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, 2024, 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, 2024.

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 deliver financial intelligence to investment professionals worldwide.

Our platform delivers expansive data, sophisticated analytics, and flexible technology used by global financial professionals to power their critical investment workflows. As of February 28, 2025, we had more than 8,600 clients comprised of over 219,000 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 data and technology platform. Our products and services include workstations, portfolio analytics and enterprise data solutions. We also offer managed services that operate as an extension of our clients' internal teams to support data, performance, risk and reporting workflows.

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 and analyze, monitor and manage their portfolios. Our solutions span the investment lifecycle 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. All of our 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. Within each segment, we offer data, products and analytical applications by firm type:

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

• "Dealmakers" focuses on investment bankers, sell-side research analysts, corporate users, investor relations officers and private equity and venture capital professionals,

• "Wealth" focuses on wealth management clients, and

• "Partnerships and CGS": "Partnerships" delivers solutions to firms in the financial services ecosystem including data, analytics and technology platform providers. "CGS" is a leader in securities identification, managed on behalf of the American Bankers Association to bring reliability to all sectors of the global financial markets.

Refer to Note 16, 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.

Business Strategy

We strive to be a trusted enterprise partner and service provider to our clients across the financial services spectrum, delivering relevant intelligence, insights and execution solutions tailored to our clients' 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 are focused on three core pillars and primary areas of investment:

• Expanding our data offerings:** We continue to scale up our data ecosystem to provide a comprehensive inventory of industry, proprietary and third-party data. This includes granular data for key industry verticals, real-time market data, fund data and sustainable finance. We believe that our breadth of high-quality, connected data will serve as critical raw material for large language models. In addition to using our growing data catalog to power our artificial intelligence ("AI") powered workstation products, we aim to continue to expand our data delivery capabilities in the cloud and through other methods to advance our position as an enterprise data provider for our clients.

• Embedding deeper in client workflows**: Through continued innovation, we aim to deepen our integration into our clients' workflows. We are focused on expanding further into the buy-side front office by leveraging our expertise in portfolio performance, analytics, and risk management. In addition, we are building on our strong presence on advisor desktops by expanding into prospecting and digital reporting workflows. We are also working to introduce next-generation automation in research, financial modeling, and pitch creation.

• Innovating with AI**: Our artificial intelligence roadmap, driven by our FactSet AI Blueprint, continues to resonate with our clients. We recently launched new AI-powered solutions for generating portfolio performance commentary, analyzing earnings call transcripts, and requesting FactSet data using natural language queries in client-built environments and chatbots. We believe that our pragmatic, open and flexible approach to leveraging AI to enhance our clients’ workflows will differentiate FactSet from our competitors and drive growth.

Fiscal 2025 Second Quarter in Review

Revenues in the second quarter of fiscal 2025 were $570.7 million, an increase of 4.5% from the comparable prior year period. This 4.5% growth in revenues was driven by a 4.0% increase in organic revenues and a 0.7% increase from acquisition-related revenues, partially offset by a net decrease of 0.2% from foreign currency exchange rate fluctuations. Revenues increased in all our segments, primarily in the Americas. Revenues increased primarily from workstations and CGS. 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 the definition of organic revenues and a reconciliation between revenues and organic revenues.

As of February 28, 2025, organic annual subscription value ("Organic ASV") totaled $2,276.2 million, an increase of 4.1% over the prior year. Organic ASV increased in all our segments, with the majority of the increase in the Americas. The Organic ASV increase was mainly from workstations and, to a lesser extent, CGS. 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 definition of Organic ASV.

Operating margin was 32.5% for the second quarter of fiscal 2025, compared to 33.3% in the prior year period. When expenses are expressed as a percentage of revenues, this decrease in operating margin was mainly due to higher professional fees and computer-related expenses, partially offset by growth in revenues and a decrease in employee compensation costs. Diluted earnings per common share ("Diluted EPS") was $3.76 for the second quarter of fiscal 2025, an increase of 3.0% from the comparable prior year period, primarily driven by higher operating income.

We returned $104.0 million to our stockholders in the form of share repurchases and dividends during the three months ended February 28, 2025.

As of February 28, 2025, our client and user count was 8,645 and 219,141, respectively. Our employee headcount was 12,598 as of February 28, 2025, up 2.6% compared to the prior year. This increase was driven by net headcount growth of 4.8% in Americas, 3.1% in EMEA and 1.9% in Asia Pacific.

Annual Subscription Value ("ASV")

We believe ASV reflects our ability to grow recurring revenues and generate positive cash flows, and thus 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.

–"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.

Beginning in fiscal 2025, we are reporting Organic ASV, rather than Organic ASV plus professional services, to focus on the recurring nature of our revenues. This underscores the shift of our offerings toward providing more managed services and less project-based services.

Organic ASV

The following table presents the calculation of Organic ASV as of February 28, 2025. 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 February 28, 2025
ASV			$	2,306.1
Currency impact(1)			1.9
Acquisition ASV*(*2)			(31.8)
Organic ASV			$	2,276.2
Organic ASV annual growth rate			4.1		%

(1)The impact from foreign currency movements.

(2)Acquired ASV from acquisitions completed within the last 12 months.

As of February 28, 2025, Organic ASV was $2,276.2 million, an increase of 4.1% compared with February 29, 2024. Organic ASV increased in all our segments, with the majority of the increase in the Americas. The increase in Organic ASV was driven by higher sales to existing clients, price increases to existing clients and sales to new clients, partially offset by existing client cancellations. More specifically, the increase in Organic ASV was mainly from workstations and, to a lesser extent, CGS.

Segment ASV

As of February 28, 2025, ASV from the Americas represented 65% of total ASV and was $1,501.1 million, an increase from $1,413.6 million as of February 29, 2024. Americas Organic ASV was $1,474.9 million as of February 28, 2025, a 4.4% increase from the prior year period. The Organic ASV increase in the Americas was primarily driven by workstations and, to a lesser extent, CGS.

As of February 28, 2025, ASV from EMEA represented 25% of total ASV and was $571.3 million, an increase from $556.5 million as of February 29, 2024. EMEA Organic ASV was $571.4 million as of February 28, 2025, a 2.6% increase from the prior year period. The EMEA Organic ASV increase was mainly from CGS and data solutions.

As of February 28, 2025, ASV from Asia Pacific represented 10% of total ASV and was $233.7 million, an increase from $215.5 million as of February 29, 2024. Asia Pacific Organic ASV was $229.9 million as of February 28, 2025, a 6.8% increase from the prior year period. The Asia Pacific Organic ASV increase was primarily driven by workstations and data solutions.

Buy-side and Sell-side Organic ASV Growth

The buy-side and sell-side Organic ASV annual growth rates as of February 28, 2025 were 4.1% and 2.2%, 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 remaining

Organic ASV is derived from sell-side firms, primarily including broker-dealers, banking and advisory firms, and private equity and venture capital firms.

Client and User Additions

The table below presents our total clients and users:

			As of February 28, 2025			As of February 29, 2024			Change
Clients(1)			8,645			8,020			7.8		%
Users(2)			219,141			206,478			6.1		%

(1)The client count includes clients with ASV of $10,000 and above and does not reflect the acquisition of Liquid Holdings, LLC ("LiquidityBook").

(2)The user count does not reflect the Platform Group Limited ("Irwin") and LiquidityBook acquisitions.

Our total client count was 8,645 as of February 28, 2025, a net increase of 7.8% or 625 clients in the last 12 months, mainly due to an increase in corporates, which now includes clients from the Irwin acquisition, and wealth management clients.

As of February 28, 2025, there were 219,141 professionals using FactSet, representing a net increase of 6.1% or 12,663 users in the last 12 months, primarily driven by an increase in wealth management users.

Annual ASV retention was greater than 95% of ASV as of February 28, 2025 and February 29, 2024. When expressed as a percentage of clients, annual retention was 91% as of February 28, 2025, compared with 90% as of February 29, 2024.

Employee Headcount

As of February 28, 2025, our net employee headcount increased by 2.6% to 12,598, compared with 12,279 employees as of February 29, 2024. This net headcount growth was primarily driven by our Irwin and LiquidityBook acquisitions and an increase in employees based in India as a result of our continued investment in our centers of excellence ("COEs"). Approximately 67% of our employees are located in our COEs.

As of February 28, 2025, compared to February 29, 2024, our net headcount growth was 4.8% in the Americas, 3.1% in EMEA and 1.9% in Asia Pacific. As of February 28, 2025, we had 8,681 employees located in Asia Pacific, 2,475 in the Americas and 1,442 in EMEA.

Results of Operations

For an understanding of the significant factors that influenced our performance for the three and six months ended February 28, 2025 and February 29, 2024, 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												Six Months Ended
			February 28,			February 29,						% Change			February 28,			February 29,						% Change
(in thousands, except per share data)			2025			2024			2025			2024
Revenues			$	570,660		$	545,945					4.5		%	$	1,139,327		$	1,088,161					4.7		%
Cost of services			269,604			255,142						5.7		%	528,383			506,763						4.3		%
Selling, general and administrative			115,564			108,861						6.2		%	234,117			210,416						11.3		%
Operating income			$	185,492		$	181,942					2.0		%	$	376,827		$	370,982					1.6		%
Net income			$	144,860		$	140,940					2.8		%	$	294,882		$	289,495					1.9		%
Diluted weighted average common shares			38,510			38,650									38,513			38,646
Diluted EPS			$	3.76		$	3.65					3.0		%	$	7.66		$	7.49					2.3		%

Revenues

Three months ended February 28, 2025 compared with three months ended February 29, 2024

Revenues for the three months ended February 28, 2025 were $570.7 million, an increase of 4.5%. This 4.5% growth in revenues was driven by a 4.0% increase in organic revenues, which totaled $568.0 million for the three months ended February 28, 2025, and a 0.7% increase from acquisition-related revenues, partially offset by a net decrease of 0.2% from foreign currency exchange rate fluctuations. Revenues increased in all our segments, primarily in the Americas. The increase in revenues was primarily driven by workstations and, to a lesser extent, CGS.

Six months ended February 28, 2025 compared with six months ended February 29, 2024

Revenues for the six months ended February 28, 2025 were $1,139.3 million, an increase of 4.7%. This 4.7% growth in revenues was driven by a 4.4% increase in organic revenues, which totaled $1,135.7 million for the six months ended February 28, 2025, and a 0.4% increase from acquisition-related revenues, partially offset by a net decrease of 0.1% from foreign currency exchange rate fluctuations. Revenues increased in all our segments, primarily in the Americas. The increase in revenues was mainly from workstations and, to a lesser extent, CGS and data solutions.

Revenues by Segment

The following table summarizes our revenues by segment:

			Three Months Ended									Six Months Ended
			February 28,			February 29,			% Change			February 28,			February 29,			% Change
(dollar amounts in thousands)			2025			2024			2025			2024
Americas			$	369,661		$	352,618		4.8		%	$	736,903		$	700,985		5.1		%
% of revenues			64.8		%	64.6		%				64.7		%	64.4		%
EMEA			$	143,387		$	139,176		3.0		%	$	287,112		$	278,737		3.0		%
% of revenues			25.1		%	25.5		%				25.2		%	25.6		%
Asia Pacific			$	57,612		$	54,151		6.4		%	$	115,312		$	108,439		6.3		%
% of revenues			10.1		%	9.9		%				10.1		%	10.0		%
Consolidated			$	570,660		$	545,945		4.5		%	$	1,139,327		$	1,088,161		4.7		%

Three months ended February 28, 2025 compared with three months ended February 29, 2024

Americas

Americas revenues increased 4.8% to $369.7 million during the three months ended February 28, 2025, compared with $352.6 million from the same period a year ago. This 4.8% growth in revenues was driven by a 4.0% increase in organic revenues and a 0.9% increase from acquisition-related revenues, partially offset by a net decrease of 0.1% from foreign currency exchange rate fluctuations. The increase in revenues was driven by workstations, CGS and front office solutions.

EMEA

EMEA revenues increased 3.0% to $143.4 million during the three months ended February 28, 2025, compared with $139.2 million from the same period a year ago. This 3.0% growth in revenues was driven by a 3.1% increase in organic revenues and a 0.3% increase from acquisition-related revenues, partially offset by a net decrease of 0.4% from foreign currency exchange rate fluctuations. The increase in revenues was mainly from CGS, data solutions and middle office solutions.

Asia Pacific

Asia Pacific revenues increased 6.4% to $57.6 million during the three months ended February 28, 2025, compared with $54.1 million from the same period a year ago. This growth in revenues was driven by a 6.8% increase in organic revenues and a 0.2% increase from acquisition-related revenues, partially offset by a net decrease of 0.6% from foreign currency exchange rate fluctuations. The increase in revenues was driven by data solutions and workstations.

Six months ended February 28, 2025 compared with six months ended February 29, 2024

Americas

Revenues from the Americas increased 5.1% to $736.9 million during the six months ended February 28, 2025, compared with $701.0 million from the same period a year ago. This 5.1% growth in revenues was driven by a 4.6% increase in organic revenues and a 0.6% increase from acquisition-related revenues, partially offset by a net decrease of 0.1% from foreign currency exchange rate fluctuations. The increase in revenues was driven by workstations and, to a lesser extent, CGS and front office solutions.

EMEA

Revenues from EMEA increased 3.0% to $287.1 million during the six months ended February 28, 2025, compared with $278.7 million from the same period a year ago. This 3.0% growth in revenues was driven by a 2.9% increase in organic revenues and a 0.2% increase from acquisition-related revenues, partially offset by a net decrease of 0.1% from foreign currency exchange rate fluctuations. The increase in revenues was mainly from middle office solutions, CGS and data solutions.

Asia Pacific

Revenues from Asia Pacific increased 6.3% to $115.3 million during the six months ended February 28, 2025, compared with $108.4 million from the same period a year ago. This 6.3% growth in revenues was driven by a 6.5% increase in organic revenues and a 0.1% increase from acquisition-related revenues, partially offset by a 0.3% decrease from foreign currency exchange rate fluctuations. The increase in revenues was driven by data solutions and workstations.

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, telecommunication 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.

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

			Three Months Ended									Six Months Ended
			February 28,			February 29,						February 28,			February 29,			% Change
(dollar amounts in thousands)			2025			2024			% Change			2025			2024
Cost of services			$	269,604		$	255,142		5.7		%	$	528,383		$	506,763		4.3		%
SG&A			115,564			108,861			6.2		%	234,117			210,416			11.3		%
Total operating expenses			$	385,168		$	364,003		5.8		%	$	762,500		$	717,179		6.3		%
Operating income			$	185,492		$	181,942		2.0		%	$	376,827		$	370,982		1.6		%
Operating margin			32.5		%	33.3		%				33.1		%	34.1		%

Cost of Services

Three months ended February 28, 2025 compared with three months ended February 29, 2024

Cost of services increased 5.7% to $269.6 million for the three months ended February 28, 2025, compared with $255.1 million for the same period a year ago, primarily due to an increase in computer-related expenses and amortization of intangible assets, partially offset by a decrease in employee compensation costs.

Cost of services, when expressed as a percentage of revenues, was 47.2% for the three months ended February 28, 2025, an increase of 50 basis points compared with the same period a year ago. This increase was primarily due to higher computer-related expenses, amortization of intangible assets and other expenses included in Cost of services, partially offset by a decrease in employee compensation costs.

When expressed as a percentage of revenues:

• Computer-related expenses increased by 120 basis points, primarily driven by higher spend related to cloud-based hosting services and licensed software arrangements.

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

• Employee compensation costs decreased by 210 basis points, primarily driven by a decrease in restructuring charges, partially offset by an increase in variable compensation costs.

Six months ended February 28, 2025 compared with six months ended February 29, 2024

Cost of services increased 4.3% to $528.4 million for the six months ended February 28, 2025, compared with $506.8 million in 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 46.4% for the six months ended February 28, 2025, a decrease of 20 basis points compared with the same period a year ago. This decrease was primarily driven by lower employee compensation costs, partially offset by an increase in amortization of intangible assets.

When expressed as a percentage of revenues:

• Employee compensation costs decreased 190 basis points, primarily due to a decrease in restructuring charges, partially offset by an increase in variable compensation costs.

• Amortization of intangible assets increased 100 basis points, mainly due to higher amortization from capitalized costs related to the development of our internal-use software.

Selling, General and Administrative

Three months ended February 28, 2025 compared with three months ended February 29, 2024

SG&A increased 6.2% to $115.6 million for the three months ended February 28, 2025, compared with $108.9 million in the same period a year ago, primarily driven by higher professional fees.

SG&A, when expressed as a percentage of revenues, was 20.3% for the three months ended February 28, 2025, an increase of 30 basis points compared with the same period a year ago. This increase was primarily driven by higher professional fees, partially offset by a decrease in bad debt expense.

When expressed as a percentage of revenues:

• Professional fees increased by 140 basis points, mainly due to acquisition-related costs.

• Bad debt expense decreased by 50 basis points, primarily due to improved client collections.

Six months ended February 28, 2025 compared with six months ended February 29, 2024

SG&A expenses increased 11.3% to $234.1 million for the six months ended February 28, 2025, compared with $210.4 million for the same period a year ago, primarily driven by higher professional fees and employee compensation costs.

SG&A expenses, when expressed as a percentage of revenues, were 20.5% for the six months ended February 28, 2025, an increase of 120 basis points compared with the same period a year ago. This increase was primarily due to higher professional fees and employee compensation costs.

When expressed as a percentage of revenues:

• Professional fees increased by 110 basis points, mainly due to acquisition-related costs.

• Employee compensation costs increased by 40 basis points, mainly due to an increase in variable compensation costs.

Operating Income and Operating Margin

Three months ended February 28, 2025 compared with three months ended February 29, 2024

Operating income increased 2.0% to $185.5 million for the three months ended February 28, 2025, compared with $181.9 million in the prior year period. This increase was primarily driven by growth in revenues, partially offset by an increase in professional fees, computer-related expenses and amortization of intangible assets. Based on the operating income for the three months ended February 28, 2025, comparing the average foreign currency exchange rates for the three months ended February 28, 2025 to the rates for the three months ended February 29, 2024, net of hedge activity, resulted in an increase in operating income of $1.3 million.

Operating margin decreased to 32.5% during the three months ended February 28, 2025, compared with 33.3% in the prior year period. When expenses are expressed as a percentage of revenues, this decrease in operating margin was mainly due to higher professional fees and computer-related expenses, partially offset by growth in revenues and a decrease in employee compensation costs.

Six months ended February 28, 2025 compared with six months ended February 29, 2024

Operating income increased 1.6% to $376.8 million for the six months ended February 28, 2025, compared with $371.0 million in the prior year period. This increase was primarily due to growth in revenues, partially offset by higher amortization of intangible assets, professional fees and computer-related expenses. Based on the operating income for the six months ended February 28, 2025, comparing the average foreign currency exchange rates for the six months ended February 28, 2025 to the rates for the six months ended February 29, 2024, net of hedge activity, resulted in an increase in operating income of $0.2 million.

Operating margin decreased to 33.1% for the six months ended February 28, 2025, compared with 34.1% in the prior year period. When expenses are expressed as a percentage of revenues, this decrease was primarily due to an increase in professional fees and amortization of intangible assets, partially offset by growth in revenues and a decrease in employee compensation costs.

Operating Income by Segment

We operate our business through three segments: the Americas; EMEA; and Asia Pacific. Refer to Note 16, 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												Six Months Ended
			February 28,			February 29,						% Change			February 28,			February 29,						% Change
(dollar amounts in thousands)			2025			2024						2025			2024
Americas			$	73,127		$	81,711					(10.5)		%	$	154,925		$	162,559					(4.7)		%
EMEA			70,568			62,839						12.3		%	139,606			131,704						6.0		%
Asia Pacific			41,797			37,392						11.8		%	82,296			76,719						7.3		%
Total Operating Income			$	185,492		$	181,942					2.0		%	$	376,827		$	370,982					1.6		%

Three months ended February 28, 2025 compared with three months ended February 29, 2024

Americas

Americas operating income decreased 10.5% to $73.1 million during the three months ended February 28, 2025, compared with $81.7 million in the same period a year ago. This decrease was primarily due to higher professional fees, computer-related expenses and amortization of intangible assets, partially offset by growth in revenues of 4.8%.

• Professional fees increased mainly due to acquisition-related costs.

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

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

EMEA

EMEA operating income increased 12.3% to $70.6 million during the three months ended February 28, 2025, compared with $62.8 million in the same period a year ago. This increase was primarily due to growth in revenues of 3.0% and lower employee compensation costs mainly due to a decrease in restructuring charges.

Asia Pacific

Asia Pacific operating income increased 11.8% to $41.8 million during the three months ended February 28, 2025, compared with $37.4 million in the same period a year ago. This increase was mainly due to growth in revenues of 6.4%, partially offset by an increase in employee compensation costs primarily due to higher variable compensation costs and annual base salaries. The increase in annual base salaries was primarily driven by annual merit increases and a net headcount increase of 162 employees.

Six months ended February 28, 2025 compared with six months ended February 29, 2024

Americas

Americas operating income decreased 4.7% to $154.9 million during the six months ended February 28, 2025, compared with $162.6 million in the same period a year ago. This decrease was primarily due to higher amortization of intangible assets, professional fees and computer-related expenses, partially offset by growth in revenues of 5.1%.

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

• Professional fees increased mainly due acquisition-related costs.

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

EMEA

EMEA operating income increased 6.0% to $139.6 million during the six months ended February 28, 2025, compared with $131.7 million in the same period a year ago. This increase was primarily due to growth in revenues of 3.0% and a decrease in employee compensation expense. Employee compensation costs decreased primarily due to lower variable compensation costs and payroll taxes, partially offset by an increase in annual base salaries driven by annual merit increases and a net headcount increase of 44 employees.

Asia Pacific

Asia Pacific operating income increased 7.3% to $82.3 million during the six months ended February 28, 2025, compared with $76.7 million in the same period a year ago. This increase was mainly due to growth in revenues of 6.3%, 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 162 employees.

Income Taxes

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

			Three Months Ended												Six Months Ended
			February 28,			February 29,									February 28,			February 29,
(dollar amounts in thousands)			2025			2024						% Change			2025			2024						% Change
Income before income taxes			$	172,320		$	168,645					2.2		%	$	352,059		$	343,841					2.4		%
Provision for income taxes			$	27,460		$	27,705					(0.9)		%	$	57,177		$	54,346					5.2		%
Effective tax rate			15.9		%	16.4		%							16.2		%	15.8		%

We are subject to taxation in the United States ("U.S.") 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 for the three months ended February 28, 2025 was 15.9%, compared with 16.4% for the three months ended February 29, 2024. This decrease was primarily due to lower U.S. tax on foreign earnings, partially offset by certain discrete items, mainly lower excess tax benefits related to stock-based compensation.

Our effective tax rate for the six months ended February 28, 2025 was 16.2%, compared with 15.8% for the six months ended February 29, 2024. This increase was primarily due to lower excess tax benefits related to stock-based compensation, partially offset by lower U.S. tax on foreign earnings.

For the periods presented, our effective tax rates were lower than the applicable U.S. corporate income tax rate. This was primarily attributable to excess tax benefits from stock-based compensation, foreign tax credits, research and development ("R&D") tax credits and a foreign derived intangible income ("FDII") deduction, partially offset by our state income taxes.

Net Income and Diluted EPS

			Three Months Ended									Six Months Ended
			February 28,			February 29,						February 28,			February 29,
(in thousands, except per share data)			2025			2024			% Change			2025			2024			% Change
Net income			$	144,860		$	140,940		2.8		%	$	294,882		$	289,495		1.9		%
Diluted weighted average common shares			38,510			38,650			(0.4)		%	38,513			38,646			(0.3)		%
Diluted EPS			$	3.76		$	3.65		3.0		%	$	7.66		$	7.49		2.3		%

The increase in Net income and Diluted EPS for the three and six months ended February 28, 2025, compared to the respective prior year period, was primarily driven by higher operating income.

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 excludes 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. In addition, for year to date comparisons, organic revenues excludes 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												Six Months Ended
			February 28,			February 29,						% Change			February 28,			February 29,			% Change
(dollar amounts in thousands)			2025			2024						2025			2024
Revenues			$	570,660		$	545,945					4.5		%	$	1,139,327		$	1,088,161		4.7		%
Acquisition revenues			(3,793)			—									(4,489)			—
Currency impact			1,118			—									820			—
Organic revenues			$	567,985		$	545,945					4.0		%	$	1,135,658		$	1,088,161		4.4		%

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 represents 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									Six Months Ended
			February 28,			February 29,						February 28,			February 29,
(in thousands, except per share data)			2025			2024			% Change			2025			2024			% Change
Operating income			$	185,492		$	181,942		2.0%			$	376,827		$	370,982		1.6%
Intangible asset amortization			18,137			16,674						34,718			34,018
Business acquisitions and related costs			9,040			—						12,793			—
Sales tax dispute(1)			—			—						2,398			—
Restructuring/severance			—			10,710						(317)			8,291
Adjusted operating income			$	212,669		$	209,326		1.6%			$	426,419		$	413,291		3.2%
Operating margin			32.5%			33.3%						33.1%			34.1%
Adjusted operating margin(2)			37.3%			38.3%						37.4%			38.0%
Net income			$	144,860		$	140,940		2.8		%	$	294,882		$	289,495		1.9		%
Intangible asset amortization			13,425			12,579						25,815			25,167
Business acquisitions and related costs			6,691			—						9,512			—
Sales tax dispute(1)			—			—						1,783			—
Restructuring/severance			—			8,080						(236)			6,134
Income tax items			—			1,468						1,351			1,397
Adjusted net income(3)			$	164,976		$	163,067		1.2		%	$	333,107		$	322,193		3.4		%
Net income			$	144,860		$	140,940		2.8		%	$	294,882		$	289,495		1.9		%
Interest expense			13,916			16,599						28,316			33,337
Income taxes			27,460			27,705						57,177			54,346
Depreciation and amortization expense			38,410			31,582						74,127			58,650
EBITDA			$	224,646		$	216,826		3.6		%	$	454,502		$	435,828		4.3		%
Non-recurring non-cash expenses(4)			—			1,285						—			1,285
Adjusted EBITDA			$	224,646		$	218,111		3.0		%	$	454,502		$	437,113		4.0		%
Diluted EPS			$	3.76		$	3.65		3.0		%	$	7.66		$	7.49		2.3		%
Intangible asset amortization			0.35			0.32						0.66			0.64
Business acquisitions and related costs			0.17			—						0.25			—
Sales tax dispute(1)			—			—						0.05			—
Restructuring/severance			—			0.21						(0.01)			0.17
Income tax items			—			0.04						0.04			0.04
Adjusted Diluted EPS(3)			$	4.28		$	4.22		1.4		%	$	8.65		$	8.34		3.7		%
Weighted average common shares (diluted)			38,510			38,650						38,513			38,646

(1)Related to a resolved matter with the Massachusetts Department of Revenue. Refer to Note 12, 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 further discussion on this matter.

(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, all adjustments for the three months ended February 28, 2025 and February 29, 2024 were taxed at an adjusted tax rate of 26.0% and 24.6%, respectively. The six months ended February 28, 2025 and February 29, 2024 were taxed at an adjusted tax rate of 25.6% and 26.0%, respectively.

(4)Related to the accelerated vesting of stock awards for certain employees.

Liquidity and Capital Resources

As of February 28, 2025, Cash and cash equivalents were $278.5 million and restricted cash was $13.0 million, compared with Cash and cash equivalents of $423.0 million as of August 31, 2024. Refer to Summary of Cash Flows within this section below, for more information on cash flows during the second quarter of fiscal 2025.

Our cash and cash equivalents are held in numerous locations throughout the world, with $116.3 million in the Americas, $114.4 million in EMEA (predominantly in the UK) and the remaining $47.8 million in Asia Pacific (predominantly in the Philippines, Australia and India) as of February 28, 2025.

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, cash equivalents and restricted cash 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, cash equivalents and restricted cash 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"). The 2022 Revolving Facility, together with the 2022 Term Facility, are referred to as the "2022 Credit Facilities".

The 2022 Term Facility matured 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. The 2022 Revolving Facility allowed for additional commitments of up to $750.0 million from lenders or other financial institutions. On January 31, 2025, we entered into a joinder agreement to our 2022 Credit Agreement that added an incremental revolving loan lender and increased the available commitments under the 2022 Revolving Facility by $100.0 million. The joinder agreement increased the total 2022 Revolving Facility commitments to $600.0 million, reducing the additional commitments we can seek to $650.0 million. All other terms of the 2022 Credit Agreement remained unchanged.

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 28, 2025, we repaid $62.5 million and $125.0 million, respectively, under the 2022 Term Facility. As of February 28, 2025, the 2022 Term Facility has been fully repaid.

During the six months ended February 28, 2025, we borrowed $305.0 million and repaid $75.0 million for total net borrowings of $230.0 million under the 2022 Revolving Facility. As of February 28, 2025, the outstanding borrowings under the 2022 Revolving Facility were $480.0 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 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 February 28, 2025, 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 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 February 28, 2025.

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 3.50 to 1.00 as of February 28, 2025. We were in compliance with all covenants and requirements of the 2022 Credit Agreement as of February 28, 2025.

Refer to Note 11, 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.

Interest Rate Swap Agreements

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%. The 2024 Swap Agreement matured on February 28, 2025.

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 2024 Swap Agreement and 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"). 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 $192.0 million and $186.3 million to our stockholders in the form of share repurchases and dividends during the six months ended February 28, 2025 and February 29, 2024, respectively. Over the last 12 months, we returned $391.6 million to our stockholders in the form of share repurchases and dividends.

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 six months ended February 28, 2025, we repurchased 136,714 shares for $64.4 million and 241,189 shares for $113.1 million, respectively. For the three and six months ended February 29, 2024, we repurchased 113,050 shares for $52.3 million and 249,000 shares for $112.2 million, respectively.

There is no defined number of shares to be repurchased over a specified timeframe through the life of our share repurchase program. On September 17, 2024, our Board of Directors authorized up to $300 million for share repurchases during fiscal 2025. As of February 28, 2025, $186.9 million remained authorized under our share repurchase program. 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.

Dividends

During the six months ended February 28, 2025 and February 29, 2024, we paid dividends of $78.8 million and $74.1 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.

Capital Expenditures

For the six months ended February 28, 2025, capital expenditures increased by 29.2% to $49.6 million, compared with $38.4 million for the same period a year ago. This increase was primarily due to higher capitalized costs related to the development of our internal-use software.

Acquisitions

Liquid Holdings, LLC ("LiquidityBook")

On February 7, 2025 we completed the acquisition of LiquidityBook for a purchase price of $243.8 million, net of cash acquired, and inclusive of preliminary working capital adjustments. The purchase price includes contingent consideration of $11.9 million which reflects the acquisition date fair value of potential future payments that are contingent upon the achievement of certain specified milestones. LiquidityBook provides cloud-native trading solutions to hedge fund, asset and wealth management, outsourced trading, and sell-side middle office clients. LiquidityBook operates a proprietary FIX network that enables streamlined connectivity to over 200 brokers and order routing to more than 1,600 destinations across 80 markets globally. This acquisition adds technology-forward order management and investment book of record capabilities and enhances FactSet’s ability to serve the integrated workflow needs of clients across the portfolio life cycle.

Platform Group Limited ("Irwin")

On November 5, 2024, we completed the acquisition of Irwin for a purchase price of $120.2 million, net of cash acquired, and inclusive of preliminary working capital adjustments. The purchase price includes contingent consideration of $9.6 million which reflects the acquisition date fair value of potential future payments that are contingent upon the achievement of certain specified milestones. Irwin is a leading investor relations and capital markets platform for public companies and their advisors. This acquisition builds on a recent successful partnership between FactSet and Irwin, and expands our ability to address the holistic workflow needs of investor relations professionals with an integrated, modern solution.

Refer to Note 6, Acquisitions 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 these acquisitions.

Contractual Obligations

Purchase obligations represent our legally-binding agreements to purchase fixed or minimum quantities at determinable prices. As of August 31, 2024, we had total purchase obligations with suppliers and vendors of $382.6 million. Our total purchase obligations as of August 31, 2024 primarily related to hosting services, acquisition of data and, to a lesser extent, third-party software providers. For the six months ended February 28, 2025, we had no new material purchase obligations.

We also have contractual obligations related to our lease liabilities and outstanding debt. Refer to Note 10, Leases and Note 11, 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:

			Six Months Ended
			February 28,			February 29,
(dollar amounts in thousands)			2025			2024			$ Change
Net cash provided by operating activities			$	260,327		$	298,942		$	(38,615)
Net cash provided by (used in) investing activities			(338,124)			(83,319)			(254,805)
Net cash provided by (used in) financing activities			(45,542)			(259,227)			213,685
Effect of exchange rate changes on cash, cash equivalents and restricted cash			(8,048)			(132)			(7,916)
Net increase (decrease) in cash, cash equivalents and restricted cash			$	(131,387)		$	(43,736)		$	(87,651)

Operating

For the six months ended February 28, 2025, net cash provided by operating activities was $260.3 million, which included net income of $294.9 million, non-cash charges of $131.4 million and a net cash outflow of $166.0 million to support our working

capital requirements. The non-cash charges were primarily driven by depreciation and amortization. The change in our working capital was primarily driven by cash outflows related to payments to resolve an outstanding sales tax dispute, timing of income tax and vendor payments, and timing of client collections.

For the six months ended February 29, 2024, net cash provided by operating activities was $298.9 million, which included net income of $289.5 million, non-cash charges of $117.5 million and a net cash outflow of $108.1 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 a cash outflow related to our annual variable compensation payment and higher accounts receivable due to an increase in sales and days sales outstanding.

Investing

For the six months ended February 28, 2025, net cash used in investing activities was $338.1 million. The cash used in investing activities primarily consisted of $342.5 million of acquisition-related consideration related to the Irwin and LiquidityBook transactions and $49.6 million of capital expenditures driven by the capitalization of internal-use software development costs, partially offset by $58.2 million in proceeds from our investments in mutual funds.

For the six months ended February 29, 2024, net cash used in investing activities was $83.3 million. The cash used in investing activities was primarily related to $44.9 million of purchases of investments, mainly in mutual funds, and capital expenditures of $38.4 million driven by the capitalization of internal-use software development costs.

Financing

For the six months ended February 28, 2025, net cash used in financing activities was $45.5 million, consisting mainly of $200.0 million related to the repayment of the 2022 Credit Facilities, $113.1 million of share repurchases and $78.8 million of dividend payments, partially offset by $305.0 million of proceeds related to additional borrowings under the 2022 Revolving Facility.

For the six months ended February 29, 2024, net cash used in financing activities was $259.2 million, consisting mainly of $125.0 million related to the partial repayment of the 2022 Term Facility, $112.2 million of share repurchases and $74.1 million of dividend payments, partially offset by $66.5 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:

			Six Months Ended
			February 28,			February 29,
(dollar amounts in thousands)			2025			2024			$ Change
Net cash provided by operating activities			$	260,327		$	298,942		$	(38,615)
Less: purchases of property, equipment, leasehold improvements and capitalized internal-use software			(49,610)			(38,383)			(11,227)
Free cash flow			$	210,717		$	260,559		$	(49,842)

We generated free cash flow of $210.7 million during the six months ended February 28, 2025, a decrease of $49.8 million compared with the same period a year ago. This decrease was driven by a $38.6 million reduction in cash provided by operating activities, primarily due to an increase in working capital requirements, and higher capitalized costs mainly related to the development of our internal-use software. The increase in working capital requirements was mainly due to the resolution of a sales tax dispute, the timing of income tax and vendor payments, and timing of client collections.

Off-Balance Sheet Arrangements

As of February 28, 2025 and August 31, 2024, we had no off-balance sheet financing other than letters of credit incurred in the ordinary course of business. Refer to Note 11, Debt and Note 12, 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 February 28, 2025 and August 31, 2024, 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. During the six months ended February 28, 2025 and February 29, 2024, we maintained a series of foreign currency forward contracts to hedge a portion of our projected operating expenses in our primary currency exposures, namely the British Pound Sterling, Euro, Indian Rupee and Philippine Peso. As of February 28, 2025, the hedge maturity periods of our outstanding foreign currency forward contracts range from the third quarter of fiscal 2025 through the second quarter of fiscal 2026.

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 28, 2025 and August 31, 2024:

			February 28, 2025						August 31, 2024
(in thousands)			Local Currency Amount			Notional Contract Amount (USD)			Local Currency Amount			Notional Contract Amount (USD)
British Pound Sterling			£	43,800		$	55,323		£	41,200		$	52,372
Indian Rupee			Rs	4,325,590		50,100			Rs	4,651,351		55,200
Euro			€	33,600		36,398			€	43,800		48,183
Philippine Peso			₱	1,957,088		33,600			₱	1,850,674		32,400
Total						$	175,421					$	188,155

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, 2024. These accounting policies were consistently applied in preparing our Consolidated Financial Statements for the six months ended February 28, 2025.

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, 2024. There were no significant changes in our critical accounting estimates during the six months ended February 28, 2025.

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.