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]

Financial Data and Key Metrics Changes - In the second quarter, organic ASV grew by 4.1% year over year, with adjusted operating margin at 37.3% and adjusted diluted EPS at $4.28 [9][24] - GAAP revenues increased by 4.5% year over year to $571 million, while organic revenues grew by 4% to $568 million [25] - GAAP operating margin decreased by approximately 80 basis points to 32.5% compared to the previous year, while adjusted operating margin decreased by 100 basis points to 37.3% [25][26] - Free cash flow was $150 million in the second quarter, up 23% over the same period last year [29] Business Line Data and Key Metrics Changes - Wealth management saw double-digit growth, with significant market share gains, particularly with UBS selecting FactSet for their advisor desktops [12][13] - The banking segment faced challenges, but renewal activity increased notably, with over a dozen large banking renewals signed [14][15] - Private equity and venture capital (PEVC) experienced accelerated double-digit growth, while corporates also contributed to growth due to the Erwin acquisition [15][16] Market Data and Key Metrics Changes - In the Americas, organic ASV grew by 4%, with mixed results in asset management and banking [11] - EMEA saw organic ASV growth of 3%, with momentum in hedge funds and PEVC firms offset by headwinds in asset management [11] - Asia Pacific maintained 7% organic ASV growth, driven by strong sales of data solutions among wealth, corporates, hedge funds, and PEVC firms [11] Company Strategy and Development Direction - The company aims to drive top-line growth, focusing on wealth management as a key growth engine and expanding its product offerings [18][19] - Recent acquisitions, including Erwin and Liquidity Book, are expected to enhance cross-selling opportunities and accelerate growth [19][32] - The company is prioritizing investments in technology and generative AI to support growth and improve operational efficiency [34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in reaching an inflection point in ASV growth, despite a challenging market environment [9][10] - There is optimism regarding the strength of the sales pipeline and product-led innovation, with expectations for growth acceleration in the second half of the year [10][20] - Management acknowledged ongoing market uncertainties but highlighted positive client dialogues and a robust pipeline [10][20] Other Important Information - The company repurchased nearly 137,000 shares for approximately $64 million and paid a quarterly dividend of $1.04 per share [31] - The gross leverage ratio was 1.7 times, consistent with maintaining investment-grade ratings [32] - The guidance for organic ASV growth was narrowed to a range of approximately 4.4% to 5.8% [33] Q&A Session Summary Question: Can you provide more details on the traction with clients regarding Pitch Creator and other Gen AI products? - Management noted strong momentum with Pitch Creator and other products, with positive reception from banks and ongoing trials with large clients [36][37] Question: Is the environment improving, or is the company performing better in a challenging environment? - Management indicated that while the environment remains tough, they have de-risked major challenges and are seeing strength across all markets [44][46] Question: How does the company view the impact of banking on guidance? - Management stated that they are not relying on banking for their numbers, with conservative estimates baked into guidance [52][54] Question: Is the UBS Vault deal included in ASV this quarter? - Management confirmed that the UBS deal was signed in the quarter, but the ASV impact will be realized in future quarters as implementation occurs [57][62] Question: What is the outlook for pricing in the context of lower CPI? - Management explained that lower CPI impacts annual price increases, but they are capturing additional ASV through higher pricing and increased volume in new business [64][68]

Financial Data and Key Metrics Changes - Organic ASV grew by 4.1% year over year, with adjusted operating margin at 37.3% and adjusted diluted EPS at $4.28 [9][24] - GAAP revenues increased by 4.5% year over year to $571 million, while organic revenues grew by 4% to $568 million [25] - GAAP operating margin decreased by approximately 80 basis points to 32.5%, while adjusted operating margin decreased by 100 basis points year over year to 37.3% [25][26] - Free cash flow was $150 million in the second quarter, up 23% over the same period last year [29] Business Line Data and Key Metrics Changes - Wealth management saw double-digit growth, with significant market share gains, particularly with UBS selecting FactSet for their advisor desktops [12][13] - Banking faced challenges, but renewal activity increased notably, with over a dozen large banking renewals signed [14][15] - PEVC (Private Equity and Venture Capital) experienced accelerated double-digit growth, while corporates contributed to growth due to the Erwin acquisition [15][16] Market Data and Key Metrics Changes - In the Americas, organic ASV grew by 4%, with mixed results in asset management and banking [11] - EMEA saw organic ASV growth of 3%, with momentum in hedge funds and PEVC firms offset by headwinds in asset management [11] - Asia Pacific maintained 7% organic ASV growth, driven by strong sales of data solutions among wealth, corporates, hedge funds, and PEVC firms [11] Company Strategy and Development Direction - The company aims to drive top-line growth, focusing on wealth management as a key growth engine and expanding its product offerings [18][19] - Recent acquisitions, including Erwin and Liquidity Book, are expected to enhance cross-selling opportunities and accelerate growth [19][20] - The company is prioritizing investments in technology and generative AI to improve workflow productivity and client engagement [20][34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in reaching an inflection point in ASV growth, despite a challenging market environment [9][10] - There is optimism regarding the sales pipeline and product-led innovation, with expectations for growth acceleration in the second half of the fiscal year [9][10] - Management acknowledged market uncertainties but highlighted strong client relationships and a robust pipeline as positive indicators for future performance [20][34] Other Important Information - The company reaffirmed its guidance for organic ASV growth at a midpoint of 5%, narrowing the range to $100 million to $130 million [32][33] - The effective tax rate is expected to remain between 17% to 18% [34] - The company returned $392 million to shareholders over the last twelve months through dividends and share repurchases [31] Q&A Session Summary Question: Can you provide more details on the traction with clients regarding Pitch Creator and other Gen AI products? - Management noted strong momentum with Pitch Creator and positive reception from banks, with plans to monetize these products more seriously in Q3 and Q4 [36][37] Question: Is the environment improving, or is the company performing better in a challenging environment? - Management indicated that while the environment remains challenging, they have de-risked major issues and are seeing strength across all markets [44][46] Question: How does the company view the impact of banking on guidance? - Management stated that they are not relying on banking for their numbers, with conservative estimates baked into the guidance [52][54] Question: Is the UBS Vault deal included in ASV this quarter? - Management confirmed that the UBS deal was booked in Q2, but user contributions will come in later quarters [57][62] Question: Can you clarify the pricing dynamics in the quarter? - Management explained that lower CPI impacted annual price increases, but they are capturing additional ASV through higher pricing and volume in new business [64][66] Question: What is the outlook for the data and feeds business? - Management highlighted strong demand for high-quality data, with improvements in the data feed business driven by new tech startups and partnerships [78][80]

Financial Performance - FactSet's revenues for the second quarter of fiscal year 2025 reached $570660000, a 45% increase compared to $545945000 in the same period last year[29] - Organic revenues grew by 40% to $567985000[29,45] - Adjusted diluted EPS increased by 14% year-over-year to $428[12,29] - Free cash flow increased by 233% to $150219000[29,56] Key Metrics - Organic ASV (Annual Subscription Value) grew by 41%[12] - Total Organic ASV reached $2276000000, with Americas contributing $1475000000, EMEA $571000000, and Asia Pacific $230000000[24] - Client retention rate remained high at over 95%[14] - Client count increased by 8% year-over-year[22] - User count increased by 6% since Q2 2024[17] Capital Allocation - The company steadily increased annual dividends and continued share repurchases in the second quarter 2025[30] Fiscal Year 2025 Outlook - The company narrowed its organic ASV growth guidance range to between $100000000 and $130000000, representing approximately 44% to 58% growth[34] - Revenue guidance was increased to a range of $2305000000 to $2325000000[34] - Adjusted operating margin guidance was reaffirmed at 360% to 370%[34] - Adjusted diluted EPS guidance was reaffirmed at $1680 to $1740[34]

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].

Financial Performance - Q2 GAAP revenues reached $570.7 million, a 4.5% increase from Q2 2024, driven by growth in wealth and institutional buy-side clients [4]. - Organic Q2 ASV was $2,276.2 million, reflecting a year-over-year growth of 4.1% or $90.7 million [4]. - GAAP diluted EPS increased by 3.0% to $3.76, while adjusted diluted EPS rose 1.4% to $4.28 compared to the prior year [4]. - FactSet's revenues for the three months ended February 28, 2025, were $570,660,000, representing a 4.5% increase from $545,945,000 for the same period in 2024 [28]. - Organic revenues for the same period were $567,985,000, reflecting a 4.0% growth compared to the previous year [33]. - The company's net income for the six months ended February 28, 2025, was $294,882,000, up from $289,495,000 in the prior year [31]. - Net income for the three months ended February 28, 2025, was $144,860, a 2.8% increase from $140,940 in the same period of 2024 [36]. - Adjusted net income rose to $164,976, reflecting a 1.2% increase from $163,067 year-over-year [36]. - Free cash flow increased by 23.3% to $150,219 compared to $121,881 in the prior year [39]. Guidance and Projections - Fiscal 2025 guidance anticipates organic ASV growth of $100 million to $130 million, equating to approximately 4.4% to 5.8% [4]. - Adjusted diluted EPS is expected to remain unchanged in the range of $16.80 to $17.40, while GAAP diluted EPS is projected to decrease to $14.80 to $15.40 from a previous range of $15.10 to $15.70 [24]. - The company expects annual revenues for fiscal 2025 to be between $2,305 million and $2,325 million [38]. - Adjusted diluted earnings per share (EPS) is projected to be between $17.40 and $16.80 for fiscal 2025 [38]. - Adjusted operating margin is expected to range from 36.0% to 37.0% for fiscal 2025 [38]. Client and User Metrics - Client count as of February 28, 2025, was 8,645, with a net increase of 396 clients in the past three months [16]. - User count reached 219,141, marking a net increase of 874 users, primarily in wealth management [16]. - Annual ASV retention exceeded 95%, with client retention at 91% [16]. - The percentage of ASV from buy-side clients was 82.3% in Q2'25, showing a slight increase from 82.1% in Q1'25 [42]. Investments and Acquisitions - FactSet repurchased 136,714 shares for $64.4 million at an average price of $470.70 during Q2 2025 [13]. - The acquisition of LiquidityBook enhances FactSet's capabilities in order management and investment book of record [16]. - The company has made significant investments in acquisitions, with $342,461,000 spent on acquiring businesses in the current period [31]. Financial Position - FactSet's total assets increased to $4,241,442,000 as of February 28, 2025, compared to $4,055,040,000 on August 31, 2024 [30]. - Total stockholders' equity increased to $2,056,917,000 as of February 28, 2025, from $1,912,460,000 in the previous period [30]. - FactSet's cash and cash equivalents decreased to $278,548,000 as of February 28, 2025, from $422,979,000 at the beginning of the period [30]. - The company reported cash flows from operating activities of $260,327,000 for the six months ended February 28, 2025, down from $298,942,000 in the same period last year [31]. Operating Performance - Operating income for the three months ended February 28, 2025, was $185,492, a 2.0% increase from $181,942 in the same period of 2024 [36]. - The operating margin for the three months ended February 28, 2025, was 32.5%, down from 33.3% in the previous year [36].