FACTSET RESEARCH SYSTEMS INC

Previous wording

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 Factorsin our Annual Report on Form 10-K for the fiscal year ended August 31, 2025.

Current wording

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 discussed in Part I, Item 1A. Risk Factorsin our Annual Report on Form 10-K for the fiscal year ended August 31, 2025.

Previous wording

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.

Current wording

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 May 31, 2026, we had more than 9,100 clients comprised of over 247,000 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.

Previous wording

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.

Current wording

Revenues in the third quarter of fiscal 2026 were $622.9 million, an increase of 6.4% from the comparable prior year period. The growth in revenues was driven by a 7.0% increase in organic revenues, partially offset by a 0.6% decrease in revenues due to the disposition of a business at the end of the prior fiscal year. Revenues increased in all our segments, primarily in the Americas. The increase in revenues was primarily from workstations and data 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.

Previous wording

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.

Current wording

As of May 31, 2026, organic annual subscription value ("Organic ASV") totaled $2,485.6 million, an increase of 7.1% over the prior year. Organic ASV increased in all our segments, with the majority of the increase in the Americas. The Organic ASV increase was mainly 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.

Previous wording

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.

Current wording

Operating margin was 26.7% for the third quarter of fiscal 2026, compared to 33.2% in the prior year period. When expenses are expressed as a percentage of revenues, this decrease was primarily driven by higher operating expenses, mainly due to an increase in employee compensation costs, including one-time restructuring charges and Chief Executive Officer ("CEO") compensation costs pursuant to the terms of his employment agreement, partially offset by growth in revenues.

Previous wording

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.

Current wording

Net income for the third quarter of fiscal 2026 was $126.7 million, a decrease of 14.7% from the prior year period. Diluted earnings per common share ("Diluted EPS") was $3.50 for the third quarter of fiscal 2026, a decrease of 9.6% compared with the prior year period. These decreases were driven by higher operating expenses, partially offset by growth in revenues. The decrease in Diluted EPS was also partially offset by a reduction in the diluted weighted average common shares outstanding of approximately 2.2 million shares.

Previous wording

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

Current wording

We returned $243.4 million to our stockholders in the form of share repurchases and dividends during the three months ended May 31, 2026.

Previous wording

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.

Current wording

As of May 31, 2026, our client and user count was 9,130 and 247,766, respectively. Our employee headcount was 12,694 as of May 31, 2026, up 0.9% compared to the prior year. This increase was driven by net headcount growth of 1.1% in Asia Pacific, 0.6% in EMEA and 0.4% in the Americas.

Previous wording

–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.

Current wording

–Organic ASV at any point in time equals our ASV excluding ASV from acquisitions and the comparable impact of dispositions and discontinued lines of business effected within the last 12 months and the impact of foreign currency movements.

Previous wording

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.

Current wording

As of May 31, 2026, ASV from the Americas represented 65% of total ASV and was $1,621.0 million, an increase from $1,513.1 million as of May 31, 2025. Americas Organic ASV was $1,621.0 million as of May 31, 2026, a 7.2% increase from the prior year. The Organic ASV increase in the Americas was primarily driven by workstations and data solutions.

Previous wording

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.

Current wording

As of May 31, 2026, ASV from EMEA represented 24% of total ASV and was $608.1 million, an increase from $581.9 million as of May 31, 2025. EMEA Organic ASV was $608.7 million as of May 31, 2026, a 5.6% increase from the prior year. The EMEA Organic ASV increase was mainly from data solutions and workstations.

Previous wording

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.

Current wording

As of May 31, 2026, ASV from Asia Pacific represented 11% of total ASV and was $255.2 million, an increase from $240.1 million as of May 31, 2025. Asia Pacific Organic ASV was $255.9 million as of May 31, 2026, a 10.0% increase from the prior year. The Asia Pacific Organic ASV increase was primarily driven by middle office solutions, data solutions and workstations.

Previous wording

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

Current wording

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

Previous wording

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.

Current wording

Annual ASV retention was greater than 95% of ASV as of May 31, 2026 and May 31, 2025. When expressed as a percentage of clients, annual retention was 90% and 91% as of May 31, 2026 and May 31, 2025, respectively.

Previous wording

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.

Current wording

As of May 31, 2026, our net employee headcount increased by 0.9% to 12,694, compared with 12,579 employees as of May 31, 2025. This net headcount growth was primarily driven by our continued investment in our centers of excellence ("COEs"), mainly through an increase in employees based in India.

Previous wording

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.

Current wording

As of May 31, 2026, compared to May 31, 2025, our net headcount growth was 1.1% in Asia Pacific, 0.6% in EMEA and 0.4% in the Americas. As of May 31, 2026, we had 8,765 employees located in Asia Pacific, 2,476 in the Americas and 1,453 in EMEA. Approximately 68% of our employees are located in our COEs.

Previous wording

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.

Current wording

For an understanding of the significant factors that influenced our performance for the three and nine months ended May 31, 2026 and May 31, 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.

Previous wording

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.

Current wording

The growth in revenues of 6.8% was driven by a 6.6% increase in organic revenues, which totaled $1,829.1 million for the nine months ended May 31, 2026 and a 0.2% 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.

Previous wording

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.

Current wording

The growth in revenues of 7.0% was driven by a 7.0% increase in organic revenues and a 0.1% net increase from foreign currency exchange rate fluctuations, partially offset by a 0.1% decrease in revenues due to the disposition of a business at the end of the prior fiscal year. The increase in revenues was primarily driven by workstations and data solutions.

Previous wording

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.

Current wording

The growth in revenues of 7.7% was driven by a 7.0% 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 mainly driven by workstations, data solutions and portfolio management and trading solutions.

Previous wording

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.

Current wording

The growth in revenues of 4.1% was driven by a 4.4% increase in organic revenues and a 0.7% 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.

Previous wording

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 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.

Current wording

The growth in revenues of 7.6% was driven by a 9.5% 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 0.3% net decrease from foreign currency exchange rate fluctuations. The increase in revenues was primarily driven by data solutions, workstations and middle office solutions, partially offset by a decrease in revenues due to the disposition.

Previous wording

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.

Current wording

Cost of services, when expressed as a percentage of revenues, was 50.1% for the three months ended May 31, 2026, an increase of 220 basis points compared with the same period a year ago. This increase was primarily due to higher employee compensation costs and, to a lesser extent, technology-related expenses and amortization of intangible assets.

Previous wording

•Technology-related expenses increased by 60 basis points, primarily driven by higher spend in cloud-based hosting services.

Current wording

•Technology-related expenses increased by 40 basis points, primarily driven by higher spend in cloud-based hosting services, licensed software arrangements and AI token consumption.

Previous wording

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.

Current wording

Cost of services, when expressed as a percentage of revenues, was 48.7% for the nine months ended May 31, 2026, an increase of 180 basis points compared with the same period a year ago. This increase was primarily driven by higher amortization of intangible assets, technology-related expenses and employee compensation costs.

Previous wording

•Technology-related expenses increased by 40 basis points, primarily driven by higher spend in cloud-based hosting services.

Current wording

•Technology-related expenses increased by 50 basis points, primarily driven by higher spend in cloud-based hosting services and licensed software arrangements.

Previous wording

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.

Current wording

The increase in SG&A was primarily driven by higher employee compensation costs. SG&A, when expressed as a percentage of revenues, was 23.2% for the three months ended May 31, 2026, an increase of 430 basis points compared with the same period a year ago. The increase was primarily driven by higher employee compensation costs and a loss from the net settlement of our foreign currency forward contracts.

Previous wording

•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.

Current wording

•Employee compensation costs increased by 290 basis points, primarily due to higher variable compensation costs, restructuring charges and an increase in stock-based compensation expense. Variable compensation costs increased mainly due to financial achievement against targets. 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 restructuring charges were related to driving organizational efficiencies.

Previous wording

•SG&A decreased by 40 basis points due to a benefit from the net settlement of foreign currency forward contracts.

Current wording

•SG&A increased by 50 basis points due to a loss from the net settlement of foreign currency forward contracts.

Previous wording

•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.

Current wording

When expressed as a percentage of revenues, employee compensation costs increased by 190 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 mainly due to financial achievement against targets. The increase in annual base salaries was primarily driven by annual merit increases.

Previous wording

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.

Current wording

Operating income decreased 4.8% to $543.3 million for the nine months ended May 31, 2026, compared with $571.0 million in the prior year period. Operating margin decreased to 29.5% for the nine months ended May 31, 2026, compared with 33.1% in the prior year period. These decreases were primarily driven by higher employee compensation costs, amortization of intangible assets and technology-related expenses, partially offset by growth in revenues.

Previous wording

•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.

Current wording

•Employee compensation costs increased primarily due to restructuring charges, higher stock-based compensation expense and an increase in variable compensation costs. The restructuring charges were related to driving organizational efficiencies. The increase in stock-based compensation expense and variable compensation costs were driven by the recognition, over their respective service periods, of the one-time equity awards and cash awards, respectively, granted to our CEO pursuant to the terms of his employment agreement. In addition, variable compensation costs increased due to financial achievement against targets.

Previous wording

•Technology-related expenses increased mainly due to higher spend in cloud-based hosting services.

Current wording

•Technology-related expenses increased mainly due to higher spend in cloud-based hosting services, licensed software arrangements and AI token consumption.

Previous wording

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.

Current wording

EMEA operating income decreased primarily due to higher employee compensation costs, partially offset by growth in revenues of 4.3%. Employee compensation costs increased mainly from restructuring charges, to drive organizational efficiencies, and an increase in annual base salaries, primarily driven by annual merit increases.

Previous wording

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.

Current wording

Asia Pacific operating income increased mainly due to growth in revenues of 7.5%, partially offset by higher employee compensation costs. Employee compensation costs increased primarily from higher variable compensation costs, due to financial achievement against targets, and an increase in annual base salaries, mainly driven by annual merit increases.

Previous wording

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%.

Current wording

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 7.7%.

Previous wording

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.

Current wording

Asia Pacific operating income increased mainly due to growth in revenues of 7.6%, partially offset by higher employee compensation costs. Employee compensation costs increased primarily due to higher annual base salaries, mainly driven by annual merit increases.

Previous wording

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.

Current wording

Our effective tax rate for the three months ended May 31, 2026 and May 31, 2025 was 17.8% and 17.5%, respectively. The increase was primarily due to the limitation on the deductibility of executive compensation.

Previous wording

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.

Current wording

Our effective tax rate for the nine months ended May 31, 2026 and May 31, 2025 was 18.4% and 16.7%, respectively. The increase was primarily due to a stock-based compensation tax shortfall for the nine months ended May 31, 2026, compared to an excess tax benefit for the prior year period.

Previous wording

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.

Current wording

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 and nine months ended May 31, 2025 due to excess tax benefits from stock-based compensation.