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INCOME TAXES
 12 Months Ended
Aug. 31, 2026
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
We are subject to taxation in the U.S. and various state, local and foreign jurisdictions in which we conduct our business. Income tax expense is based on taxable income determined in accordance with current enacted laws and tax rates. Deferred income taxes are recorded for the temporary differences between the financial statement carrying amounts and the tax basis of our assets and liabilities using currently enacted tax rates.
Provision for Income Taxes and Effective Tax Rate
The components of Income before income taxes were as follows:
(in thousands)Years ended August 31,
202620252024
U.S. operations$400,450 $479,288 $416,093 
Non-U.S. operations249,266 241,670 235,410 
Income before income taxes$649,716 $720,958 $651,503 
The components of the provision for income taxes consist of the following:
(in thousands)Years ended August 31,
202620252024
Current
U.S. federal$38,586 $16,255 $46,903 
U.S. state and local29,729 27,594 40,926 
Non-U.S.62,204 83,614 58,568 
Total current taxes$130,519 $127,463 $146,397 
Deferred
U.S. federal$(16,056)$(1,132)$(26,962)
U.S. state and local457 2,875 (5,648)
Non-U.S.1,315 (5,288)590 
Total deferred taxes$(14,284)$(3,545)$(32,020)
Total provision for income taxes
U.S. federal$22,530 $15,123 $19,941 
U.S. state and local30,186 30,469 35,278 
Non-U.S.63,519 78,326 59,158 
Provision for income taxes
$116,235 $123,918 $114,377 
Our effective tax rate will vary based on, among other factors, changes in levels of foreign income, as well as other non-recurring events.
We elected to adopt ASU 2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures, on a prospective basis. Refer to Note 2, Summary of Significant Accounting Policies - Recently Adopted Accounting Pronouncements, for further information. For the year ended August 31, 2026, after the adoption of ASU 2023-09, the following table presents a reconciliation between the U.S. corporate income tax rate and our effective tax rate:
(expressed as a percentage of income before income taxes)
Year ended August 31, 2026
Tax at U.S. federal statutory tax rate$136,440 21.0 %
Increase (decrease) in taxes resulting from:
State and local taxes, net of U.S. federal income tax benefit(1)
24,351 3.7 %
Foreign tax effects
United Kingdom ("UK")
Statutory tax differences between the UK and the U.S.8,447 1.3 %
Other453 0.1 %
Other foreign jurisdictions3,169 0.5 %
Effect of cross-border tax laws
Foreign derived intangible income(17,167)(2.6)%
Other2,711 0.4 %
Tax credits
Research & development ("R&D") tax credit(18,500)(2.8)%
Foreign tax credit(26,553)(4.1)%
Other (1,120)(0.2)%
Changes in valuation allowances51 — %
Nontaxable or nondeductible items9,233 1.4 %
Changes in unrecognized tax benefits(8,933)(1.4)%
Other3,653 0.6 %
Provision for income taxes and effective tax rate$116,235 17.9 %
(1) New York and New York City make up the majority (greater than 50%) of the tax effect in this category.
Prior to the adoption of ASU 2023-09, the following table presents a reconciliation between the U.S. corporate income tax rate and our effective tax rate:
Years ended August 31,
(expressed as a percentage of income before income taxes)20252024
Tax at U.S. Federal statutory tax rate21.0 %21.0 %
Increase (decrease) in taxes resulting from:
State and local taxes, net of U.S. federal income tax benefit3.1 2.2 
Foreign income at other than U.S. rates1.7 1.5 
Foreign derived intangible income ("FDII") tax deduction(2.0)(2.3)
Income tax benefits from R&D tax credits(3.1)(2.8)
Stock-based payments(1.4)(2.1)
U.S. impact of foreign income(3.1)(2.5)
Uncertain tax positions1.4 2.3 
Other, net(0.4)0.3 
Effective tax rate17.2 %17.6 %
Deferred Tax Assets and Liabilities
We recognize deferred income taxes to reflect the temporary differences between the financial statement carrying amounts of assets and liabilities and their corresponding tax basis. The tax effects of these differences are as follows:
(in thousands)As of August 31,
20262025
Deferred tax assets:
Lease liabilities$34,170 $35,352 
Stock-based compensation44,355 36,675 
Capitalization of R&D costs188,556 143,829 
NOL carryforward(1)
27,602 7,930 
Foreign tax credit carryforward(1)
22,543 8,251 
Other(1)
26,189 23,612 
Total deferred tax assets$343,415 $255,649 
Deferred tax liabilities:
Depreciation on PPE$(43,968)$(41,432)
Purchased intangible assets, including acquired technology(165,952)(141,566)
Lease ROU assets(19,686)(18,184)
Investment in subsidiary(16,734)— 
Section 481(a) adjustment(19,321)— 
Other(8,038)(5,393)
Total deferred tax liabilities$(273,699)$(206,575)
Deferred tax assets (liabilities), net$69,716 $49,074 
Valuation allowance
(6,445)(2,750)
Total deferred tax assets (liabilities), net$63,271 $46,324 
(1) Net operating loss carryforward and Foreign tax credit carryforward were presented separately from Other as part of the deferred tax assets in fiscal 2026. Comparative figures for fiscal 2025 have been conformed.
Total deferred tax assets and liabilities recorded within the Consolidated Balance Sheets were as follows:
(in thousands)As of August 31,
20262025
Deferred tax assets$74,550 $61,226 
Deferred tax liabilities(11,279)(14,902)
Total deferred tax assets (liabilities), net$63,271 $46,324 
As of August 31, 2026, our pre-tax foreign, federal and state NOLs were approximately $97.9 million, $15.4 million and $9.9 million, respectively. These carryforwards may be used to offset future taxable income. Our foreign NOLs begin to expire on August 31, 2034. Our federal NOLs have various expiration dates, beginning August 31, 2037, with some federal NOLs having an unlimited carryforward. Our state NOLs have various expiration dates, beginning August 31, 2029. Utilization of the NOLs may be subject to an annual limitation due to the ownership limitations provided by the Internal Revenue Code of 1986, as amended (the "Code"), and similar state provisions. Any annual limitation may result in the expiration of NOLs before utilization.
As of August 31, 2026, our foreign tax credit carryforwards were $22.5 million, with various expiration dates beginning August 31, 2030.
We record valuation allowances against deferred income tax assets when we determine that it is more likely than not that such deferred income tax assets will not be realized based upon all the available evidence. The Company had valuation allowances of $6.4 million and $2.8 million at August 31, 2026 and 2025, respectively, related to foreign net operating losses and foreign tax credit carryforwards.
Unrecognized Tax Benefits
The determination of liabilities related to uncertain tax positions, and associated interest and penalties, requires significant estimates and assumptions; as such, there can be no assurance that we will accurately predict the outcomes of these audits. We have no reason to believe that such audits will result in the payment of additional taxes and/or penalties that would have a material adverse effect on our results of operations or financial position, beyond current estimates. 
The following table summarizes the changes in the balance of gross unrecognized tax benefits:
(in thousands)
Unrecognized tax benefits as of August 31, 2023
$21,053 
Additions based on tax positions related to the current year6,068
     Additions for tax positions related to prior years11,726 
Release for tax positions of prior years(3,557)
Unrecognized tax benefits as of August 31, 2024
$35,290 
Additions based on tax positions related to the current year5,344 
     Additions for tax positions related to prior years2,368 
Release for tax positions of prior years(3,568)
Unrecognized tax benefits as of August 31, 2025
$39,434 
Additions based on tax positions related to the current year3,318 
Additions for tax positions related to prior years176 
Release for tax positions of prior years(21,675)
Unrecognized tax benefits as of August 31, 2026
$21,253 
We recognize accrued interest related to unrecognized tax benefits in our Provision for income taxes in the Consolidated Statements of Income. Our accrued interest related to unrecognized tax benefits was $4.2 million, $5.7 million and $3.9 million as of August 31, 2026, 2025 and 2024, respectively. As of fiscal 2026, 2025 and 2024, there were $23.2 million, $38.5 million and $29.1 million of unrecognized tax benefits that, if recognized, would affect the annual effective tax rate.
After the adoption of ASU 2023-09, the following table summarizes our cash paid for income taxes, net of refunds, for the year ended August 31, 2026:
(in thousands)
As of August 31, 2026
U.S. federal$20,816 
U.S. state and local:
New York City$10,397 
All other U.S. state and local21,283 
Total U.S. state and local$31,680 
Non-U.S.:
United Kingdom$56,399 
All other Non-U.S.13,836 
Total Non-U.S.$70,235 
Total cash paid for income taxes, net of refunds
$122,731 
Cash paid for income taxes, net of refunds, during the years ended August 31, 2025 and 2024 was $103.2 million and $157.0 million, respectively.
In the normal course of business, our tax filings are subject to audit by federal, state and foreign tax authorities. As of August 31, 2026, we remained subject to examination in the following significant tax jurisdictions for the fiscal years as indicated below:
Significant Tax JurisdictionOpen Tax Fiscal Years
U.S.
Federal2023through2025
State (various)2019through2025
Non-U.S.
United Kingdom2021through2025
India
2023
through
2025
Undistributed Foreign Earnings
We consider a portion of the unremitted earnings of our foreign subsidiaries and outside basis differences not related to those earnings to be permanently reinvested, where applicable. These unremitted earnings and outside basis differences could give rise to tax liabilities if ever remitted or if a foreign subsidiary was sold. As of August 31, 2026, it is not practicable to determine the deferred tax liability associated with such earnings or basis differences. In addition, we have not provided for deferred taxes on any outside basis differences of our domestic subsidiaries as we have the ability and intent to recover these basis differences in a tax-free manner.
Base Erosion and Profit Shifting Pillar Two
The Organization for Economic Co-operation and Development released Base Erosion and Profit Shifting Pillar Two rules (“Pillar Two”) to introduce a global minimum corporate tax of 15% for companies with global revenues and profits above certain thresholds. Although the U.S. has not yet enacted legislation to adopt Pillar Two, certain countries in which we operate have already adopted, or are in the process of adopting, legislation to implement Pillar Two. We have determined that Pillar Two would not have a material impact on our Consolidated Financial Statements, related disclosures, or effective tax rate. As the Pillar Two rules continue to evolve, their application may alter our tax obligations in certain countries in which we operate. We will continue to monitor developments and assess the potential impact of this tax legislation as further guidance becomes available.
One Big Beautiful Bill Act
On July 4, 2025, the One Big Beautiful Bill Act (the "Act") was signed into law. The legislation includes a broad range of tax reform provisions affecting businesses including, but not limited to, 100% bonus depreciation, expensing of U.S.-based R&D costs, and changes to the U.S. taxation of profits derived from international operations. The legislation has multiple effective dates, with certain provisions effective in fiscal year 2025 and others implemented through fiscal year 2027. The Act did not have a material impact on the Company results of operations and financial position as of and for the fiscal year ended August 31, 2026.