791					100.0		%				$	614,461					100.0		%				$	61,330					10.0		%
Cost of sales			329,367						48.7						319,709						52.0						(9,658)						(3.0)
Gross profit			346,424						51.3						294,752						48.0						51,672						17.5
Selling, general, and administrative expenses			275,688						40.8						238,411						38.8						(37,277)						(15.6)
Income from operations			70,736						10.5						56,341						9.2						14,395						25.5
Total other income, net			(10,628)						(1.5)						(661)						(0.1)						9,967						1,507.9
Income before income taxes			81,364						12.0						57,002						9.3						24,362						42.7
Income tax expense			17,812						2.6						12,153						2.0						(5,659)						(46.6)
Net income			63,552						9.4						44,849						7.3						18,703						41.7
Total other comprehensive loss, net of tax			(8,299)						(1.2)						(14,966)						(2.4)						6,667						44.5
Comprehensive income			$	55,253					8.2		%				$	29,883					4.9		%				$	25,370					84.9		%
Net income per share
Basic			$	2.43											$	1.67											$	0.76					45.4		%
Diluted			$	2.41											$	1.66											$	0.75					45.5		%

Net Sales. Net sales by location, and by brand and channel were as follows:

			Three Months Ended June 30,
			2023						2022						Change
			Amount						Amount						Amount						%
Net sales by location
Domestic			$	419,535					$	384,515					$	35,020					9.1		%
International			256,256						229,946						26,310						11.4
Total			$	675,791					$	614,461					$	61,330					10.0		%
Net sales by brand and channel
UGG brand
Wholesale			$	121,545					$	137,862					$	(16,317)					(11.8)		%
Direct-to-Consumer			73,975						70,059						3,916						5.6
Total			195,520						207,921						(12,401)						(6.0)
HOKA brand
Wholesale			260,847						231,885						28,962						12.5
Direct-to-Consumer			159,637						98,141						61,496						62.7
Total			420,484						330,026						90,458						27.4
Teva brand
Wholesale			35,132						46,895						(11,763)						(25.1)
Direct-to-Consumer			13,266						12,725						541						4.3
Total			48,398						59,620						(11,222)						(18.8)
Sanuk brand
Wholesale			6,470						10,726						(4,256)						(39.7)
Direct-to-Consumer			3,109						3,431						(322)						(9.4)
Total			9,579						14,157						(4,578)						(32.3)
Other brands
Wholesale			1,427						1,993						(566)						(28.4)
Direct-to-Consumer			383						744						(361)						(48.5)
Total			1,810						2,737						(927)						(33.9)
Total			$	675,791					$	614,461					$	61,330					10.0		%
Total Wholesale			$	425,421					$	429,361					$	(3,940)					(0.9)		%
Total Direct-to-Consumer			250,370						185,100						65,270						35.3
Total			$	675,791					$	614,461					$	61,330					10.0		%

Total net sales increased primarily due to higher DTC channel sales and HOKA brand wholesale channel sales, partially offset by lower UGG brand and Teva brand wholesale channel sales. Further, we experienced a decrease of 9.2% in the total volume of pairs sold to 10,800 from 11,900 compared to the prior period. On a constant currency basis, net sales increased by 11.1% compared to the prior period.

Drivers of significant changes in net sales, compared to the prior period, were as follows:

• DTC net sales increased primarily due to higher global net sales for the HOKA brand, driven by higher consumer acquisition and retention online across an assortment of performance products. Comparable DTC net sales for the 13 weeks ended July 2, 2023, increased by 33.4%, compared to the prior period.

• Wholesale net sales of the HOKA brand increased domestically, driven by higher consumer demand across an assortment of performance products. These effects were partially offset by lower net sales in Europe due to lapping benefits from earlier distributor shipments in the prior period.

• Wholesale net sales of the UGG brand decreased primarily due to lower domestic net sales, primarily driven by lapping earlier shipment patterns in the prior period as customers front-loaded shipments to avoid risks of supply chain disruptions. These effects were partially offset by higher international net sales, primarily in Europe, driven by greater adoption of key product franchises.

• Wholesale net sales of the Teva brand decreased driven by lower domestic net sales, primarily in the sandal category, including quarterly shipping timing differences compared to the prior period.

• International net sales, which are included in the reportable operating segment net sales presented above, increased by 11.4% and represented 37.9% and 37.4% of total net sales for the three months ended June 30, 2023, and 2022, respectively. These changes were primarily driven by higher net sales for the DTC channel for the UGG and HOKA brands, as well as higher net sales for the wholesale channel for the UGG brand, partially offset by lower net sales for the wholesale channel for the HOKA brand. These results include effects from lapping earlier distributor shipments in the prior period, as discussed above under our reportable operating segments.

Gross Profit. Gross margin increased to 51.3% from 48.0%, compared to the prior period, primarily due to favorable changes in freight costs, a greater mix of sales in the DTC channel and for the HOKA brand, partially offset by domestic promotional and closeout activity and unfavorable changes in foreign currency exchange rates.

Selling, General and Administrative Expenses. The net increase in SG&A expenses, compared to the prior period, was primarily the result of the following:

• Increased other operating expenses of approximately $16,100, primarily due to higher IT expenses for programming and software costs, legal expenses, sales meeting expenses, travel expenses, samples expenses, and net insurance premiums.

• Increased payroll and related costs of approximately $15,200, primarily due to higher employee headcount and higher performance-based compensation.

• Increased variable advertising and promotion expenses of approximately $9,400, primarily due to higher promotional marketing expenses for the HOKA to drive global brand awareness and market share gains, highlight new product categories, and provide localized marketing.

• Increased other variable net selling expenses of approximately $8,800, primarily due to higher rent and occupancy expenses, credit card fees, and IT expenses.

• Decreased net foreign currency-related losses of $7,700, primarily driven by remeasurements with favorable changes in Asian and Canadian exchange rates against the US dollar.

• Decreased allowances for trade accounts receivable of approximately $3,400, primarily due to lower accounts receivable balances outstanding.

Income from Operations. Income (loss) from operations by reportable operating segment was as follows:

			Three Months Ended June 30,
			2023						2022						Change
			Amount						Amount						Amount						%
Income (loss) from operations
UGG brand wholesale			$	16,866					$	30,665					$	(13,799)					(45.0)		%
HOKA brand wholesale			86,524						69,616						16,908						24.3
Teva brand wholesale			9,237						12,493						(3,256)						(26.1)
Sanuk brand wholesale			759						2,466						(1,707)						(69.2)
Other brands wholesale			(2,041)						(469)						(1,572)						(335.2)
Direct-to-Consumer			75,462						41,220						34,242						83.1
Unallocated overhead costs			(116,071)						(99,650)						(16,421)						(16.5)
Total			$	70,736					$	56,341					$	14,395					25.5		%

The increase in total income from operations, compared to the prior period, was primarily due to higher net sales at higher gross margins, partially offset by higher SG&A expense as a percentage of net sales.

Drivers of significant net changes in total income from operations, compared to the prior period, were as follows:

• The increase in income from operations of the DTC channel was due to higher global net sales, primarily for the HOKA brand, at higher gross margins, as well as lower SG&A expenses as a percentage of net sales.

• The increase in income from operations of HOKA brand wholesale was due to higher domestic net sales at higher gross margins, partially offset by higher global SG&A expenses as a percentage of net sales.

• The decrease in income from operations of UGG brand wholesale was due to lower domestic net sales at lower gross margins, as well as higher SG&A expenses as a percentage of net sales.

• The increase in unallocated overhead costs was due to higher payroll costs, primarily for performance-based compensation and higher headcount, higher other operating expenses, primarily for IT programming and software costs and legal expenses, and higher occupancy and rent costs, partially offset by lower net foreign currency-related losses.

Total Other Income, Net. Total other income, net, compared to the prior period, increased due to higher interest income on higher invested cash balances, combined with higher average interest rates.

Income Tax Expense. Income tax expense and our effective income tax rate were as follows:

			Three Months Ended June 30,
			2023						2022
Income tax expense			$	17,812					$	12,153
Effective income tax rate			21.9		%				21.3		%

The net increase in our effective income tax rate, compared to the prior period, was primarily driven by higher income from operations, including changes in jurisdictional mix of worldwide income before income taxes, as well as reduced net discrete tax benefits, primarily due to stock-based compensation.

Foreign income before income taxes was $37,089 and $33,023 and worldwide income before income taxes was $81,364 and $57,002 during the three months ended June 30, 2023, and 2022, respectively. The decrease in foreign income before income taxes as a percentage of worldwide income before income taxes, compared to the prior period, was primarily due to higher domestic income before income taxes as a percentage of worldwide income before income taxes, as well as an increase in foreign operating expenses as a percentage of worldwide sales.

Net Income. The increase in net income, compared to the prior period, was primarily due to higher operating margins as well as higher interest income. Net income per share increased, compared to the prior period, due to higher net income and lower weighted-average common shares outstanding driven by stock repurchases.

Total Other Comprehensive Loss, Net of Tax. The decrease in total other comprehensive loss, net of tax, compared to the prior period, was primarily due to lower foreign currency translation losses relating to changes to our net asset position for favorable European and Asian foreign currency exchange rates.

Liquidity

We finance our working capital and operating requirements using a combination of cash and cash equivalents balances, cash provided from ongoing operating activities, and, to a lesser extent, available borrowings under our revolving credit facilities. Our working capital requirements begin when we purchase raw and other materials and inventories and continue until we collect the resulting trade accounts receivable. Given the historical seasonality of our business, our working capital requirements fluctuate significantly throughout our fiscal year, and we utilize available cash to build inventory levels during certain quarters in our fiscal year to support higher selling seasons. While the impact of seasonality has been mitigated to some extent, we expect our working capital requirements will continue to fluctuate from period to period.

As of June 30, 2023, our cash and cash equivalents are $1,046,889. We believe our cash and cash equivalents balances, cash provided from ongoing operating activities, and available borrowings under our revolving credit facilities, will provide sufficient liquidity to enable us to meet our working capital requirements and contractual obligations for at least the next 12 months.

Our liquidity may be impacted by a number of factors, including our results of operations, the strength of our brands and market acceptance of our products, impacts of seasonality and weather conditions, our ability to respond to changes in consumer preferences and tastes, the timing of capital expenditures and lease payments, our ability to collect our trade accounts receivables in a timely manner and effectively manage our inventories, our ability to manage supply chain constraints, our ability to respond to macroeconomic, political and legislative developments, and various other risks and uncertainties described in Part I, Item 1A, “Risk Factors,” of our 2023 Annual Report. Furthermore, we may require additional cash resources due to changes in business conditions, strategic initiatives, or stock repurchase strategy, a national or global economic recession, or other future developments, including any investments or acquisitions we may decide to pursue, although we do not have any present commitments with respect to any such investments or acquisitions.

If there are unexpected material impacts on our business in future periods and we need to raise or conserve additional cash to fund our operations, we may seek to borrow under our revolving credit facilities, seek new or modified borrowing arrangements, or sell additional debt or equity securities. The sale of convertible debt or equity securities could result in additional dilution to our stockholders, and equity securities may have rights or preferences that are superior to those of our existing stockholders. The incurrence of additional indebtedness would result in additional debt service obligations, as well as covenants that would restrict our operations and further encumber our assets. In addition, there can be no assurance that any additional financing will be available on acceptable terms, if at all. Although we believe we have adequate sources of liquidity over the long term, factors such as a prolonged or severe economic recession or inflationary pressure, could adversely affect our business and liquidity.

Repatriation of Cash. Our cash repatriation strategy, and by extension, our liquidity, may be impacted by several additional considerations, which include future changes to or interpretations of global tax law and regulations, and our actual earnings in future periods. During the three months ended June 30, 2023, and 2022, no cash and cash equivalents were repatriated. As of June 30, 2023, and March 31, 2023, we have $299,392 and $299,114, respectively, of cash and cash equivalents held by foreign subsidiaries, a portion of which may be subject to additional foreign withholding taxes if it were to be repatriated. We continue to evaluate our cash repatriation strategy and we currently anticipate repatriating current and future unremitted earnings of non-US subsidiaries only to the extent they have already been subject to US tax, if such cash is not required to fund ongoing foreign operations. Refer to Note 5, “Income Taxes,” of our consolidated financial statements in Part IV of our 2023 Annual Report for further information on the impacts of the recent Tax Reform Act.

Stock Repurchase Program. We continue to evaluate our capital allocation strategy, and to consider further opportunities to utilize our global cash resources in a way that will profitably grow our business, meet our strategic objectives, and drive stockholder value, including by potentially repurchasing additional shares of our common stock. As of June 30, 2023, the aggregate remaining approved amount under our stock repurchase program is $1,331,166. The stock repurchase program does not obligate us to acquire any amount of common stock and may be suspended at any time at our discretion.

Capital Resources

Revolving Credit Facilities. During the three months ended June 30, 2023, we made no borrowings or repayments under our revolving credit facilities. As of June 30, 2023, we have no outstanding balances under our revolving credit facilities, outstanding letters of credit of $958 under our unsecured revolving credit facility (Primary Credit Facility), and outstanding bank guarantees of $28 under our credit facility in China (China Credit Facility), with available borrowings for all revolving credit facilities of $440,354. There were no changes to the terms and borrowing availability under our revolving credit facilities disclosed in our 2023 Annual Report.

Debt Covenants. As of June 30, 2023, we are in compliance with all financial covenants under our revolving credit facilities.

Refer to Note 6, “Revolving Credit Facilities,” of our consolidated financial statements in Part IV of our 2023 Annual Report for further information on our revolving credit facilities.

Cash Flows

The following table summarizes the major components of our condensed consolidated statements of cash flows for the periods presented:

			Three Months Ended June 30,
			2023						2022						Change
			Amount						Amount						Amount						%
Net cash provided by (used in) operating activities			$	125,262					$	(28,921)					$	154,183					533.1		%
Net cash used in investing activities			(30,732)						(12,467)						(18,265)						(146.5)
Net cash used in financing activities			(25,619)						(100,036)						74,417						74.4
Effect of foreign currency exchange rates on cash and cash equivalents			(3,817)						(6,873)						3,056						44.5
Net change in cash and cash equivalents			$	65,094					$	(148,297)					$	213,391					143.9		%

Operating Activities. Our primary source of liquidity is net cash provided by operating activities, which is primarily driven by our net income after non-cash adjustments and changes in working capital.

The increase in net cash provided by operating activities during the three months ended June 30, 2023, compared to the prior period, was primarily due to $134,646 of favorable changes in operating assets and liabilities, as well as $19,537 of favorable net income after non-cash adjustments, including from favorable changes in stock-based compensation and deferred tax expense. The favorable changes in operating assets and liabilities were primarily due to net favorable changes in inventories, trade accounts receivables, net, and net operating lease assets and liabilities, partially offset by net unfavorable changes in trade accounts payable, prepaid expenses and other current assets, and income tax receivable.

Significant impacts to working capital compared to the prior period were primarily due to changes in the following: (1) fewer purchases of inventories due to better in-transit times compared to the prior period, (2) a higher rate of collections for trade accounts receivable, net, on higher net sales, partially offset by (3) lower net trade accounts payable due to timing of payments and lower freight costs, and (4) changes due to timing of tax refunds and payments.

Investing Activities. The increase in net cash used in investing activities during the three months ended June 30, 2023, compared to the prior period, was primarily due to higher capital expenditures for leasehold improvements for our warehouses and DCs, partially offset by lower IT infrastructure, system, and other technology costs.

Financing Activities. The decrease in net cash used in financing activities during the three months ended June 30, 2023, compared to the prior period, was primarily due to lower stock repurchases.

Contractual Obligations

There were no material changes outside the ordinary course of business during the three months ended June 30, 2023, to the contractual obligations and other commitments disclosed in our 2023 Annual Report. Refer to the section titled "Contractual Obligations" in Part II, Item 7, within our 2023 Annual Report for further information on our contractual obligations and other commitments.

Critical Accounting Policies and Estimates

Management must make certain estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements based on historical experience, existing and known circumstances, authoritative accounting pronouncements, and other factors that we believe to be reasonable, but actual results could differ materially from these estimates. The full impact of macroeconomic factors on our business and operations, including inflation, foreign currency exchange rate volatility, changes in interest rates, changes in commodity pricing, changes in discretionary spending and recessionary concerns, is unknown and cannot be reasonably estimated. However, management believes it has made appropriate accounting estimates in accordance with US GAAP based on the facts and circumstance available as of the reporting date. Actual results could differ materially from these estimates and assumptions, which may result in material effects on our financial condition, results of operations and liquidity. Refer to the section titled "Use of Estimates" within Note 1, "General," of our condensed consolidated financial statements in Part I, Item 1 within this Quarterly Report, for additional information regarding applicable key estimates and assumptions.

There have been no material changes to the critical accounting policies and key estimates and assumptions disclosed in the section titled "Critical Accounting Policies and Estimates" in Part II, Item 7, within our 2023 Annual Report.