Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management’s Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") should be read in conjunction with the Consolidated Financial Statements and related Notes included in this Quarterly Report on Form 10-Q, our Annual Report on Form 10-K for the fiscal year ended August 31, 2023, our Current Reports on Form 8-K and our other filings with the Securities and Exchange Commission. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed below. Factors that could cause such differences include, but are not limited to, those identified below and those discussed in Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the fiscal year ended August 31, 2023.

Our MD&A is designed to provide a reader of our financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity and certain other factors that may affect our future results. Our MD&A is presented in the following sections:

• Executive Overview

• Annual Subscription Value ("ASV")

• Client and User Additions

• Employee Headcount

• Results of Operations

• Non-GAAP Financial Measures

• Liquidity and Capital Resources

• Off-Balance Sheet Arrangements

• Foreign Currency Exposure

• Critical Accounting Estimates

• New Accounting Pronouncements

Executive Overview

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 May 31, 2024, we had more than 8,000 clients comprised of over 208,000 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"). The CUSIP Global Services ("CGS") business supports security master files relied on by the investment industry for critical front, middle and back-office functions. These platforms 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, in the Notes to the Consolidated Financial Statements included in Part I, Item 1. of this Quarterly Report on Form 10-Q for more information on our segments and CODM.

Business Strategy

Our strategy is to build the leading open content and analytics platform and powerful enterprise solutions that deliver a differentiated advantage for our clients’ success. By offering personalized digital products, we strive to be a trusted partner and service provider, delivering relevant insights and research ideas tailored to our clients' specific business models.

We are focused on growing our global business through three strategically aligned geographic segments: the Americas, EMEA and Asia Pacific. This approach allows us to better manage resources, target solutions and interact with clients effectively. To execute our strategy, we have outlined the following key initiatives:

• Expanding our Digital Platform**: We are scaling up our content refinery to provide a comprehensive inventory of industry, proprietary and third-party data. This includes granular data for key industry verticals, real-time data, fund data and sustainable finance. Through an open ecosystem of cloud-based data and analytics, we aim to offer flexible solutions and content accessible through various delivery methods. In addition, we are working to expand our use of artificial intelligence to drive efficiencies for our clients, with anticipated initiatives including automation of tasks and integration of natural language queries. We believe that our breadth of high-quality, connected content will be a critical raw material for large language models.

• Ensuring Execution Excellence**: Innovation and collaboration are at the core of our approach. We employ technology to accelerate content collection, data connectivity and the development of summaries and themes. Our sales force is committed to enhancing price realization, productivity, efficiency and improved client outcomes. We are also optimizing operations and managing expenses to improve returns on our investments.

• Fostering a Growth Mindset**: We prioritize recruiting, training and empowering a diverse and efficient workforce. We are driving sustainable growth by investing in talent that can create leading technological solutions and efficiently execute our strategy. Additionally, strategic partnerships and acquisitions help to accelerate our expansion in key areas.

Fiscal 2024 Third Quarter in Review

Revenues in the third quarter of fiscal 2024 were $552.7 million, an increase of 4.3% from the comparable prior year period. The growth in revenues was reflective of organic revenues growth of 4.5% for the third quarter of fiscal 2024 compared with the prior year period. Revenues increased in all our segments, primarily in the Americas and, to a lesser extent, EMEA and Asia Pacific. Revenues increased due to higher demand and price increases primarily from workstations, data solutions and middle office solutions. Refer to Part I, Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, Non-GAAP Financial Measures, of this Quarterly Report on Form 10-Q for a definition of organic revenues and a reconciliation between revenues and organic revenues.

As of May 31, 2024, organic annual subscription value ("Organic ASV") plus Professional Services totaled $2,220.4 million, an increase of 5.0% over the prior year. Organic ASV increased in all our segments, with the majority of the increase in the Americas and, to a lesser extent, EMEA and Asia Pacific. The Organic ASV increase was driven by higher demand and price increases primarily from workstations, data solutions, middle office solutions and CGS subscriptions. Refer to Part I, Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, Annual Subscription Value, of this Quarterly Report on Form 10-Q for the definitions of Organic ASV and Organic ASV plus Professional Services.

Operating margin increased to 36.6% during the three months ended May 31, 2024, compared with 32.5% in the prior year period. This increase was mainly due to growth in revenues and, when expressed as a percentage of revenues, a decrease in compensation costs and bad debt expense, partially offset by an increase in amortization of intangible assets, marketing costs and computer-related expenses. Diluted earnings per common share ("Diluted EPS") for the three months ended May 31, 2024 was $4.09, an increase of 18.2% compared with the prior year period.

Annual Subscription Value ("ASV")

We believe ASV reflects our ability to grow recurring revenues, generate positive cash flows and serves as a key indicator of the successful execution of our business strategy.

–"ASV" at any point in time represents our forward-looking revenues for the next 12 months from all subscription services currently being supplied to clients, excluding revenues from Professional Services.

–"Organic ASV" at any point in time equals our ASV excluding ASV from acquisitions and dispositions completed within the last 12 months and the effects of foreign currency movements.

–"Professional Services" are revenues derived from project-based consulting and implementation services, annualized over the past 12 months.

–"Organic ASV plus Professional Services" at any point in time equals the sum of Organic ASV and Professional Services.

Organic ASV plus Professional Services

The following table presents the calculation of Organic ASV plus Professional Services as of May 31, 2024. With proper notice provided as contractually required, our clients can add to, delete portions of, or terminate service, subject to certain limitations.

(dollar amounts in millions)			As of May 31, 2024
As reported ASV plus Professional Services(1)			$	2,219.2
Currency impact(2)			1.2
Organic ASV plus Professional Services			$	2,220.4
Organic ASV plus Professional Services annual growth rate			5.0		%

(1)Includes $17.2 million in Professional Services as of May 31, 2024.

(2)The impact from foreign currency movements.

As of May 31, 2024, Organic ASV plus Professional Services was $2,220.4 million, an increase of 5.0% compared with May 31, 2023. Organic ASV increased in all our segments, with the majority of the increase related to the Americas, and, to a lesser extent, EMEA and Asia Pacific. This increase in Organic ASV was primarily driven by higher sales to existing clients and, to a lesser extent, price increases to existing clients and sales to new clients, partially offset by existing client cancellations. These higher sales and price increases were primarily attributable to workstations, data solutions, middle office solutions and CGS subscriptions.

Segment ASV

As of May 31, 2024, ASV from the Americas represented 64% of total ASV and was $1,417.1 million, an increase from $1,344.7 million as of May 31, 2023. Americas Organic ASV was $1,417.1 million as of May 31, 2024, a 5.7% increase from the prior year period. The Organic ASV increase in the Americas was driven by higher demand and price increases primarily from workstations and CGS subscriptions.

As of May 31, 2024, ASV from EMEA represented 26% of total ASV and was $565.7 million, an increase from $541.3 million as of May 31, 2023. EMEA Organic ASV was $565.5 million as of May 31, 2024, a 4.4% increase from the prior year period. The EMEA Organic ASV increase was driven by higher demand and price increases mainly from data solutions and middle office solutions.

As of May 31, 2024, ASV from Asia Pacific represented 10% of total ASV and was $219.2 million, an increase from $209.8 million as of May 31, 2023. Asia Pacific Organic ASV was $220.6 million as of May 31, 2024, a 6.1% increase from the prior year period. The Asia Pacific Organic ASV increase was driven by higher demand and price increases primarily from middle office solutions and data solutions.

Buy-side and Sell-side Organic ASV Growth

The buy-side and sell-side Organic ASV annual growth rates as of May 31, 2024 were 5.3% and 3.7%, respectively. Buy-side clients account for approximately 82% of our Organic ASV, consistent with the prior year period, and primarily include institutional asset managers, wealth managers, asset owners, partners, hedge funds and corporate clients. The remainder of our Organic ASV is derived from sell-side firms and primarily include broker-dealers, banking and advisory, and private equity and venture capital firms.

Client and User Additions

The table below presents our total clients and users:

			As of May 31, 2024			As of May 31, 2023			Change
Clients(1)			8,029			7,770			3.3		%
Users			208,140			187,845			10.8		%

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

Our total client count was 8,029 as of May 31, 2024, a net increase of 3.3% or 259 clients in the last 12 months, mainly due to an increase in corporate clients and, to a lesser extent, wealth management clients.

As of May 31, 2024, there were 208,140 professionals using FactSet, representing a net increase of 10.8% or 20,295 users in the last 12 months, primarily driven by an increase in wealth users.

Annual ASV retention was greater than 95% of ASV for the period ended May 31, 2024 and May 31, 2023. When expressed as a percentage of clients, annual retention was approximately 90% for the period ended May 31, 2024, compared with approximately 92% for the period ended May 31, 2023.

Employee Headcount

As of May 31, 2024, our net employee headcount increased by 1.6% to 12,262, compared with 12,072 employees as of May 31, 2023. This net headcount growth was primarily due to our continued investment in our centers of excellence ("COEs"), particularly through expanding our talent pool in our India and Philippines locations. Our COEs account for approximately 68% of our employees.

As of May 31, 2024 compared to May 31, 2023, our net headcount growth in Asia Pacific was 5.4%, while the Americas and EMEA experienced a net headcount decrease of 7.9% and 3.3%, respectively. As of May 31, 2024, we had 8,521 employees located in Asia Pacific, 2,343 in the Americas and 1,398 in EMEA.

Results of Operations

For an understanding of the significant factors that influenced our performance for the three and nine months ended May 31, 2024 and May 31, 2023, the following discussion should be read in conjunction with the Consolidated Financial Statements and related Notes presented in Part I, Item 1. in this Quarterly Report on Form 10-Q.

The following table summarizes the results of operations for the periods described:

			Three Months Ended												Nine Months Ended
			May 31,									% Change			May 31,									% Change
(in thousands, except per share data)			2024			2023			2024			2023
Revenues			$	552,708		$	529,811					4.3		%	$	1,640,869		$	1,549,711					5.9		%
Cost of services			246,986			241,689						2.2		%	753,749			709,537						6.2		%
Selling, general and administrative			103,098			115,725						(10.9)		%	312,616			325,903						(4.1)		%
Asset impairments			165			438						(62.3)		%	1,063			1,167						(8.9)		%
Operating income			$	202,459		$	171,959					17.7		%	$	573,441		$	513,104					11.8		%
Net income			$	158,135		$	134,663					17.4		%	$	447,630		$	403,054					11.1		%
Diluted weighted average common shares			38,640			38,912									38,644			38,936
Diluted EPS			$	4.09		$	3.46					18.2		%	$	11.58		$	10.35					11.9		%

Revenues

Three months ended May 31, 2024 compared with three months ended May 31, 2023

Revenues for the three months ended May 31, 2024 were $552.7 million, an increase of 4.3%. This growth in revenues of 4.3% was reflective of a 4.5% increase in organic revenues, partially offset by a 0.2% decrease from foreign currency exchange rate fluctuations. Organic revenues increased to $553.4 million for the three months ended May 31, 2024. Revenues increased in all our segments, primarily in the Americas and, to a lesser extent, EMEA and Asia Pacific.

The increase in revenues was driven by increased sales to existing clients and, to a lesser extent, price increases to existing clients and sales to new clients, partially offset by existing client cancellations. Revenues increased due to higher demand and price increases primarily from workstations, data solutions and middle office solutions.

Nine months ended May 31, 2024 compared with nine months ended May 31, 2023

Revenues for the nine months ended May 31, 2024 were $1,640.9 million, an increase of 5.9%. This growth in revenues was reflective of organic revenues growth of 5.9%, with organic revenues increasing to $1,641.0 for the nine months ended May 31, 2024. Revenues increased in all our geographic segments, primarily in the Americas and, to a lesser extent, EMEA and Asia Pacific.

The increase in revenues was mainly due to increased sales to existing clients and, to a lesser extent, price increases to existing clients and sales to new clients, partially offset by existing client cancellations. Revenues increased due to higher demand and price increases primarily from workstations, data solutions and middle office solutions.

Revenues by Segment

The following table summarizes our revenues by segment:

			Three Months Ended									Nine Months Ended
			May 31,						% Change			May 31,						% Change
(dollar amounts in thousands)			2024			2023			2024			2023
Americas			$	356,468		$	337,691		5.6		%	$	1,057,453		$	992,179		6.6		%
% of revenues			64.5		%	63.8		%				64.4		%	64.0		%
EMEA			$	141,279		$	137,973		2.4		%	$	420,016		$	401,219		4.7		%
% of revenues			25.6		%	26.0		%				25.6		%	25.9		%
Asia Pacific			$	54,961		$	54,147		1.5		%	$	163,400		$	156,313		4.5		%
% of revenues			9.9		%	10.2		%				10.0		%	10.1		%
Consolidated			$	552,708		$	529,811		4.3		%	$	1,640,869		$	1,549,711		5.9		%

Three months ended May 31, 2024 compared with three months ended May 31, 2023

Americas

Americas revenues increased 5.6% to $356.5 million during the three months ended May 31, 2024, compared with $337.7 million from the same period a year ago. This growth in revenues was primarily reflective of organic revenues growth of 5.5%. The increase in revenues was driven by higher demand and price increases primarily from workstations and CGS subscriptions.

EMEA

EMEA revenues increased 2.4% to $141.2 million during the three months ended May 31, 2024, compared with $138.0 million from the same period a year ago. This growth in revenues was reflective of organic revenues growth of a 2.4%. The increase in revenues was driven by higher demand and price increases primarily from data solutions and middle office solutions.

Asia Pacific

Asia Pacific revenues increased 1.5% to $55.0 million during the three months ended May 31, 2024, compared with $54.1 million from the same period a year ago. This growth in revenues of 1.5% was reflective of a 3.0% increase in organic

revenues, partially offset by a 1.5% decrease from foreign currency exchange rate fluctuations. The increase in revenues was driven by higher demand and price increases primarily from data solutions, workstations and middle office solutions.

Nine months ended May 31, 2024 compared with nine months ended May 31, 2023

Americas

Revenues from the Americas increased 6.6% to $1,057.5 million during the nine months ended May 31, 2024, compared with $992.2 million from the same period a year ago. This growth in revenues was primarily driven by organic revenues growth of 6.5%. The increase in revenues was driven by higher demand and price increases primarily from workstations and, to a lesser extent, CGS subscriptions, data solutions and middle office solutions.

EMEA

Revenues from EMEA increased 4.7% to $420.0 million during the nine months ended May 31, 2024, compared with $401.2 million from the same period a year ago. This growth in revenues of 4.7% was reflective of a 4.4% increase in organic revenues and a 0.3% benefit from foreign currency exchange rate fluctuations. The increase in revenues was driven by higher demand and price increases primarily from data solutions and middle office solutions.

Asia Pacific

Revenues from Asia Pacific increased 4.5% to $163.4 million during the nine months ended May 31, 2024, compared with $156.3 million from the same period a year ago. This growth in revenues of 4.5% was reflective of a 5.6% increase in organic revenues, partially offset by a 1.1% decrease from foreign currency exchange rate fluctuations. The increase in revenues was driven by higher demand and price increases primarily from workstations and data solutions.

Operating Expenses

Principal Operating Expenses

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

Selling, general and administrative ("SG&A") consists primarily of employee compensation costs and also includes expenses related to occupancy costs, professional fees, depreciation of furniture and fixtures, amortization of leasehold improvements, travel and entertainment expenses, marketing costs, other employee-related expenses, internal communication costs and bad debt expense.

Employee compensation costs are a major component of both our Cost of services and SG&A. These expenses primarily include costs related to salaries, incentive compensation and sales commissions, stock-based compensation, benefits, employment taxes, and any applicable restructuring costs.

We assign employee compensation costs between Cost of services and SG&A based on the roles and activities associated with each employee. We categorize employees within the content collection, consulting, product development, software and systems engineering groups as Cost of services personnel. Employees included in our sales department and those that serve in various other support departments, including marketing, finance, legal, human resources and administrative services, are classified as SG&A.

Asset impairments consist primarily of expenses recognized when the carrying value of an asset exceeds its fair value.

The following table summarizes the components of our total operating expenses and operating margin:

			Three Months Ended									Nine Months Ended
			May 31,									May 31,						% Change
(dollar amounts in thousands)			2024			2023			% Change			2024			2023
Cost of services			$	246,986		$	241,689		2.2		%	$	753,749		$	709,537		6.2		%
SG&A			103,098			115,725			(10.9)		%	312,616			325,903			(4.1)		%
Asset impairments			165			438			(62.3)		%	1,063			1,167			(8.9)		%
Total operating expenses			$	350,249		$	357,852		(2.1)		%	$	1,067,428		$	1,036,607		3.0		%
Operating income			$	202,459		$	171,959		17.7		%	$	573,441		$	513,104		11.8		%
Operating margin			36.6		%	32.5		%				34.9		%	33.1		%

Cost of Services

Three months ended May 31, 2024 compared with three months ended May 31, 2023

Cost of services increased 2.2% to $247.0 million for the three months ended May 31, 2024, compared with $241.7 million for the same period a year ago, primarily due to an increase in amortization of intangible assets and computer-related expenses, partially offset by a decrease in employee compensation costs.

Cost of services, when expressed as a percentage of revenues, was 44.7% for the three months ended May 31, 2024, a decrease of 90 basis points compared with the same period a year ago. This decrease was primarily due to lower employee compensation costs, partially offset by an increase in amortization of intangible assets and computer-related expenses.

When expressed as a percentage of revenues:

• Employee compensation costs decreased by 250 basis points primarily driven by a one-time payroll tax adjustment and a decrease in salaries. The decrease in salaries was primarily driven by higher capitalization of costs related to development of internal-use software.

• Amortization of intangible assets increased 80 basis points mainly due to higher amortization from capitalized costs related to the development of our internal-use software.

• Computer-related expenses increased 60 basis points primarily due to higher spending related to cloud-based hosting services and licensed software arrangements.

Nine months ended May 31, 2024 compared with nine months ended May 31, 2023

Cost of services increased 6.2% to $753.7 million for the nine months ended May 31, 2024, compared with $709.5 million in the same period a year ago, primarily due to an increase in employee compensation costs, amortization of intangible assets and computer-related expenses.

Cost of services, when expressed as a percentage of revenues, was 45.9% for the nine months ended May 31, 2024, an increase of 20 basis points compared with the same period a year ago. This increase was primarily driven by higher amortization of intangible assets and increases in the other expenses included in Costs of services outpacing the increase in revenues, partially offset by a decrease in employee compensation costs when expressed as a percentage of revenues.

When expressed as a percentage of revenues:

• Amortization of intangible assets increased 40 basis points mainly due to higher amortization from capitalized costs related to the development of our internal-use software.

• Employee compensation costs decreased 60 basis points primarily due to revenues outpacing the increase in employee compensation costs and a decrease in variable compensation costs, partially offset by higher annual base salaries, net of capitalization of compensation costs related to the development of our internal-use software, and an increase in restructuring charges. The increase in annual base salaries was primarily driven by annual merit increases and a net headcount increase in Cost of services of 257, primarily located in our COEs.

Selling, General and Administrative

Three months ended May 31, 2024 compared with three months ended May 31, 2023

SG&A decreased 10.9% to $103.1 million for the three months ended May 31, 2024, compared with $115.7 million from the same period a year ago, primarily driven by lower employee compensation costs.

SG&A, when expressed as a percentage of revenues, was 18.7% for the three months ended May 31, 2024, a decrease of 320 basis points compared with the same period a year ago. This decrease was primarily driven by lower employee compensation costs, bad debt expense and occupancy costs, partially offset by an increase in marketing expense.

When expressed as a percentage of revenues:

• Employee compensation costs decreased by 290 basis points primarily due to a decrease in variable compensation and payroll taxes.

• Bad debt expense decreased by 60 basis points as the prior year included a higher expense from our estimated collectibility of outstanding receivables.

• Occupancy costs decreased 50 basis points primarily due to exiting certain leased spaces in the prior year.

• Marketing expense increased by 60 basis points primarily related to costs associated with a client symposium.

Nine months ended May 31, 2024 compared with nine months ended May 31, 2023

SG&A expenses decreased 4.1% to $312.6 million for the nine months ended May 31, 2024, compared with $325.9 million for the same period a year ago, primarily driven by lower employee compensation costs.

SG&A expenses, when expressed as a percentage of revenues, were 19.1% for the nine months ended May 31, 2024, a decrease of 200 basis points compared with the same period a year ago. This decrease was primarily due to lower employee compensation costs mainly driven by a reduction in variable compensation expense.

Operating Income and Operating Margin

Three months ended May 31, 2024 compared with three months ended May 31, 2023

Operating income increased 17.7% to $202.5 million for the three months ended May 31, 2024, compared with $172.0 million in the prior year period. This increase was primarily driven by growth in revenues and a decrease in employee compensation costs, partially offset by an increase in amortization of intangible assets and computer-related expenses. Foreign currency exchange rate fluctuations, net of hedge activity, decreased operating income by $1.1 million for the three months ended May 31, 2024 compared with the three months ended May 31, 2023.

Operating margin increased to 36.6% during the three months ended May 31, 2024, compared with 32.5% in the prior year period. This increase was mainly due to growth in revenues and, when expressed as a percentage of revenues, a decrease in employee compensation costs and bad debt expense, partially offset by higher amortization of intangible assets, marketing costs and computer-related expenses.

Nine months ended May 31, 2024 compared with nine months ended May 31, 2023

Operating income increased 11.8% to $573.4 million for the nine months ended May 31, 2024, compared with $513.1 million in the prior year period. This increase was primarily due to growth in revenues, partially offset by higher amortization of intangible assets, computer-related expenses and employee compensation costs. Foreign currency exchange rate fluctuations, net of hedge activity, decreased operating income by $1.5 million for the nine months ended May 31, 2024 compared with the nine months ended May 31, 2023.

Operating margin increased to 34.9% for the nine months ended May 31, 2024, compared with 33.1% in the prior year period. This increase was primarily due to growth in revenues and, when expressed as a percentage of revenue, a decrease in employee compensation costs, partially offset by higher amortization of intangible assets.

Operating Income by Segment

We operate our business through three segments: the Americas; EMEA; and Asia Pacific. Refer to Note 15, Segment Information in the Notes to the Consolidated Financial Statements included in Part I, Item 1. of this Quarterly Report on Form 10-Q for further discussion regarding our segments. The following table summarizes our operating income by segment:

			Three Months Ended															Nine Months Ended
			May 31,												% Change			May 31,									% Change
(dollar amounts in thousands)			2024						2023						2024			2023
Americas			$	87,696					$	79,005					11.0		%	$	250,255		$	207,717					20.5		%
EMEA			75,463						58,607						28.8		%	207,167			194,870						6.3		%
Asia Pacific			39,300						34,347						14.4		%	116,019			110,517						5.0		%
Total Operating Income			$	202,459					$	171,959					17.7		%	$	573,441		$	513,104					11.8		%

Three months ended May 31, 2024 compared with three months ended May 31, 2023

Americas

Americas operating income increased 11.0% to $87.7 million during the three months ended May 31, 2024, compared with $79.0 million in the same period a year ago. This increase was primarily due to growth in revenues of 5.6% and a decrease in employee compensation costs, partially offset by higher amortization of intangible assets and computer-related expenses.

• Employee compensation costs decreased primarily due to a one-time payroll tax adjustment and a decrease in salaries. The decrease in salaries was mainly driven by a net headcount reduction of 200 employees and higher capitalization of compensation costs related to the development of our internal-use software, partially offset by annual merit increases.

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

• Computer-related expenses increased primarily due to higher spending related to cloud-based hosting services and licensed software arrangements.

EMEA

EMEA operating income increased 28.8% to $75.5 million during the three months ended May 31, 2024, compared with $58.6 million in the same period a year ago. This increase was primarily due to growth in revenues of 2.4% and lower employee compensation costs. Employee compensation costs decreased mainly due to lower variable compensation and a decrease in restructuring charges due to the release of certain accruals during the three months ended May 31, 2024.

Asia Pacific

Asia Pacific operating income increased 14.4% to $39.3 million during the three months ended May 31, 2024, compared with $34.3 million in the same period a year ago. This increase was mainly due to growth in revenues of 1.5% and the reduction of certain operating expenses, partially offset by higher employee compensation costs. Employee compensation costs increased primarily due to higher annual base salaries driven by annual merit increases and a net headcount increase of 438 employees.

Nine months ended May 31, 2024 compared with nine months ended May 31, 2023

Americas

Americas operating income increased 20.5% to $250.3 million during the nine months ended May 31, 2024, compared with $207.7 million in the same period a year ago. This increase was primarily due to growth in revenues of 6.6% and lower employee compensation costs, partially offset by higher amortization of intangible assets and computer-related expenses.

• Employee compensation costs decreased primarily due to lower variable compensation and, to a lesser extent, a decrease due to lower salaries and a one-time payroll tax adjustment, partially offset by an increase in restructuring charges. The decrease in salaries was primarily driven by higher capitalization of compensation costs related to the development of our internal-use software.

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

• Computer-related expenses increased primarily due to higher spending related to cloud-based hosting services and licensed software arrangements.

EMEA

EMEA operating income increased 6.3% to $207.1 million during the nine months ended May 31, 2024, compared with $194.9 million in the same period a year ago. This increase was primarily due to growth in revenues of 4.7%, partially offset by higher employee compensation costs. Employee compensation costs increased primarily due to higher annual base salaries driven by annual merit increases, partially offset by a net headcount decrease of 48 employees.

Asia Pacific

Asia Pacific operating income increased 5.0% to $116.0 million during the nine months ended May 31, 2024, compared with $110.5 million in the same period a year ago. This increase was mainly due to growth in revenues of 4.5% and reduction of certain operating expenses, partially offset by higher employee compensation costs. Employee compensation costs increased primarily due to higher annual base salaries driven by annual merit increases and a net headcount increase of 438 employees.

Income Taxes

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

			Three Months Ended												Nine Months Ended
			May 31,												May 31,
(dollar amounts in thousands)			2024			2023						% Change			2024			2023						% Change
Income before income taxes			$	190,532		$	161,998					17.6		%	$	534,373		$	476,645					12.1		%
Provision for income taxes			$	32,397		$	27,335					18.5		%	$	86,743		$	73,591					17.9		%
Effective tax rate			17.0		%	16.9		%							16.2		%	15.4		%

We are subject to taxation in the United States and various foreign jurisdictions in which we conduct our business.

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 of 17.0% for the three months ended May 31, 2024 was relatively flat compared with 16.9% for the three months ended May 31, 2023. This was primarily due to higher pretax income, which reduced the effective tax rate impact of certain tax benefits, offset by increased utilization of foreign tax credits and excess tax benefits from stock-based compensation.

Our effective tax rate for the nine months ended May 31, 2024 was 16.2%, compared with 15.4% for the nine months ended May 31, 2023. This increase was primarily due to higher pretax income, which reduced the effective tax rate impact of certain tax benefits, partially offset by increased utilization of foreign tax credits.

Net Income and Diluted EPS

			Three Months Ended									Nine Months Ended
			May 31,									May 31,
(in thousands, except per share data)			2024			2023			% Change			2024			2023			% Change
Net income			$	158,135		$	134,663		17.4		%	$	447,630		$	403,054		11.1		%
Diluted weighted average common shares			38,640			38,912			(0.7)		%	38,644			38,936			(0.7)		%
Diluted EPS			$	4.09		$	3.46		18.2		%	$	11.58		$	10.35		11.9		%

The increase in Net income and Diluted EPS for the three and nine months ended May 31, 2024, compared to the respective prior year period, was primarily driven by higher operating income, partially offset by an increase in the provision for income taxes.

Non-GAAP Financial Measures

To supplement the financial measures prepared in accordance with generally accepted accounting principles in the United States ("GAAP"), we use non-GAAP financial measures including organic revenues, adjusted operating income, adjusted operating margin, adjusted net income, EBITDA, adjusted EBITDA and adjusted Diluted EPS. The reconciliations from our financial measures calculated and presented in accordance with GAAP to these non-GAAP financial measures are shown in the tables below. These non-GAAP financial measures should not be considered in isolation from, as a substitute for, or superior to, financial measures reported in accordance with GAAP. Moreover, these non-GAAP financial measures have limitations in that they do not reflect all the items associated with the operations of our business as determined in accordance with GAAP. Other companies may calculate similarly titled non-GAAP financial measures differently than we do, limiting the usefulness of those measures for comparative purposes.

Despite the limitations of these non-GAAP financial measures, we believe these adjusted financial measures and the information they provide are useful in viewing our performance using the same tools that management uses to gauge progress in achieving our goals. Adjusted measures may also facilitate comparisons to our historical performance.

Organic revenues exclude the current year impact of revenues from acquisitions and dispositions completed within the past 12 months ("Acquisition revenues" and "Disposition revenues", respectively) and the current year impact from changes in foreign currency. For year to date comparisons, organic revenues exclude current year revenues that were incurred prior to the first anniversary date of an acquisition. The table below provides an unaudited reconciliation of revenues to organic revenues:

			Three Months Ended												Nine Months Ended
			May 31,									% Change			May 31,						% Change
(dollar amounts in thousands)			2024			2023						2024			2023
Revenues			$	552,708		$	529,811					4.3		%	$	1,640,869		$	1,549,711		5.9		%
Acquisition revenues			(119)			—									(430)			—
Currency impact			843			—									516			—
Organic revenues			$	553,432		$	529,811					4.5		%	$	1,640,955		$	1,549,711		5.9		%

The table below provides an unaudited reconciliation of Operating income, operating margin, Net income and Diluted EPS to adjusted operating income, adjusted operating margin, adjusted net income, EBITDA, adjusted EBITDA and adjusted Diluted EPS. Adjusted operating income and margin, adjusted net income, and adjusted Diluted EPS exclude the impact of acquisition-related intangible asset amortization and non-recurring items. EBITDA and adjusted EBITDA represent earnings before interest expense, provision for income taxes and depreciation and amortization, while adjusted EBITDA further excludes non-recurring non-cash expenses.

			Three Months Ended									Nine Months Ended
			May 31,									May 31,
(in thousands, except per share data)			2024			2023			% Change			2024			2023			% Change
Operating income			$	202,459		$	171,959		17.7%			$	573,441		$	513,104		11.8%
Intangible asset amortization			16,674			17,655						50,692			53,372
Business acquisition / integration costs(1)			423			—						423			6,828
Restructuring / severance			(1,596)			1,318						6,695			1,751
Adjusted operating income			$	217,960		$	190,932		14.2%			$	631,251		$	575,055		9.8%
Operating margin			36.6%			32.5%						34.9%			33.1%
Adjusted operating margin(2)			39.4%			36.0%						38.5%			37.1%
Net income			$	158,135		$	134,663		17.4		%	$	447,630		$	403,054		11.1		%
Intangible asset amortization			11,466			14,406						36,791			44,729
Business acquisition / integration costs(1)			291			—						307			5,723
Restructuring / severance			(1,096)			1,075						4,859			1,468
Income tax items			—			(2,477)						1,397			(4,029)
Adjusted net income(3)			$	168,796		$	147,667		14.3		%	$	490,984		$	450,945		8.9		%
Net income			$	158,135		$	134,663		17.4		%	$	447,630		$	403,054		11.1		%
Interest expense			16,894			16,354						50,231			49,628
Income taxes			32,397			27,335						86,743			73,591
Depreciation and amortization expense			32,504			26,473						91,154			78,681
EBITDA			$	239,930		$	204,825		17.1		%	$	675,758		$	604,954		11.7		%
Non-recurring non-cash expenses(4)			—			459						1,285			459
Adjusted EBITDA			$	239,930		$	205,284		16.9		%	$	677,043		$	605,413		11.8		%
Diluted EPS			$	4.09		$	3.46		18.2		%	$	11.58		$	10.35		11.9		%
Intangible asset amortization			0.30			0.36						0.94			1.14
Business acquisition / integration costs(1)			0.01			—						0.01			0.15
Restructuring / severance			(0.03)			0.03						0.14			0.04
Income tax items			—			(0.06)						0.04			(0.10)
Adjusted Diluted EPS(3)			$	4.37		$	3.79		15.3		%	$	12.71		$	11.58		9.8		%
Weighted average common shares (Diluted)			38,640			38,912						38,644			38,936

(1)Related to certain business acquisition costs for the three and nine months ended May 31, 2024 and integration costs from the CGS acquisition for the nine months ended May 31, 2023.

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

(3)For purposes of calculating adjusted net income and adjusted Diluted EPS, the three months ended May 31, 2024 and May 31, 2023 were taxed at an adjusted tax rate of 31.2% and 18.4%, respectively. The nine months ended May 31, 2024 and May 31, 2023 were taxed at an adjusted tax rate of 27.4% and 16.2%, respectively.

(4)Related to the accelerated vesting of stock awards for certain employees during the nine months ended May 31, 2024.

Liquidity and Capital Resources

As of May 31, 2024, Cash and cash equivalents were $453.1 million, compared with $425.4 million as of August 31, 2023. Our cash and cash equivalents are held in numerous locations throughout the world, with $188.5 million in EMEA (predominantly in the UK and Germany), $173.9 million in the Americas and the remaining $90.7 million in Asia Pacific (predominantly in the

Philippines and India) as of May 31, 2024. We permanently reinvest all foreign unremitted earnings, except in jurisdictions where earnings can be repatriated substantially free of tax.

Our cash flows provided by operating activities, existing cash and cash equivalents, supplemented with our debt borrowings, have been sufficient to fund our operations while allowing us to invest in activities that support the long-term growth of our operations. Generally, some or all of our remaining available cash flows have been used to, among other things, service our existing and future debt obligations, satisfy our working capital requirements and fund various activities, including our capital expenditures, acquisitions, investments, dividend payments and repurchases of our common stock. Based on past performance and current expectations, we believe our sources of liquidity, including the available capacity under our existing revolving credit facility and other financing alternatives, will provide us the necessary capital to fund these transactions and achieve our planned growth for the next 12 months and the foreseeable future. We are exposed to credit risk for our cash and cash equivalents held in financial institutions in the event of a default, to the extent that such amounts are in excess of applicable insurance limits; however, we do not believe our concentration of cash and cash equivalents presents a significant credit risk as the counterparties to the instruments consist of multiple high-quality, credit-worthy financial institutions.

Sources of Liquidity

Debt and Swap Agreements

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 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.

We may voluntarily prepay loans under the 2022 Credit Facilities at any time without premium or penalty. During the three and nine months ended May 31, 2024, we repaid $62.5 million and $187.5 million, respectively, under the 2022 Term Facility, inclusive of voluntary prepayments of $50.0 million and $150.0 million, respectively. Since loan inception on March 1, 2022, we have repaid $812.5 million under the 2022 Term Facility, inclusive of voluntary prepayments of $712.5 million. As of May 31, 2024, we had short-term liquidity requirements of $187.5 million related to the outstanding balance of the 2022 Term Facility which becomes due March 1, 2025.

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 Secured Overnight Financing Rate ("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 May 31, 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.

Additionally, 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 May 31, 2024.

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 May 31, 2024. We were in compliance with all covenants and requirements of the 2022 Credit Agreement as of May 31, 2024.

Refer to Note 10, Debt in the Notes to the Consolidated Financial Statements included in Part I, Item 1. of this Quarterly Report on Form 10-Q, for further discussion of the 2022 Credit Agreement.

2024 Swap Agreement

On March 1, 2024, we entered into an interest rate swap agreement ("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, in the Notes to the Consolidated Financial Statements included in Part I, Item 1. of this Quarterly Report on Form 10-Q, for more information on the 2024 Swap Agreement.

2022 Swap Agreement

On March 1, 2022, we entered into an interest rate swap agreement (the "2022 Swap Agreement") to hedge a portion of our outstanding floating SOFR debt with a fixed interest rate of 1.162%. The 2022 Swap Agreement matured on February 28, 2024. Refer to Note 5, Derivative Instruments, in the Notes to the Consolidated Financial Statements included in Part I, Item 1. of this Quarterly Report on Form 10-Q, for more information on the 2022 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 during fiscal 2022 and we incurred approximately $9.1 million in debt issuance costs. 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.

Uses of Liquidity

Returning Value to Stockholders

We returned $283.2 million and $168.5 million to our stockholders in the form of share repurchases and dividends during the nine months ended May 31, 2024 and May 31, 2023, respectively. Over the last 12 months, we returned $430.1 million to our stockholders in the form of share repurchases and dividends.

Dividends

In the third quarter of fiscal 2024, our Board of Directors approved a 6% increase in the regular quarterly dividend from $0.98 to $1.04 per share. Fiscal 2024 marked the 25th consecutive fiscal year we have increased dividends on a stock split-adjusted basis, highlighting our continued commitment to returning value to our stockholders. During the nine months ended May 31, 2024 and May 31, 2023, we paid dividends of $111.3 million and $101.4 million, respectively. Future cash dividend payments are subject to final determination by our Board of Directors and will depend on our earnings, capital requirements, financial condition and other relevant factors.

Share Repurchase Program

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. During the three and nine months ended May 31, 2024, we repurchased 135,150 shares for $59.8 million and 384,150 shares for $171.9 million, respectively. We suspended our share repurchase program beginning in the second quarter of fiscal 2022, with the exception of potential minor repurchases to offset dilution from grants of equity awards or repurchases to satisfy withholding tax obligations due upon the vesting of stock-based awards, to prioritize the repayment of debt under the 2022 Credit Facilities. We resumed our share repurchase program in the third quarter of fiscal 2023. For the three and nine months ended May 31, 2023, we repurchased 165,950 shares for $67.1 million.

There is no defined number of shares to be repurchased over a specified timeframe through the life of our share repurchase program. As of May 31, 2024, $128.1 million remained 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.

Contractual Obligations

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 nine months ended May 31, 2024, there were no material changes to our contractual obligations.

We also have contractual obligations related to our lease liabilities and outstanding debt. Refer to Note 9, Leases and Note 10, Debt in the Notes to the Consolidated Financial Statements included in Part I, Item 1. of this Quarterly Report on Form 10-Q for information regarding lease commitments and outstanding debt obligations, respectively.

Summary of Cash Flows

The following table provides a summary of our net cash flow activity for the periods presented:

			Nine Months Ended
			May 31,
(dollar amounts in thousands)			2024			2023			$ Change
Net cash provided by operating activities			$	537,177		$	489,903		$	47,274
Net cash provided by (used in) investing activities			(104,658)			(72,310)			(32,348)
Net cash provided by (used in) financing activities			(402,908)			(437,357)			34,449
Effect of exchange rate changes on cash and cash equivalents			(1,911)			3,118			(5,029)
Net increase (decrease) in cash and cash equivalents			$	27,700		$	(16,646)		$	44,346

Operating

For the nine months ended May 31, 2024, net cash provided by operating activities was $537.2 million, which included net income of $447.6 million, non-cash charges of $154.8 million and a net cash outflow of $65.2 million to support our working capital requirements. The non-cash charges were primarily driven by depreciation and amortization and stock-based compensation expense. The change in our working capital was primarily driven by cash outflows related to our annual variable compensation payment and lease payments.

For the nine months ended May 31, 2023, net cash provided by operating activities was $489.9 million, which included net income of $403.1 million, non-cash charges of $140.7 million and a net cash outflow of $53.9 million to support our working capital requirements. The non-cash charges were primarily driven by depreciation and amortization, stock-based compensation expense and amortization of lease ROU assets. The change in our working capital was primarily driven by a cash outflow related to our variable compensation payment earned in the prior year, higher accounts receivable due to increased sales and an increase in days sales outstanding, and cash outflows for lease payments.

Investing

For the nine months ended May 31, 2024, net cash used in investing activities was $104.7 million. The cash used in investing activities was primarily related to capital expenditures of $59.7 million mainly driven by the capitalization of internal-use software development costs and $44.9 million in investments, primarily related to the purchase of mutual funds.

For the nine months ended May 31, 2023, net cash used in investing activities was $72.3 million. The cash used in investing activities was primarily related to capital expenditures of $61.4 million mainly due to the capitalization of internal-use software development costs and investments in network-related equipment and laptops.

Financing

For the nine months ended May 31, 2024, net cash used in financing activities was $402.9 million, consisting mainly of $187.5 million related to the partial repayment of the 2022 Term Facility, $171.9 million of share repurchases and $111.3 million of dividend payments, partially offset by $83.5 million of proceeds from employee stock plans.

For the nine months ended May 31, 2023, net cash used in financing activities was $437.4 million, consisting mainly of $312.5 million related to the partial repayment of the 2022 Term Facility, $101.4 million of dividend payments and $67.1 million of share repurchases, partially offset by $55.9 million of proceeds from employee stock plans.

Free Cash Flow

We define free cash flow, a non-GAAP financial measure, as cash provided by operating activities less purchases of property, equipment and leasehold improvements ("PPE") and capitalized internal-use software. We believe free cash flow is a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business that, after capital expenditures, can be used for strategic opportunities, including returning value to stockholders, investing in our business, making strategic acquisitions and strengthening the balance sheet. Free cash flow should be considered in addition to, rather than as a substitute for, consolidated net income as a measure of our performance and net cash provided by operating activities as a measure of our liquidity.

The following table reconciles our net cash provided by operating activities to free cash flow:

			Nine Months Ended
			May 31,
(dollar amounts in thousands)			2024			2023			$ Change
Net cash provided by operating activities			$	537,177		$	489,903		$	47,274
Less: purchases of property, equipment, leasehold improvements and capitalized internal-use software			(59,722)			(61,421)			1,699
Free cash flow			$	477,455		$	428,482		$	48,973

We generated free cash flow of $477.5 million during the nine months ended May 31, 2024, an increase of $49.0 million compared with the same period a year ago. This increase was driven by a $47.3 million increase in cash provided by operating activities, primarily due to higher net income, partially offset by an increase in working capital requirements.

Off-Balance Sheet Arrangements

As of May 31, 2024 and August 31, 2023, we had no off-balance sheet financing other than letters of credit incurred in the ordinary course of business. Refer to Note 10, Debt and Note 11, Commitments and Contingencies in the Notes to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for more information on our letters of credit.

As of May 31, 2024 and August 31, 2023, we also had no other arrangements with unconsolidated entities or financial partnerships (such as entities often referred to as structured finance or special purpose entities) established for purposes of facilitating off-balance sheet financing, other debt arrangements, or other contractually limited purposes.

Foreign Currency Exposure

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 May 31, 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 fourth quarter of fiscal 2024 through the third 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:

			May 31, 2024						August 31, 2023
(in thousands)			Local Currency Amount			Notional Contract Amount (USD)			Local Currency Amount			Notional Contract Amount (USD)
Indian Rupee			Rs	4,481,555		$	53,400		Rs	3,363,150		$	40,300
British Pound Sterling			£	41,500		52,403			£	45,000		56,098
Euro			€	44,200		48,429			€	39,000		42,646
Philippine Peso			₱	1,874,172		32,900			₱	1,888,541		33,600
Total						$	187,132					$	172,644

Refer to Part I, Item 3. Quantitative and Qualitative Disclosures About Market Risk of this Quarterly Report on Form 10-Q for more information on our foreign currency exposures.

Critical Accounting Estimates

We prepare the Consolidated Financial Statements in conformity with GAAP, which requires us to make certain estimates and apply judgements that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures. We base our estimates on historical experience and other assumptions that we believe to be reasonable at the time the Consolidated Financial Statements are prepared and, as such, they may ultimately differ materially from actual results.

We describe our significant accounting policies in Note 2, Summary of Significant Accounting Policies 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. These accounting policies were consistently applied in preparing our Consolidated Financial Statements for the nine months ended May 31, 2024.

We disclosed our critical accounting estimates in Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations, Critical Accounting Estimates, of our Annual Report on Form 10-K for the fiscal year ended August 31, 2023. There were no significant changes in our critical accounting estimates during the nine months ended May 31, 2024.

New Accounting Pronouncements

For a discussion of accounting pronouncements recently adopted and those issued but not yet adopted, refer to Note 2, Summary of Significant Accounting Policies, in the Notes to the Consolidated Financial Statements included in Part I, Item 1. of this Quarterly Report on Form 10-Q, which we include herein by reference.