Core Points - FactSet will release its financial and operating results for Q1 fiscal 2026 on December 18, 2025 [1] - A conference call will be held at 9:00 a.m. Eastern Time on the same day to discuss the results [2] - The earnings presentation will be available on FactSet's Investor Relations website at 8:30 a.m. Eastern Time on December 18, 2025 [3] Company Overview - FactSet is a global financial digital platform and enterprise solutions provider, serving approximately 9,000 global clients and over 237,000 individual users [4] - The company integrates proprietary financial data, client datasets, and third-party sources to deliver tailored solutions across various sectors [4] - FactSet has over 47 years of expertise and operates in 20 countries, focusing on innovation and long-term client success [4]

Performance Overview - Baron Focused Growth Fund delivered a gain of 4.83% in Q3, underperforming the Russell 2500 Growth Index, which increased by 10.73% [3][6] - Underperformance was attributed to concerns about economic growth affecting Consumer Discretionary stocks and increased competition impacting valuations of investments like On Holding AG and FactSet Research Systems Inc. [3][15] Portfolio Insights - Despite recent underperformance, portfolio companies are generating strong revenue growth and maintaining robust balance sheets, allowing for growth investments, strategic acquisitions, or shareholder returns [4][10] - The fund managers are actively investing new capital, believing valuations remain compelling, particularly in small- and mid-cap stocks trading at discounts to large-cap peers [5][10] Long-term Performance - The Fund has outperformed its benchmark over the past 3, 5, and 10 years, generating significant excess returns with lower market risk [6][11] - Since inception, the Fund has achieved an annualized return of 13.84%, compared to 8.37% for the benchmark [12] Investment Strategy - The portfolio is constructed to balance disruptive growth companies with steadier, mature companies, aiming for strong risk-adjusted returns [7][36] - The Fund is diversified across sectors, with a significant focus on Consumer Discretionary, and has no exposure to Energy, Materials, Consumer Staples, or Utilities [38] Key Contributors and Detractors - Top contributors included Tesla, which rose 40.0%, and Shopify, which increased by 28.8%, both benefiting from strong market positions and growth prospects [22][24] - Key detractors included FactSet, which declined 35.8%, and On Holding, which fell 18.4%, primarily due to competitive pressures and market concerns [17][19] Company-Specific Insights - FactSet continues to generate strong results despite AI-related fears, indicating a robust business model and market position [17][35] - On Holding is expected to grow revenue at a CAGR of over 20% in the coming years, supported by its premium brand positioning in the global sportswear market [19][33] - Vail Resorts is refining its marketing strategy to address concerns about visitation levels and is expected to improve pass sales through strategic pricing adjustments [21] Sector Analysis - The Fund's investments in disruptive growth companies represent 43.1% of net assets, with a focus on firms like Tesla and SpaceX, which have large addressable markets and strong growth potential [40] - Core growth investments, such as IDEXX Laboratories and CoStar Group, are expected to generate steady returns through ongoing business investments and shareholder returns [42] Financials and Real Assets - Financials investments account for 15.2% of the Fund's net assets, focusing on companies with strong recurring revenue models [44] - Real asset companies, such as Vail Resorts and Choice Hotels, are seen as having significant brand equity and pricing power, contributing to the Fund's overall strategy [43]

Core Insights - Baron Focused Growth Fund reported a 4.83% appreciation in Q3 2025, underperforming the Russell 2500 Growth Index's 10.73% gain due to economic growth slowdown concerns affecting Consumer Discretionary stocks [1] - Competitive pressures have negatively impacted the valuations of some holdings within the fund [1] Company Analysis: FactSet Research Systems Inc. (NYSE:FDS) - FactSet Research Systems Inc. experienced a one-month return of -6.00% and a 52-week loss of 44.70%, closing at $264.58 with a market cap of $9.901 billion on November 4, 2025 [2] - The company faced stock price declines due to industry-wide AI concerns, CEO transition uncertainties, and cautious commentary from peers, despite reporting strong fiscal Q4 2025 earnings and record new sales [3] - FactSet's revenues increased by 6.2% year-over-year in Q4 2025, reaching $597 million, but it is not among the top 30 most popular stocks among hedge funds, with 36 hedge fund portfolios holding it at the end of Q2 2025 [4]

Core Insights - October was a challenging month for stock selection, with the 15 selected stocks experiencing an average decline of 0.41% in value [1]. Group 1 - The SPDR S&P 500 Trust ETF was referenced, indicating a broader market context for the stock performance [1]. - The analyst has over 10 years of experience in the investment field, starting as an analyst and advancing to a management role [1]. - Dividend investing is highlighted as a personal interest of the analyst, suggesting a focus on income-generating investments [1].

Core Insights - FactSet Research Systems Inc. is a financial data provider with a market cap of $10.9 billion, operating globally across various regions [1] - The company is expected to announce its Q1 results by mid-December, with analysts predicting an adjusted profit of $4.39 per share, a slight increase from $4.37 in the same quarter last year [2] - For the full fiscal year 2026, adjusted EPS is projected to be $17.30, reflecting a 1.9% increase from $16.98 in 2025, with a further expected surge of 11.3% to $19.25 in fiscal 2027 [3] Stock Performance - FactSet's stock has declined by 37.2% over the past 52 weeks, significantly underperforming the Financial Select Sector SPDR Fund's 12.2% gains and the S&P 500 Index's 18.3% returns [4] - Following the release of Q4 results on September 18, the stock price dropped by 10.4% in a single trading session [5] Financial Metrics - As of the end of August, FactSet's annual subscription value (ASV) was $2.4 billion, marking a 6.7% year-over-year increase [5] - The company's revenues for the quarter rose by 6.2% year-over-year to $596.9 million, surpassing consensus estimates by 72 basis points [5] - Operating margins contracted by 200 basis points year-over-year to 33.8%, while adjusted EPS grew by 8.3% year-over-year to $4.05, falling 2.4% short of Street expectations [6] Analyst Sentiment - Analysts maintain a cautious outlook on FactSet, with a consensus "Hold" rating; among 19 analysts, there are two "Strong Buys," 10 "Holds," and seven "Strong Sells" [7] - The mean price target for the stock is $335.07, indicating a potential upside of 16.2% from current price levels [7]

Core Insights - FactSet Research Systems Inc. (NYSE:FDS) is recognized as one of the 10 Best Rising Dividend Stocks to Buy Now [1] Group 1: Financial Performance - FactSet offers a subscription-based model for financial data and analytics, with an annual subscription value (ASV) retention rate exceeding 95%, providing a stable revenue base [2] - The company has increased dividends for 26 consecutive years, currently paying a quarterly dividend of $1.10 per share, which results in a yield of 1.52% as of October 28 [3] Group 2: Technological Innovation - FactSet is focusing on technological advancements, including the launch of its Intelligent Platform and AI-driven solutions such as IRN 2.0 and DaaS, aimed at enhancing client operations and service delivery [4]

Core Insights - The financial industry is undergoing significant changes due to the digital revolution, necessitating companies to adapt and scale up to remain competitive [1] Company Insights - FactSet Research has been identified as an interesting stock within the evolving financial landscape [1] - The analyst has been involved in stock investing and macroeconomic analysis for nearly a decade, focusing on various sectors including banks, telecommunications, logistics, and hotels [1] Market Insights - The analyst has diversified investments across different industries and market capitalizations, including holdings in US banks, hotels, shipping, and logistics companies [1] - The analyst's experience includes trading in both the ASEAN and US markets, with a particular emphasis on the financial sector [1]

Core Viewpoint - The recommendation for FactSet Research Systems (NYSE: FDS) is a buy rating, emphasizing that the market is overly focused on short-term margin pressure while underappreciating the strength of its AI strategy and core business [1] Investment Approach - The investment strategy focuses on long-term investments while incorporating short-term shorts to uncover alpha opportunities [1] - The approach revolves around bottom-up analysis, examining the fundamental strengths and weaknesses of individual companies [1] - The investment duration is medium to long-term, aiming to identify companies with solid fundamentals, sustainable competitive advantages, and growth potential [1]

Core Insights - Conestoga Capital Advisors reported that equity markets reached new all-time highs in Q3 2025, but their Mid Cap Composite underperformed with a return of -3.2% net-of-fees compared to a 2.8% gain for the Russell Midcap Growth Index [1] - The focus on high-quality, profitable companies faced challenges in a risk-on environment, impacting performance [1] Company Analysis: FactSet Research Systems Inc. (NYSE:FDS) - FactSet Research Systems Inc. provides integrated financial information and analytical applications for the investment community, with a one-month return of 1.98% and a 52-week loss of 36.76% [2] - As of October 21, 2025, FactSet's stock closed at $294.11 per share, with a market capitalization of $11.119 billion [2] - The company is experiencing slowed organic growth due to budget constraints at asset managers and increased competition from firms like Bloomberg and S&P, alongside rising technology and content costs affecting margins [3] - Despite being a high-quality franchise, FactSet's premium valuation presents execution risks [3] Market Position and Hedge Fund Interest - FactSet is not among the 30 most popular stocks among hedge funds, with 36 hedge fund portfolios holding the stock at the end of Q2 2025, an increase from 29 in the previous quarter [4] - In Q4 of fiscal 2025, FactSet's revenues grew by 6.2% year-over-year, reaching $597 million [4] - While FactSet shows potential as an investment, certain AI stocks are considered to offer greater upside potential with less downside risk [4]

Client and Revenue Metrics - As of August 31, 2025, FactSet had approximately 9,000 clients and over 237,000 investment professionals using its platform[16]. - Revenues from the Americas segment represented 65% of total revenues during fiscal 2025, while EMEA and Asia Pacific accounted for 25% and 10%, respectively[20]. - Annual Subscription Value (ASV) retention was greater than 95%, with annual retention expressed as a percentage of clients at 91% for the year ended August 31, 2025[30]. - Buy-side clients accounted for approximately 82% of FactSet's Organic ASV as of August 31, 2025[31]. - Organic Annual Subscription Value (Organic ASV) totaled $2,370.9 million, reflecting a 5.7% increase over the prior year, with significant growth in the Americas[157]. - ASV from the Americas represented 65% of total ASV at $1,570.1 million, a 7.9% increase from the previous year[167]. - ASV from EMEA accounted for 25% of total ASV at $591.6 million, marking a 3.5% increase from the prior year[168]. - As of August 31, 2025, Asia Pacific ASV was $243.9 million, a 5.7% increase from $230.3 million in 2024, with organic ASV growing 7.2% to $242.7 million[169]. - The company added 779 clients, bringing the total to 8,996, a 9.5% increase year-over-year[172]. - User count increased by 20,943 to 237,324, representing a 9.7% growth, primarily from wealth management users[173]. Financial Performance - Revenues for fiscal 2025 were $2,321.7 million, an increase of 5.4% from the prior year, driven by a 4.4% increase in organic revenues[156]. - Operating margin improved to 32.2% for fiscal 2025, up from 31.8% in fiscal 2024, primarily due to revenue growth[158]. - Net income for fiscal 2025 was $597.0 million, an increase of 11.2% from the prior year, with diluted earnings per share rising to $15.55, an increase of 11.8%[159]. - The company returned $460.4 million to stockholders through share repurchases and dividends during fiscal 2025[159]. - Operating income rose 6.7% to $748.3 million, with an operating margin of 32.2%, up from 31.8% in the prior year[191]. - Cost of services increased by 8.5% to $1,097.8 million, primarily due to higher employee compensation and amortization of intangible assets[187]. - SG&A expenses decreased by 2.9% to $475.7 million, with a margin of 20.5% of revenues, down 170 basis points from the previous year[190]. - Adjusted net income for fiscal 2025 was $651,617,000, a 2.6% increase from $635,073,000 in fiscal 2024[205]. - Cash and cash equivalents as of August 31, 2025, were $337.7 million, down from $423.0 million as of August 31, 2024[207]. - The company had $486.9 million of undistributed foreign earnings as of August 31, 2025, with $69.1 million permanently reinvested[208]. Employee and Organizational Insights - As of August 31, 2025, FactSet had 12,800 employees, representing a 3.2% increase compared to the previous year[41]. - In fiscal 2025, 94% of employees participated in learning programs, completing 339,000 hours globally[43]. - The employee engagement survey in fiscal 2025 achieved an 88% response rate, indicating strong employee alignment with the company's purpose[43]. - FactSet employees contributed 17,200 volunteer hours across 391 events in fiscal 2025, with over 85% participating in philanthropic initiatives[43]. - In fiscal 2025, FactSet expanded mental health resources through a global platform providing access to on-demand clinical experts and personalized wellness content[47]. - The company has donated over 9 million meals since 2019 through its Hunger Awareness initiative[47]. - As of August 31, 2025, 47% of employees were in Content Operations, 28% in Technology and Product Development, 21% in Sales and Client Solutions, and 4% in Corporate Support[42]. Leadership and Governance - The Chief Executive Officer, Sanoke Viswanathan, was appointed effective September 8, 2025[49]. - Helen L. Shan serves as Chief Financial Officer, overseeing all financial functions since her appointment on July 23, 2024[50]. - Christopher R. Ellis was appointed as Executive Vice President, Head of Strategic Initiatives and Partnerships effective November 1, 2023[58]. Technology and Cybersecurity - FactSet's AI solutions are generating increased usage and demand, with a focus on integrating AI into client workflows to enhance productivity[33]. - The company operates two fully redundant data centers in the U.S. and utilizes multiple cloud providers to support its operations[35]. - The company continues to invest in AI solutions to improve product discoverability and usability, adapting to clients' evolving workflows[37]. - The company maintains a dedicated information security program with approximately 60 employees focused on managing cybersecurity risks[119]. - The company’s cybersecurity risk management is integrated into its broader Enterprise Risk Management framework, reviewed quarterly[121]. - The company faces significant cybersecurity risks, including unauthorized access to confidential data and potential cyber-attacks, which could adversely affect its operations and financial condition[64]. Market and Competitive Landscape - FactSet's competitive landscape includes major players like Bloomberg L.P. and S&P's Market Intelligence division, highlighting the competitive nature of the financial information services industry[39]. - The company is experiencing intense competition across its products and services, with competitors leveraging advanced technologies, including AI, which may impact market share and profitability[81]. - A continued shift from active to passive investing could negatively affect user growth and demand for the company's services, as passive investing requires lower fees and less decision-making[82]. - Economic downturns and uncertainty in the global economy may lead to client consolidation and reduced demand for the company's products and services, impacting overall business results[84]. - The increasing availability of free or inexpensive information sources may reduce demand for the company's products and services[95]. Regulatory and Compliance Risks - The company is subject to SEC reporting requirements and maintains minimum net capital requirements as a registered broker-dealer[44]. - The company is exposed to fluctuations in foreign currency exchange rates, particularly with the British Pound Sterling, Euro, Indian Rupee, and Philippine Peso, which may adversely affect financial results[109]. - The company is subject to numerous global data privacy laws, which could impact its operations and expose it to claims of violations[105]. - Legislative and regulatory changes, such as the EU's DORA and the U.S. Financial Data Transparency Act, may increase compliance costs and impact client relationships[101]. - The company identified a material weakness in internal controls related to financial reporting, with remediation efforts expected to continue into fiscal 2026[99]. Strategic Initiatives and Challenges - The company is investing in enhancing its information technology disaster recovery processes to minimize service disruption risks, although challenges remain in maintaining operational resilience[74]. - The company is implementing a multi-year project to modernize its IT infrastructure, which involves substantial expenditures and risks associated with transitioning to new technologies[75]. - The use of open source software in the company's products may introduce security vulnerabilities and unexpected restrictions, potentially impacting commercialization efforts[76]. - The company faces challenges in developing and marketing new products to maintain technological competitiveness amid rapid market changes, including AI advancements[86]. - Errors or defects in new products can lead to market rejection, reputational damage, and loss of revenues, particularly after product introductions[87]. - Clients are increasingly seeking additional contractual protections, which may create liabilities and compliance challenges for the company[88]. - In fiscal 2025, the company completed several acquisitions, including Irwin, LiquidityBook, and LogoIntern, but faces integration risks and the challenge of realizing anticipated benefits[89]. - The company relies on third-party service providers for critical functions, which exposes it to risks of system failures and security breaches that could impact operations[65]. - The company relies on third-party content agreements, which may be subject to termination or increased costs, impacting the availability of key information for clients[94].