DECKERS OUTDOOR CORP

NOTE 2. REVENUE RECOGNITION AND BUSINESS CONCENTRATIONS

Disaggregated Revenue. Refer to Note 10, “Reportable Operating Segments,” for further information on the Company’s disaggregation of revenue by reportable operating segment.

Channel Concentration. Net sales by channel was as follows:

Geographic Concentration. Net sales by geography was as follows:

For the three and six months ended September 30, 2025, and 2024, no single foreign country comprised 10.0% or more of the Company’s total net sales.

Customer Concentration. For the three and six months ended September 30, 2025, and 2024, no single global customer comprised 10.0% or more of the Company’s total net sales. As of September 30, 2025, the Company has one customer that represents 10.6% of trade accounts receivable, net, compared to one customer that represents 13.6% of trade accounts receivable, net, as of March 31, 2025. Management performs regular evaluations concerning the ability of the Company’s customers to satisfy their obligations to the Company and recognizes an allowance for doubtful accounts based on these evaluations.

Sales Return Asset and Liability. Sales returns are a refund asset for the right to recover the inventory and a refund liability for the stand-ready right of return. The refund asset for the right to recover the inventory is recorded in other current assets and the related refund liability is recorded in other accrued expenses in the condensed consolidated balance sheets.

The following tables summarize changes in the estimated sales returns for the periods presented:

(1)Net additions to the sales return liability include a provision for anticipated sales returns, which consists of both contractual return rights and discretionary authorized returns.

Contract Liabilities. Contract liabilities are recorded in other accrued expenses in the condensed consolidated balance sheets and include loyalty programs and other deferred revenue.

Loyalty Programs. Activity related to loyalty programs was as follows:

Deferred Revenue. Activity related to deferred revenue was as follows:

Refer to Note 2, “Revenue Recognition,” in the Company’s consolidated financial statements in Part IV of the 2025 Annual Report for further information on the Company’s variable consideration accounting policies, including sales return asset and liability, as well as contract liabilities.

NOTE 3. FAIR VALUE MEASUREMENTS

The Company measures certain financial assets and liabilities at fair value on a recurring basis. Refer to Note 4, “Fair Value Measurements,” in the Company’s consolidated financial statements in Part IV of the 2025 Annual Report for further information on the Company’s fair value accounting policies.

Assets and liabilities that are measured on a recurring basis at fair value in the condensed consolidated balance sheets are as follows:

The fair value of Designated Derivative Contracts and Non-Designated Derivative Contracts is determined using quoted forward spot rates at the end of the applicable reporting period from counterparties, which are corroborated by market-based pricing (Level 2), with related assets and liabilities recorded in other current assets and other accrued expenses, respectively, in the condensed consolidated balance sheets. Refer to Note 7, “Derivative Instruments,” for further information, including the definition of the terms Designated Derivative Contracts and Non-Designated Derivative Contracts.

NOTE 4. INCOME TAXES

Income tax expense and the effective income tax rate were as follows:

The tax provisions during the three and six months ended September 30, 2025, and 2024, were computed using the estimated effective income tax rate applicable to each of the domestic and foreign taxable jurisdictions for the current fiscal year, and prior fiscal year, respectively, and were adjusted for discrete items that occurred within the periods presented above. During the three and six months ended September 30, 2025, the net change in the effective income tax rate, compared to the prior period, was primarily due to non-recurring changes in valuation allowances on tax attributes, net discrete tax benefits for audit settlements and adjustments to income taxes payable, and changes in jurisdictional mix of worldwide income before income taxes, partially offset by reduced tax benefits for stock-based compensation. In addition, the net change in the effective tax rate during the six months ended September 30, 2025 included an income tax expense for reserve adjustments.

Recent Tax Law Changes. On July 4, 2025, H.R. 1, also known as the One Big Beautiful Bill Act (OBBBA), was signed into law. The OBBBA includes, among other provisions, changes to US corporate income tax law, including restoration of accelerated depreciation on capital expenditures, deductible research and development expenses, and modifications to the international tax framework. The Company continues to evaluate the impact of the law on its condensed consolidated financial statements as more information becomes available, although it expects to achieve cash tax savings as a result of the full expensing of US research and development expenses in the current fiscal year.

NOTE 5. COMMITMENTS AND CONTINGENCIES

Leases. The Company enters into operating lease contracts, which primarily relate to retail stores, showrooms, offices, and distribution facilities. There were no material changes outside the ordinary course of business during the six months ended September 30, 2025, to the Company’s operating lease terms disclosed in the 2025 Annual Report.

Supplemental information for amounts presented in the condensed consolidated statements of cash flows related to operating leases was as follows:

(1)Amounts disclosed include non-cash additions or reductions resulting from lease remeasurements, as well as reductions for tenant improvement allowances. Non-cash additions in the current period predominately include investments in the Company's global retail store footprint that are in the ordinary course of business.

Purchase Obligations. Except as noted below, there were no material changes outside the ordinary course of business during the six months ended September 30, 2025, to the Company’s purchase obligations disclosed in the 2025 Annual Report.

3PL Agreements. During the six months ended September 30, 2025, the Company entered into a 3PL service agreement with a non-cancellable minimum commitment of approximately $93,611 through March 31, 2029, related to the transition of one of its international 3PLs to a new partner with an upgraded warehouse management system which the Company expects to be operational in the first quarter of its fiscal year ending March 31, 2027 (next fiscal year).

Litigation. From time to time, the Company is involved in various legal proceedings, disputes, and other claims arising in the ordinary course of business, including employment, intellectual property, and product liability claims. Although the results of these matters cannot be predicted with certainty, the Company believes it is not currently a party to any legal proceedings, disputes, or other claims for which a material loss is considered probable and for which the amount (or range) of loss is reasonably estimable.

Refer to Note 7, “Commitments and Contingencies,” in the Company’s consolidated financial statements in Part IV of the 2025 Annual Report for further information on the Company’s contractual obligations and commitments.

NOTE 6. STOCK-BASED COMPENSATION

Stock Incentive Plans. The 2024 Stock Incentive Plan (2024 SIP) provides for the issuance of a variety of stock-based compensation awards, including time-based restricted stock units (RSUs), performance-based restricted stock units (PSUs), long-term incentive plan PSUs (LTIP PSUs), stock appreciation rights, stock bonuses, incentive stock options (ISOs), and non-qualified stock options, to employees, directors, consultants, independent contractors, and advisors. In September 2024, the 2024 SIP replaced the 2015 Stock Incentive Plan (2015 SIP).

Refer to Note 8, “Stock-Based Compensation,” in the Company’s consolidated financial statements in Part IV of the 2025 Annual Report for additional information about the terms of the 2024 SIP and 2015 SIP.

Annual Stock Awards. The Company granted the following awards during the periods presented:

(1) The amounts reported reflect achievement of the target performance level under the terms of the applicable LTIP PSUs.

During the six months ended September 30, 2025, with the exception of the RSU and LTIP PSU awards summarized above, no material additional awards were granted under the 2024 SIP.

Future unrecognized stock-based compensation for RSUs outstanding as of September 30, 2025, is $39,841.

For the LTIP PSUs granted during the current fiscal year, prior fiscal year, and fiscal year ended March 31, 2024, the Company expects to exceed the minimum threshold target performance criteria based on the Company’s current long-range forecast as of September 30, 2025. Future unrecognized stock-based compensation for all LTIP PSUs outstanding as of September 30, 2025, based on the anticipated performance level, is $30,825.

Refer to Note 8, “Stock-Based Compensation,” in the Company’s consolidated financial statements in Part IV of the 2025 Annual Report for further information on the Company’s prior grants of stock-based compensation awards.

NOTE 7. DERIVATIVE INSTRUMENTS

The Company enters into foreign currency forward or option contracts (derivative contracts) to manage foreign currency risk and certain of these derivative contracts are designated as cash flow hedges of forecasted sales (Designated Derivative Contracts). The Company also enters into derivative contracts that are not designated as cash flow hedges, to offset a portion of anticipated gains and losses on certain intercompany balances until the expected time of repayment (Non-Designated Derivative Contracts). Refer to Note 1, “General,” in the Company’s consolidated financial statements in Part IV of the 2025 Annual Report for further information related to accounting policies on the Company’s derivative contracts.

The Company has the following derivative contracts recorded at fair value in the condensed consolidated balance sheets:

As of September 30, 2025, five counterparties hold the Company’s outstanding derivative contracts, which are expected to mature in the next 15 months. As of March 31, 2025, five counterparties held the Company’s outstanding derivative contracts.

The following table summarizes changes in unrealized (loss) gain on cash flow hedges included in accumulated other comprehensive loss (AOCL), including the effect of Designated Derivative Contracts and the related income tax effects of unrealized gains or losses that are recorded in OCI in the condensed consolidated statements of comprehensive income:

The non-performance risk of the Company and its counterparties did not have a material impact on the fair value of its derivative contracts. As of September 30, 2025, the amount of unrealized loss on derivative contracts recorded in AOCL is expected to be reclassified into net sales within the next 15 months. Refer to Note 8, “Stockholders’ Equity,” for further information on the components of AOCL.

Subsequent to September 30, 2025, through October 9, 2025, the Company entered into Designated Derivative Contracts and Non-Designated Derivative Contracts with notional values totaling $28,794 and $39,521, respectively, which are collectively expected to mature within the next 18 months and are held bythree counterparties.

NOTE 8. STOCKHOLDERS’ EQUITY

Stock Repurchase Program. The Company’s Board of Directors (Board) has approved various authorizations under the Company’s stock repurchase program to repurchase shares of its common stock in the open market or in privately negotiated transactions, subject to market conditions, applicable legal requirements, and other factors (collectively, the stock repurchase program). The Board last approved an authorization of $2,250,000 on May 21, 2025 to repurchase shares of the Company’s common stock under the same conditions as the prior stock repurchase program. As of September 30, 2025, the aggregate remaining approved amount under the stock repurchase program is $2,159,714. The stock repurchase program does not obligate the Company to acquire any amount of common stock and may be suspended at any time at the Company’s discretion.

Stock repurchase activity under the stock repurchase program was as follows:

(1) All share repurchases were made pursuant to the stock repurchase program in open-market transactions.

(2)May not calculate on rounded amounts.

(3) The dollar value of shares repurchased excludes the cost of broker commissions, excise taxes, and other costs.

Subsequent to September 30, 2025, through October 9, 2025, the Company repurchased 345,118 shares at a weighted average price of $101.41 per share for $35,000 and had $2,124,714 remaining authorized under the stock repurchase program.

Accumulated Other Comprehensive Loss. The components within AOCL, net of tax, recorded in the condensed consolidated balance sheets, are as follows:

NOTE 9. BASIC AND DILUTED SHARES

The reconciliation of basic to diluted weighted-average common shares outstanding was as follows:

Excluded Awards. The equity awards excluded from the calculation of the dilutive effect may be excluded due to one of the following: (1) the shares were antidilutive or (2) the necessary conditions had not been satisfied for the shares to be deemed issuable based on the Company’s performance for the relevant performance period. The number of shares stated for each of these excluded awards is the maximum number of shares issuable pursuant to these awards. For those awards subject to the achievement of performance criteria, the actual number of shares to be issued pursuant to such awards will be based on Company performance in future periods, net of forfeitures, and may be materially lower than the number of shares presented, which could result in a lower dilutive effect. Refer to Note 8, “Stock-Based Compensation,” in the Company’s consolidated financial statements in Part IV of the 2025 Annual Report for further information on the Company’s equity incentive plans.

NOTE 10. REPORTABLE OPERATING SEGMENTS

Information reported to the Chief Operating Decision Maker (CODM), who is the Principal Executive Officer (PEO), is organized into the Company’sthree reportable operating segments, which include the brand operations for the HOKA brand, UGG brand, and Other brands.

The Company does not regularly provide total assets or capital expenditures information by reportable operating segments to the CODM because that information is not used to evaluate performance or allocate resources to each reportable operating segment.

Segment Net Sales, Gross Margin, and Income from Operations. The CODM regularly evaluates the performance of each reportable operating segment based on net sales, gross profit as a percentage of net sales (gross margin), and income from operations when making decisions about resource allocations to each reportable operating segment. Income from operations of each reportable operating segment includes certain costs, which are specifically related to each reportable operating segment and that are regularly provided to the CODM. These costs consist of cost of sales; payroll and related expenses, including stock-based compensation; advertising, marketing, and promotion expenses; rent and occupancy; depreciation and other related costs; and other segment items. There are no inter-segment sales for any period presented. The accounting policies applicable to the Company’s reportable operating segments are consistent with those described in Note 1, “General,” in the Company’s consolidated financial statements in Part IV of the 2025 Annual Report.

Income from operations of each reportable operating segment excludes enterprise and shared brand expenses, as well as total other income, net, which are not used to assess reportable operating segment performance. Unallocated enterprise and shared brand expenses are costs that are managed centrally and not specific to any one brand. These costs are primarily comprised of certain payroll and related expenses, including stock-based compensation; global IT expenses; 3PL service fees; depreciation, rent, and occupancy for owned warehouses and DCs and offices; and other SG&A expenses, such as costs for contract services, materials, supplies, and travel. These costs span multiple functions including owned warehouses and DCs and 3PL service fees, along with enterprise costs, which include centralized commercial operations, IT, finance, human resources, legal, supply chain, and corporate executives.

Reportable operating segment information, with a reconciliation to the condensed consolidated statements of comprehensive income, was as follows:

(1) The significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM.

(2) Depreciation and other related costs generally include depreciation of property and equipment, amortization and impairment of intangible assets or other long-lived assets, accretion, and loss on disposal of assets.

(3) Other segment items are comprised of other SG&A expenses, which generally include credit card fees, commissions, materials and supplies, travel, certain 3PL service fees, and other miscellaneous expenses.

(4) Operating margin is defined as income from operations divided by net sales.

A reconciliation of reportable segment income from operations to condensed consolidated statements of comprehensive income was as follows:

(1) The change in reportable operating segments had an impact on segment income from operations, a measure of segment profitability, and a clarification was made that certain prior unallocated overhead costs are defined as unallocated enterprise and shared brand expenses and are excluded from the measure of segment profitability.