Item 1. FINANCIAL STATEMENTS

FactSet Research Systems Inc.

CONSOLIDATED STATEMENTS OF INCOME – Unaudited

			Three Months Ended						Six Months Ended
			February 29,			February 28,			February 29,			February 28,
(in thousands, except per share data)			2024			2023			2024			2023
Revenues			$	545,945		$	515,085		$	1,088,161		$	1,019,900
Operating expenses
Cost of services			255,142			240,806			506,763			467,848
Selling, general and administrative			108,807			104,582			209,518			210,178
Asset impairments			54			447			898			729
Total operating expenses			364,003			345,835			717,179			678,755
Operating income			181,942			169,250			370,982			341,145
Other income (expense), net
Interest income			2,847			2,903			5,859			5,108
Interest expense			(16,599)			(16,737)			(33,337)			(33,274)
Other income (expense), net			455			1,346			337			1,668
Total other income (expense), net			(13,297)			(12,488)			(27,141)			(26,498)
Income before income taxes			168,645			156,762			343,841			314,647
Provision for income taxes			27,705			25,169			54,346			46,256
Net income			$	140,940		$	131,593		$	289,495		$	268,391
Basic earnings per common share			$	3.70		$	3.44		$	7.61		$	7.03
Diluted earnings per common share			$	3.65		$	3.38		$	7.49		$	6.89
Basic weighted average common shares			38,103			38,281			38,059			38,201
Diluted weighted average common shares			38,650			38,981			38,646			38,947

The accompanying notes are an integral part of these Consolidated Financial Statements.

FactSet Research Systems Inc.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME – Unaudited

			Three Months Ended						Six Months Ended
			February 29,			February 28,			February 29,			February 28,
(in thousands)			2024			2023			2024			2023
Net income			$	140,940		$	131,593		$	289,495		$	268,391
Other comprehensive income (loss), net of tax
Net unrealized gain (loss) on cash flow hedges(1)			(1,186)			(2,254)			(2,840)			4,301
Foreign currency translation adjustment gains (losses)			(2,956)			3,070			(1,048)			11,839
Other comprehensive income (loss)			(4,142)			816			(3,888)			16,140
Comprehensive income			$	136,798		$	132,409		$	285,607		$	284,531

(1) Presented net of a tax benefit of $419 thousand and $779 thousand for the three months ended February 29, 2024 and February 28, 2023, respectively. Presented net of a tax benefit of $1,007 thousand and a tax expense of $1,485 thousand for the six months ended February 29, 2024 and February 28, 2023, respectively.

The accompanying notes are an integral part of these Consolidated Financial Statements.

FactSet Research Systems Inc.

CONSOLIDATED BALANCE SHEETS – Unaudited

(in thousands, except share data)			February 29, 2024			August 31, 2023
ASSETS
Cash and cash equivalents			$	381,708		$	425,444
Investments			68,519			32,210
Accounts receivable, net of reserves of $10,787 at February 29, 2024 and $7,769 at August 31, 2023			272,177			237,665
Prepaid taxes			42,570			24,206
Prepaid expenses and other current assets			58,047			50,610
Total current assets			823,021			770,135
Property, equipment and leasehold improvements, net			80,971			86,107
Goodwill			1,003,883			1,004,736
Intangible assets, net			1,860,609			1,859,202
Deferred taxes			24,345			27,229
Lease right-of-use assets, net			133,917			141,837
Other assets			64,120			73,676
TOTAL ASSETS			$	3,990,866		$	3,962,922
LIABILITIES
Accounts payable and accrued expenses			$	128,155		$	121,816
Current lease liabilities			28,965			28,839
Accrued compensation			72,319			112,892
Deferred revenues			175,121			152,430
Current taxes payable			17,832			31,009
Dividends payable			37,360			37,265
Total current liabilities			459,752			484,251
Long-term debt			1,489,488			1,612,700
Deferred taxes			8,232			6,737
Deferred revenues, non-current			3,177			3,734
Taxes payable			35,734			30,344
Long-term lease liabilities			185,759			198,382
Other liabilities			6,970			6,844
TOTAL LIABILITIES			$	2,189,112		$	2,342,992
Commitments and contingencies (see Note 11)
STOCKHOLDERS’ EQUITY
Preferred stock, $0.01 par value, 10,000,000 shares authorized, none issued			$	—		$	—
Common stock, $0.01 par value; 150,000,000 shares authorized; 42,475,726 and 42,096,628 shares issued; 38,123,087 and 38,025,372 shares outstanding at February 29, 2024 and August 31, 2023, respectively			425			421
Additional paid-in capital			1,421,133			1,323,631
Treasury stock, at cost: 4,352,639 and 4,071,256 shares at February 29, 2024 and August 31, 2023, respectively			(1,248,707)			(1,122,077)
Retained earnings			1,719,932			1,505,096
Accumulated other comprehensive loss			(91,029)			(87,141)
TOTAL STOCKHOLDERS’ EQUITY			$	1,801,754		$	1,619,930
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY			$	3,990,866		$	3,962,922

The accompanying notes are an integral part of these Consolidated Financial Statements.

FactSet Research Systems Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS – Unaudited

			Six Months Ended
			February 29,			February 28,
(in thousands)			2024			2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net income			$	289,495		$	268,391
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization			58,650			52,208
Amortization of lease right-of-use assets			15,263			19,596
Stock-based compensation expense			30,962			27,500
Deferred income taxes			5,632			(6,470)
Asset impairments			898			729
Changes in assets and liabilities, net of effects of acquisitions
Accounts receivable, net of reserves			(39,468)			(54,294)
Accounts payable and accrued expenses			10,377			12,102
Accrued compensation			(40,456)			(51,714)
Deferred revenues			22,133			11,069
Taxes payable, net of prepaid taxes			(26,150)			(2,576)
Lease liabilities, net			(19,840)			(22,877)
Other, net			(8,554)			17,650
Net cash provided by operating activities			298,942			271,314
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, equipment, leasehold improvements and capitalized internal-use software			(38,383)			(35,416)
Purchases of investments			(44,936)			(10,889)
Net cash provided by (used in) investing activities			(83,319)			(46,305)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayments of debt			(125,000)			(250,000)
Dividend payments			(74,141)			(67,478)
Proceeds from employee stock plans			66,544			43,605
Repurchases of common stock			(112,165)			—
Other financing activities			(14,465)			(11,781)
Net cash provided by (used in) financing activities			(259,227)			(285,654)
Effect of exchange rate changes on cash and cash equivalents			(132)			2,698
Net increase (decrease) in cash and cash equivalents			(43,736)			(57,947)
Cash and cash equivalents at beginning of period			425,444			503,273
Cash and cash equivalents at end of period			$	381,708		$	445,326

The accompanying notes are an integral part of these Consolidated Financial Statements.

FactSet Research Systems Inc.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY- Unaudited

For the Three Months Ended February 29, 2024

(in thousands, except share data)			Common Stock						Additional Paid-in Capital			Treasury Stock						Retained Earnings			Accumulated Other Comprehensive Loss			Total Stockholders’ Equity
Shares			Par Value			Shares			Amount
Balance as of November 30, 2023			42,297,330			$	423		$	1,366,343		4,237,590			$	(1,195,491)		$	1,616,352		$	(86,887)		$	1,700,740
Net income																		140,940						140,940
Other comprehensive income (loss)																					(4,142)			(4,142)
Common stock issued for employee stock plans			172,244			2			38,138			197			(88)									38,052
Vesting of restricted stock			6,152			—			—			1,802			(873)									(873)
Repurchases of common stock												113,050			(52,255)									(52,255)
Stock-based compensation expense									16,652															16,652
Dividends declared																		(37,360)						(37,360)
Balance as of February 29, 2024			42,475,726			$	425		$	1,421,133		4,352,639			$	(1,248,707)		$	1,719,932		$	(91,029)		$	1,801,754
For the Six Months Ended February 29, 2024
(in thousands, except share data)			Common Stock						Additional Paid-in Capital			Treasury Stock						Retained Earnings			Accumulated Other Comprehensive Loss			Total Stockholders’ Equity
Shares			Par Value			Shares			Amount
Balance as of August 31, 2023			42,096,628			$	421		$	1,323,631		4,071,256			$	(1,122,077)		$	1,505,096		$	(87,141)		$	1,619,930
Net income																		289,495						289,495
Other comprehensive income (loss)																					(3,888)			(3,888)
Common stock issued for employee stock plans			297,348			3			66,541			343			(153)									66,391
Vesting of restricted stock			81,750			1			(1)			32,040			(14,312)									(14,312)
Repurchases of common stock												249,000			(112,165)									(112,165)
Stock-based compensation expense									30,962															30,962
Dividends declared																		(74,659)						(74,659)
Balance as of February 29, 2024			42,475,726			$	425		$	1,421,133		4,352,639			$	(1,248,707)		$	1,719,932		$	(91,029)		$	1,801,754

FactSet Research Systems Inc.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY- Unaudited

For the Three Months Ended February 28, 2023

(in thousands, except share data)			Common Stock						Additional Paid-in Capital			Treasury Stock						Retained Earnings			Accumulated Other Comprehensive Loss			Total Stockholders’ Equity
Shares			Par Value			Shares			Amount
Balance as of November 30, 2022			41,848,430			$	418		$	1,225,947		3,634,322			$	(941,705)		$	1,282,527		$	(93,059)		$	1,474,128
Net income																		131,593						131,593
Other comprehensive income (loss)																					816			816
Common stock issued for employee stock plans			95,543			1			20,180															20,181
Vesting of restricted stock			5,910			1						1,853			(791)									(790)
Stock-based compensation expense									15,325															15,325
Dividends declared																		(34,099)						(34,099)
Balance as of February 28, 2023			41,949,883			$	420		$	1,261,452		3,636,175			$	(942,496)		$	1,380,021		$	(92,243)		$	1,607,154
For the Six Months Ended February 28, 2023
(in thousands, except share data)			Common Stock						Additional Paid-in Capital			Treasury Stock						Retained Earnings			Accumulated Other Comprehensive Loss			Total Stockholders’ Equity
Shares			Par Value			Shares			Amount
Balance as of August 31, 2022			41,653,218			$	417		$	1,190,350		3,608,462			$	(930,715)		$	1,179,739		$	(108,383)		$	1,331,408
Net income																		268,391						268,391
Other comprehensive income (loss)																					16,140			16,140
Common stock issued for employee stock plans			226,966			2			43,602			410			(166)									43,438
Vesting of restricted stock			69,699			1						27,303			(11,615)									(11,614)
Stock-based compensation expense									27,500															27,500
Dividends declared																		(68,109)						(68,109)
Balance as of February 28, 2023			41,949,883			$	420		$	1,261,452		3,636,175			$	(942,496)		$	1,380,021		$	(92,243)		$	1,607,154

The accompanying notes are an integral part of these Consolidated Financial Statements.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FactSet Research Systems Inc.

February 29, 2024

(Unaudited)

						Page
Note 1			Description of Business			11
Note 2			Summary of Significant Accounting Policies			11
Note 3			Revenue Recognition			13
Note 4			Fair Value Measures			14
Note 5			Derivative Instruments			16
Note 6			Goodwill			19
Note 7			Intangible Assets			19
Note 8			Income Taxes			20
Note 9			Leases			21
Note 10			Debt			22
Note 11			Commitments and Contingencies			24
Note 12			Stockholders' Equity			26
Note 13			Earnings Per Share			27
Note 14			Stock-Based Compensation			28
Note 15			Segment Information			30

1. DESCRIPTION OF BUSINESS

FactSet Research Systems Inc. and its wholly-owned subsidiaries (collectively, "we," "our," "us," the "Company" or "FactSet") is a global financial digital platform and enterprise solutions provider with open and flexible technologies that drive the investment community to see more, think bigger and do its best work.

Our platform delivers expansive data, sophisticated analytics and flexible technology used by global financial professionals to power their critical investment workflows. As of February 29, 2024, we had more than 8,000 clients comprised of over 206,000 investment professionals, including institutional asset managers, bankers, wealth managers, asset owners, partners, hedge funds, corporate users and private equity and venture capital professionals. Our revenues are primarily derived from subscriptions to our multi-asset class data and solutions powered by our connected content, referred to as our "content refinery." Our products and services include workstations, portfolio analytics and enterprise solutions.

We drive our business based on our detailed understanding of our clients' workflows, which helps us to solve their most complex challenges. We provide financial data and market intelligence on securities, companies, industries and people to enable our clients to research investment ideas, as well as to analyze, monitor and manage their portfolios. Our on- and off-platform solutions span the investment life cycle of investment research, portfolio construction and analysis, trade execution, performance measurement, risk management and reporting. We provide open and flexible technology offerings, including a configurable desktop and mobile platform, comprehensive data feeds, cloud-based digital solutions and application programming interfaces ("APIs"). Our CUSIP Global Services ("CGS") business supports security master files relied on by the investment industry for critical front, middle and back-office functions. Our platform and solutions are supported by our dedicated client service team.

We operate our business through three reportable segments ("segments"): the Americas, EMEA and Asia Pacific. During fiscal 2024, we revised our internal organization within each segment to offer data, products and analytical applications by firm type:

• "Institutional Buyside" focuses on asset managers, asset owners, and hedge fund companies,

• "Dealmakers" focuses on banking and sell-side research, corporate, and private equity and venture capital workflows,

• "Wealth" focuses on wealth management workflows, and

• "Partnerships and CGS": "Partnerships" delivers solutions to content providers, financial exchanges, and rating agencies. "CGS" is the exclusive issuer of Committee on Uniform Security Identification Procedures ("CUSIP") and CUSIP International Number System ("CINS") identifiers.

As our chief operating decision maker ("CODM") continues to review our business and operating results based on our three segments, the Americas, EMEA and Asia Pacific, the realignment of our internal organization by firm type will not impact our segments for fiscal 2024. Refer to Note 15, Segment Information, for further discussion on our segments and CODM.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

We conduct business globally and manage our business on a geographic basis. The accompanying unaudited Consolidated Financial Statements and Notes to the Consolidated Financial Statements included in this Quarterly Report on Form 10-Q are prepared in accordance with generally accepted accounting principles in the United States ("GAAP") for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all information and footnotes required by GAAP for annual financial statements. As such, the information in this Quarterly Report on Form 10-Q should be read in conjunction with the audited Consolidated Financial Statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended August 31, 2023. The accompanying unaudited Consolidated Financial Statements include our accounts and those of our wholly-owned subsidiaries; all intercompany activity and balances have been eliminated.

In the opinion of management, the accompanying unaudited Consolidated Financial Statements include all normal recurring adjustments, transactions or events discretely impacting the interim periods considered necessary to present fairly our results of operations, financial position, cash flows and equity.

Reclassifications

We presented the components of Interest expense, net separately as Interest income and Interest expense in the Consolidated Statements of Income for the three and six months ended February 29, 2024. We conformed the comparative figures for the three and six months ended February 28, 2023 to the current period presentation.

Use of Estimates

The preparation of our Consolidated Financial Statements and related disclosures in conformity with GAAP required management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates may include income taxes, stock-based compensation, goodwill and intangible assets, business combinations, long-lived assets, contingencies and impairment assessments. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of our assets and liabilities. Actual results could differ materially from those estimates.

Concentrations of Credit Risk

Credit risk arises from the potential nonperformance by counterparties to fulfill their financial obligations. Our financial instruments that potentially subject us to concentrations of credit risk consist primarily of our cash and cash equivalents, accounts receivable, investments in mutual funds and derivative instruments. The maximum credit exposure of our cash and cash equivalents, accounts receivable and investments in mutual funds is their carrying values as of the balance sheet date. The maximum credit exposure related to our derivative instruments is based upon their respective gross fair values as of the balance sheet date.

Cash and Cash Equivalents and Investments

We are exposed to credit risk on our cash, cash equivalents and investments in mutual funds in the event of default by the governmental and financial institutions with which we transact. We invest in a manner that aligns with our restrictive cash investment practices, preserves capital and provides liquidity, while minimizing our exposure to credit risk. We limit our exposure to credit loss by investing with multiple governmental and financial institutions that we believe are high-quality and credit-worthy. We have not experienced any credit losses relating to our cash, cash equivalents and investments in mutual funds.

Accounts Receivable

Our accounts receivable credit risk is dependent upon the financial stability of our individual clients. As of February 29, 2024 and August 31, 2023, our accounts receivable reserve was $10.8 million and $7.8 million, respectively. We do not require collateral from our clients; however, no single client represented more than 3.5% of our total revenues in any period presented. Our concentration of credit risk related to our accounts receivable is generally limited, due to our large and geographically dispersed client base.

Derivative Instruments

Our use of derivative instruments exposes us to credit risk to the extent counterparties may be unable to meet the terms of their agreements. To mitigate credit risk, we limit counterparties to financial institutions we believe are credit-worthy and use several institutions to reduce concentration risk. We do not expect any losses as a result of default by our counterparties.

Concentrations of Data Providers

We integrate data from various third-party sources into our hosted proprietary data and analytics platform. As certain data sources have a limited number of suppliers, we make every effort to assure that, where reasonable, alternative sources are available. We are not dependent on any individual third-party data supplier to meet the needs of our clients, with only two data suppliers each representing more than 10% of our total data costs for the six months ended February 29, 2024.

Concentrations of Cloud Providers

Our clients rely on us for the delivery of time-sensitive, up-to-date data and applications. Our business is dependent on our ability to process substantial volumes of data and transactions rapidly and efficiently. We currently use multiple providers of cloud services; however, one supplier provided the majority of our cloud computing support for the six months ended February 29, 2024. We maintain back-up facilities and other redundancies at our data centers, take security measures and have emergency planning procedures to minimize the risk that an event will disrupt our operations.

Recently Adopted Accounting Pronouncements

We did not adopt any new standards or updates issued by the Financial Accounting Standards Board ("FASB") during the three and six months ended February 29, 2024 that had a material impact on our Consolidated Financial Statements.

Accounting Pronouncements Not Yet Adopted

Income Taxes - Improvements to Income Tax Disclosures

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures. This ASU enhances annual income tax disclosures primarily related to our effective tax rate reconciliation and income taxes paid. The amendments in this ASU are to be applied prospectively, although retrospective application is permitted, and are effective for our annual financial statements starting in fiscal 2026. Early adoption is permitted. This ASU is not expected to have a material impact on our Consolidated Financial Statements. We are currently assessing the impact of the new requirements on our disclosures.

Segment Reporting - Improvements to Reportable Segment Disclosures

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures. This ASU enhances segment disclosures primarily related to significant segment expenses for both interim and annual periods. The amendments in this ASU are to be applied retrospectively and are effective for our annual financial statements starting in fiscal 2025 and interim periods starting in fiscal 2026. Early adoption is permitted. This ASU is not expected to have a material impact on our Consolidated Financial Statements. We are currently assessing the impact of the new requirements on our disclosures.

Disclosure Improvements - Codification Amendment in Response to the Securities and Exchange Commission's ("SEC") Disclosure Update and Simplification Initiative

In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements - Codification Amendment in Response to the SEC’s Disclosure Update and Simplification Initiative. The ASU incorporates several disclosure and presentation requirements currently residing in the SEC Regulations S-X and S-K. The amendments will be applied prospectively and are effective when the SEC removes the related requirements from Regulations S-X or S-K. Any amendments the SEC does not remove by June 30, 2027 will not be effective. As we are currently subject to these SEC requirements, this ASU is not expected to have a material impact on our Consolidated Financial Statements or related disclosures.

No other new accounting pronouncements issued or effective as of February 29, 2024 have had, or are expected to have, a material impact on our Consolidated Financial Statements.

3. REVENUE RECOGNITION

We derive most of our revenues by providing client access to our multi-asset class solutions powered by our content refinery (referred to as the "Hosted Platform"). The Hosted Platform is a subscription-based service that provides client access to various combinations of products and services including workstations, portfolio analytics and enterprise solutions. We also derive revenues through our CGS platform, a subscription-based service that provides access to a database of universally recognized security identifiers and related descriptive data for issuers and their financial instruments (referred to as the "Identifier Platform").

The majority of each of our contracts with clients, whether for our Hosted Platform or Identifier Platform services, represents a single performance obligation covering a series of distinct products and services that are substantially the same and that have the same pattern of transfer to the client. The primary nature of the promise to the client is to provide daily access to each of these data and analytics platforms over the associated contractual term. These platforms provide integrated financial information, analytical applications and industry-leading service for the investment community. Based on the nature of the services and products offered by these platforms, we apply an output time-based measure of progress as the client is simultaneously receiving and consuming the benefits of the respective platform. We recognize revenue for the majority of these platforms in accordance with the 'as invoiced' practical expedient, because the consideration that we have the right to invoice corresponds directly with the value of our performance to date. There are no significant judgments that would impact the timing of revenue recognition.

Due to our election of the practical expedient, we do not consider payment terms as a financing component within a client contract when, at contract inception, the period between the transfer of the promised services to the client and the payment timing for those services will be one year or less.

The majority of client contracts have a duration of one year, or the amount we are entitled to receive corresponds directly with the value of our performance obligations completed to date. Therefore, we do not disclose the value of the remaining unsatisfied performance obligations.

Disaggregated Revenues

We disaggregate revenues from our client contracts by segment based on our clients' respective geographic locations. Our business segmentation by geography is aligned with the operational and economic characteristics of our business. Refer to Note 15, Segment Information, for further information.

The following table presents revenues disaggregated by segment:

			Three Months Ended						Six Months Ended
			February 29,			February 28,			February 29,			February 28,
(in thousands)			2024			2023			2024			2023
Americas			$	352,618		$	331,121		$	700,985		$	654,488
EMEA			139,176			132,508			278,737			263,246
Asia Pacific			54,151			51,456			108,439			102,166
Total Revenues			$	545,945		$	515,085		$	1,088,161		$	1,019,900

4. FAIR VALUE MEASURES

Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability (i.e., the "exit price") in an orderly transaction between market participants at the measurement date. In determining fair value, the use of various valuation methodologies, including market, income and cost approaches, are permissible. The inputs to these methodologies consider market comparable information, taking into account the principal or most advantageous market in which we would transact, when pricing the asset or liability.

Fair Value Hierarchy

The accounting guidance for fair value measurements establishes a three-level fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The hierarchy ranks the reliability of the inputs, based upon the lowest level of input that is significant to the fair value measurement, used to determine fair value. Our assessment of the significance of a particular input to the fair value measurement requires judgment and may affect its placement within the fair value hierarchy. We have categorized our assets and liabilities within the fair value hierarchy as follows:

Level 1 – applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2 – applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3 – applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

The assumptions used in determining fair value represent our best estimates, but these estimates involve inherent uncertainties and the application of our judgment. As a result, if factors change, our fair value estimates could be materially different in the future and may adversely affect our business and financial results.

(a) Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following tables show, by level within the fair value hierarchy, our assets and liabilities that are measured at fair value on a recurring basis as of February 29, 2024, and August 31, 2023. We did not have any transfers between levels of fair value measurements during the six months ended February 29, 2024 and the fiscal year ended August 31, 2023.

			Fair Value Measurements as of February 29, 2024
(in thousands)			Level 1			Level 2			Level 3			Total
Assets
Money market funds(1)			$	103,333		$	—		$	—		$	103,333
Mutual funds(2)			—			68,519			—			68,519
Derivative instruments(3)			—			418			—			418
Total assets measured at fair value			$	103,333		$	68,937		$	—		$	172,270
Liabilities
Derivative instruments(3)			$	—		$	490		$	—		$	490
Contingent Liability(4)			—			—			8,282			8,282
Total liabilities measured at fair value			$	—		$	490		$	8,282		$	8,772

			Fair Value Measurements as of August 31, 2023
(in thousands)			Level 1			Level 2			Level 3			Total
Assets
Money market funds(1)			$	137,125		$	—		$	—		$	137,125
Mutual funds(2)			—			32,210			—			32,210
Derivative instruments(3)			—			4,383			—			4,383
Total assets measured at fair value			$	137,125		$	36,593		$	—		$	173,718
Liabilities
Derivative instruments(3)			$	—		$	608		$	—		$	608
Contingent Liability(4)			—			—			8,008			8,008
Total liabilities measured at fair value			$	—		$	608		$	8,008		$	8,616

(1) Our money market funds are readily convertible into cash. The net asset value of each fund on the last day of the reporting period is used to determine its fair value. Our money market funds are included in Cash and cash equivalents within the Consolidated Balance Sheets.

(2) Our mutual funds' fair value is based on the fair value of the underlying investments held by the mutual funds, allocated to each share of the mutual fund using a net asset value approach. The fair value of the underlying investments is based on observable inputs. Our mutual funds are included in Investments within the Consolidated Balance Sheets.

(3) Our derivative instruments as of February 29, 2024 included our foreign exchange forward contracts and, as of August 31, 2023, included our foreign exchange forward contracts and our 2022 Swap Agreement. We utilize the income approach to measure fair value for our foreign exchange forward contracts. The income approach uses pricing models that rely on market observable inputs such as spot, forward and interest rates, as well as credit default swap spreads. To estimate fair value for our interest rate swap agreement, we utilize a present value of future cash flows, leveraging a model-derived valuation that uses observable inputs such as interest rate yield curves. Refer to Note 5, Derivative Instruments, for more information on our derivative instruments and their classification within the Consolidated Balance Sheets.

(4) Our contingent liability resulted from the acquisition of a business during fiscal 2023. This liability reflects the present value of potential future payments that are contingent upon the achievement of certain specified milestones. The acquisition date fair value of the contingent liability was $7.9 million and was valued using a scenario-based method. This method incorporates unobservable inputs and assumptions made by management, including the probability of achieving specified milestones, expected time until payment and the discount rate. The fair value of the contingent liability is remeasured each reporting period until the contingency is resolved, with any changes in fair value recorded in Selling, general and administrative ("SG&A") within the Consolidated Statements of Income. The change in the fair value of the contingent liability from the acquisition date through February 29, 2024 was driven by the passage of time, with no changes made to key assumptions used in our fair value estimates.

(b) Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

Assets that are measured at fair value on a non-recurring basis primarily include our property, equipment and leasehold improvements ("PPE"), lease right-of-use ("ROU") assets, goodwill and intangible assets. These assets are assessed for impairment whenever events or circumstances indicate their carrying value may not be fully recoverable, and at least annually for goodwill. The fair values of these non-financial assets are determined based on valuation techniques using the best information available, and may include quoted market prices, market comparable information and discounted cash flow projections.

(c) Assets and Liabilities Measured at Fair Value for Disclosure Purposes Only

We elected not to carry our Long-term debt on the Consolidated Balance Sheets at fair value. The carrying value of our Long-term debt is net of related unamortized discounts and debt issuance costs.

Our Long-term debt is comprised of our Senior Notes and 2022 Credit Facilities. Our Senior Notes are publicly traded; therefore, the fair value of our Senior Notes is estimated based on quoted prices in active markets as of the reporting date, which are considered Level 1 inputs. The fair value of our 2022 Credit Facilities is estimated based on quoted market prices for similar instruments, adjusted for unobservable inputs to ensure comparability to our investment rating, maturity terms and principal outstanding, which are considered Level 3 inputs. Refer to Note 10, Debt for definitions of these terms and more information on the Senior Notes and 2022 Credit Facilities.

The following table summarizes information on our outstanding debt as of February 29, 2024 and August 31, 2023:

						February 29, 2024						August 31, 2023
(in thousands)			Fair Value Hierarchy			Principal Amount			Estimated Fair Value			Principal Amount			Estimated Fair Value
2027 Notes			Level 1			$	500,000		$	465,950		$	500,000		$	460,890
2032 Notes			Level 1			500,000			434,735			500,000			423,700
2022 Term Facility			Level 3			250,000			251,093			375,000			376,406
2022 Revolving Facility			Level 3			250,000			247,813			250,000			246,875
Total principal amount						$	1,500,000		$	1,399,591		$	1,625,000		$	1,507,871
Total unamortized discounts and debt issuance costs						(10,512)						(12,300)
Total net carrying value of debt						$	1,489,488					$	1,612,700

5. DERIVATIVE INSTRUMENTS

Cash Flow Hedges

In designing our hedging approach, we consider several factors, including offsetting exposures, the significance of exposures, the forecasting of risk and the potential effectiveness of the hedge to reduce the volatility of our earnings and cash flows. Factors considered in the decision to hedge an underlying market exposure include the materiality of the risk, the volatility of the market, the duration of the hedge, the degree to which the underlying exposure is committed, and the availability, effectiveness and cost of derivative instruments. Derivative instruments are only utilized for risk management purposes and are not used for speculative or trading purposes. We limit counterparties to financial institutions we believe are credit-worthy. Refer to Note 2, Summary of Significant Accounting Policies - Concentrations of Credit Risk, for further discussion on counterparty credit risk.

We leverage foreign currency forward contracts and interest rate swap agreements to mitigate certain operational exposures from the impact of changes in foreign currency exchange rates and to manage our floating interest rate exposure, respectively. For a derivative that was designated and qualified as a cash flow hedge, the effective portion of the change in fair value of the derivative is recorded in Accumulated Other Comprehensive Loss ("AOCL"), net of tax, in the Consolidated Balance Sheets. Realized gains or losses resulting from settlement of our foreign currency forward contracts and interest rate swap agreements are subsequently reclassified into SG&A and Interest expense, respectively, in the Consolidated Statements of Income when the hedges are settled. All of our derivatives qualified and were designated as cash flow hedges, and none of our derivatives were deemed ineffective, during the six months ended February 29, 2024 and February 28, 2023. There was no discontinuance of our cash flow hedges during the six months ended February 29, 2024 and February 28, 2023, and as such, no corresponding gains or losses related to changes in the value of our contracts were reclassified into earnings prior to settlement.

Foreign Currency Forward Contracts

As we operate globally, we are exposed to the risk that our financial condition, results of operations and cash flows could be impacted by changes in foreign currency exchange rates. As of February 29, 2024, we maintained a series of foreign currency forward contracts to hedge a portion of our primary currency exposures, namely the British Pound Sterling, Indian Rupee, Euro and Philippine Peso. We entered into these contracts with the intent to hedge between 25% to 75% of the currency exposure related to our projected operating income in these primary currencies over their respective hedge periods. The hedge maturity periods range from the third quarter of fiscal 2024 through the second quarter of fiscal 2025.

The following table summarizes the gross notional value of our foreign currency forward contracts to purchase the respective local currency with U.S. dollars as of:

			February 29, 2024						August 31, 2023
(in thousands)			Local Currency Amount			Notional Contract Amount (USD)			Local Currency Amount			Notional Contract Amount (USD)
British Pound Sterling			£	42,400		$	53,431		£	45,000		$	56,098
Indian Rupee			Rs	4,391,942		52,400			Rs	3,363,150		40,300
Euro			€	43,700		47,960			€	39,000		42,646
Philippine Peso			₱	1,890,330		33,600			₱	1,888,541		33,600
Total						$	187,391					$	172,644

Refer to Part I, Item 3. Quantitative and Qualitative Disclosures About Market Risk of this Quarterly Report on Form 10-Q for further discussion of our exposure to foreign exchange rate fluctuations.

Interest Rate Swap Agreements

2022 Swap Agreement

On March 1, 2022, we entered into an interest rate swap agreement ("2022 Swap Agreement") with a notional amount of $800.0 million to hedge a portion of our outstanding floating Secured Overnight Financing Rate ("SOFR") debt with a fixed interest rate of 1.162%. The notional amount of the 2022 Swap Agreement declined by $100.0 million on a quarterly basis beginning May 31, 2022. Effective December 30, 2022, we partially novated our 2022 Swap Agreement to equally apportion the then outstanding notional amount of the interest rate swap between two counterparties. No other terms of the 2022 Swap Agreement were amended, terminated, or otherwise modified prior to its maturity. The 2022 Swap Agreement matured on February 28, 2024.

2024 Swap Agreement

On March 1, 2024, we entered into an interest rate swap agreement ("2024 Swap Agreement") with a notional amount of $200.0 million to hedge a portion of our outstanding floating SOFR debt with a fixed interest rate of 5.145%. The notional amount of the 2024 Swap Agreement declines by $50.0 million on a quarterly basis beginning May 31, 2024 and matures on February 28, 2025.

Refer to Note 10, Debt, for further discussion of our outstanding floating SOFR debt and refer to Part I, Item 3. Quantitative and Qualitative Disclosures About Market Risk of this Quarterly Report on Form 10-Q for further discussion of our exposure to interest rate risk on our long-term debt outstanding.

Gross Notional Value and Fair Value of Derivative Instruments

The following is a summary of the gross notional values of our derivative instruments:

(in thousands)			Gross Notional Value
February 29, 2024			August 31, 2023
Foreign currency forward contracts			$	187,391		$	172,644
Interest rate swap agreement			—			200,000
Total cash flow hedges			$	187,391		$	372,644

The following is a summary of the fair values of our derivative instruments:

			Fair Value of Derivative Instruments
(in thousands)			Derivative Assets									Derivative Liabilities
Derivatives designated as hedging instruments			Balance Sheet Classification			February 29, 2024			August 31, 2023			Balance Sheet Classification			February 29, 2024			August 31, 2023
Foreign currency forward contracts			Prepaid expenses and other current assets			$	418		$	1,260		Accounts payable and accrued expenses			$	490		$	608
Interest rate swap agreement			Prepaid expenses and other current assets			—			3,123			Accounts payable and accrued expenses			—			—
Total cash flow hedges						$	418		$	4,383					$	490		$	608

Derivative Recognition

The following table provides the pre-tax effect of derivative instruments in cash flow hedging relationships for the three months ended February 29, 2024 and February 28, 2023:

			Gain (Loss) Recognized in AOCL on Derivatives						Location of Gain (Loss) Reclassified from AOCL into Income			Gain (Loss) Reclassified from AOCL into Income
(in thousands)			February 29,			February 28,			February 29,			February 28,
Derivatives in Cash Flow Hedging Relationships			2024			2023			2024			2023
Foreign currency forward contracts			$	(623)		$	(215)		SG&A			$	(47)		$	(279)
Interest rate swap agreement			17			848			Interest expense			1,046			3,945
Total cash flow hedges			$	(606)		$	633					$	999		$	3,666

The following table provides the pre-tax effect of derivative instruments in cash flow hedging relationships for the six months ended February 29, 2024 and February 28, 2023:
			Gain (Loss) Reclassified in AOCL on Derivatives						Location of Gain (Loss) Reclassified from AOCL into Income			Gain (Loss) Reclassified from AOCL into Income
(in thousands)			February 29,			February 28,			February 29,			February 28,
Derivatives in Cash Flow Hedging Relationships			2024			2023			2024			2023
Foreign currency forward contracts			$	(406)		$	3,108		SG&A			$	318		$	(5,244)
Interest rate swap agreement			27			4,276			Interest expense			3,150			6,842
Total cash flow hedges			$	(379)		$	7,384					$	3,468		$	1,598

As of February 29, 2024, we estimate that net pre-tax derivative losses of $0.1 million included in AOCL will be reclassified into earnings within the next 12 months. As of February 29, 2024, our cash flow hedges were highly effective with no amount of ineffectiveness recorded in the Consolidated Statements of Income. All components of each derivative’s gain or loss were included in the assessment of hedge effectiveness.

Offsetting of Derivative Instruments

We enter into master netting arrangements designed to permit net settlement of derivative transactions among the respective counterparties, settled on the same date and in the same currency. As of February 29, 2024 and August 31, 2023, there were no material amounts recorded net in the Consolidated Balance Sheets.

6. GOODWILL

Changes in the carrying value of goodwill by segment for the six months ended February 29, 2024 are as follows:

(in thousands)			Americas			EMEA			Asia Pacific			Total
Balance at August 31, 2023			$	704,759		$	297,734		$	2,243		$	1,004,736
Acquisitions			181			—			—			181
Foreign currency translations			—			(967)			(67)			(1,034)
Balance at February 29, 2024			$	704,940		$	296,767		$	2,176		$	1,003,883

Goodwill is not amortized as it is estimated to have an indefinite life. Goodwill impairment is tested at the reporting unit level, which is consistent with our reportable segments. We test goodwill annually during the fourth quarter of each fiscal year or more frequently if events and circumstances occur indicating that it is more likely than not that the fair value of any one of our reporting units is less than its respective carrying value. If the carrying value of the reporting unit exceeds the fair value, then the goodwill is considered impaired and written down to the reporting unit’s fair value.

We tested our goodwill for impairment during the fourth quarter of fiscal 2023 utilizing a quantitative analysis. We elected to bypass the optional qualitative assessment and concluded there was no impairment as the fair value of each of our reporting units exceeded its carrying value. Our goodwill impairment test performed during the fourth quarter of fiscal 2022 utilized a qualitative analysis and concluded there was no impairment as it was more likely than not that the fair value of each of our reporting units was not less than its respective carrying value.

7. INTANGIBLE ASSETS

We amortize intangible assets on a straight line basis over their estimated useful lives. The following table presents the estimated useful life, gross carrying amounts and accumulated amortization totals related to our identifiable intangible assets as of February 29, 2024 and August 31, 2023:

						February 29, 2024									August 31, 2023
(in thousands, except useful lives)			Estimated Useful Life (years)			Gross Carrying Amount			Accumulated Amortization			Net Carrying Amount			Gross Carrying Amount			Accumulated Amortization			Net Carrying Amount
ABA business process			36			$	1,583,000		$	87,944		$	1,495,056		$	1,583,000		$	65,958		$	1,517,042
Client relationships			11 to 26			265,129			74,416			190,713			265,315			68,701			196,614
Developed technology			3 to 5			145,213			45,901			99,312			109,222			45,560			63,662
Acquired databases			15			46,000			6,133			39,867			46,000			4,600			41,400
Software technology			2 to 10			142,368			112,798			29,570			142,395			108,702			33,693
Data content			7 to 20			35,169			29,320			5,849			35,021			28,508			6,513
Non-compete agreements			4			290			48			242			290			12			278
Total						$	2,217,169		$	356,560		$	1,860,609		$	2,181,243		$	322,041		$	1,859,202

The weighted average useful life of our intangible assets as of February 29, 2024 was 32.1 years. Intangible assets are tested for impairment qualitatively on a quarterly basis or whenever events or changes in circumstances indicate that the carrying amount of an asset group is not recoverable. If indicators of impairment are present, our intangible assets are tested for impairment by comparing the carrying value to undiscounted cash flows and, if impaired, written down to fair value based on discounted cash flows. We did not identify a material impairment nor a material change to the estimated remaining useful lives of our intangible assets during the six months ended February 29, 2024 and February 28, 2023. Our intangible assets have no assigned residual values.

The following table presents the amortization expense for our intangible assets which is included in Cost of services in our Consolidated Statements of Income:

			Three Months Ended						Six Months Ended
			February 29,			February 28,			February 29,			February 28,
(in thousands)			2024			2023			2024			2023
Amortization expense			$	26,688		$	21,782		$	48,853		$	43,436

As of February 29, 2024, estimated intangible asset amortization expense for each of the next five years and thereafter is as follows:

(in thousands)			Estimated Amortization Expense
Years Ended August 31,
2024 (remaining six months)			$	53,369
2025			102,958
2026			95,323
2027			72,779
2028			63,279
Thereafter			1,472,901
Total			$	1,860,609

8. INCOME TAXES

We are subject to taxation in the United States and various foreign jurisdictions in which we conduct our business. Income tax expense is based on taxable income determined in accordance with current enacted laws and tax rates. Deferred income taxes are recorded for the temporary differences between the financial statement carrying amounts and the tax basis of our assets and liabilities using currently enacted tax rates.

Income Taxes Provision and Effective Tax Rate

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

			Three Months Ended						Six Months Ended
			February 29,			February 28,			February 29,			February 28,
(in thousands)			2024			2023			2024			2023
Income before income taxes			$	168,645		$	156,762		$	343,841		$	314,647
Provision for income taxes			$	27,705		$	25,169		$	54,346		$	46,256
Effective tax rate			16.4		%	16.1		%	15.8		%	14.7		%

Our provision for income taxes for interim periods is calculated by applying an estimate of our annual effective tax rate to our quarter and year-to-date results, adjusted for discrete items recorded in the period. The computation of the annual estimated effective tax rate at each interim period requires certain estimates and assumptions including, but not limited to, the expected pretax income (or loss) for the year, projections of the proportion of income (or loss) earned and taxed in foreign jurisdictions, permanent and temporary differences and the likelihood of recovering deferred tax assets, then adjusted for any discrete items. On a quarterly basis, we update the estimate of our annual effective tax rate as new events occur, assumptions change, or additional information is obtained.

Our effective tax rate for the three and six months ended February 29, 2024 was lower than the applicable U.S. corporate income tax rate mainly due to a net tax benefit from the employee exercise of stock options, research and development ("R&D") tax credits and utilization of foreign tax credits, partially offset by our state taxes. For the three and six months ended February 28, 2023, our effective tax rate was lower than the applicable U.S. corporate income tax rate mainly due to R&D tax credits, a foreign derived intangible income ("FDII") deduction and a net tax benefit from the employee exercise of stock options.

Our effective tax rate for the three months ended February 29, 2024 was higher than for the three months ended February 28, 2023, mainly driven by higher pretax income at applicable statutory tax rates and a higher overall foreign tax rate, partially offset by an increase in the exercise of stock options and increased utilization of foreign tax credits.

Our effective tax rate for the six months ended February 29, 2024 was higher than for the six months ended February 28, 2023, mainly driven by higher pretax income at applicable statutory tax rates and a higher overall foreign tax rate, partially offset by increased utilization of foreign tax credits.

Undistributed Foreign Earnings

We permanently reinvest all foreign undistributed earnings, except in jurisdictions where earnings can be repatriated substantially free of tax. It is not practicable to determine the deferred tax liability that would be payable if these earnings were repatriated to the U.S.

Inflation Reduction Act of 2022

On August 16, 2022, the Inflation Reduction Act ("IRA") was signed into law. The IRA contains several revisions to the Internal Revenue Code effective for taxable years beginning after December 31, 2022, including a 15% minimum income tax on certain large corporations. We do not expect this revision to have a material impact on our Consolidated Financial Statements.

9. LEASES

Our lease portfolio is primarily related to our office space, under various operating lease agreements. We review new arrangements at inception to evaluate whether we obtain substantially all the economic benefits of and have the right to control the use of an asset. Our lease ROU assets and lease liabilities are recognized based on the present value of future minimum lease payments at lease commencement (which includes fixed lease payments and certain qualifying index-based variable payments) over the reasonably certain lease term, leveraging an estimated incremental borrowing rate ("IBR"). Certain adjustments to calculate our lease ROU assets may be required due to prepayments, lease incentives received and initial direct costs incurred. We account for lease and non-lease components as a single lease component, which we recognize over the expected lease term on a straight-line expense basis in occupancy costs (a component of SG&A expense) in our Consolidated Statements of Income.

As of February 29, 2024, we recognized $133.9 million of Lease ROU assets, net and $214.7 million of combined Current lease liabilities and Long-term lease liabilities in the Consolidated Balance Sheets. Our leases have a remaining lease term ranging from less than one year to just under 12 years and do not include any renewal or termination options that were not reasonably certain to be exercised.

The following table presents our future minimum lease payments and a reconciliation to the combined Current lease liabilities and Long-term lease liabilities in the Consolidated Balance Sheets as of February 29, 2024:

(in thousands)			Minimum Lease Payments
Years Ended August 31,
2024 (remaining six months)			$	19,037
2025			38,022
2026			37,658
2027			36,339
2028			31,771
Thereafter			88,843
Total minimum lease payments			$	251,670
Less: Imputed interest			36,946
Total lease liabilities			$	214,724

The following table includes components of our occupancy costs:

			Three Months Ended						Six Months Ended
			February 29,			February 28,			February 29,			February 28,
(in thousands)			2024			2023			2024			2023
Operating lease costs(1)			$	7,645		$	8,156		$	15,263		$	16,233
Variable lease costs(2)			$	4,817		$	3,834		$	9,306		$	8,054

(1) Operating lease costs include costs associated with fixed lease payments and index-based variable payments that qualified for lease accounting under ASC 842, Leases and complied with the practical expedients and exceptions we elected.

(2) Variable lease costs include costs that were not fixed at the lease commencement date and are not dependent on an index or rate. These costs were not included in the measurement of lease liabilities and primarily include variable non-lease costs, such as utilities, real estate taxes, insurance and maintenance, as well as lease costs for those leases that qualified for the short-term lease exception.

The following table summarizes our weighted average remaining lease term and weighted average discount rate related to our operating leases recorded on the Consolidated Balance Sheets:

			As of February 29, 2024			As of August 31, 2023
Weighted average remaining lease term (in years)			7.4			7.8
Weighted average discount rate (IBR)			4.6		%	4.5		%

The following table summarizes supplemental cash flow information related to our operating leases:

			Six Months Ended
			February 29,			February 28,
(in thousands)			2024			2023
Cash paid for amounts included in the measurement of lease liabilities			$	19,811		$	19,596
Lease ROU assets obtained in exchange for lease liabilities(1)			$	2,313		$	1,379
Reductions to ROU assets resulting from reductions to lease liabilities(2)			$	(23)		$	—

(1)Primarily includes new lease arrangements entered into during the respective period and contract modifications that extend our lease terms and/or provide additional rights.

(2)Primarily relates to lease term reassessments based on contractual options to early terminate, resulting in a reduction to the lease liability and the corresponding lease ROU asset.

10. DEBT

We elected not to carry our Long-term debt at fair value. The carrying value of our debt is net of related unamortized discounts and debt issuance costs. Our total debt obligations as of February 29, 2024 and August 31, 2023 consisted of the following:

(in thousands)			Issuance Date			Contractual Maturity Date			February 29, 2024			August 31, 2023
2022 Credit Agreement
2022 Term Facility			3/1/2022			3/1/2025			$	250,000		$	375,000
2022 Revolving Facility			3/1/2022			3/1/2027			250,000			250,000
Senior Notes
2027 Notes			3/1/2022			3/1/2027			500,000			500,000
2032 Notes			3/1/2022			3/1/2032			500,000			500,000
Total unamortized discounts and debt issuance costs									(10,512)			(12,300)
Total Long-term debt									$	1,489,488		$	1,612,700

As of February 29, 2024, annual maturities on our total debt obligations, based on contractual maturity date, were as follows:

(in thousands)			Maturities
Years Ended August 31,
2024 (remaining six months)			$	—
2025			250,000
2026			—
2027			750,000
2028			—
Thereafter			500,000
Total			$	1,500,000

2022 Credit Agreement

On March 1, 2022, we entered into a credit agreement (the "2022 Credit Agreement") and borrowed an aggregate principal amount of $1.0 billion under its senior unsecured term loan credit facility (the "2022 Term Facility") and $250.0 million of the available $500.0 million under its senior unsecured revolving credit facility (the "2022 Revolving Facility" and, together with the 2022 Term Facility, the "2022 Credit Facilities"). The 2022 Term Facility matures on March 1, 2025, and the 2022 Revolving Facility matures on March 1, 2027. The 2022 Revolving Facility allows for the availability of up to $100.0 million in the form of letters of credit and up to $50.0 million in the form of swingline loans. We may seek additional commitments under the 2022 Revolving Facility from lenders or other financial institutions up to an aggregate principal amount of $750.0 million.

We pay a commitment fee on the daily unused amount of the 2022 Revolving Facility using a pricing grid based on our senior unsecured non-credit enhanced long-term debt rating and our total leverage ratio. From the borrowing date through November 30, 2023, the commitment fee was 0.125%, which subsequently decreased to 0.1% through February 29, 2024.

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

During fiscal 2022, we incurred approximately $9.5 million in debt issuance costs related to the 2022 Credit Facilities. Debt issuance costs are presented in the Consolidated Balance Sheets as a direct deduction from the carrying amount of the debt liability. Debt issuance costs are amortized to Interest expense in the Consolidated Statements of Income on a straight-line basis over the contractual term of the debt, which approximates the effective interest method.

We may voluntarily prepay loans under the 2022 Credit Facilities at any time without premium or penalty. During the three and six months ended February 29, 2024, we repaid $62.5 million and $125.0 million, respectively, under the 2022 Term Facility, inclusive of voluntary prepayments of $50.0 million and $100.0 million, respectively. Since loan inception on March 1, 2022, we have repaid $750.0 million under the 2022 Term Facility, inclusive of voluntary prepayments of $662.5 million.

From the borrowing date through November 30, 2023, the outstanding borrowings under the 2022 Credit Facilities bore interest at a rate equal to the applicable one-month Term SOFR plus a 1.1% spread (comprised of a 1.0% interest rate margin based on a debt leverage pricing grid plus a 0.1% credit spread adjustment). From December 1, 2023 through February 29, 2024, the spread decreased to 0.975% (comprised of a 0.875% interest rate margin based on a debt leverage pricing grid plus a 0.1% credit spread adjustment). Interest on the 2022 Credit Facilities is currently payable on the last business day of each month, in arrears.

The 2022 Credit Agreement contains usual and customary event of default provisions for facilities of this type, which are subject to usual and customary grace periods and materiality thresholds. If an event of default occurs under the 2022 Credit Agreement, the lenders may, among other things, terminate their commitments and declare all outstanding borrowings immediately due and payable.

The 2022 Credit Agreement contains usual and customary affirmative and negative covenants for facilities of this type, including a financial covenant requiring maintenance of a total leverage ratio of no greater than 3.75 to 1.00 as of February 29, 2024. We were in compliance with all covenants and requirements of the 2022 Credit Agreement as of February 29, 2024.

Swap Agreements

2022 Swap Agreement

On March 1, 2022, we entered into the 2022 Swap Agreement to hedge a portion of our outstanding floating SOFR debt with a fixed interest rate of 1.162%. Effective December 30, 2022, we apportioned the then outstanding notional amount of the 2022 Swap Agreement between two counterparties. The 2022 Swap Agreement matured on February 28, 2024.

2024 Swap Agreement

On March 1, 2024, we entered into the 2024 Swap Agreement to hedge a portion of our outstanding floating SOFR debt with a fixed interest rate of 5.145%.

Refer to Note 5, Derivative Instruments for further discussion of the 2022 Swap Agreement and the 2024 Swap Agreement.

Senior Notes

On March 1, 2022, we completed a public offering of $500.0 million aggregate principal amount of 2.900% Senior Notes due March 1, 2027 (the "2027 Notes") and $500.0 million aggregate principal amount of 3.450% Senior Notes due March 1, 2032 (the "2032 Notes" and, together with the 2027 Notes, the "Senior Notes"). The Senior Notes were issued pursuant to an indenture, dated as of March 1, 2022, by and between us and U.S. Bank Trust Company, National Association, as trustee (the "Trustee"), as supplemented by the supplemental indenture, dated as of March 1, 2022, between us and the Trustee (the "Supplemental Indenture").

The Senior Notes were issued at an aggregate discount of $2.8 million and we incurred approximately $9.1 million in debt issuance costs. Debt discounts and debt issuance costs are presented in the Consolidated Balance Sheets as a net direct deduction from the carrying amount of the debt liability. The debt discounts and debt issuance costs are amortized to Interest expense in the Consolidated Statements of Income over the contractual term of the debt, leveraging the effective interest method.

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

We may redeem the Senior Notes, in whole or in part, at any time at specified redemption prices, plus any accrued and unpaid interest. Upon the occurrence of a change of control triggering event (as defined in the Supplemental Indenture), we must offer to repurchase the Senior Notes at 101% of their principal amount, plus any accrued and unpaid interest.

Interest Expense

The following table presents the interest expense on our outstanding debt which is a component of Interest expense in our Consolidated Statements of Income:

			Three Months Ended						Six Months Ended
			February 29,			February 28,			February 29,			February 28,
(in thousands)			2024			2023			2024			2023
Interest expense on outstanding debt(1)			$	16,589		$	16,728		$	33,318		$	33,256

(1) Interest expense on our outstanding debt includes the related amortization of debt issuance costs and debt discounts, net of the effects of the 2022 Swap Agreement.

11. COMMITMENTS AND CONTINGENCIES

Commitments represent obligations, such as those for future purchases of goods or services, that are not yet recorded on the balance sheet as liabilities. We record liabilities for commitments when incurred (i.e., when the goods or services are received).

We accrue non-income-tax liabilities for contingencies when we believe that a loss is probable, and the amount can be reasonably estimated. Judgment is required to determine both the probability and the estimated amount of loss. If the reasonable estimate of a probable loss is a range, we record the most probable estimate of the loss, or the minimum amount when no amount within the range is a better estimate than any other amount. We review accruals on a quarterly basis and adjust, as necessary, to reflect the impact of negotiations, settlements, rulings, advice of legal counsel and other current information. Contingent gains are recognized only when realized.

Uncertain income tax positions are accounted for in accordance with applicable accounting guidance, refer to Note 10, Income Taxes in the Notes to the Consolidated Financial Statements included in Part II, Item 8. of our Annual Report on Form 10-K for the fiscal year ended August 31, 2023 for further details.

Purchase Commitments with Suppliers and Vendors

Purchase obligations represent our legally-binding agreements to purchase fixed or minimum quantities at determinable prices. As of August 31, 2023, we had total purchase obligations with suppliers of $362.2 million. Our total purchase obligations as of August 31, 2023 primarily related to hosting services, acquisition of data, and, to a lesser extent, third-party software providers. Hosting services support our hybrid cloud strategy, which relies in large part on third-party hosting providers. Data is an integral component of the value we provide to our clients. Our commitments to third-party software providers mainly include internal-use software licenses. For the six months ended February 29, 2024, there were no material changes to our purchase obligations.

We also have contractual obligations related to our lease liabilities and outstanding debt. Refer to Note 9, Leases and Note 10, Debt for information regarding lease commitments and outstanding debt obligations, respectively.

Capital Commitments

As of February 29, 2024 and August 31, 2023, we had outstanding capital commitments related to an investment of $0.6 million and $0.7 million, respectively.

Letters of Credit

From time to time, we are required to obtain letters of credit in the ordinary course of business. As of February 29, 2024 and August 31, 2023, we had $0.5 million and $0.6 million of standby letters of credit outstanding, respectively. No liabilities related to these arrangements are reflected in the Consolidated Balance Sheets.

Our 2022 Revolving Facility allows for the availability of up to $100.0 million in the form of letters of credit. We have not obtained any letters of credit under the 2022 Revolving Facility since its inception. Refer to Note 10, Debt, for information regarding the 2022 Revolving Facility.

Contingencies

Legal Matters

We are engaged in various legal proceedings, claims and litigation that have arisen in the ordinary course of business. The outcome of all the matters against us are subject to future resolution, including the uncertainties of litigation. Based on information available at February 29, 2024, our management believes that the ultimate outcome of these unresolved matters against us, individually or in the aggregate, will not have a material adverse effect on our consolidated financial position, our results of operations or our cash flows.

Income Taxes

As a multinational company operating in many states and countries, we are routinely audited by various taxing authorities and have reserved for potential adjustments to our provision for income taxes that may result from examinations by, or any negotiated settlements with, these tax authorities. We believe that the final outcome of these examinations or settlements will not have a material effect on our consolidated financial position, results of operations or our cash flows. If events occur which indicate payment of these amounts is unnecessary, the reversal of the liabilities would result in the recognition of tax benefits in the period we determine the liabilities are no longer necessary. If our estimates of the federal, state and foreign income tax liabilities are less than the ultimate assessment, additional expense would result.

Sales Tax Matters

On August 8, 2019, we received a Notice of Intent to Assess (the "First Notice") additional sales taxes, interest and underpayment penalties (the "Sales Taxes") from the Commonwealth of Massachusetts Department of Revenue (the "Commonwealth") relating to the tax periods from January 1, 2006 through December 31, 2013. On July 20, 2021, we received a Notice of Intent to Assess (the "Second Notice") additional Sales Taxes from the Commonwealth relating to the tax periods from January 1, 2014 through December 31, 2018. On December 29, 2022, we received a Notice of Intent to Assess (the "Third Notice"; cumulatively with the First and Second Notices, the "Notices") additional Sales Taxes from the Commonwealth relating to the tax periods from January 1, 2019 through June 30, 2021. We requested pre-assessment conferences with the Department of Revenue's Office of Appeals to appeal the Notices, and on May 24, 2023, we received a Letter of Determination from the Commonwealth upholding the Notices, along with a Notice of Assessment for all the periods covered by the Notices. On June 22, 2023, we filed an Application for Abatement with the Commonwealth disputing all amounts assessed, which was subsequently denied. On February 20, 2024, we received a “Notice of Selection for Audit” for sales tax for the period from July 1, 2021 through December 31, 2023. We have filed petitions with the Appellate Tax Board to appeal all amounts assessed by the Commonwealth and believe that we will ultimately prevail; however, if we do not prevail, the amount of these assessments could have a material impact on our consolidated financial position, results of operations and cash flows.

We have concluded that some payment to the Commonwealth is probable. We have recorded an accrual which is not material to our Consolidated Financial Statements. While we believe that the assumptions and estimates used to determine the accrual are reasonable, future developments could result in adjustments being made to this accrual.

Indemnifications

As permitted or required under Delaware law and to the maximum extent allowable under that law, we have certain obligations to indemnify each of our current and former officers and directors for certain events or occurrences while the officer or director is, or was, serving at our request in such capacity. These indemnification obligations are valid as long as the director or officer acted in good faith and in a manner the person reasonably believed to be in, or not opposed to, the best interests of FactSet, and with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. It is not possible to determine the maximum potential amount for claims made under the indemnification obligations due to the unique set of facts and circumstances likely to be involved in each particular claim and indemnification provision; however, we have purchased a director and officer insurance policy that mitigates our exposure and may enable us to recover a portion of any future amounts paid. We do not believe, based on historical experience and information currently available, that it is probable that any material amounts will be required to be paid under such indemnification obligations.

12. STOCKHOLDERS' EQUITY

Share Repurchases

			Three Months Ended						Six Months Ended
			February 29,			February 28,			February 29,			February 28,
(in thousands, except share data)			2024			2023			2024			2023
Repurchases of common stock under the share repurchase program(1)			113,050			—			249,000			—
Total cost of shares repurchased(1)			$	52,255		$	—		$	112,165		$	—

(1) Amounts do not include repurchases of common stock primarily to satisfy tax withholding obligations due upon vesting of stock-based awards of 1,999 shares ($1.0 million) and 1,853 shares ($0.8 million) during the three months ended February 29, 2024 and February 28, 2023, respectively, and 32,383 shares ($14.5 million) and 27,713 shares ($11.8 million) during the six months ended February 29, 2024 and February 28, 2023, respectively.

We may repurchase shares of our common stock under our share repurchase program from time-to-time in the open market or via privately negotiated transactions, subject to market conditions. We suspended our share repurchase program beginning in the second quarter of fiscal 2022 through the second quarter of fiscal 2023 to prioritize the repayment of debt under the 2022 Credit Facilities. As such, we did not repurchase any shares of our common stock under the share repurchase program during the three and six months ended February 28, 2023.

There is no defined number of shares to be repurchased over a specified timeframe through the life of our share repurchase program. As of February 29, 2024, we had $187.8 million authorized under our share repurchase program for future share repurchases. Refer to Part II, Item 2. Unregistered Sales of Equity Securities and Use of Proceeds, of this Quarterly Report on Form 10-Q for further discussion on our share repurchase program.

Equity-based Awards

Refer to Note 14, Stock-Based Compensation for more information on equity awards issued during the three and six months ended February 29, 2024 and February 28, 2023.

Dividends

Our Board of Directors approved the following dividends:

Year Ended			Dividends per Share of Common Stock			Record Date			Total Amount (in thousands)			Payment Date
Fiscal 2024
First Quarter			$	0.98		November 30, 2023			$	37,299		December 21, 2023
Second Quarter			$	0.98		February 29, 2024			$	37,360		March 21, 2024
Fiscal 2023
First Quarter			$	0.89		November 30, 2022			$	34,010		December 15, 2022
Second Quarter			$	0.89		February 28, 2023			$	34,099		March 16, 2023

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

Accumulated Other Comprehensive Loss

The components of AOCL as of February 29, 2024 and August 31, 2023 were as follows:

(in thousands)			February 29, 2024			August 31, 2023
Accumulated unrealized gains (losses) on cash flow hedges, net of tax			$	40		$	2,880
Accumulated foreign currency translation adjustments			(91,069)			(90,021)
Total AOCL			$	(91,029)		$	(87,141)

13. EARNINGS PER SHARE

Basic earnings per common share ("Basic EPS") is computed by dividing net income by the number of weighted average common shares outstanding during the period. Diluted earnings per common share ("Diluted EPS") is computed using the treasury stock method, by dividing net income by the cumulative weighted average common shares that are outstanding or are issuable upon the exercise of outstanding stock-based compensation awards during the period.

A reconciliation of the weighted average shares outstanding used in the Basic EPS and Diluted EPS computation is as follows:

			Three Months Ended						Six Months Ended
			February 29,			February 28,			February 29,			February 28,
(in thousands, except per share data)			2024			2023			2024			2023
Numerator
Net income used for calculating Basic EPS and Diluted EPS			$	140,940		$	131,593		$	289,495		$	268,391
Denominator
Weighted average common shares used in the calculation of Basic EPS			38,103			38,281			38,059			38,201
Common stock equivalents associated with stock-based compensation plan			547			700			587			746
Shares used in the calculation of Diluted EPS			38,650			38,981			38,646			38,947
Basic EPS			$	3.70		$	3.44		$	7.61		$	7.03
Diluted EPS			$	3.65		$	3.38		$	7.49		$	6.89

Stock options that were out-of-the-money and performance share units ("PSUs") in which the performance criteria have not been met as of the end of the respective reporting period are omitted from the calculation of Diluted EPS as their impact was antidilutive. The following table presents those awards that were excluded from Diluted EPS for the periods presented:

			As of February 29,			As of February 28,
(in thousands)			2024			2023
Out-of-the-money stock options			0			543
PSUs			95			93

14. STOCK-BASED COMPENSATION

Our stock-based awards include stock options, restricted stock units ("RSUs"), PSUs and common stock purchased by eligible employees under our employee stock purchase plan ("ESPP"). We measure and recognize stock-based compensation for all stock-based awards granted to our employees and our non-employee members of the Board of Directors ("non-employee directors") based on their estimated grant date fair value. To estimate the grant date fair value, we utilize a lattice-binomial option-pricing model ("binomial model") for our employee stock options and the Black-Scholes model for non-employee director stock options and common stock purchased by eligible employees under our ESPP.

For RSUs and PSUs (collectively, "Restricted Stock Awards"), the grant date fair value is measured by reducing the grant date price of our common stock by the present value of future dividend payments on the underlying stock during the requisite service period. The number of PSUs granted assumes target-level achievement of the specified performance levels within the payout range. The ultimate number of common shares that may be earned from a PSU is determined based on the actual achievement of the specified performance levels within the payout range.

Stock-based compensation expense for stock option and RSU awards is recognized over the requisite service period using the straight-line method. For granted stock options and RSUs, the amount of stock-based compensation expense recognized on any date is at least equal to the vested portion of the award on that date.

Our PSUs require us to make assumptions regarding the probability of achieving specified performance levels established at the time of grant and we recognize stock-based compensation expense using the straight-line method over the requisite service period. The probability of achieving the specified performance levels is reviewed on a quarterly basis to ensure the amount of stock-based compensation expense appropriately reflects the expected achievement. The ultimate number of common shares that may be earned pursuant to these PSU awards range from 0% to 150% of the number of target shares for the November 2022 annual grant and 0% to 200% of the number of target shares for the November 2023 annual grant, depending on the level of our achievement of stated financial performance objectives.

For our ESPP, stock-based compensation expense is recognized on a straight-line basis over the offering period.

Stock-based awards are subject to the continued employment and continued service at the time of vesting by employees and non-employee directors, respectively. Compensation expense for stock-based awards is recorded net of estimated forfeitures, which are based on historical forfeiture rates and are revised if actual forfeitures differ from those estimates.

The following table presents the stock-based compensation for the periods presented:

			Three Months Ended						Six Months Ended
			February 29,			February 28,			February 29,			February 28,
(in thousands)			2024			2023			2024			2023
Stock-based compensation expense			$	16,652		$	15,325		$	30,962		$	27,500

There were no stock-based compensation costs capitalized in any periods presented. As of February 29, 2024, $151.8 million of total unrecognized compensation expense related to non-vested stock-based awards is expected to be recognized over a weighted average vesting period of 3.1 years.

As of February 29, 2024, we had 3.7 million employee stock-based awards available for grant under the FactSet Research Systems Inc. Stock Option and Award Plan, as Amended and Restated (the "LTIP").

Employee Stock Option Awards

Our annual employee stock option grant, made during the first quarter of each fiscal year, makes up the majority of our stock options granted under the LTIP in each fiscal year.

The following table presents the employee stock options granted under the LTIP for the six months ended February 29, 2024 and February 28, 2023:

			Six Months Ended
			February 29,			February 28,
			2024			2023
Stock options granted(1)			243,125			267,641
Weighted average exercise price			$	436.63		$	426.25
Weighted average grant date fair value			$	132.60		$	125.58

(1) Includes the annual employee grant on November 1, 2023 and November 1, 2022 of 242,371 and 266,051 stock options, respectively. These annual employee grants both vest 20% annually on the anniversary date of the grant and are fully vested after five years, expiring ten years from the date of grant.

As part of the November 1, 2023 annual employee grant, the estimated grant date fair value, using the binomial model, leveraged the following assumptions:

November 1, 2023 Annual Employee Grant Details
Risk-free interest rate			4.78% - 5.53%
Expected life (years)			6.62
Expected volatility			23.5%
Dividend yield			0.90%
Estimated fair value			$132.60
Exercise price			$436.57

Employee Restricted Stock Awards

Restricted Stock Awards are granted to our employees under the LTIP. These awards entitle the holders to shares of common stock as the Restricted Stock Awards vest, but not to dividends declared on the underlying shares while the stock subject to the Restricted Stock Awards is unvested.

Our Restricted Stock Awards granted during the six months ended February 29, 2024 and February 28, 2023, primarily related to our annual grants on November 1, 2023 and November 1, 2022, respectively, and were as follows:

			Six Months Ended
			February 29,						February 28,
			2024						2023
			Shares			Weighted Average Grant Date Fair Value Per Award			Shares			Weighted Average Grant Date Fair Value Per Award
RSUs Granted(1)			64,827			$	425.09		47,371			$	415.33
PSUs Granted(2)			37,008			$	424.63		34,482			$	415.31
Performance adjustment - PSUs(3)			14,472			$	306.33		8,542			$	245.67
Total Restricted Stock Awards			116,307						90,395

(1) The majority of the RSUs granted vest 20% annually on the anniversary date of the grant and are fully vested after five years.

(2) The majority of the PSUs granted cliff vest on the third anniversary of the grant date, subject to the achievement of certain performance metrics. The ultimate number of common shares that may be earned pursuant to these PSU awards range from 0% to 150% of the number of target shares for the November 2022 annual grant and 0% to 200% of the number of target shares for the November 2023 annual grant, depending on the level of our achievement of stated financial performance objectives.

(3) For the three months ended February 29, 2024 and February 28, 2023, additional PSUs were granted based on performance above the specified target level of achievement for PSUs granted on November 9, 2020 and November 1, 2019, respectively.

Employee Stock Purchase Plan

Shares of FactSet common stock may be purchased by eligible employees under our ESPP in three-month intervals. The purchase price is equal to 85% of the lesser of the fair market value of our common stock on the first day or the last day of each three-month offering period. Employee purchases may not exceed 10% of their gross compensation, and there is a $25,000 contribution limit per employee for each calendar year. Shares purchased through our ESPP cannot be sold or otherwise transferred for 18 months after purchase. Dividends paid on shares held in our ESPP are used to purchase additional ESPP shares at the market price on the dividend payment date.

Stock-based compensation expense related to our ESPP was $0.6 million for both the three months ended February 29, 2024 and February 28, 2023. Stock-based compensation expense related to our ESPP was $1.2 million for the six months ended February 29, 2024 and $1.3 million for the six months ended February 28, 2023.

As of February 29, 2024, our ESPP had 45,503 shares reserved for future issuance.

15. SEGMENT INFORMATION

Operating segments are defined as components of an enterprise that have the following characteristics: (i) they engage in business activities from which they may earn revenue and incur expense, (ii) their operating results are regularly reviewed by the CODM for resource allocation decisions and performance assessment, and (iii) their discrete financial information is available. Our Chief Executive Officer functions as our CODM.

We have three operating segments: Americas, EMEA and Asia Pacific. This is how our CODM manages our business and the geographic markets in which we operate. These operating segments are consistent with our reportable segments.

The Americas segment serves our clients throughout North, Central, and South America. The EMEA segment serves our clients in Europe, the Middle East, and Africa. The Asia Pacific segment serves our clients in Asia and Australasia. Segment revenues reflect sales to our clients based on their respective geographic locations.

Each segment records expenses related to its individual operations with the exception of expenditures associated with our data centers, third-party data costs and corporate headquarters charges, which are recorded by the Americas segment and are not allocated to the other segments. The expenses incurred at our content collection centers, located in India, the Philippines and Latvia, are allocated to each segment based on their respective percentage of revenues as this reflects the benefits provided by each segment.

The following tables reflect the results of operations of our segments:

(in thousands)			Americas			EMEA			Asia Pacific			Total
For the three months ended February 29, 2024
Revenues			$	352,618		$	139,176		$	54,151		$	545,945
Operating income			$	81,711		$	62,839		$	37,392		$	181,942
Capital expenditures(1)			$	20,015		$	295		$	1,607		$	21,917
(in thousands)			Americas			EMEA			Asia Pacific			Total
For the three months ended February 28, 2023
Revenues			$	331,121		$	132,508		$	51,456		$	515,085
Operating income			$	61,181		$	68,941		$	39,128		$	169,250
Capital expenditures(1)			$	15,589		$	739		$	1,128		$	17,456
(in thousands)
For the six months ended February 29, 2024			Americas			EMEA			Asia Pacific			Total
Revenues			$	700,985		$	278,737		$	108,439		$	1,088,161
Operating income			$	162,559		$	131,704		$	76,719		$	370,982
Capital expenditures(1)			$	34,793		$	1,256		$	2,334		$	38,383
(in thousands)
For the six months ended February 28, 2023			Americas			EMEA			Asia Pacific			Total
Revenues			$	654,488		$	263,246		$	102,166		$	1,019,900
Operating income			$	128,712		$	136,263		$	76,170		$	341,145
Capital expenditures(1)			$	31,343		$	1,312		$	2,761		$	35,416

(1) Capital expenditures includes purchases of property, equipment and leasehold improvements and capitalized internal-use software.

Segment Total Assets

The following table reflects the total assets for our segments as of:

(in thousands)			February 29, 2024			August 31, 2023
Segment Assets
Americas			$	3,121,172		$	3,148,192
EMEA			605,954			558,393
Asia Pacific			263,740			256,337
Total assets			$	3,990,866		$	3,962,922