FactSet(US:FDS)2024-07-03 11:25Part I FINANCIAL INFORMATION Financial Statements Presents FactSet's unaudited consolidated financial statements for Q3 and YTD May 31, 2024, including income, balance sheets, cash flows, and notes Consolidated Statements of Income Q3 FY2024 revenues grew 4.3% to $552.7 million, net income rose 17.4% to $158.1 million, with diluted EPS at $4.09 Consolidated Statements of Income Highlights (Unaudited) | Metric (in thousands, except per share data) | Three Months Ended May 31, 2024 | Three Months Ended May 31, 2023 | YoY Change | Nine Months Ended May 31, 2024 | Nine Months Ended May 31, 2023 | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Revenues | $552,708 | $529,811 | 4.3% | $1,640,869 | $1,549,711 | 5.9% | | Operating Income | $202,459 | $171,959 | 17.7% | $573,441 | $513,104 | 11.8% | | Net Income | $158,135 | $134,663 | 17.4% | $447,630 | $403,054 | 11.1% | | Diluted EPS | $4.09 | $3.46 | 18.2% | $11.58 | $10.35 | 11.9% | Consolidated Balance Sheets As of May 31, 2024, total assets were $4.04 billion, liabilities decreased to $2.15 billion, and stockholders' equity rose to $1.89 billion Consolidated Balance Sheet Highlights (Unaudited) | Metric (in thousands) | May 31, 2024 | August 31, 2023 | | :--- | :--- | :--- | | Total Current Assets | $858,275 | $770,135 | | Goodwill | $1,004,749 | $1,004,736 | | Total Assets | $4,039,701 | $3,962,922 | | Total Current Liabilities | $671,505 | $484,251 | | Long-term Debt | $1,240,626 | $1,612,700 | | Total Liabilities | $2,149,297 | $2,342,992 | | Total Stockholders' Equity | $1,890,404 | $1,619,930 | Consolidated Statements of Cash Flows YTD May 31, 2024, operating cash flow increased to $537.2 million, financing used $402.9 million, resulting in a $27.7 million net cash increase Consolidated Cash Flow Highlights (Unaudited) | Metric (in thousands) | Nine Months Ended May 31, 2024 | Nine Months Ended May 31, 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $537,177 | $489,903 | | Net cash used in investing activities | ($104,658) | ($72,310) | | Net cash used in financing activities | ($402,908) | ($437,357) | | Net increase (decrease) in cash | $27,700 | ($16,646) | | Cash and cash equivalents at end of period | $453,144 | $486,627 | Notes to the Consolidated Financial Statements Detailed notes cover accounting policies, revenue, financial instruments, goodwill, debt, commitments, and segment information, including revenue by geography - The company operates through three geographic segments: Americas, EMEA, and Asia Pacific; internal realignment by firm type in fiscal 2024 did not change reportable segments3335 Revenues by Segment (in thousands) | Segment | Three Months Ended May 31, 2024 | Three Months Ended May 31, 2023 | Nine Months Ended May 31, 2024 | Nine Months Ended May 31, 2023 | | :--- | :--- | :--- | :--- | :--- | | Americas | $356,468 | $337,691 | $1,057,453 | $992,179 | | EMEA | $141,279 | $137,973 | $420,016 | $401,219 | | Asia Pacific | $54,961 | $54,147 | $163,400 | $156,313 | | Total | $552,708 | $529,811 | $1,640,869 | $1,549,711 | - As of May 31, 2024, total debt was $1.43 billion, down from $1.61 billion at August 31, 2023, including various debt facilities and senior notes105 - In Q3 2024, the Board approved a 6% increase in quarterly dividend to $1.04 per share; YTD May 31, 2024, 384,150 shares were repurchased for $171.9 million137142 Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) MD&A discusses Q3 and YTD FY2024 financial performance, highlighting 4.3% Q3 revenue growth, 5.0% Organic ASV growth, and a 36.6% operating margin Executive Overview and Business Strategy FactSet's strategy focuses on expanding its open content and analytics platform, execution excellence, and growth, with Q3 FY2024 revenues at $552.7 million and diluted EPS at $4.09 - The company's strategy focuses on building the leading open content and analytics platform, with key initiatives including expanding the digital platform, scaling the content refinery, leveraging AI, ensuring execution excellence, and fostering a growth mindset175176178 Key Performance Metrics As of May 31, 2024, Organic ASV plus Professional Services grew 5.0% to $2.22 billion, client count rose 3.3% to 8,029, and users increased 10.8% to over 208,000 Organic ASV plus Professional Services (as of May 31, 2024) | Metric (in millions) | Amount | Annual Growth Rate | | :--- | :--- | :--- | | As reported ASV plus Professional Services | $2,219.2 | - | | Currency impact | $1.2 | - | | Organic ASV plus Professional Services | $2,220.4 | 5.0% | - Organic ASV growth was driven by higher demand and price increases across workstations, data solutions, middle office solutions, and CGS subscriptions177182 Client and User Growth | Metric | As of May 31, 2024 | As of May 31, 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Clients | 8,029 | 7,770 | 3.3% | | Users | 208,140 | 187,845 | 10.8% | Results of Operations Q3 FY2024 revenues increased 4.3% to $552.7 million, operating income rose 17.7% to $202.5 million, and operating margin expanded to 36.6% Revenues by Segment - Q3 FY2024 vs Q3 FY2023 (in thousands) | Segment | Q3 2024 | Q3 2023 | % Change | | :--- | :--- | :--- | :--- | | Americas | $356,468 | $337,691 | 5.6% | | EMEA | $141,279 | $137,973 | 2.4% | | Asia Pacific | $54,961 | $54,147 | 1.5% | | Consolidated | $552,708 | $529,811 | 4.3% | - Total operating expenses decreased by 2.1% in Q3 2024, primarily due to a 10.9% reduction in SG&A expenses from lower employee compensation costs208214 - The operating margin for Q3 2024 increased by 410 basis points to 36.6%, driven by lower employee compensation and bad debt expenses as a percentage of revenues218 - The effective tax rate for Q3 2024 was 17.0%, nearly flat compared to 16.9% in the prior-year quarter233 Liquidity and Capital Resources As of May 31, 2024, cash was $453.1 million; YTD operating cash flow was $537.2 million, free cash flow $477.5 million, with capital used for debt, repurchases, and dividends - During the nine months ended May 31, 2024, the company repaid $187.5 million under its 2022 Term Facility, including $150.0 million in voluntary prepayments249271 - A total of $283.2 million was returned to stockholders YTD FY2024 through dividends ($111.3 million) and share repurchases ($171.9 million)260262271 Free Cash Flow (in thousands) | Metric | Nine Months Ended May 31, 2024 | Nine Months Ended May 31, 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $537,177 | $489,903 | | Less: Capital Expenditures | ($59,722) | ($61,421) | | Free cash flow | $477,455 | $428,482 | Quantitative and Qualitative Disclosures About Market Risk The company manages market risks from foreign currency and interest rates using forward contracts for currency exposure and interest rate swaps for variable-rate debt - The company hedges 25% to 75% of projected operating income exposure in British Pound Sterling, Indian Rupee, Euro, and Philippine Peso using foreign currency forward contracts277284 - A hypothetical 10% U.S. dollar devaluation as of May 31, 2024, would increase fair value of forward contracts by $18 million and decrease operating income by $32 million287 - As of May 31, 2024, variable rate debt interest rate exposure was $287.5 million; a 25 basis point SOFR change would result in an approximate $1 million change to annual interest expense293 Controls and Procedures Management concluded disclosure controls and procedures were effective as of May 31, 2024, with no material changes in internal control over financial reporting - The Principal Executive Officer and Principal Financial Officer concluded that disclosure controls and procedures were effective as of the end of the reporting period295 - No material changes in internal control over financial reporting occurred during the quarter296 Part II OTHER INFORMATION Legal Proceedings The company is involved in ordinary course legal proceedings, including a Massachusetts sales tax dispute, with management believing the outcome will not be materially adverse - The company is appealing Massachusetts sales tax assessments for periods from January 2006 through June 2021, believing it will ultimately prevail133 Risk Factors No material changes to the risk factors previously disclosed in the Annual Report on Form 10-K for the fiscal year ended August 31, 2023 - No material changes to the risk factors identified in the Annual Report on Form 10-K for the fiscal year ended August 31, 2023 have occurred299 Unregistered Sales of Equity Securities and Use of Proceeds Details Q3 FY2024 common stock repurchases, totaling 137,993 shares, with $128.1 million remaining authorized for future repurchases as of May 31, 2024 Issuer Purchases of Equity Securities (Q3 FY2024) | Period | Total Shares Purchased | Average Price Paid per Share | Shares Purchased as Part of Program | | :--- | :--- | :--- | :--- | | March 2024 | 36,688 | $466.23 | 36,200 | | April 2024 | 48,500 | $432.56 | 48,500 | | May 2024 | 52,805 | $433.53 | 50,450 | | Total | 137,993 | - | 135,150 | - As of May 31, 2024, $128.1 million remained available for future repurchases under the company's share repurchase program301 Defaults Upon Senior Securities No defaults upon senior securities occurred during the reporting period - None303 Mine Safety Disclosures This item is not applicable to the company's operations - Not applicable304 Other Information No other information to report, and no Rule 10b5-1 trading arrangements were adopted or terminated by directors or officers - No directors or officers adopted or terminated a Rule 10b5-1 trading arrangement during the quarter ended May 31, 2024305 Exhibits Lists exhibits filed with Form 10-Q, including officer certifications and XBRL data files