Group 1 - FactSet Research Systems Inc. (NYSE: FDS) has been covered by analysts with a generally bearish or neutral outlook on the stock over the years [1] - The analysis focuses on high-quality companies that can outperform the market in the long run due to competitive advantages and high levels of defensibility [1] - The focus of the analysis is primarily on European and North American companies, without constraints regarding market capitalization [1]

FactSet Research Systems Inc. (NYSE: FDS ) is a company I covered from time to time in the last few years, and I was always rather bearish about the stock or neutral at best. In my opinion, FactSet wasMy analysis is focused on high-quality companies, that can outperform the market over the long-run due to a competitive advantage (economic moat) and high levels of defensibility. Focused on European and North American companies, but without constraints regarding market capitalization (from large cap to small ...

Core Insights - FactSet reported earnings per share (EPS) of $4.05, which was below the estimated $4.13, resulting in an earnings surprise of -2.41% [2][6] - The company's revenue for the fourth quarter was $596.9 million, exceeding estimates and reflecting a 6.2% year-over-year growth [3][6] - For the full fiscal year 2025, FactSet's GAAP revenues reached $2.32 billion, marking a 5.4% increase from the previous year [4] - FactSet's organic Annual Subscription Value (ASV) grew by 5.7% to $2.37 billion, indicating successful customer base expansion [4] - The fourth-quarter GAAP operating margin improved to 29.7%, showcasing efficient cost management [5][6] - The adjusted operating margin for the fourth quarter decreased to 33.8%, while the fiscal year GAAP operating margin was 32.2% [5] Financial Performance - EPS for the fourth quarter was $4.05, missing the estimate of $4.13, indicating a -2.41% earnings surprise [2][6] - Revenue for the fourth quarter was $596.9 million, surpassing the estimated $592.8 million, reflecting a 6.2% increase from $562.19 million in the same period in 2024 [3] - For the full fiscal year 2025, GAAP revenues were reported at $2.32 billion, a 5.4% increase from the previous year [4] Operating Metrics - The fourth-quarter GAAP operating margin improved by approximately 700 basis points to 29.7% [5] - The adjusted operating margin decreased by 200 basis points to 33.8% in the fourth quarter [5] - For the fiscal year, the GAAP operating margin was 32.2%, while the adjusted operating margin was 36.3% [5]

Core Insights - FactSet Research Systems reported fourth-quarter earnings of $4.05 per share, missing the consensus estimate of $4.13, while revenue was $596.9 million, slightly exceeding forecasts of $592.8 million [1] - The company provided weak guidance for fiscal 2026, projecting adjusted EPS between $16.90 and $17.60, below the consensus of $18.27 [3] Financial Performance - Organic revenue grew 4.5% to $587.3 million, driven by institutional buy-side and wealth clients [1] - Annual Subscription Value (ASV) reached $2.41 billion, an increase from $2.26 billion a year earlier, with organic ASV rising 5.7% to $2.37 billion, reflecting a year-over-year increase of $127.3 million [2] Future Guidance - GAAP revenue for fiscal 2026 is projected to be between $2.42 billion and $2.45 billion, with organic ASV growth expected to be between $100 million and $150 million [3] - The company announced the departure of director James J. McGonigle from the board effective December 1, 2025, with no reported disagreements with management or the board [2]

Core Insights - FactSet (FDS) reported mixed results for Q4 fiscal 2025, with earnings per share of $4.05 missing the Zacks Consensus Estimate by 2.4%, while revenues of $596.9 million exceeded expectations, increasing by 6.2% year-over-year [1][9] Revenue Performance - Organic revenues grew by 4.5% year-over-year to $562.2 million, with regional growth rates of 5.3% in the Americas, 1.7% in EMEA, and 5.9% in Asia Pacific [3] - Revenues from the Americas segment were $388.7 million, up 7.3% year-over-year, while EMEA revenues were $147.4 million, a 3% increase, and Asia Pacific revenues reached $60.8 million, marking 7.4% growth [4] Annual Subscription Value (ASV) and Professional Services - FactSet's ASV plus professional services totaled $2.4 billion, reflecting a 5.7% increase year-over-year, with buy-side and sell-side organic ASV growth rates of 5.5% and 4.3%, respectively [5] - Organic ASV from the United States was $1.5 billion, up 6%, while EMEA and Asia Pacific ASV were $586.3 million (4.2% increase) and $242.7 million (7.2% increase), respectively [6] Operating Results - Adjusted operating income was $201.7 million, slightly above estimates, with an adjusted operating margin of 33.8%, down 200 basis points from the previous year [7] Balance Sheet and Cash Flow - The company ended the quarter with cash and cash equivalents of $337.7 million, down from $356.4 million in the previous quarter, and long-term debt remained at $1.4 billion [8] - FactSet generated $212.1 million in cash from operating activities, with capital expenditures of $34 million, resulting in a free cash flow utilization of $178.1 million [8] Fiscal 2026 Guidance - For fiscal 2026, FactSet anticipates revenues between $2.423 billion and $2.448 billion, lower than the Zacks Consensus Estimate of $2.45 billion, and expects earnings per share in the range of $16.9 to $17.6, also below the consensus estimate of $18.51 [10]

Core Insights - FactSet Research reported revenue of $596.9 million for the quarter ended August 2025, marking a year-over-year increase of 6.2% and a surprise of +0.73% over the Zacks Consensus Estimate of $592.55 million [1] - The EPS for the same period was $4.05, compared to $3.74 a year ago, but fell short of the consensus estimate of $4.15, resulting in an EPS surprise of -2.41% [1] Financial Performance Metrics - Total Annual Subscription Value (ASV) reached $2.41 billion, slightly above the estimated $2.4 billion [4] - Total Clients increased to 8,996, surpassing the average estimate of 8,856 [4] - Total Users rose to 237,324, exceeding the average estimate of 225,183 [4] - ASV from buy-side clients was 82%, close to the average estimate of 82.3% [4] - Domestic ASV was reported at $1.57 billion, above the average estimate of $1.55 billion [4] - International ASV was $835.5 million, slightly below the average estimate of $850.35 million [4] - Organic ASV was $2.37 billion, significantly higher than the average estimate of $2.06 billion [4] - ASV from sell-side clients was 18%, compared to the average estimate of 17.7% [4] Revenue Breakdown - Revenues from US clients were $388.7 million, exceeding the average estimate of $383.83 million, with a year-over-year change of +7.2% [4] - Revenues from international clients reached $208.2 million, slightly above the average estimate of $208.09 million, reflecting a year-over-year change of +4.3% [4] - Revenues from Asia Pacific clients were $60.8 million, compared to the average estimate of $60.66 million, showing a year-over-year change of +7.4% [4] - Revenues from EMEA clients totaled $147.4 million, in line with the average estimate of $147.48 million, representing a year-over-year change of +3% [4] Stock Performance - FactSet shares have returned -13.3% over the past month, contrasting with the Zacks S&P 500 composite's +2.5% change [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 - For fiscal year 2025, the company achieved annual revenue of $2.3 billion, with an adjusted operating margin of 36.3% and adjusted EPS of $16.98, all within guidance ranges [15][24] - Fourth quarter revenues increased by 6.2% year-over-year, reaching $597 million, contributing to a 5.4% overall revenue growth for fiscal 2025 [24][25] - The company reported organic ASV growth of $127 million for FY25, with Q4 organic ASV of $81.8 million, marking the largest quarter in the company's history [14][15] Business Line Data and Key Metrics Changes - Wealth management delivered strong Q4 performance with organic growth exceeding 10%, driven by significant seven-figure deals and competitive displacements [17][18] - The banking segment saw a 4% year-over-year organic ASV growth, with strong quarterly results attributed to confidence in the AI roadmap [18][20] - Off-platform ASV with wealth clients grew over 50% year-over-year, indicating successful expansion beyond traditional offerings [17] Market Data and Key Metrics Changes - In the Americas, organic ASV growth accelerated to 6%, with asset managers increasing technology investments [16] - EMEA region saw organic ASV growth improve to 4%, with strategic wins despite ongoing challenges for mid-sized asset managers [16] - Asia-Pacific experienced a 7% increase in organic ASV growth, driven by strong demand for middle office solutions and AI-ready data [16][21] Company Strategy and Development Direction - The company aims to become the leading AI-powered financial intelligence platform, focusing on integrating AI into client workflows and enhancing product offerings [10][11] - Strategic investments in AI and data expansion are prioritized to maintain market leadership and drive future growth [28][30] - The company plans to deepen integration with client workflows and expand offerings in data feeds and analytics solutions [29][30] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the current environment of tight client budgets and longer sales cycles but remains confident in the company's competitive positioning [22][23] - The outlook for fiscal 2026 anticipates organic ASV growth of $100 million to $150 million, reflecting a conservative approach due to market dynamics [32][33] - The company expects continued strong demand for solutions, particularly in wealth management and banking, supported by a robust sales pipeline [31][32] Other Important Information - The company returned over $460 million to shareholders in fiscal 2025 through dividends and share repurchases, demonstrating a commitment to shareholder value [27] - The company divested RMS Partners to focus on core growth areas, which led to a one-time gain recognized in GAAP results [27][28] Q&A Session Summary Question: Margin decline breakdown and future outlook - Management indicated that margin decline is primarily due to increased investments in growth and structural changes, with expectations for operating leverage in the future [36][37][38] Question: AI strategy and competitive dynamics - The CEO emphasized the significant opportunity in AI, with ongoing efforts to understand client priorities and enhance product offerings [41][42][43] Question: Strength in wealth management - Management highlighted strong momentum in wealth management, with opportunities for seven-figure deals and improved client engagement [45][46][48] Question: Trends in bank hiring - Management noted improved hiring trends in banking, with a focus on productivity tools and AI-related offerings [70][71] Question: Internal productivity initiatives - Management discussed the importance of internal productivity improvements and the potential for AI to enhance efficiency and output [72][76][77]

Financial Data and Key Metrics Changes - For fiscal year 2025, the company achieved annual revenue of $2.3 billion, with an adjusted operating margin of 36.3% and adjusted EPS of $16.98, all within guidance ranges [15][24] - The fourth quarter saw revenues increase by 6.2% year-over-year, reaching $597 million, contributing to a 5.4% overall revenue growth for fiscal 2025 [24][26] - The company reported a record Q4 organic ASV of $81.8 million, representing a sequential growth acceleration of 5.7% [15][24] Business Line Data and Key Metrics Changes - Wealth management delivered strong Q4 performance with organic growth exceeding 10%, driven by significant seven-figure deals and competitive displacements [17][18] - The banking segment saw a 4% year-over-year growth in organic ASV, with strong quarterly results attributed to client confidence in the AI roadmap [18][24] - Off-platform ASV with wealth clients grew over 50% year-over-year, indicating successful expansion beyond traditional offerings [17] Market Data and Key Metrics Changes - In the Americas, organic ASV growth accelerated to 6%, with asset managers increasing technology investments [16] - EMEA region saw organic ASV growth improve to 4%, with strategic wins despite ongoing challenges for mid-sized asset managers [16] - Asia-Pacific experienced a 7% increase in organic ASV, driven by strong demand for middle office solutions and AI-ready data [16] Company Strategy and Development Direction - The company aims to become the leading AI-powered financial intelligence platform, focusing on integrating AI into client workflows and enhancing product offerings [7][10] - Strategic investments in AI and data solutions are expected to drive top-line growth, with a disciplined approach to long-term growth guided by client needs [11][12] - The company plans to expand its offerings in data feeds and analytics solutions, particularly in wealth management and banking sectors [29][30] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the tight client budgets and evolving market dynamics, emphasizing the importance of quality data and technology as competitive advantages [22][23] - The outlook for fiscal 2026 anticipates organic ASV growth of $100 million to $150 million, reflecting a conservative approach due to longer sales cycles [32][33] - The company is positioned at an inflection point, with strategic investments beginning to translate into competitive advantages [34] Other Important Information - The company returned over $460 million to shareholders in fiscal 2025 through dividends and share repurchases, demonstrating a commitment to shareholder value [27] - The company divested RMS Partners, a non-core platform, to focus resources on core growth areas [27][28] - The company plans to continue building on momentum while investing in data expansion and AI capabilities [28][30] Q&A Session Summary Question: Margin decline breakdown and future outlook - Management indicated that margin decline was influenced by increased investments and cost inflation, with expectations for operating leverage from structural investments in the future [36][37][38] Question: AI strategy and competitive dynamics - The CEO highlighted AI as a significant opportunity, with ongoing efforts to understand client priorities and enhance product offerings [41][42][43] Question: Strength in wealth management and future growth - Management noted strong momentum in wealth management, with opportunities for seven-figure deals and improved attach rates at existing clients [45][46][48] Question: Trends in bank hiring - Management observed improved hiring trends in banking, with technology investments driving productivity [68][70] Question: Internal productivity initiatives and AI impact - Management discussed the potential for AI to enhance productivity and drive top-line growth, with a focus on redeploying talent for greater efficiency [72][75]

Financial Data and Key Metrics Changes - For FY 2025, the company added $127 million of organic ASV, near the top end of guidance range [14] - Annual revenue increased to $2.3 billion, with an adjusted operating margin of 36.3% and adjusted EPS growing to $16.98 [15] - Q4 organic ASV reached $81.8 million, the largest quarter in the company's history, representing a sequential growth acceleration of 5.7% [15][24] Business Line Data and Key Metrics Changes - Wealth management delivered strong Q4 performance with organic growth exceeding 10%, driven by seven-figure deals and competitive displacements [17] - Dealmaker's organic ASV grew 4% year-over-year, with strong quarterly results in banking due to confidence in the AI roadmap [18] - Off-platform ASV with wealth clients grew more than 50% year-over-year, expanding the enterprise footprint outside of the wealth workstation [17] Market Data and Key Metrics Changes - In the Americas, organic ASV growth accelerated to 6%, with asset managers increasing technology investments [16] - EMEA organic ASV growth improved to 4%, with strategic wins including competitor displacement at a large asset manager [16] - Asia-Pacific organic ASV growth increased by 7%, driven by strong demand for middle office solutions and AI-ready data [16] Company Strategy and Development Direction - The company aims to become the leading AI-powered financial intelligence platform, focusing on integrating AI into client workflows and enhancing product offerings [10][11] - Strategic investments in AI and data are expected to drive top-line growth, with a disciplined approach to long-term growth guided by client needs [12][30] - The company plans to expand its offerings in data feeds and analytics solutions to meet the growing needs of advisors in wealth management [30] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the tight client budgets and evolving market dynamics, emphasizing the importance of quality data and technology as competitive advantages [22] - The company expects continued strong demand for its solutions, with a conservative guidance reflecting longer sales cycles and rigorous client approval processes [32][33] - The outlook for FY 2026 anticipates organic ASV growth of $100 million-$150 million, with GAAP revenues projected between $2.42 billion and $2.45 billion [32][33] Other Important Information - The company repurchased approximately 260,000 shares for $107 million during the quarter, concluding a $300 million share repurchase program [27][28] - A quarterly dividend of $1.10 per share was paid, marking the 26th consecutive year of dividend increases [28] - The company divested RMS Partners, a non-core sell-side research platform, to focus on core growth areas [28][29] Q&A Session Summary Question: Margin decline breakdown and future expectations - Management indicated that margin decline is influenced by bonus normalization and additional hiring for growth investments, with expectations for operating leverage in the future [36][37][38] Question: AI strategy and competitive dynamics - The CEO emphasized AI as a significant opportunity, with a focus on understanding client priorities and enhancing product offerings [40][41][42] Question: Wealth management growth and seven-figure deals - Management noted strong momentum in wealth management, with opportunities for large deals and improved attach rates at existing clients [44][45][46] Question: Trends in bank hiring - Management observed improved hiring trends in banking, with a focus on productivity tools and AI-related offerings [68][70] Question: Internal productivity initiatives and AI impact - Management discussed the potential for AI to enhance productivity and output, leading to top-line growth while managing headcount growth [72][76]

Financial Data and Key Metrics Changes - For FY25, the company added $127 million of organic ASV, near the top end of guidance range [12] - Annual revenue increased to $2.3 billion, with an adjusted operating margin of 36.3% and adjusted EPS growing to $16.98 [13] - Q4 organic ASV reached $81.8 million, the largest quarter in company history, representing a sequential growth acceleration of 5.7% [13][22] - Q4 revenues increased 6.2% year over year, reaching $597 million, with FY25 delivering 5.4% overall revenue growth [22] Business Line Data and Key Metrics Changes - Wealth management delivered strong Q4 performance with organic growth exceeding 10%, driven by seven-figure deals [15] - Off-platform ASV with wealth clients grew more than 50% year-over-year [15] - Dealmaker's organic ASV grew 4% year-over-year, with strong quarterly results in banking [16] - The integration of Irwin and FactSet is driving growth in corporate IR needs [17] Market Data and Key Metrics Changes - In the Americas, organic ASV growth accelerated to 6%, with asset managers increasing technology investments [14] - EMEA organic ASV growth improved to 4%, with strategic wins including competitor displacement [14] - Asia-Pacific organic ASV growth increased 7%, driven by strong demand for middle office solutions and AI-ready data [14] Company Strategy and Development Direction - The company aims to become the leading AI-powered financial intelligence platform, focusing on client engagement and product innovation [5][10] - Strategic investments in AI and data solutions are expected to drive top-line growth and enhance client workflows [10][28] - The company plans to expand its offerings in data feeds and analytics solutions to meet the growing needs of advisors [28] Management's Comments on Operating Environment and Future Outlook - Management acknowledges tight client budgets and evolving market dynamics, leading to longer sales cycles [19] - The company is positioned at an inflection point with strategic investments beginning to translate into competitive advantages [32] - Guidance for FY26 anticipates organic ASV growth of $100 million to $150 million, reflecting a conservative approach due to current market conditions [30][31] Other Important Information - The company repurchased approximately 260,000 shares for $107 million during the quarter, concluding a $300 million share repurchase program [24] - A quarterly dividend of $1.10 per share was paid, marking the 26th consecutive year of dividend increases [25] - The company divested RMS Partners to concentrate resources on core growth areas [25][26] Q&A Session Summary Question: Margin decline breakdown and future outlook - Management indicated that margin decline is due to bonus normalization and additional hiring for investments, with expectations for operating leverage in the future [36][38] Question: AI strategy and competitive dynamics - The focus will be on understanding client priorities and enhancing product offerings, with AI seen as a significant opportunity for growth [41][42] Question: Strength in wealth management and future growth - The company sees ongoing demand for analytics and AI in wealth management, with opportunities for seven-figure deals and geographic expansion [46][48] Question: AI strategy and competitive moat - AI investments are expected to enhance internal efficiencies and client engagement, with a strong focus on implementation quality [52][56] Question: Trends in bank hiring - Improved hiring trends were noted in Q4, with expectations for continued momentum in the banking sector [73] Question: Accelerating organic revenue growth - The company believes that increased use of analytics and AI will drive demand for services, with a focus on executing existing opportunities [81][82]