FICO 10-Q: Smart Summary

• Business description: Fair Isaac Corporation (NYSE: FICO) is a global analytics software company founded in 1956, providing software and the FICO® Score to thousands of businesses in more than 80 countries across banking, insurance, retail, telecommunications, automotive lending, and other industries, as well as to consumers through online services for credit score access.
• Pending standard — income tax disclosures: ASU 2023-09 (issued December 2023) requires disaggregated effective tax rate reconciliation and income tax paid disclosures; effective for FICO beginning with the fiscal year ending September 30, 2026 — evaluation of impact is ongoing.
• Pending standard — expense disaggregation: ASU 2024-03 (issued November 2024) requires footnote-level disaggregation of income statement expenses including employee compensation, depreciation, and intangible asset amortization; effective for FICO's annual periods beginning with the fiscal year ending September 30, 2028 and interim periods beginning October 1, 2028 — evaluation of impact is ongoing.
• Pending standard — internal-use software: ASU 2025-06 (issued September 2025) replaces prescriptive software development stage guidance with a two-condition capitalization model and clarifies disclosure requirements; effective for FICO beginning October 1, 2028, with early adoption permitted — evaluation of impact is ongoing.

• Hierarchy coverage: Only Level 1 assets and liabilities were held as of March 31, 2026 and September 30, 2025; no Level 2 or Level 3 assets or liabilities existed at either date, and there were no transfers between levels during the quarters and six-month periods ended March 31, 2026 and 2025.
• Marketable securities: Comprised of securities held under a non-qualified deferred compensation plan for certain officers and senior management employees (distributed upon separation from service or at a specific date while still employed), measured at $53M as of March 31, 2026 and $54.6M as of September 30, 2025, included in marketable securities on the condensed consolidated balance sheets.
• Cash equivalents: A Level 1 asset of $6,000 was included as of September 30, 2025 (within cash and cash equivalents); no equivalent item was present as of March 31, 2026. Cash deposits of $134.1M at September 30, 2025 are excluded from the fair value table.
• Senior notes: Carried as Level 1 liabilities at both period ends; fair value details are disclosed in Note 6.

• Instruments used: Foreign currency forward contracts (not designated as hedges) are used to offset exposures in the British pound, Euro, and Singapore dollar; contracts are short-term with average maturities at inception of less than three months, and are marked to market through other expense, net.
• Fair value at period end: All outstanding forward contracts were entered into on March 31, 2026 and September 30, 2025, so fair value was $0 on each of those dates.
• Gains (losses) on forward contracts: Losses of ($409,000) and ($575,000) were recorded in other expense, net for the quarter and six months ended March 31, 2026, compared to gains of $502,000 and losses of ($882,000) for the same periods in 2025.

Foreign currency impact: The only movement in the six months ended March 31, 2026 was a foreign currency translation adjustment of ($1.9M in the Software segment, reducing total goodwill from $783.3M to $781.4M. Impairment: As of March 31, 2026, there was no accumulated goodwill impairment loss.

• Property and equipment, net: Total property and equipment, net increased to $79.6M at March 31, 2026 from $67.7M at September 30, 2025, driven by growth in internal-use software from $47.2M to $64.4M, while gross property and equipment declined slightly from $66.1M to $64.6M; accumulated depreciation and amortization was ($49.4M) versus ($45.6M).
• Other accrued liabilities: Total other accrued liabilities declined to $98.5M at March 31, 2026 from $114.6M at September 30, 2025, with interest payable falling from $53.5M to $46.7M and other accrued liabilities falling from $61.1M to $51.8M.

• Revolving credit facility: $1B unsecured revolving line of credit matures May 13, 2030; as of March 31, 2026, $265M was outstanding at a weighted-average interest rate of 4.931%, with the company in compliance with all financial covenants, including a maximum consolidated leverage ratio of 3.5 to 1.0 (subject to step-up to 4.0 to 1.0 following certain permitted acquisitions).
• 2026 Senior Notes issuance and 2018 Senior Notes repayment: On March 20, 2026, the company issued $1B of senior notes at 6.25% per annum, maturing September 15, 2034; proceeds were used to repay in full the $400M 2018 Senior Notes (5.25% per annum) on March 26, 2026, prior to their May 15, 2026 maturity.
• Existing senior notes: The 2019 and 2021 Senior Notes total $900M at 4.00% per annum, maturing June 15, 2028; the 2025 Senior Notes are $1.5B at 6.00% per annum, maturing May 15, 2033; all indenture covenants were in compliance as of March 31, 2026.
• Fair value vs. carrying value: As of March 31, 2026, aggregate face value of Senior Notes was $3.4B against a fair value of $3.3B, reflecting Senior Notes trading below par across all outstanding issuances.

• Geographic mix shift: Americas accounted for 90% of total revenue in the quarter ended March 31, 2026 (up from 86% in the prior-year quarter), driven by Scores segment strength; U.S. revenue alone was $565.9M in the quarter ended March 31, 2026 versus $383.5M in the quarter ended March 31, 2025, and $967.8M versus $714.5M for the respective six-month periods.
• Customer concentration: The three major consumer reporting agencies — TransUnion, Equifax, and Experian — collectively generated 64% of total revenues in the quarter ended March 31, 2026 (vs. 52% in the quarter ended March 31, 2025) and 58% vs. 49% for the respective six-month periods; all three individually exceeded 10% of total revenues in each period.
• Software segment mix: SaaS software grew to 61% of Software segment revenue in both the quarter and six months ended March 31, 2026 (vs. 55% in the prior-year periods), while platform software rose to 44% of Software revenue in the quarter (vs. 31%) and 42% for the six months (vs. 30%); software recognized over the contract term represented 88% of Software revenue in the quarter (vs. 86%).
• Deferred revenue and remaining obligations: Deferred revenue declined to $185M at March 31, 2026 (current portion $183.2M, long-term $1.8M) from $189.2M at September 30, 2025; remaining performance obligations were $717.7M as of March 31, 2026 (vs. $655.7M as of September 30, 2025), with approximately 50% expected to be recognized over the next 14 months.
• Receivables: Net receivables grew to $648.4M at March 31, 2026 from $566.4M at September 30, 2025, with unbilled receivables of $300.8M (vs. $246.6M); at March 31, 2026, three customers accounted for 10% or more of total consolidated receivables.

• Effective tax rate: The ETR was 25.7% and 23.7% for the quarters ended March 31, 2026 and 2025, respectively, and 22.8% and 13.2% for the six months ended March 31, 2026 and 2025, respectively; the interim rate is based on estimates of the full fiscal year ETR and can be affected by quarter-specific adjustments.
• OBBBA impact: The One Big Beautiful Bill Act (OBBBA) of 2025, signed July 4, 2025, introduced immediate expensing of domestic research and experimental (R&E) expenditures and an election to accelerate unamortized domestic R&E expenditures over a one- or two-year period; both provisions are effective for FICO in fiscal 2026 and their impacts were reflected in results for the six months ended March 31, 2026.
• Unrecognized tax benefits: The total unrecognized tax benefit was $21.1M at March 31, 2026, up from $19.5M at September 30, 2025; accrued interest on these uncertain positions was $2.5M and $1.9M at the same respective dates.

Anti-dilutive awards: Anti-dilutive share-based awards excluded from the calculations of diluted EPS were immaterial during the periods presented.

• Segment structure: The company reports 2 segments — Scores and Software. Scores includes B2B scoring solutions and B2C offerings (including myFICO.com subscriptions); Software includes pre-configured analytic and decision management solutions, FICO Platform, stand-alone analytic and decisioning software, and associated professional services, available as SaaS or on-premises.
• CODM evaluation basis: The Chief Executive Officer evaluates segments on segment revenues, total segment operating expenses, and segment operating income. Broad-based incentive expense, share-based compensation, restructuring and acquisition-related expense, amortization expense, and certain other corporate charges are NOT allocated to segments. Assets and capital expenditures are also not allocated to segments; depreciation and amortization is allocated from internal cost centers.
• Unallocated reconciling items (Quarter Ended March 31, 2026): Unallocated corporate expenses were ($47.3M), unallocated share-based compensation expense was ($45.3M), unallocated interest expense, net was ($44.6M), and unallocated other expense, net was ($1.9M), bridging segment operating income of $495.1M to income before income taxes of $356M.
• Unallocated reconciling items (Six Months Ended March 31, 2026): Unallocated corporate expenses were ($95.4M), unallocated share-based compensation expense was ($89.6M), unallocated interest expense, net was ($86.6M), and unallocated other expense, net was ($2M), bridging segment operating income of $821.5M to income before income taxes of $548M.

• Business segments: FICO operates 2 segments — Scores and Software — serving thousands of businesses in more than 80 countries, with most leading banks and credit card issuers among its clients, alongside insurers, retailers, telecommunications providers, automotive lenders, consumer reporting agencies, and public agencies.
• Scores segment: Covers B2B scoring solutions (predictive credit and other scores integrated into client transaction streams and decision-making processes) and B2C scoring solutions including myFICO.com subscription offerings; the FICO® Score is described as the standard measure of consumer credit risk in the U.S.
• Software segment: Includes pre-configured analytic and decision management solutions for account origination, customer management, customer engagement, fraud detection, and marketing, plus associated professional services; also includes FICO® Platform (a modular SaaS/on-premises offering for advanced analytic and decision use cases) and stand-alone analytic and decisioning software.

• Total revenues: $691.7 million in the quarter ended March 31, 2026, a 39% increase from the quarter ended March 31, 2025; $1.2 billion in the six months ended March 31, 2026, a 28% increase from the six months ended March 31, 2025.
• Scores segment: Revenues of $475.0 million in the quarter ended March 31, 2026, a 60% increase from the quarter ended March 31, 2025; $779.5 million in the six months ended March 31, 2026, a 46% increase from the six months ended March 31, 2025; Software segment Annual Recurring Revenue was $788.8 million as of March 31, 2026, a 10% increase from March 31, 2025, with a Dollar-Based Net Retention Rate of 109%.
• Profitability: Operating income was $402.5 million in the quarter ended March 31, 2026, a 64% increase from the quarter ended March 31, 2025; net income was $264.5 million, a 63% increase; diluted EPS was $11.14, a 69% increase; for the six months ended March 31, 2026, operating income was $636.5 million (+50%), net income was $422.8 million (+34%), and diluted EPS was $17.73 (+39%).
• Capital structure and returns: Cash flows from operating activities were $397.4 million for the six months ended March 31, 2026 vs. $268.9 million in the prior-year period; cash and cash equivalents were $219.4 million as of March 31, 2026 vs. $134.1 million as of September 30, 2025; the company issued $1.0 billion of senior notes in March 2026, using proceeds to pay down the revolving credit line and repay $400 million of senior notes due May 2026, bringing total debt to $3.6 billion vs. $3.1 billion as of September 30, 2025; share repurchases were $611.3 million in the quarter ended March 31, 2026 vs. $207.0 million in the prior-year quarter, and $773.9 million in the six months ended March 31, 2026 vs. $366.8 million in the prior-year period.

• Definition and scope: ACV Bookings measures the average annualized value of software contracts signed in the current period that generate on-premises and SaaS software revenue; only contracts with an initial term of at least 24 months are included, while perpetual licenses and non-recurring software revenues are excluded, and renewals count only the incremental annual revenue over the current contract.
• Usage-based fee estimates: Approximately 20% of total ACV Bookings on an annualized basis relates to estimates of future usage-based fees; historically, differences between initial estimates and actual results have not been material.
• Period-over-period growth: Total on-premises and SaaS software ACV Bookings grew from $21.8 million to $28.3 million for the quarter ended March 31 (2025 vs. 2026) and from $43.0 million to $66.1 million for the six months ended March 31 (2025 vs. 2026).

• ARR definition: ARR is defined as the annualized revenue run-rate of on-premises and SaaS software agreements within a quarterly reporting period, calculated as quarterly recurring revenue run-rate multiplied by four; perpetual licenses and other non-recurring components are excluded. The metric is used to mitigate variability caused by ASC 606's point-in-time recognition of a portion of on-premises software subscription revenue.
• Total ARR growth: Total ARR reached $788.8 million as of March 31, 2026, up 10% year over year, accelerating from the 3%–5% YoY growth range seen across the prior three quarters.
• Platform ARR momentum: Platform ARR grew 49% YoY to $348.8 million as of March 31, 2026, representing 44% of total ARR, up from 33% a year earlier at March 31, 2025.
• Non-platform ARR decline: Non-platform ARR contracted 8% YoY to $440.0 million as of March 31, 2026, continuing a trend of declines that began in the March 31, 2025 quarter, and its share of total ARR fell to 56% from 67% a year earlier.

• Definition: DBNRR compares ARR from a cohort of customers at the end of the prior comparable quarter (base ARR) to ARR from that same cohort at the end of the current quarter (retained ARR), capturing upsell, price increases, and usage-based fee increases as positives, and attrition, price decreases, and usage-based fee decreases as negatives; new customer sales are excluded.
• Platform DBNRR trend: Platform DBNRR has risen sharply over the past three quarters — from 112% at December 31, 2025 to 136% at March 31, 2026 — recovering well above its June 30, 2024 level of 124%.
• Non-platform DBNRR trend: Non-platform DBNRR has trended downward from 101% at June 30, 2024 to 90% at March 31, 2026, dipping below 100% beginning September 30, 2024 and remaining there through the current period.
• Total DBNRR: Total DBNRR reached 109% as of March 31, 2026, up from 103% at December 31, 2025 and the highest level recorded across the eight periods shown, compared to a low of 102% at March 31, 2025 and September 30, 2025.

• Scores segment growth: Scores revenue grew 60% to $474,973 thousand in the quarter ended March 31, 2026 (from $297,039 thousand), and 46% to $779,507 thousand in the six months ended March 31, 2026 (from $532,714 thousand), expanding its share of total revenues from 60% to 69% quarter-over-quarter and from 57% to 65% on a six-month basis.
• Software segment growth: Software revenue grew 7% to $216,704 thousand in the quarter ended March 31, 2026 (from $201,696 thousand), and 4% to $424,129 thousand in the six months ended March 31, 2026 (from $405,989 thousand), with its share of total revenues declining from 40% to 31% quarter-over-quarter and from 43% to 35% on a six-month basis.
• Total revenue: Total revenues grew 39% to $691,677 thousand for the quarter ended March 31, 2026, and 28% to $1,203,636 thousand for the six months ended March 31, 2026.

• Scores segment revenue: Revenue increased $177.9 million, driven by a $175.1 million rise in business-to-business scores revenue (attributable to higher unit price and increased volume of mortgage originations) and a $2.8 million rise in business-to-consumer scores revenue (attributable to higher royalties from scores sold indirectly through credit reporting agencies).

• Revenue drivers: Software segment revenues increased $15.0 million (7%), driven by a $15.4 million increase in on-premises and SaaS software revenue, partially offset by a $0.4 million decrease in professional services revenue; the on-premises and SaaS growth was primarily attributable to an increase in revenue recognized over time largely driven by SaaS growth for Platform products.

• Scores segment revenue: Revenue grew $246.8 million total, driven by a $241.4 million increase in business-to-business scores revenue and a $5.4 million increase in business-to-consumer revenue.
• B2B drivers: The business-to-business increase was primarily attributable to a higher unit price and an increase in volume of mortgage originations.
• B2C drivers: The business-to-consumer increase was primarily attributable to an increase in royalties derived from scores sold indirectly to consumers through credit reporting agencies.

• Revenue drivers: Software segment revenues increased $18,140 thousand (4%) for the six months ended March 31, 2026, driven by a $17,615 thousand (5%) rise in on-premises and SaaS software revenue and a $525 thousand (1%) rise in professional services revenue.
• SaaS growth: The increase in on-premises and SaaS software revenue was primarily attributable to an increase in revenue recognized over time, largely driven by SaaS growth for Platform products.

• Revenue growth: Revenues grew 39% to $691,677 thousand in the quarter ended March 31, 2026 (from $498,735 thousand) and 28% to $1,203,636 thousand in the six months ended March 31, 2026 (from $938,703 thousand).
• Operating leverage: Total operating expenses rose only 14% quarter-over-quarter to $289,212 thousand and 10% year-to-date to $567,122 thousand, causing operating income to expand 64% to $402,465 thousand (58% of revenues) in the quarter and 50% to $636,514 thousand (53% of revenues) in the six months; cost of revenues fell as a share of revenues from 18% to 13% (quarter) and 19% to 15% (six months).
• Interest & tax headwinds: Net interest expense rose 42% to $44,579 thousand in the quarter and 42% to $86,585 thousand in the six months; the provision for income taxes surged 82% to $91,571 thousand in the quarter and 161% to $125,129 thousand in the six months, compressing net income margin to 38% (quarter) and 35% (six months) despite strong operating income growth.
• Headcount: Employees at quarter end increased by 40 to 3,758 from 3,718 a year earlier.

• Cost composition: Cost of revenues consists primarily of employee salaries, incentives, and benefits for personnel directly involved in delivering software products, operating SaaS infrastructure, and providing support, implementation and consulting services; overhead, facilities and data center costs; software royalty fees; consumer reporting agency data and processing services; third-party hosting fees; travel costs; and outside services.
• Quarterly change: Cost of revenues rose $3.6 million quarter-over-prior year quarter, driven by a $3.0 million increase in infrastructure and facilities costs (primarily third-party data center hosting) and a $0.6 million increase in personnel, labor and other costs; as a % of revenues, cost of revenues fell to 13% in the quarter ended March 31, 2026 from 18% in the quarter ended March 31, 2025, primarily due to increased sales of higher-margin Scores products.
• Year-to-date change: Cost of revenues rose $3.5 million year-to-date, with a $4.7 million increase in infrastructure and facilities costs (primarily third-party data center hosting) partially offset by a $1.2 million decrease in direct materials and other costs (primarily decreased telecommunications costs supporting FICO® Customer Communications Services revenue); as a % of revenues, cost of revenues fell to 15% in the six months ended March 31, 2026 from 19% in the six months ended March 31, 2025, again driven by increased sales of higher-margin Scores products.

• R&D expense composition: Research and development expenses include personnel and related overhead costs incurred in developing new products and services, including research of mathematical and statistical models and development of new versions of Software products.
• Quarterly drivers: R&D expenses rose $8.9 million quarter-over-prior year quarter, driven by a $6.0 million increase in infrastructure and facilities costs (primarily third-party data center hosting) and a $4.8 million increase in personnel and labor costs (increased headcount and incentive costs), partially offset by a $1.9 million decrease in outside services and other costs (decreased third-party contractor costs); as a % of revenues, R&D decreased to 8% in the quarter ended March 31, 2026 from 9% in the quarter ended March 31, 2025.
• Year-to-date drivers: R&D expenses rose $13.6 million year-to-date, driven by a $10.0 million increase in infrastructure and facilities costs and a $7.2 million increase in personnel and labor costs (increased headcount, share-based compensation, and incentive costs), partially offset by a $3.6 million decrease in outside services and other costs; as a % of revenues, R&D decreased to 9% for the year-to-date period ended March 31, 2026 from 10% for the comparable prior-year period.

• SG&A composition: SG&A expenses consist principally of employee salaries, incentives, commissions and benefits; travel costs; overhead costs; advertising and other promotional expenses; corporate facilities expenses; legal expenses; and business development expenses.
• Quarterly drivers: SG&A rose $23.7 million quarter-over-prior year quarter, driven by a $15.8 million increase in personnel and labor costs (higher headcount, share-based compensation, incentive costs, and commission costs) and a $7.9 million increase in marketing and other costs (advertising and other promotional costs); as a % of revenues, SG&A decreased to 21% for the quarter ended March 31, 2026 from 24% for the quarter ended March 31, 2025.
• Year-to-date drivers: SG&A rose $36.5 million for the six months ended March 31, 2026 versus the prior-year period, driven by a $24.8 million increase in personnel and labor costs (higher headcount, share-based compensation, and commission costs) and an $11.7 million increase in marketing and other costs (advertising and other promotional costs, third-party consulting costs, and third-party contractor costs); as a % of revenues, SG&A decreased to 23% for the six months ended March 31, 2026 from 26% for the six months ended March 31, 2025.

• Components: Interest expense includes interest on senior notes issued in March 2026, May 2025, December 2021, December 2019, and May 2018, plus interest and credit agreement fees on the revolving line of credit and, for the prior year quarter and prior year-to-date period, term loans; interest expense is netted with interest income derived primarily from investment of funds in excess of immediate operating requirements.
• Quarter-over-quarter change: Net interest expense increased $13.2 million versus the prior year quarter, primarily attributable to the $1.5 billion of 2025 Senior Notes and the $1.0 billion of 2026 Senior Notes, partially offset by a lower average outstanding balance and lower average interest rate on borrowings under the credit agreement during the quarter ended March 31, 2026.
• Year-to-date change: Interest expense increased $25.7 million versus the prior year-to-date period, driven by the same $1.5 billion of 2025 Senior Notes and $1.0 billion of 2026 Senior Notes, partially offset by a lower average outstanding balance and lower average interest rate on borrowings under the credit agreement during the six months ended March 31, 2026.

• Composition: Other expense, net consists primarily of unrealized and realized gains/losses on marketable securities classified as trading securities, foreign-currency remeasurement gains/losses on receivables and cash balances (net of offsetting foreign currency forward contracts), and other non-operating items.
• Quarter-over-prior year quarter: Other expense, net increased $0.6 million, primarily driven by a decrease in foreign exchange rate gains from remeasurement of foreign-currency-denominated receivables and cash balances into functional currencies at period-end market rates.
• Year-to-date period-over-period: Other expense, net increased $0.8 million, primarily driven by an increase in foreign exchange rate losses from the same remeasurement process.

• Effective tax rate: The effective income tax rate was 25.7% for the quarter ended March 31, 2026 (vs. 23.7% in the prior-year quarter) and 22.8% for the six months ended March 31, 2026 (vs. 13.2% in the prior-year six-month period); interim rates are based on estimates of the full fiscal year effective tax rate and can be affected by quarter-of-resolution adjustments.
• Excess tax benefits: Both periods were favorably impacted by excess tax benefits related to stock awards, though the benefit is dependent on share-based compensation grants and the stock price at vesting relative to grant-date fair value; a decrease in stock price for awards vesting in December 2025 reduced the net excess tax benefit for the six months ended March 31, 2026.

• Scores segment driver: Quarter-over-quarter Scores segment operating income grew 63% to $432,476 thousand (91% margin vs. 89% prior year), driven by a $177.9 million increase in segment revenue attributed to higher business-to-business scores revenue from a higher unit price and an increase in volume of mortgage originations, partially offset by a $10.4 million increase in segment operating expenses.
• Software segment pressure: Software segment operating income declined 1% to $62,594 thousand (29% margin vs. 31% prior year) as a $15.7 million increase in segment operating expenses — attributed to higher third-party data center hosting costs and a decrease in sales of higher-margin software recognized at a point in time — more than offset a $15.0 million increase in segment revenue.
• Unallocated items: Unallocated corporate expenses rose 16% to $47,295 thousand and unallocated share-based compensation rose 9% to $45,310 thousand in the quarter, together reducing total segment operating income to reported operating income of $402,465 thousand.
• Year-to-date: Six-month operating income increased 50% to $636,514 thousand, with Scores segment operating income up 49% to $700,329 thousand (90% margin) and Software segment operating income down 2% to $121,208 thousand (29% margin), while unallocated corporate expenses and share-based compensation increased 12% and 9%, respectively.

• Liquidity position: As of March 31, 2026, cash and cash equivalents were $219.4 million, including $104.0 million held by foreign subsidiaries, supplemented by a $1.0 billion revolving line of credit; management believes these resources plus anticipated operating cash flows will be sufficient to fund working and other capital requirements for at least the next 12 months and the foreseeable future, with no significant debt obligations maturing over the next 12 months.
• Repatriation: For jurisdictions outside the U.S. where cash may be repatriated, the company expects the net tax impact of any repatriations to be immaterial to overall tax liability.
• Capital allocation flexibility: The company may use available cash for technology or business acquisitions, strategic investments, or may raise additional funds through debt or equity issuance if needed, though management notes additional financing might not be available on favorable terms or at all.

• Operating cash flow: Net cash provided by operating activities increased to $397.4 million during the six months ended March 31, 2026 from $268.9 million during the six months ended March 31, 2025, a $128.5 million increase.
• Drivers of increase: The $128.5 million increase was attributable to a $107.7 million increase in net income and a $35.9 million increase in non-cash items, partially offset by a $15.1 million decrease due to the timing of receipts and payments in the ordinary course of business.

• Investing outflows: Net cash used in investing activities increased to $21.1 million for the six months ended March 31, 2026 from $19.9 million for the six months ended March 31, 2025, a $1.3 million year-over-year increase.
• Key drivers: The increase was primarily attributable to a $3.6 million increase in capitalized internal-use software costs, partially offset by a $2.5 million decrease in purchases of property and equipment.

• Net cash used in financing activities: Increased to $289.2 million for the six months ended March 31, 2026 from $247.7 million for the six months ended March 31, 2025, a $41.5 million year-over-year increase.
• Key outflow drivers: The increase was primarily attributable to a $396.8 million increase in repurchases of common stock, a $327.5 million increase in payments, net of proceeds, on the revolving line of credit and term loans, and the $400.0 million repayment of 2018 Senior Notes.
• Offsetting inflows: The outflow increase was partially offset by proceeds from the issuance of $1.0 billion 2026 Senior Notes and a $92.8 million decrease in taxes paid related to net share settlement of equity awards.

• February 2026 program: In February 2026, the Board approved a new open-ended repurchase program authorizing up to $1.5 billion in aggregate repurchases of common stock in the open market or in negotiated transactions, replacing the June 2025 program (which was itself a replacement for the July 2024 program); as of March 31, 2026, $1.1 billion remained under the February 2026 program.
• Repurchase activity: The company expended $611.3 million and $773.9 million during the quarter and six months ended March 31, 2026, respectively, under the June 2025 and February 2026 programs combined, compared to $207.0 million and $366.8 million during the quarter and six months ended March 31, 2025, respectively, under previously authorized programs.

• Facility terms: $1.0 billion unsecured revolving line of credit with a syndicate of banks, maturing May 13, 2030; permitted uses include working capital, general corporate purposes, refinancing of existing debt, acquisitions, and repurchase of common stock.
• Interest rate structure: Borrowings priced at the greatest of (a) prime rate, (b) Federal Funds rate plus 0.5%, or (c) Daily Simple SOFR plus 1%, each plus an applicable margin tied to the consolidated leverage ratio; the applicable margin ranges from 0% to 0.75% per annum for base rate borrowings and 1% to 1.75% per annum for SOFR borrowings.
• Covenants: Credit agreement requires a maximum consolidated leverage ratio of 3.5 to 1.0 (with a step-up to 4.0 to 1.0 following certain permitted acquisitions), plus other covenants typical of an unsecured credit facility.
• Current utilization: As of March 31, 2026, $265.0 million was outstanding at a weighted-average interest rate of 4.931%, with the company in compliance with all financial covenants.

• 2018 Senior Notes retired: The $400 million 5.25% senior notes issued May 8, 2018 (originally maturing May 15, 2026) were repaid in full on March 26, 2026, prior to maturity, using proceeds from the 2026 Senior Notes issuance.
• Outstanding fixed-rate tranches: The 2019 Senior Notes ($350 million, 4.00%, maturing June 15, 2028) and the 2021 Senior Notes ($550 million, 4.00%, same June 15, 2028 maturity) together total $900 million; the 2025 Senior Notes ($1.5 billion, 6.00%, maturing May 15, 2033) and the 2026 Senior Notes ($1.0 billion, 6.25%, maturing September 15, 2034) complete the capital structure — all issued in private offerings to qualified institutional investors.
• Carrying value and covenant compliance: As of March 31, 2026, the aggregate carrying value of all Senior Notes was $3.4 billion, and the company was in compliance with all financial covenants under the indentures, which contain covenants typical of unsecured obligations.