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

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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, 2025, 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, 2025.

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 ("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, artificial intelligence ("AI")-powered technologies used by global financial professionals to power their critical investment workflows. As of February 28, 2026, we had more than 9,000 clients comprised of over 241,000 investment professionals, including institutional asset managers, bankers, wealth managers, asset owners, 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 a 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 solutions, cloud-based digital solutions, and application programming interfaces ("APIs"). AI is embedded across these offerings to enhance data discovery, automate routine workflows and improve the speed and accuracy of client insights. 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 client service team.

We operate our business through three reportable segments ("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 more information on our segments.

Within each segment, we offer data, products and analytical applications by firm type: Institutional Buyside, Dealmakers, Wealth, and Market Infrastructure. In fiscal 2026, we renamed "Partnerships and CGS" to "Market Infrastructure".

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"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
"Market Infrastructure" focuses on partnerships that deliver solutions to firms in the financial services ecosystem including data, analytics and technology platform providers and includes CGS, the exclusive issuer of Committee on Uniform Security Identification Procedures ("CUSIP") and CUSIP International Number System ("CINS") identifiers globally.

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 and delivery capabilities:** 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. In addition to using our growing data catalog to drive our 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**: We believe sustainable success in enterprise AI depends on trusted, high-quality data, secure integration with models and workflows, and deep domain expertise. We continue to advance a pragmatic, open, and flexible strategy for integrating AI and natural language processing into our clients’ workflows, aiming to boost productivity by surfacing actionable insights throughout the portfolio lifecycle and automating routine research and content processing tasks. FactSet is delivering AI embedded workflow solutions for various personas including research analysts, bankers, portfolio managers, wealth advisors and engineering teams across our clients.

Fiscal 2026 Second Quarter in Review

Revenues in the second quarter of fiscal 2026 were $611.0 million, an increase of 7.1% from the comparable prior year period. The growth in revenues was driven by a 6.8% increase in organic revenues and a net increase of 0.3% from foreign currency exchange rate fluctuations. Revenues increased in all our segments, primarily in the Americas. The increase in revenues was primarily from workstations, data solutions, and portfolio management and trading 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 the definition of organic revenues and a reconciliation between revenues and organic revenues.

As of February 28, 2026, organic annual subscription value ("Organic ASV") totaled $2,449.1 million, an increase of 6.7% 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 driven by data solutions and workstations. 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 30.3% for the second quarter of fiscal 2026, compared to 32.5% in the prior year period. When expenses are expressed as a percentage of revenues, this decrease was primarily driven by higher employee compensation costs, partially offset by growth in revenues and a decrease in professional fees.

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Net income for the second quarter of fiscal 2026 was $133.1 million, a decrease of 8.1% from the prior year period. Diluted earnings per common share ("Diluted EPS") was $3.59 for the second quarter of fiscal 2026, a decrease of 4.5% compared with the prior year period. These decreases were driven by higher operating expenses and an impairment charge within Other assets, partially offset by growth in revenues. The decrease in Diluted EPS was also partially offset by lower diluted weighted average common shares outstanding.

We returned $204.0 million to our stockholders in the form of share repurchases and dividends during the three months ended February 28, 2026.

As of February 28, 2026, our client and user count was 9,101 and 241,352, respectively. Our employee headcount was 12,840 as of February 28, 2026, up 1.9% compared to the prior year. This increase was driven by net headcount growth of 2.3% in Asia Pacific, 1.1% in the Americas and 1.0% in EMEA.

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.

Organic ASV

The following table presents the calculation of Organic ASV as of February 28, 2026. 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, 2026
ASV	$	2,450.2
Impact from foreign currency movements	(1.1)

Organic ASV	$	2,449.1
Organic ASV annual growth rate(1)	6.7		%

(1)For comparability purposes, in calculating the organic ASV annual growth rate, the prior year excludes ASV from dispositions completed in the last 12 months.

Organic ASV increased in all our segments, with the majority of the increase in the Americas. The increase in Organic ASV was primarily driven by data solutions and workstations. This increase is derived from higher net sales to existing clients and, to a lesser extent, sales to new clients.

Segment ASV

As of February 28, 2026, ASV from the Americas represented 66% of total ASV and was $1,605.9 million, an increase from $1,501.1 million as of February 28, 2025. Americas Organic ASV was $1,605.8 million as of February 28, 2026, a 7.0% increase from the prior year. The Organic ASV increase in the Americas was primarily driven by workstations and data solutions.

As of February 28, 2026, ASV from EMEA represented 24% of total ASV and was $595.2 million, an increase from $571.3 million as of February 28, 2025. EMEA Organic ASV was $594.2 million as of February 28, 2026, a 4.3% increase from the prior year. The EMEA Organic ASV increase was mainly from data solutions and workstations.

As of February 28, 2026, ASV from Asia Pacific represented 10% of total ASV and was $249.1 million, an increase from $233.7 million as of February 28, 2025. Asia Pacific Organic ASV was $249.1 million as of February 28, 2026, a 10.0% increase from the prior year. The Asia Pacific Organic ASV increase was primarily driven by data solutions, workstations and middle office solutions.

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Client and User Additions

The table below presents our total clients and users:


	As of February 28,
	2026	2025	Change
Clients(1)	9,101	8,645	5.3	%
Users	241,352	219,141	10.1	%

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

Client count increased mainly due to corporate and wealth management clients and user count increased primarily due to wealth management users.

Annual ASV retention was greater than 95% of ASV as of February 28, 2026 and February 28, 2025. When expressed as a percentage of clients, annual retention was 91% as of February 28, 2026 and February 28, 2025.

Employee Headcount

As of February 28, 2026, our net employee headcount increased by 1.9% to 12,840, compared with 12,598 employees as of February 28, 2025. This net headcount growth was primarily driven by our continued investment in our centers of excellence ("COEs"), through an increase in employees based in India.

As of February 28, 2026, compared to February 28, 2025, our net headcount growth was 2.3% in Asia Pacific, 1.1% in the Americas,and 1.0% in EMEA. As of February 28, 2026, we had 8,883 employees located in Asia Pacific, 2,501 in the Americas and 1,456 in EMEA. Approximately 68% of our employees are located in our COEs.

Results of Operations

For an understanding of the significant factors that influenced our performance for the three and six months ended February 28, 2026 and February 28, 2025, 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 presented:


	Three Months Ended							Six Months Ended
	February 28,					% Change		February 28,				% Change
(in thousands, except per share data)	2026		2025		2026	2025
Revenues	$	611,019	$	570,660		7.1	%	$	1,218,640	$	1,139,327	7.0	%
Cost of services	296,742		269,604			10.1	%	584,658		528,383		10.7	%
Selling, general and administrative	129,316		115,564			11.9	%	256,950		234,117		9.8	%

Operating income	$	184,961	$	185,492		(0.3)	%	$	377,032	$	376,827	0.1	%

Net income	$	133,056	$	144,860		(8.1)	%	$	285,636	$	294,882	(3.1)	%
Diluted weighted average common shares	37,063		38,510					37,339		38,513
Diluted EPS	$	3.59	$	3.76		(4.5)	%	$	7.65	$	7.66	(0.1)	%

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Revenues

Three months ended February 28, 2026 compared with three months ended February 28, 2025

The growth in revenues of 7.1% was driven by a 6.8% increase in organic revenues, which totaled $606.2 million for the three months ended February 28, 2026, and a net increase of 0.3% from foreign currency exchange rate fluctuations. Revenues increased in all our geographic segments, primarily in the Americas. The increase in revenues was primarily driven by workstations, data solutions, and portfolio management and trading solutions.

Six months ended February 28, 2026 compared with six months ended February 28, 2025

The growth in revenues of 7.0% was driven by a 6.4% increase in organic revenues, which totaled $1,206.2 million for the six months ended February 28, 2026, a 0.3% increase from acquisition revenues, net of a decrease in revenues from the disposition of a business at the end of the prior fiscal year, and a 0.3% net increase from foreign currency exchange rate fluctuations. Revenues increased in all our segments, primarily in the Americas. The increase in revenues was mainly from workstations, data solutions, and portfolio management and trading solutions.

Revenues by Segment

The following table summarizes our revenues by segment:


	Three Months Ended								Six Months Ended
	February 28,						% Change		February 28,						% Change
(dollar amounts in thousands)	2026			2025			2026		2025
Americas	$	399,683		$	369,661		8.1	%	$	795,859		$	736,903		8.0	%
% of revenues	65.4		%	64.8		%			65.3		%	64.7		%
EMEA	$	149,120		$	143,387		4.0	%	$	298,637		$	287,112		4.0	%
% of revenues	24.4		%	25.1		%			24.5		%	25.2		%
Asia Pacific	$	62,216		$	57,612		8.0	%	$	124,144		$	115,312		7.7	%
% of revenues	10.2		%	10.1		%			10.2		%	10.1		%
Consolidated	$	611,019		$	570,660		7.1	%	$	1,218,640		$	1,139,327		7.0	%

Three months ended February 28, 2026 compared with three months ended February 28, 2025

Americas

The growth in revenues of 8.1% was driven by a 7.4% increase in organic revenues and a 0.7% increase from acquisition revenues, net of a decrease in revenues from the disposition of a business at the end of the prior fiscal year. The increase in revenues was driven by workstations, data solutions, and portfolio management and trading solutions.

EMEA

The growth in revenues of 4.0% was driven by a 4.0% increase in organic revenues and a 1.0% net increase from foreign currency exchange rate fluctuations, partially offset by a 1.0% decrease in revenues from the disposition of a business at the end of the prior fiscal year, net of acquisition revenues. The increase in revenues was mainly from data solutions and workstations, partially offset by a decrease in revenues due to the disposition.

Asia Pacific

The growth in revenues of 8.0% was driven by a 9.7% increase in organic revenues, partially offset by a 1.6% decrease in revenues from the disposition of a business at the end of the prior fiscal year, net of acquisition revenues, and a 0.1% net

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decrease from foreign currency exchange rate fluctuations. The increase in revenues was driven by data solutions, workstations and middle office solutions, partially offset by a decrease in revenues due to the disposition.

Six months ended February 28, 2026 compared with six months ended February 28, 2025

Americas

The growth in revenues of 8.0% was driven by a 6.9% increase in organic revenues and a 1.1% increase from acquisition revenues, net of a decrease in revenues from the disposition of a business at the end of the prior fiscal year. The increase in revenues was driven by workstations, data solutions, and portfolio management and trading solutions.

EMEA

The growth in revenues of 4.0% was driven by a 4.0% increase in organic revenues and a 0.8% net increase from foreign currency exchange rate fluctuations, partially offset by a 0.8% decrease in revenues from the disposition of a business at the end of the prior fiscal year, net of acquisition revenues. The increase in revenues was mainly from data solutions and workstations, partially offset by a decrease in revenues due to the disposition.

Asia Pacific

The growth in revenues of 7.7% was driven by a 9.0% increase in organic revenues and a 0.1% net increase from foreign currency exchange rate fluctuations, partially offset by a 1.4% decrease in revenues from the disposition of a business at the end of the prior fiscal year, net of acquisition revenues. The increase in revenues was driven by data solutions and workstations, partially offset by a decrease in revenues due to the disposition.

Principal Operating Expenses

Cost of services is mainly comprised of employee compensation costs and also includes expenses related to data costs, technology-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, bad debt expense, the impact from our foreign currency forward contracts and asset impairments.

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 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.

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


	Three Months Ended								Six Months Ended
	February 28,								February 28,						% Change

(dollar amounts in thousands)	2026			2025			% Change		2026			2025
Cost of services	$	296,742		$	269,604		10.1	%	$	584,658		$	528,383		10.7	%
SG&A	129,316			115,564			11.9	%	256,950			234,117			9.8	%

Total operating expenses	$	426,058		$	385,168		10.6	%	$	841,608		$	762,500		10.4	%

Operating income	$	184,961		$	185,492		(0.3)	%	$	377,032		$	376,827		0.1	%
Operating margin	30.3		%	32.5		%			30.9		%	33.1		%

Cost of Services

Three months ended February 28, 2026 compared with three months ended February 28, 2025

The increase in Cost of services was primarily due to higher employee compensation costs and, to a lesser extent, an increase in technology-related expenses and amortization of intangible assets.

Cost of services, when expressed as a percentage of revenues, was 48.6% for the three months ended February 28, 2026, an increase of 130 basis points compared with the same period a year ago. This increase was primarily due to higher employee compensation costs, technology-related expenses and amortization of intangible assets.

When expressed as a percentage of revenues:

Employee compensation costs increased by 50 basis points, primarily due to higher annual base salaries driven by annual merit increases and higher benefit costs related to the labor codes reform implemented by the Government of India effective November 21, 2025 ("India Labor Codes Reform").
Technology-related expenses increased by 40 basis points, primarily driven by higher spend in cloud-based hosting services.
Amortization of intangible assets increased by 40 basis points, mainly due to higher amortization from our capitalized internal-use software development costs.

Six months ended February 28, 2026 compared with six months ended February 28, 2025

The increase in Cost of services was primarily due to higher employee compensation costs and, to a lesser extent, an increase in amortization of intangible assets and technology-related expenses.

Cost of services, when expressed as a percentage of revenues, was 48.0% for the six months ended February 28, 2026, an increase of 160 basis points compared with the same period a year ago. This increase was primarily driven by higher amortization of intangible assets and technology-related expenses.

When expressed as a percentage of revenues:

Amortization of intangible assets increased by 70 basis points, mainly due to higher amortization from our capitalized internal-use software development costs.
Technology-related expenses increased by 60 basis points, primarily driven by higher spend in cloud-based hosting services.

Selling, General and Administrative

Three months ended February 28, 2026 compared with three months ended February 28, 2025

The increase in SG&A was primarily attributable to higher employee compensation costs. SG&A, when expressed as a percentage of revenues, was 21.2% for the three months ended February 28, 2026, an increase of 90 basis points compared with the same period a year ago. The increase was primarily driven by higher employee compensation costs, partially offset by a decrease in professional fees and a benefit from the net settlement of our foreign currency forward contracts.

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When expressed as a percentage of revenues:

Employee compensation costs increased by 160 basis points, primarily due to higher variable compensation costs, annual base salaries and an increase in stock-based compensation expense. Variable compensation costs increased mainly due to a higher bonus accrual. In addition, variable compensation costs and stock-based compensation expense increased due to the recognition, over their respective service periods, of the one-time cash awards and equity awards, respectively, granted to our Chief Executive Officer ("CEO") pursuant to the terms of his employment agreement. The increase in annual base salaries was primarily driven by annual merit increases.
Professional fees decreased by 60 basis points, mainly due to acquisition-related costs recorded in the prior year period.
SG&A decreased by 40 basis points due to a benefit from the net settlement of foreign currency forward contracts.

Six months ended February 28, 2026 compared with six months ended February 28, 2025

The increase in SG&A was primarily driven by higher employee compensation costs. SG&A, when expressed as a percentage of revenues, was 21.1% for the six months ended February 28, 2026, an increase of 50 basis points compared with the same period a year ago. This increase was primarily driven by higher employee compensation costs, partially offset by a decrease in professional fees, a benefit from the net settlement of our foreign currency forward contracts and charges related to the Sales Tax Dispute recorded in the prior year period. Refer to Part I, Item 1. Note 11, Commitments and Contingencies in the Notes to the Consolidated Financial Statements of this Quarterly Report on Form 10-Q for more information on the Sales Tax Dispute.

When expressed as a percentage of revenues:

Employee compensation costs increased by 140 basis points, mainly due to higher variable compensation costs, stock-based compensation expense and annual base salaries. Variable compensation costs and stock-based compensation expense increased mainly due to the recognition, over their respective service periods, of the one-time cash awards and equity awards, respectively, granted to our CEO pursuant to the terms of his employment agreement. In addition, variable compensation costs increased due to a higher bonus accrual. The increase in annual base salaries was primarily driven by annual merit increases.
Professional fees decreased by 50 basis points, mainly due to acquisition-related costs recorded in the prior year period.
SG&A decreased by 50 basis points due to a benefit from the net settlement of foreign currency forward contracts and charges related to the Sales Tax Dispute recorded in the prior year period.

Operating Income and Operating Margin

Three months ended February 28, 2026 compared with three months ended February 28, 2025

Operating income decreased 0.3% to $185.0 million for the three months ended February 28, 2026, compared with $185.5 million in the prior year period. This decrease was primarily driven by higher employee compensation costs and an increase in other expenses included in Cost of services, partially offset by growth in revenues.

Operating margin decreased to 30.3% for the three months ended February 28, 2026, compared with 32.5% in the prior year period. When expenses are expressed as a percentage of revenues, this decrease was primarily driven by higher employee compensation costs, partially offset by growth in revenues and a decrease in professional fees.

Six months ended February 28, 2026 compared with six months ended February 28, 2025

Operating income increased 0.1% to $377.0 million for the six months ended February 28, 2026, compared with $376.8 million in the prior year period. This increase was primarily driven by growth in revenues, partially offset by higher employee compensation costs, amortization of intangible assets and technology-related expenses.

Operating margin decreased to 30.9% for the six months ended February 28, 2026, compared with 33.1% in the prior year period. When expenses are expressed as a percentage of revenues, this decrease was primarily due to higher employee compensation costs, amortization of intangible assets and technology-related expenses, partially offset by growth in revenues.

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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						Six Months Ended
	February 28,				% Change		February 28,				% Change

(dollar amounts in thousands)	2026		2025		2026		2025
Americas	$	74,201	$	73,127	1.5	%	$	152,734	$	154,925	(1.4)	%
EMEA	66,242		70,568		(6.1)	%	134,396		139,606		(3.7)	%
Asia Pacific	44,518		41,797		6.5	%	89,902		82,296		9.2	%
Total Operating Income	$	184,961	$	185,492	(0.3)	%	$	377,032	$	376,827	0.1	%

Three months ended February 28, 2026 compared with three months ended February 28, 2025

Americas

Americas operating income increased primarily due to growth in revenues of 8.1%, partially offset by higher employee compensation costs and, to a lesser extent, an increase in technology-related expenses and amortization of intangible assets.

Employee compensation costs increased primarily due to higher variable compensation costs, stock-based compensation expense, and an increase in annual base salaries. Variable compensation costs increased mainly due to a higher bonus accrual. In addition, variable compensation costs and stock-based compensation expense increased due to the recognition, over their respective service periods, of the one-time cash awards and equity awards, respectively, granted to our CEO pursuant to the terms of his employment agreement. The increase in annual base salaries was primarily driven by annual merit increases.
Technology-related expenses increased mainly due to higher spend in cloud-based hosting services.
Amortization of intangible assets increased primarily due to higher amortization from our capitalized internal-use software development costs.

EMEA

EMEA operating income decreased primarily due to higher employee compensation costs, partially offset by growth in revenues of 4.0%. Employee compensation costs increased mainly due to higher annual base salaries, primarily driven by annual merit increases.

Asia Pacific

Asia Pacific operating income increased mainly due to growth in revenues of 8.0%, partially offset by higher employee compensation costs. Employee compensation costs were higher primarily due to an increase in benefit costs related to the India Labor Codes Reform and higher annual base salaries, driven by annual merit increases.

Six months ended February 28, 2026 compared with six months ended February 28, 2025

Americas

Americas operating income decreased primarily due to higher employee compensation costs and, to a lesser extent, an increase in amortization of intangible assets and technology-related expenses, partially offset by growth in revenues of 8.0%.

Employee compensation costs increased primarily due to higher variable compensation costs, stock-based compensation expense and an increase in annual base salaries. Variable compensation costs and stock-based compensation expense increased mainly due to the recognition, over their respective service periods, of the one-time cash awards and equity awards, respectively, granted to our CEO pursuant to the terms of his employment agreement. In addition, variable compensation costs increased due to a higher bonus accrual. The increase in annual base salaries was primarily driven by annual merit increases.

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Amortization of intangible assets increased mainly due to higher amortization from our capitalized internal-use software development costs.
Technology-related expenses increased mainly due to higher spend in cloud-based hosting services.

EMEA

EMEA operating income decreased primarily due to higher employee compensation costs, partially offset by growth in revenues of 4.0%. Employee compensation costs increased primarily due to an increase in annual base salaries driven by annual merit increases.

Asia Pacific

Asia Pacific operating income increased mainly due to growth in revenues of 7.7%, partially offset by higher employee compensation costs. Employee compensation costs increased primarily due to higher annual base salaries, driven by annual merit increases, and higher benefit costs related to the India Labor Codes Reform.

Income Taxes

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


	Three Months Ended								Six Months Ended
	February 28,								February 28,
(dollar amounts in thousands)	2026			2025			% Change		2026			2025			% Change
Income before income taxes	$	161,111		$	172,320		(6.5)	%	$	351,224		$	352,059		(0.2)	%
Provision for income taxes	$	28,055		$	27,460		2.2	%	$	65,588		$	57,177		14.7	%
Effective tax rate	17.4		%	15.9		%			18.7		%	16.2		%

We are subject to taxation in the United States ("U.S.") and various state, local and foreign jurisdictions in which we conduct our business. Our effective tax rate will vary based on, among other factors, changes in levels of foreign income, as well as other non-recurring events.

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 pretax income (or loss) attributable to, and subject to tax 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, 2026 and February 28, 2025 was 17.4% and 15.9%, respectively. The increase was primarily due to the limitation on the deductibility of executive compensation and lower excess tax benefits from stock-based compensation, partially offset by a favorable resolution of uncertain tax positions in the U.S.

Our effective tax rate for the six months ended February 28, 2026 and February 28, 2025 was 18.7% and 16.2%, respectively. The increase was primarily due to a stock-based compensation tax shortfall for the six months ended February 28, 2026, compared to an excess tax benefit for the prior year period.

For the periods presented, our effective tax rates were lower than the applicable U.S. corporate income tax rate ("U.S. tax rate") primarily due to the U.S. tax impact of foreign earnings, research and development ("R&D") tax credits, and a foreign derived intangible income ("FDII") tax deduction, partially offset by the impact of state income taxes. In addition, our effective tax rate was lower than the U.S. tax rate for the three months ended February 28, 2026 due to a favorable resolution of uncertain tax positions in the U.S., and for the three and six months ended February 28, 2025 due to excess tax benefits from stock-based compensation.

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Net Income and Diluted EPS


	Three Months Ended						Six Months Ended
	February 28,						February 28,
(in thousands, except per share data)	2026		2025		% Change		2026		2025		% Change
Net income	$	133,056	$	144,860	(8.1)	%	$	285,636	$	294,882	(3.1)	%
Diluted weighted average common shares	37,063		38,510		(3.8)	%	37,339		38,513		(3.0)	%
Diluted EPS	$	3.59	$	3.76	(4.5)	%	$	7.65	$	7.66	(0.1)	%

The decrease in Net income and Diluted EPS for the three months ended February 28, 2026, compared to the prior year period, was mainly driven by higher operating expenses and an impairment charge within Other assets, partially offset by growth in revenues. The decrease in Diluted EPS was also partially offset by lower diluted weighted average common shares outstanding.

The decrease in Net income and Diluted EPS for the six months ended February 28, 2026, compared to the respective prior year period, was primarily driven by higher operating expenses and an increase in the provision for income taxes, partially offset by growth in revenues. The decrease in Diluted EPS was also partially offset by lower diluted weighted average common shares outstanding.

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, adjusted Diluted EPS and free cash flow. Reconciliations from our financial measures calculated and presented in accordance with GAAP to these non-GAAP financial measures are shown in the tables below, and the reconciliation of free cash flow is included in the Liquidity and Capital Resources section. 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 earned prior to the first anniversary date of the acquisition. The table below provides an unaudited reconciliation of revenues to organic revenues:


	Three Months Ended						Six Months Ended
	February 28,				% Change		February 28,				% Change

(dollar amounts in thousands)	2026		2025		2026		2025
Revenues	$	611,019	$	570,660	7.1	%	$	1,218,640	$	1,139,327	7.0	%
Acquisition revenues	(3,392)		—				(10,066)		—
Disposition revenues	—		(3,117)				—		(5,767)
Currency impact	(1,451)		—				(2,369)		—
Organic revenues	$	606,176	$	567,543	6.8	%	$	1,206,205	$	1,133,560	6.4	%

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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 28,
(in thousands, except per share data)	2026		2025		% Change		2026		2025		% Change
Operating income	$	184,961	$	185,492	(0.3)%		$	377,032	$	376,827	0.1%
Intangible asset amortization	19,179		18,137				38,349		34,718
CEO compensation costs(1)	3,944		—				10,634		—
India Labor Codes Reform	2,883		—				2,883		—
Business disposition, acquisitions and related costs	2,043		9,040				4,706		12,793
Asset impairment	887		—				887		—
Sales tax dispute(2)	—		—				—		2,398
Restructuring/severance	171		—				(328)		(317)

Adjusted operating income	$	214,068	$	212,669	0.7%		$	434,163	$	426,419	1.8%
Operating margin	30.3%		32.5%				30.9%		33.1%
Adjusted operating margin(3)	35.0%		37.3%				35.6%		37.4%
Net income	$	133,056	$	144,860	(8.1)	%	$	285,636	$	294,882	(3.1)	%
Intangible asset amortization	15,121		13,425				30,428		25,815
Impairment within Other assets(4)	10,249		—				10,315		—
CEO compensation costs(1)	3,109		—				8,438		—
India Labor Codes Reform	2,273		—				2,288		—
Business disposition, acquisitions and related costs	1,611		6,691				3,734		9,512
Asset impairment	699		—				704		—
Sales Tax Dispute(2)	—		—				—		1,783
Gain on sale of investments	—		—				(5,160)		—
Restructuring/severance	135		—				(261)		(236)
Non-operating income from business disposition	(130)		—				(428)		—
Income tax items	(852)		—				(852)		1,351
Adjusted net income(5)	$	165,271	$	164,976	0.2	%	$	334,842	$	333,107	0.5	%
Net income	$	133,056	$	144,860	(8.1)	%	$	285,636	$	294,882	(3.1)	%
Interest expense	13,062		13,916				26,447		28,316
Income taxes	28,055		27,460				65,588		57,177
Depreciation and amortization expense	43,690		38,410				87,838		74,127
EBITDA	$	217,863	$	224,646	(3.0)	%	$	465,509	$	454,502	2.4	%
Non-recurring non-cash expenses(6)	15,331		—				16,521		—

Adjusted EBITDA	$	233,194	$	224,646	3.8	%	$	482,030	$	454,502	6.1	%
Diluted EPS	$	3.59	$	3.76	(4.5)	%	$	7.65	$	7.66	(0.1)	%
Intangible asset amortization	0.41		0.35				0.81		0.66
Impairment within Other assets(4)	0.28		—				0.28		—
CEO compensation costs(1)	0.08		—				0.23		—
India Labor Codes Reform	0.06		—				0.06		—
Business disposition, acquisitions and related costs	0.04		0.17				0.10		0.25
Asset impairment	0.02		—				0.02		—

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Gain on sale of investments	—		—				(0.14)		—
Restructuring/severance	0.00		—				(0.01)		(0.01)
Sales Tax Dispute(2)	—		—				—		0.05
Non-operating income from business disposition	0.00		—				(0.01)		—
Income tax items	(0.02)		—				(0.02)		0.04
Adjusted Diluted EPS(5)	$	4.46	$	4.28	4.2	%	$	8.97	$	8.65	3.7	%
Weighted average common shares (diluted)	37,063		38,510				37,339		38,513

(1)Related to the recognition of one-time make-whole cash and equity awards issued to our CEO, with the majority of the awards recognized over their respective service periods.

(2)Related to a resolved matter with the Massachusetts Department of Revenue. Refer to 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 further discussion on this matter.

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

(4)Related to the impairment of an equity investment.

(5)For purposes of calculating Adjusted net income and Adjusted diluted EPS, all adjustments for the three months ended February 28, 2026 and February 28, 2025 were taxed at an adjusted tax rate of 21.2% and 26.0%, respectively. The six months ended February 28, 2026 and February 28, 2025, were taxed at an adjusted tax rate of 20.7% and 25.6%, respectively.

(6)Primarily related to the impairment of an equity investment.

Liquidity and Capital Resources

As of February 28, 2026, Cash and cash equivalents were $268.3 million and restricted cash was $9.1 million, compared with Cash and cash equivalents of $337.7 million and restricted cash of $14.0 million as of August 31, 2025. Refer to Summary of Cash Flows, within this section below, for more information on cash flows during the six months ended February 28, 2026 and February 28, 2025.

Our cash and cash equivalents as of February 28, 2026 are held in numerous locations throughout the world, with $115.7 million in EMEA (with the largest balance held in the UK), $90.0 million in the Americas (with the largest balance held in the U.S.) and the remaining $62.6 million in Asia Pacific (with the largest balances held in the Philippines and India).

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.

Sources of Liquidity

Debt and Swap Agreements

In addition to the discussion below, 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 more information on our outstanding borrowings and swap agreements.

2025 Credit Agreement

On April 8, 2025, we entered into a credit agreement (the "2025 Credit Agreement") and borrowed $500.0 million under a senior unsecured term loan credit facility (the "2025 Term Facility"). We used the proceeds from the 2025 Term Facility borrowing to repay the outstanding balance under the 2022 Revolving Facility (as defined below). The 2025 Credit Agreement also provides for a $1.0 billion senior unsecured revolving credit facility (the "2025 Revolving Facility"). The 2025 Revolving Facility, together with the 2025 Term Facility, are referred to as the "2025 Credit Facilities".

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The 2025 Revolving Facility provides for up to $100.0 million in the form of letters of credit, and up to $100.0 million in the form of swingline loans. We may seek additional commitments of up to $1.0 billion under the 2025 Revolving Facility from lenders or other financial institutions. The 2025 Term Facility matures on April 8, 2028, and the 2025 Revolving Facility matures on April 8, 2030.

The 2025 Term Facility is subject to scheduled quarterly principal payments, commencing on August 31, 2025, with each quarterly principal payment equal to 1.25% of the original principal amount of the 2025 Term Facility. The 2025 Credit Facilities are not otherwise subject to any other mandatory repayments. We may voluntarily prepay loans under the 2025 Credit Facilities at any time without premium or penalty. Prepayments of the 2025 Term Facility shall be applied to reduce the subsequent scheduled quarterly principal payments in direct order of maturity. We have satisfied all scheduled quarterly principal payments through maturity.

As of February 28, 2026, our outstanding debt under the 2025 Term Facility was $375.0 million and there were no borrowings under the 2025 Revolving Facility.

From the borrowing date through February 28, 2026, the outstanding borrowings under the 2025 Credit Facilities bore interest at a rate equal to the applicable one-month Term Secured Overnight Financing Rate ("SOFR") plus a 0.975% spread (comprised of a 0.875% interest rate margin, based on a pricing grid determined by reference to our senior unsecured non-credit enhanced long-term debt rating and our total leverage ratio, plus a 0.1% credit spread adjustment).

We pay a commitment fee on the daily unused amount of the 2025 Revolving Facility using a pricing grid based on our senior unsecured non-credit enhanced long-term debt rating and our total leverage ratio. The commitment fee remained consistent at 0.1% through February 28, 2026.

The 2025 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 the last day of each fiscal quarter (subject to an increase to 4.25 to 1.00 for five consecutive fiscal quarters in connection with certain material acquisitions). We were in compliance with all covenants and requirements of the 2025 Credit Agreement as of February 28, 2026.

2022 Credit Agreement

On March 1, 2022, we entered into a credit agreement (the "2022 Credit Agreement") and borrowed $1.0 billion under a senior unsecured term loan credit facility (the "2022 Term Facility") and $250.0 million of the available $500.0 million under a 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". On January 31, 2025, we entered into a joinder agreement to our 2022 Credit Agreement pursuant to which commitments under the 2022 Revolving Facility were increased by $100.0 million, to a total of $600.0 million. All other terms of the 2022 Credit Agreement remained unchanged.

Borrowings previously outstanding under the 2022 Credit Facilities bore interest at a rate equal to the applicable one-month Term SOFR plus a spread using a debt leverage pricing grid and a credit spread adjustment (with total spread ranging from 0.975% to 1.1% over the term of the debt). The 2022 Credit Agreement was terminated on April 8, 2025, concurrent with entering into the 2025 Credit Agreement.

Senior Notes

On March 1, 2022, we completed a public offering issuing $500.0 million of 2.900% Senior Notes due March 1, 2027 (the "2027 Notes") and $500.0 million 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.

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Interest Rate Swap Agreements

We may leverage interest rate swap agreements to manage our floating interest rate exposure with a fixed interest rate. Our interest rate swap agreements are designated as cash flow hedges at inception.

2025 Swap Agreement

On April 24, 2025, we entered into an interest rate swap agreement ("2025 Swap Agreement") with a notional amount of $200.0 million to hedge a portion of our outstanding floating SOFR debt with a fixed interest rate of 4.086%. The notional amount of the 2025 Swap Agreement declined by $50.0 million on a quarterly basis beginning May 31, 2025. The 2025 Swap Agreement matured on February 28, 2026.

2024 Swap Agreement

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

Uses of Liquidity

Returning Value to Stockholders

We returned $385.3 million and $192.0 million to our stockholders in the form of share repurchases and dividends during the six months ended February 28, 2026 and February 28, 2025, respectively. Over the last 12 months, we returned $653.8 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 six months ended February 28, 2026 and February 28, 2025, we repurchased 1,129,850 shares for $302.9 million and 241,189 shares for $113.1 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 June 17, 2025, our Board of Directors authorized up to $400 million for share repurchases on or after September 1, 2025. On December 16, 2025, our Board of Directors approved an additional $600 million in share repurchase authority, which is available immediately with no expiration date. The additional authorization also removed the expiration date from the June 17, 2025 authorization. As of February 28, 2026, $697.1 million remained available 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, 2026 and February 28, 2025, we paid dividends of $82.4 million and $78.8 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, 2026, capital expenditures increased by 14.6% to $56.8 million, compared with $49.6 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 and an increase in leasehold improvements related to the build-out of our London office, partially offset by a decrease in purchases of network-related equipment.

Acquisitions

Our acquisitions with the most significant cash flows during fiscal 2025 through the second quarter of fiscal 2026 included Liquid Holdings, LLC ("LiquidityBook") and Platform Group Limited ("Irwin"). Refer to Note 5, 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 on these acquisitions.

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LiquidityBook

On February 7, 2025, we completed the acquisition of LiquidityBook for a purchase price of $243.2 million, net of cash acquired, and inclusive of working capital adjustments. The purchase price included 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. We finalized the purchase accounting for the LiquidityBook acquisition during the second quarter of fiscal 2026.

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.

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 working capital adjustments. The purchase price included 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. We finalized the purchase accounting for the Irwin acquisition during the third quarter of fiscal 2025.

Irwin is a leading investor relations and capital markets platform for public companies and their advisors. This acquisition builds on a 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.

Contractual Obligations

Purchase obligations represent our legally-binding agreements to purchase fixed or minimum quantities at determinable prices. As of August 31, 2025, we had total purchase obligations with suppliers and vendors of approximately $352 million. Our total purchase obligations as of August 31, 2025 primarily related to hosting services, acquisition of data and, to a lesser extent, third-party software providers. During the second quarter of fiscal 2026, we entered into a multi-year contract renewal with a supplier, resulting in total purchase commitments of approximately $62.5 million.

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 our 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,
(dollar amounts in thousands)	2026		2025		$ Change
Net cash provided by operating activities	$	332,972	$	260,327	$	72,645
Net cash provided by (used in) investing activities	(21,898)		(338,124)		316,226
Net cash provided by (used in) financing activities	(386,656)		(45,542)		(341,114)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	1,299		(8,048)		9,347
Net increase (decrease) in cash, cash equivalents and restricted cash	$	(74,283)	$	(131,387)	$	57,104

Operating

For the six months ended February 28, 2026, net cash provided by operating activities was $333.0 million, which included net income of $285.6 million, non-cash charges of $154.2 million and a net cash outflow of $106.8 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 timing of client collections and our annual variable compensation payment.

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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 the Sales Tax Dispute, timing of income tax and vendor payments, and timing of client collections.

Investing

For the six months ended February 28, 2026, net cash used in investing activities was $21.9 million. The cash used in investing activities primarily consisted of $56.8 million of capital expenditures mainly due to the capitalization of internal-use software development costs, partially offset by $36.1 million in proceeds from the sale of certain equity investments.

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.

Financing

For the six months ended February 28, 2026, net cash used in financing activities was $386.7 million, consisting mainly of $302.9 million of share repurchases and $82.4 million of dividend payments.

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.

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 consolidated net income and net cash provided by operating activities, but should not be used as a substitute for these key measures of our performance and liquidity.

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


	Six Months Ended
	February 28,
(dollar amounts in thousands)	2026		2025		$ Change
Net cash provided by operating activities	$	332,972	$	260,327	$	72,645
Less: purchases of property, equipment, leasehold improvements and capitalized internal-use software	(56,844)		(49,610)		(7,234)
Free cash flow	$	276,128	$	210,717	$	65,411

Off-Balance Sheet Arrangements

As of February 28, 2026 and August 31, 2025, 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 available and outstanding letters of credit.

As of February 28, 2026 and August 31, 2025, 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.

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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, 2026 and February 28, 2025, 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, 2026, the hedge maturity periods of our outstanding foreign currency forward contracts range from the third quarter of fiscal 2026 through the second quarter of fiscal 2027.

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 judgments 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, 2025. These accounting policies were consistently applied in preparing our Consolidated Financial Statements for the six months ended February 28, 2026.

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, 2025. There were no significant changes in our critical accounting estimates during the six months ended February 28, 2026.

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.

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