Acquisitions - The acquisition of LiquidityBook was completed on February 7, 2025, for a purchase price of $243.8 million, including contingent consideration of $11.9 million[81]. - LiquidityBook provides cloud-native trading solutions and enhances the company's ability to serve integrated workflow needs across the portfolio life cycle[82]. - The acquisition resulted in the recognition of goodwill totaling $162.4 million, reflecting the excess of the purchase price over the fair value of net assets acquired[83]. - The acquisition of Irwin was completed on November 5, 2024, for a purchase price of $120.2 million, including contingent consideration of $9.6 million[86]. - Irwin is a leading investor relations platform, expanding the company's capabilities in addressing the workflow needs of investor relations professionals[87]. - The acquisition of Irwin resulted in the recognition of goodwill totaling $90.3 million, representing the excess of the purchase price over the fair value of net assets acquired[89]. Financial Performance - For the three months ended February 28, 2025, total revenues reached $570,660,000, an increase from $545,945,000 for the same period in 2024, representing a growth of 4.5%[165]. - Operating income for the three months ended February 28, 2025, was $185,492,000, compared to $181,942,000 in the prior year, reflecting a year-over-year increase of 2.0%[165]. - For the six months ended February 28, 2025, total revenues were $1,139,327,000, compared to $1,088,161,000 for the same period in 2024, marking a growth of 4.7%[165]. - Operating income for the six months ended February 28, 2025, was $376,827,000, up from $370,982,000 in the previous year, reflecting a growth of 1.6%[165]. Goodwill and Intangible Assets - Goodwill increased from $1,011,129 thousand as of August 31, 2024, to $1,245,315 thousand as of February 28, 2025, reflecting acquisitions of $252,713 thousand and foreign currency translations of $(18,527) thousand[91]. - The total carrying amount of identifiable intangible assets as of February 28, 2025, was $2,408,330 thousand, with a net carrying amount of $1,935,488 thousand after accumulated amortization of $472,842 thousand[93]. - Amortization expense for intangible assets for the six months ended February 28, 2025, was $62,461 thousand, compared to $48,853 thousand for the same period in 2024, representing a year-over-year increase of 28%[94]. - The company did not identify any material impairment of intangible assets during the six months ended February 28, 2025[93]. - The company tested goodwill for impairment and concluded there was no impairment as of February 28, 2025[92]. Debt and Financing - Total debt as of February 28, 2025, was $1,472,162 thousand, an increase from $1,365,973 thousand as of August 31, 2024[108]. - The company entered into a credit agreement on March 1, 2022, borrowing a total of $1.25 billion, consisting of $1.0 billion under the senior unsecured term loan and $250 million under the senior unsecured revolving credit facility[109]. - As of February 28, 2025, the company fully repaid the 2022 Term Facility, amounting to $62.5 million and $125 million repaid during the three and six months ended February 28, 2025, respectively[111]. - The outstanding borrowings under the 2022 Revolving Facility were $480 million as of February 28, 2025, with net borrowings of $230 million during the six months ended February 28, 2025[112]. - The company issued $1 billion in Senior Notes, with $500 million at a 2.900% interest rate due March 1, 2027, and another $500 million at a 3.450% interest rate due March 1, 2032[120]. - Interest expense on outstanding debt for the three months ended February 28, 2025, was $13.9 million, down from $16.6 million for the same period in 2024[124]. Shareholder Returns - The company authorized up to $300 million for share repurchases during fiscal 2025, with $186.9 million remaining as of February 28, 2025[138]. - The company repurchased 136,714 shares of common stock at a total cost of $64.4 million during the three months ended February 28, 2025[137]. - The Board of Directors approved a dividend of $1.04 per share for the first and second quarters of fiscal 2025, totaling approximately $39,572,000 and $39,511,000 respectively[141]. Tax and Other Comprehensive Income - The effective tax rate for the six months ended February 28, 2025, was 16.2%, an increase from 15.8% for the same period in 2024, primarily due to lower excess tax benefits related to stock-based compensation[98]. - Total accumulated other comprehensive loss (AOCL) as of February 28, 2025, was $(112,753,000), compared to $(79,613,000) as of August 31, 2024[142]. Capital Expenditures - Capital expenditures for the three months ended February 28, 2025, totaled $23,736,000, up from $21,917,000 in the same period of 2024, indicating an increase of 8.3%[165]. - Capital expenditures for the six months ended February 28, 2025, were $49,610,000, compared to $38,383,000 in the same period of 2024, indicating a significant increase of 29.1%[165]. Segment Performance - Americas segment revenues for the three months ended February 28, 2025, were $369,661,000, an increase from $352,618,000 in the same period of 2024, representing a growth of 4.1%[165]. - EMEA segment revenues for the three months ended February 28, 2025, were $143,387,000, compared to $139,176,000 in the prior year, reflecting a growth of 3.1%[165]. - Asia Pacific segment revenues for the three months ended February 28, 2025, were $57,612,000, an increase from $54,151,000 in the same period of 2024, indicating a growth of 6.8%[165].

Core Insights - FactSet (FDS) shares have increased by 4.9%, underperforming the industry rally of 14.3% and the S&P 500's rise of 8.1% [1] - Revenue growth is projected at 5% for 2025 and 6% for 2026, with earnings expected to rise by 4% in 2025 and 7.7% in 2026 [1] Group 1: Financial Performance - In fiscal 2024, organic revenues grew by 5.7% year over year, reaching $2.2 billion, with a forecasted increase of 4.9% for fiscal 2025 [2] - The Annual Subscription Value (ASV) reached $2.3 billion, marking a 4.8% year-over-year increase, with U.S. revenues at $1.5 billion, up 6.1% [3] - Share repurchases totaled $235.2 million in fiscal 2024, with dividends paid amounting to $150.7 million, reflecting the company's commitment to shareholder value [4] Group 2: Strategic Partnerships and Innovations - FactSet partnered with Irwin to integrate investor relations CRM with its Workstation, enhancing solutions for IR professionals [5] - Collaboration with LightPoint provides hedge funds with an integrated solution to improve trade workflows [5] - Partnership with Coin Metrics allows financial professionals to monitor digital assets and evaluate portfolios [5] Group 3: Liquidity and Financial Health - The current ratio for FactSet in Q2 fiscal 2025 was 1.47, significantly higher than the industry average of 0.8, indicating strong liquidity [6]

Core Viewpoint - FactSet (FDS) reported second-quarter fiscal 2025 results with earnings exceeding estimates while revenues met expectations [1][2] Financial Performance - Earnings per share (EPS) of $4.28 beat the consensus estimate by 2.2% and increased 1.4% year-over-year [2] - Revenues totaled $570.7 million, meeting the Zacks Consensus Estimate and reflecting a 4.5% year-over-year growth [2] - Adjusted operating income was $212.7 million, up 1.6% from the previous year, surpassing estimates [8] Revenue Breakdown - Organic revenues increased 4% year-over-year to $568 million, with regional growth rates of 4% in the Americas, 3.1% in EMEA, and 6.8% in Asia Pacific [4] - Revenues from the Americas segment were $369.7 million, up 4.8% year-over-year [5] - EMEA revenues were $143.4 million, a 3% increase, while Asia Pacific revenues reached $57.6 million, marking a 6.5% growth [5] Subscription Value and Client Metrics - Annual Subscription Value (ASV) plus professional services reached $2.3 billion, up 4.1% year-over-year [6] - The company added 396 clients in the second quarter, bringing the total to 8,645, with a client retention rate of 91% [7] Balance Sheet and Cash Flow - Cash and cash equivalents at the end of the quarter were $278.5 million, down from $289.2 million in the previous quarter [9] - Long-term debt increased to $1.5 billion from $1.3 billion [9] - Generated $174 million in cash from operating activities, with capital expenditures of $23.7 million [10] Guidance for Fiscal 2025 - Updated revenue guidance for fiscal 2025 is set at $2.305-$2.325 billion, slightly above the previous range [11] - EPS guidance is between $16.8 and $17.4, with the midpoint aligning with consensus estimates [11] - Projected adjusted operating margin is between 36% and 37% [11]

Group 1 - The article discusses a positive outlook on FactSet Research Systems (NYSE: FDS), highlighting expectations for strong EPS growth in the coming years [1] - The author emphasizes a fundamentals-based approach to value investing, arguing against the misconception that low multiple stocks are inherently cheap [1] - The focus is on identifying companies with long-term durability, steady growth, and strong balance sheets, while acknowledging the risks associated with overpaying for successful companies [1] Group 2 - The article does not contain any disclosures related to stock positions or business relationships with the companies mentioned [2] - It clarifies that past performance is not indicative of future results and that no specific investment advice is provided [3]

Company Overview - FactSet (NYSE: FDS) is recognized for its solid business model based on recurring revenues, which contributes to its stability and reliability in the financial services sector [1]. Business Model - The company operates a digital financial platform utilized by thousands of professionals, indicating a strong user base and demand for its services [1]. Investment Perspective - The focus on fundamental analysis rather than technical trading suggests a long-term investment strategy, which aligns with the company's recurring revenue model [1].

Financial Data and Key Metrics Changes - In Q2 2025, organic ASV grew by 4.1% year-over-year, with an adjusted operating margin of 37.3% and adjusted diluted EPS of $4.28 [9][10][43] - GAAP revenues increased by 4.5% year-over-year to $571 million, while organic revenues grew by 4% to $568 million [35][36] - Free cash flow was $150 million in Q2, up 23% over the same period last year [44] Business Line Data and Key Metrics Changes - Wealth management saw double-digit growth, with significant wins including a contract with UBS [15][16] - The banking segment faced challenges, but renewal activity increased, with over a dozen large banking renewals signed [18][20] - PEVC experienced accelerated double-digit growth, while asset management faced headwinds due to cost rationalization [21][22] Market Data and Key Metrics Changes - In the Americas, organic ASV grew by 4%, while EMEA saw 3% growth and Asia-Pacific maintained 7% growth [12][13][14] - The wealth segment is gaining market share, particularly in the Americas, with expansion opportunities in Europe and Asia [16][17][118] Company Strategy and Development Direction - The company is focused on driving top-line growth, with a strong sales pipeline and product-led innovation [25][26] - Recent acquisitions, including LiquidityBook, are expected to enhance service offerings and cross-sell opportunities [23][27][111] - The strategy includes expanding into new regions and adding services to existing clients, particularly in wealth management [119] Management's Comments on Operating Environment and Future Outlook - Management acknowledges a challenging market environment but expresses confidence in the sales pipeline and product innovation [10][11] - There is optimism about growth acceleration in the second half of the fiscal year, with reaffirmed guidance for organic ASV growth [47][50] - The company is well-positioned to capitalize on Gen AI products and improve client engagement [31][50] Other Important Information - The company repurchased nearly 137,000 shares for approximately $64 million during the quarter [45] - The effective tax rate for Q2 was 15.9%, a decrease from the previous year [42] - The company is committed to returning capital to shareholders while maintaining investment-grade ratings [46][47] Q&A Session Summary Question: Can you provide more details on the traction with Gen AI products? - Management reported strong momentum with PitchCreator and other Gen AI products, with positive client reception and active trials [56][62] Question: Is the environment improving or is the company performing better in a challenging market? - Management believes they have de-risked major challenges and are seeing strength across all markets, with a positive outlook for the second half [68][71] Question: How does banking factor into the guidance range? - Management indicated that they are not relying on banking for their numbers, with conservative estimates baked into the guidance [76][80] Question: Is the UBS Vault deal included in ASV this quarter? - Yes, the UBS deal was signed in the quarter, but the ASV impact will be realized in the following quarters [84][87] Question: What is the pricing outlook given the lower CPI? - Management expects international pricing to align with the lower CPI, impacting annual price increases [90][92] Question: How are technology costs impacting margins? - Management is actively managing technology and people costs, with expectations of a ramp-up in expenses for strategic investments in the second half [96][100]

Core Insights - FactSet Research (FDS) reported revenue of $570.66 million for the quarter ended February 2025, reflecting a year-over-year increase of 4.5% [1] - Earnings per share (EPS) for the quarter was $4.28, slightly up from $4.22 in the same quarter last year, with an EPS surprise of +2.15% compared to the consensus estimate of $4.19 [1] Financial Performance Metrics - Total Annual Subscription Value (ASV) reached $2.31 billion, exceeding the average estimate of $2.30 billion [4] - Total Users stood at 219,141, slightly below the average estimate of 221,880 [4] - Total Clients increased to 8,645, surpassing the average estimate of 8,325 [4] - ASV from domestic clients was $1.50 billion, above the average estimate of $1.48 billion [4] - ASV from international clients was $805 million, slightly below the average estimate of $811.93 million [4] - ASV from buy-side clients was 82.3%, marginally above the estimated 82.2% [4] - ASV from sell-side clients was 17.7%, below the estimated 17.9% [4] Revenue Breakdown - Revenues from US clients were $369.7 million, exceeding the average estimate of $369.19 million, with a year-over-year change of +4.9% [4] - Revenues from international clients were $201 million, slightly below the average estimate of $201.57 million, reflecting a +4% year-over-year change [4] - Revenues from clients in EMEA were $143.40 million, close to the average estimate of $144.53 million, with a +3% year-over-year change [4] - Revenues from clients in the Asia Pacific region were $57.60 million, above the average estimate of $57.33 million, representing a +6.5% year-over-year change [4] Stock Performance - FactSet shares have returned -6% over the past month, compared to a -7.5% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]

Thursday, March 20, 2025 FactSet Earnings Call Second Quarter Fiscal 2025 Copyright © 2022 FactSet Research Systems Inc. All rights reserved. Confidential: Do not forward. Copyright © 2025 FactSet Research Systems Inc. All rights reserved. FactSet Business Use Only Forward-Looking Statements and Non-GAAP Measures This presentation, and other statements that FactSet may make in connection with this presentation, contains forward-looking statements based on management's current expectations, assumptions, esti ...

Company Performance - FactSet reported quarterly earnings of $4.28 per share, exceeding the Zacks Consensus Estimate of $4.19 per share, and showing a slight increase from $4.22 per share a year ago, representing an earnings surprise of 2.15% [1] - The company posted revenues of $570.66 million for the quarter ended February 2025, matching the Zacks Consensus Estimate and up from $545.95 million year-over-year [2] - Over the last four quarters, FactSet has surpassed consensus EPS estimates four times and topped consensus revenue estimates three times [2] Stock Outlook - FactSet shares have declined approximately 8.7% since the beginning of the year, compared to a 3.5% decline in the S&P 500 [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the next quarter is $4.37 on revenues of $577.8 million, and for the current fiscal year, it is $17.15 on revenues of $2.3 billion [7] Industry Context - The Business - Information Services industry, to which FactSet belongs, is currently ranked in the bottom 19% of over 250 Zacks industries, indicating potential challenges ahead [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact FactSet's stock performance [5]

Core Insights - FactSet reported a solid financial performance for Q2 fiscal 2025, with GAAP revenues of $570.7 million, reflecting a 4.5% increase year-over-year. Organic revenues grew by 4.0% to $568.0 million, driven primarily by wealth and institutional buy-side clients [4][5][6]. Financial Performance - Q2 GAAP operating margin was 32.5%, down approximately 80 basis points from the previous year, while adjusted operating margin decreased to 37.3%, down 100 basis points year-over-year [4][5]. - GAAP diluted EPS increased by 3.0% to $3.76, and adjusted diluted EPS rose by 1.4% to $4.28 compared to the same period last year [4][5]. - Free cash flow for Q2 was $150.2 million, a 23.3% increase from $121.9 million in the prior year [4][5][38]. Annual Subscription Value (ASV) - ASV reached $2,306.1 million as of February 28, 2025, up from $2,185.6 million a year earlier, with organic ASV growing by 4.1% to $2,276.2 million [6][7]. - The buy-side organic ASV growth rate was 4.1%, while sell-side growth was 2.2% [7]. Segment Performance - ASV from the Americas was $1,501.1 million, with organic ASV increasing by 4.4% to $1,474.9 million. Revenues from the Americas rose to $369.7 million [8]. - ASV from EMEA was $571.3 million, with organic ASV increasing by 2.6% to $571.4 million. EMEA revenues were $143.4 million [9]. - ASV from Asia Pacific was $233.7 million, with organic ASV increasing by 6.8% to $229.9 million. Asia Pacific revenues were $57.6 million [10]. Client and User Metrics - The client count as of February 28, 2025, was 8,645, reflecting a net increase of 396 clients in the past three months [11]. - The user count was 219,141, with a net increase of 874 users, primarily driven by growth in wealth management users [11]. Share Repurchase and Dividends - FactSet repurchased 136,714 shares for $64.4 million at an average price of $470.70 during Q2, with $186.9 million remaining for future repurchases [12]. - A quarterly dividend of $39.5 million, or $1.04 per share, was declared [16]. Business Outlook - The company reaffirmed its guidance for fiscal 2025, expecting organic ASV growth of $100 million to $130 million and GAAP revenues in the range of $2,305 million to $2,325 million [17][37].