Financial Analysis

Commitments and Contingencies Litigation and Investigation Matters In the normal course of business, the Company or its subsidiaries are named as defendants in lawsuits in which claims are asserted against the Company. The Company maintained an accrual of $25 million and $43 million at December 31, 2025 and 2024, respectively, related to its various legal proceedings. The Companys estimate of the possible range of exposure for various legal proceedings in excess of amounts accrued is $0 million to approximately $160 million. In the opinion of management, the liabilities, if any, which may ultimately result from such legal proceedings are not expected to have a material adverse effect on the Companys consolidated financial statements. On July 24, 2025, a federal securities law complaint was filed against the Company and Frank J. Bisignano (the Companys former Chairman and Chief Executive Officer), Michael P. Lyons, Robert W. Hau (the Companys former Chief Financial Officer and current Special Advisor), and Kenneth F. Best in the United States District Court for the Southern District of New York. The complaint is brought on behalf of a putative class of purchasers of Company securities from July 22, 2024 to July 24, 2025 and alleges violations of Section 10(b) of the Securities Exchange Act of 1934 (the Exchange Act), and Rule 10b-5 thereunder, and Section 20(a) of the Exchange Act. The complaint alleges, among other things, that certain statements made by the Company about the …

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The table below presents the Companys revenue disaggregated by business line and includes a reconciliation with its reportable segments. The Company serves its global client base by working among its geographic teams across various regions, including the U.S. and Canada; Europe, Middle East and Africa (EMEA); Latin America (LATAM); and Asia Pacific (APAC). The majority of the Companys revenue is earned in the U.S., with revenue generated within its EMEA, LATAM and APAC regions comprising approximately 16% of total revenue for the year ended December 31, 2025, and approximately 15% of total revenue for each of the years ended December 31, 2024 and 2023. (In millions) Year Ended December 31, Revenue by Business Line 2025 2024 2023 Small Business $ 6,795 $ 6,357 $ 5,664 Enterprise 2,256 2,163 1,933 Processing 1,089 1,111 1,125 Total Merchant Solutions segment revenue $ 10,140 $ 9,631 $ 8,722 Digital Payments $ 3,945 $ 3,869 $ 3,655 Issuing 3,284 3,112 3,011 Banking 2,435 2,496 2,435 Total Financial Solutions segment revenue $ 9,664 $ 9,477 $ 9,101 Corporate and Other $ 1,389 $ 1,348 $ 1,270 Total Revenue (1) $ 21,193 $ 20,456 $ 19,093 (1) Total revenue includes $1.5 billion, $1.2 billion and $1.1 billion for the years ended December 31, 2025, 2024 and 2023, respectively, which represent revenue recognized outside the scope of ASC 606. Such revenue primarily consists of interest-related income earned on merchant and settlement anticipation cash advances, on short-term investments …

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Share-Based Compensation The Company recognizes the fair value of share-based compensation awards granted to employees in cost of processing and services, cost of product, and selling, general and administrative expense in its consolidated statements of income. The Companys share-based compensation awards are typically granted in the first quarter of the year; however, grants may also occur throughout the year, and primarily consist of the following: Restricted Stock Units and Awards The Company grants restricted stock units and awards to employees and non-employee directors. Time-based restricted stock units and award grants generally vest over a three-year period. In December 2025, the Company granted discretionary restricted stock units to certain employees, which fully vest after an 18 month period. The Company recognizes compensation expense for restricted stock units and awards based on the market price of its common stock on the grant date over the period during which the units and awards vest. Performance Share Units The Company grants performance share units to employees. The number of shares issued at the end of the performance period is determined by the level of achievement of predefined performance goals, including earnings, revenue growth, integration attainment, and shareholder return. The Company recognizes compensation expense on performance share units ratably over the requisite performance period of the award, generally two to five years, to the extent mana …

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Income Taxes The provision for income taxes is based on income before income taxes and income (loss) from investments in unconsolidated affiliates, as follows: Year Ended December 31, (In millions) 2025 2024 2023 United States $ 3,572 $ 3,683 $ 3,342 Foreign 692 823 556 Total $ 4,264 $ 4,506 $ 3,898 The income tax provision was as follows: Year Ended December 31, (In millions) 2025 2024 2023 Components of income tax provision (benefit): Current: Federal $ 1,288 $ 831 $ 913 State 221 242 148 Foreign 244 230 204 1,753 1,303 1,265 Deferred: Federal (759) (407) (380) State (70) (112) (12) Foreign (113) (143) (119) (942) (662) (511) Income tax provision $ 811 $ 641 $ 754 An income tax rate reconciliation pursuant to the disclosure requirements of ASU 2023-09 for the year ended December 31, 2025 is as follows: (In millions) Amount Percent U.S. federal statutory income tax rate $ 896 21.0 % United States: State and local income taxes (1) 107 2.5 % Effect of cross-border tax laws 22 0.5 % Tax credits Transferable federal tax credits (96) (2.3) % Foreign tax credits (66) (1.5) % Other (14) (0.3) % Nontaxable or nondeductible items Excess tax benefit from share-based awards (55) (1.3) % Other 18 0.4 % Other adjustments 10 0.2 % Foreign tax effects: Other foreign jurisdictions (14) (0.3) % Changes in unrecognized tax benefits 3 0.1 % Income tax provision $ 811 19.0 % (1) State and local income taxes in California, Illinois, New Jersey, New York and Pennsylvania comprise the majority (gr …

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Leases Company as Lessee The Company primarily leases office space, data centers and equipment from third parties. The Company determines if a contract is a lease at inception. A contract contains a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The lease term begins on the commencement date, which is the date the Company takes possession or obtains control of the asset, and may include options to extend or terminate the lease when it is reasonably certain that the option will be exercised. Many of the Companys leases contain renewal options for varying periods, which can be exercised at the Companys sole discretion. Leases are classified as operating or finance leases based on factors such as the lease term, lease payments, and the economic life, fair value and estimated residual value of the asset. Certain leases include options to purchase the leased asset at the end of the lease term, which is assessed as a part of the Companys lease classification determination. The Companys leases have remaining lease terms ranging from one month to 18 years. The Company uses the right-of-use model to account for its leases. ROU assets represent the Companys right to use an underlying asset for the lease term and lease liabilities represent the Companys obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized on the commencement date based on the presen …

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Debt The Companys debt consisted of the following: December 31, (In millions) 2025 2024 Short-term and current maturities of long-term debt: Foreign lines of credit $ 762 $ 784 Finance lease and other financing obligations 477 326 Total short-term and current maturities of long-term debt $ 1,239 $ 1,110 Long-term debt: 3.850% senior notes due June 2025 $ $ 900 2.250% senior notes due July 2025 (British Pound-denominated) 661 3.200% senior notes due July 2026 2,000 2,000 5.150% senior notes due March 2027 750 750 2.250% senior notes due June 2027 1,000 1,000 1.125% senior notes due July 2027 (Euro-denominated) 589 521 5.450% senior notes due March 2028 900 900 2.875% senior notes due June 2028 (Euro-denominated) 883 5.375% senior notes due August 2028 700 700 4.200% senior notes due October 2028 1,000 1,000 3.500% senior notes due July 2029 3,000 3,000 4.750% senior notes due March 2030 850 850 2.650% senior notes due June 2030 1,000 1,000 1.625% senior notes due July 2030 (Euro-denominated) 589 521 4.550% senior notes due February 2031 1,000 5.350% senior notes due March 2031 500 500 4.500% senior notes due May 2031 (Euro-denominated) 942 835 3.000% senior notes due July 2031 (British Pound-denominated) 709 661 3.500% senior notes due June 2032 (Euro-denominated) 912 5.600% senior notes due March 2033 900 900 5.625% senior notes due August 2033 1,300 1,300 5.450% senior notes due March 2034 750 750 5.150% senior notes due August 2034 900 900 5.250% senior notes due August 203 …

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Recently Adopted Accounting Pronouncements In 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2023-09 , Income Taxes (Topic 740) - Improvement to Income Tax Disclosures (ASU 2023-09 ), which establishes new income tax disclosure requirements in addition to modifying and eliminating certain existing requirements. ASU 2023-09 requires entities to consistently categorize and provide greater disaggregation of information within the income tax reconciliation to enable users of financial statements to understand the nature and magnitude of factors contributing to the difference between the effective and statutory tax rates. For public entities, the provisions within ASU 2023-09 are effective for fiscal years beginning after December 15, 2024, and for interim periods of fiscal years beginning after December 15, 2025. The Company adopted ASU 2023-09 effective for the year ended December 31, 2025, with prospective application. Additional information regarding the Companys income tax rate reconciliations, including the application of the provisions of ASU 2023-09 for the year ended December 31, 2025, is included in Note 16 to the consolidated financial statements. Recently Issued Accounting Pronouncements In 2025, the FASB issued ASU No. 2025-09, Derivatives and Hedging (Topic 815): Hedge Accounting Improvements (ASU 2025-09), which is intended to more closely align hedge accounting with the economics of an entitys risk management acti …

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Related Party Transactions Merchant Alliances A portion of the Companys business is conducted through merchant alliances between the Company and certain financial institutions (see Note 8). A merchant alliance is an agreement between the Company and a financial institution that combines the processing capabilities and management expertise of the Company with the visibility and distribution channel of the financial institution. A merchant alliance acquires credit and debit card transactions from merchants. The Company provides processing and other services to the alliance and charges fees to the alliance based on contractual pricing. To the extent the Company maintains a controlling financial interest in an alliance, the alliances financial statements are consolidated with those of the Company and the related processing fees are treated as an intercompany transaction and eliminated in consolidation. To the extent the Company has significant influence in, but not control of, an alliance, the Company uses the equity method to account for its investment in the alliance. As a result, the processing and other service fees charged to merchant alliances accounted for under the equity method are recognized in the Companys consolidated statements of income primarily as processing and services revenue. Such fees totaled $90 million, $140 million and $177 million during the years ended December 31, 2025, 2024 and 2023, respectively. No directors or officers of the Company have ownership …

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Revenue Recognition Significant Accounting Policy ASC Topic 606, Revenue from Contracts with Customers (ASC 606), outlines a single comprehensive model to use in accounting for revenue arising from contracts with customers. The core principle, involving a five-step process, of the revenue model is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Revenue is measured based on consideration specified in a contract with a customer and excludes any amounts collected on behalf of third parties. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue. Shipping and handling activities associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment activity and recognized as revenue at the point in time at which control of the goods transfers to the customer. As a practical expedient, the Company does not adjust the transaction price for the effects of a significant financing component if, at contract inception, the period between customer payment and the transfer of goods or services is expected to be one year or less. Nature of Goods and Services The Companys operations are comprised of the Merch …

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Business Segment Information The Companys operations are comprised of two reportable segments, the Merchant segment and the Financial segment. The businesses in the Merchant segment provide commerce-enabling products and services to companies of all sizes around the world. These products and services include merchant acquiring and digital commerce services; mobile payment services; security and fraud protection solutions; stored-value solutions; and pay-by-bank solutions. The business lines (operating segments) aggregated within the Merchant segment consist of the following: Small Business provides products and services to small businesses and independent software vendors, including Clover , the Company's POS and business management platform for small business clients Enterprise provides products and services to large businesses, including the Companys integrated omnichannel operating system for enterprise clients Processing provides products and services to financial institutions, joint ventures, and other third party resellers which have direct relationships with merchants The Company distributes the products and services in the Merchant segment businesses through a variety of channels, including direct sales teams, strategic partnerships with agent sales forces, independent software vendors, financial institutions and other strategic partners in the form of joint venture alliances, revenue sharing alliances and referral agreements. The businesses in the Financial segment p …

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