FactSet(FDS) - 2025 Q3 - Quarterly Results

Third Quarter Fiscal 2025 Financial Performance FactSet reported a 5.9% increase in Q3 fiscal 2025 GAAP revenues to $585.5 million, driven by strong ASV growth across client segments and geographies, despite a decline in operating margins due to higher expenses Key Financial Highlights FactSet reported Q3 fiscal 2025 GAAP revenues of $585.5 million, a 5.9% increase year-over-year, driven by wealth and institutional buy-side clients, though profitability declined with GAAP operating margin falling 350 basis points to 33.2% and GAAP diluted EPS decreasing 5.4% to $3.87, primarily due to higher operating expenses Key Financial Measures | Key Financial Measures | Q3 2025 | Q3 2024 | Change YoY | | :--- | :--- | :--- | :--- | | GAAP Revenues | $585.5 million | $552.7 million | +5.9% | | Organic Revenues | $577.2 million | $552.7 million | +4.4% | | GAAP Operating Margin | 33.2% | 36.6% | -350 bps | | Adjusted Operating Margin | 36.8% | 39.4% | -270 bps | | GAAP Diluted EPS | $3.87 | $4.09 | -5.4% | | Adjusted Diluted EPS | $4.27 | $4.37 | -2.3% | | Organic ASV | $2,296.9 million | - | +4.5% | - The decrease in operating margins was primarily attributed to lapping a lower bonus accrual and a one-time payroll tax adjustment from the prior year, along with higher annual base salaries[4] - Net cash provided by operating activities increased by 6.5% to $253.8 million, and free cash flow grew by 5.4% to $228.6 million for the quarter[4] Annual Subscription Value (ASV) Analysis As of May 31, 2025, total Annual Subscription Value (ASV) reached $2,335.1 million, with organic ASV, excluding recent acquisitions and currency impacts, growing 4.5% year-over-year to $2,296.9 million, driven equally by 4.0% expansion in both buy-side and sell-side client segments Annual Subscription Value Metrics | ASV Metric | Value (as of May 31, 2025) | YoY Growth | | :--- | :--- | :--- | | Total ASV | $2,335.1 million | - | | Organic ASV | $2,296.9 million | +4.5% | | Organic ASV Increase (YoY) | +$98.5 million | - | | Organic ASV Increase (QoQ) | +$22.6 million | - | - Buy-side clients, including asset managers, wealth managers, and hedge funds, constitute 82% of organic ASV, while sell-side firms account for the remaining 18%[8] - Both buy-side and sell-side segments reported an organic ASV annual growth rate of 4.0%[8] Segment Performance by Geography The Americas remains the largest segment, contributing $1,513.1 million in ASV with a 5.0% organic growth rate, while the Asia Pacific region demonstrated the highest organic ASV growth at 7.1%, reaching $235.7 million, and EMEA showed more modest growth with organic ASV increasing by 2.1% Regional Organic Growth Rates | Region | Q3 Organic ASV Growth | Q3 Organic Revenue Growth | | :--- | :--- | :--- | | Americas | 5.0% | 5.0% | | EMEA | 2.1% | 2.3% | | Asia Pacific | 7.1% | 6.4% | - Americas: ASV reached $1,513.1 million, with quarterly revenues of $380.5 million[9] - EMEA: ASV stood at $581.9 million, with quarterly revenues of $145.7 million[10] - Asia Pacific: ASV was $240.1 million, with quarterly revenues of $59.3 million[11] Operational Highlights and Corporate Developments FactSet demonstrated strong operational performance with increased client and user counts, high ASV retention, and strategic capital allocation through share repurchases and dividend increases, alongside a key CEO leadership transition Key Operational Metrics FactSet's operational metrics showed positive momentum in Q3 2025, with the client base growing by 166 to 8,811 and user count increasing by 1,355 to 220,496, driven by wealth management, while annual ASV retention remained strong at greater than 95% and employee headcount rose 2.6% year-over-year to 12,579 - Client count increased by 166 in the past three months to 8,811, driven by hedge fund, corporate, and wealth management clients[16] - User count rose by 1,355 to 220,496, primarily due to an increase in wealth management users[16] - Annual ASV retention was greater than 95%, and client retention was 91%[16] - Employee headcount grew 2.6% over the last 12 months to 12,579, with increases mainly in sales and technology groups and from recent acquisitions[16] Capital Allocation During the third quarter, FactSet executed on its capital return strategy by repurchasing $80.7 million of its common stock, increasing its quarterly dividend by 6% to $1.10 per share for the 26th consecutive year, and refinancing its debt with a new credit agreement including a $500 million term loan and an undrawn $1.0 billion revolving credit facility - Repurchased 184,050 shares for $80.7 million during Q3, with the Board approving a new $400 million share repurchase authorization available from September 1, 2025[13] - Paid a quarterly dividend of $1.10 per share, a 6% increase from the previous quarter, marking the 26th consecutive year of dividend growth[16] - Entered into a new credit agreement with a $500 million term loan and a $1.0 billion revolving credit facility to repay previous borrowings[16] Corporate Updates FactSet announced a significant leadership transition, with Sanoke Viswanathan appointed as the new CEO, succeeding Phil Snow, effective early September 2025, and received recognition as Databricks' Financial Services Data Partner of the Year, highlighting its data integration capabilities - Sanoke Viswanathan was appointed as the new CEO, effective early September 2025, succeeding Phil Snow, who is retiring[4][16] - FactSet was named Databricks' Financial Services Data Partner of the Year, making its data available on the Databricks Marketplace to streamline client data integration[16] - After the quarter, CUSIP Global Services collaborated with Aumni, Inc. to expand CUSIP coverage for private equity and venture-backed companies[16] Fiscal 2025 Business Outlook FactSet reaffirmed its full-year fiscal 2025 guidance, projecting continued organic ASV growth and stable revenue and earnings per share ranges Reaffirmed Guidance FactSet reaffirmed its full-year fiscal 2025 guidance, projecting organic ASV growth between $100 million and $130 million, with GAAP revenues expected in the range of $2,305 million to $2,325 million and adjusted diluted EPS between $16.80 and $17.40 Fiscal 2025 Guidance | Metric | Fiscal 2025 Guidance Range | | :--- | :--- | | Organic ASV Growth | $100 million to $130 million | | GAAP Revenues | $2,305 million to $2,325 million | | GAAP Operating Margin | 32.0% to 33.0% | | Adjusted Operating Margin | 36.0% to 37.0% | | Annual Effective Tax Rate | 17% to 18% | | GAAP Diluted EPS | $14.80 to $15.40 | | Adjusted Diluted EPS | $16.80 to $17.40 | Consolidated Financial Statements (Unaudited) FactSet's financial statements for Q3 fiscal 2025 show revenue growth but a decline in net income, an increase in total assets driven by goodwill, and a net decrease in cash from operating, investing, and financing activities Consolidated Statements of Income For the third quarter of fiscal 2025, FactSet's revenues grew to $585.5 million from $552.7 million in the prior year, but due to an 11.7% increase in total operating expenses, operating income declined by 4.1% to $194.2 million, and net income fell by 6.1% to $148.5 million Consolidated Statements of Income (in thousands) | (In thousands) | Three Months Ended May 31, 2025 | Three Months Ended May 31, 2024 | | :--- | :--- | :--- | | Revenues | $585,520 | $552,708 | | Operating Income | $194,155 | $202,459 | | Net Income | $148,542 | $158,135 | | Diluted EPS | $3.87 | $4.09 | Consolidated Balance Sheets As of May 31, 2025, FactSet's total assets increased to $4.34 billion from $4.06 billion at the end of fiscal 2024, primarily driven by a significant increase in Goodwill to $1.28 billion reflecting recent acquisitions, while total liabilities saw a modest increase to $2.18 billion with long-term debt rising to $1.43 billion Consolidated Balance Sheets (in thousands) | (In thousands) | May 31, 2025 | August 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $356,361 | $422,979 | | Goodwill | $1,277,855 | $1,011,129 | | Total Assets | $4,338,762 | $4,055,040 | | Long-term debt | $1,430,197 | $1,241,131 | | Total Liabilities | $2,183,580 | $2,142,580 | | Total Stockholders' Equity | $2,155,182 | $1,912,460 | Consolidated Statements of Cash Flows For the nine months ended May 31, 2025, net cash from operating activities was $514.2 million, a slight decrease from the prior year, with investing activities using $369.4 million primarily for business acquisitions, and financing activities using $199.3 million for share repurchases and dividend payments, resulting in a net decrease in cash of $52.6 million Consolidated Statements of Cash Flows (in thousands) | (In thousands) | Nine Months Ended May 31, 2025 | Nine Months Ended May 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $514,160 | $537,177 | | Net cash used in investing activities | ($369,373) | ($104,658) | | Net cash used in financing activities | ($199,327) | ($402,908) | | Net decrease in cash | ($52,574) | $27,700 | Reconciliation of U.S. GAAP to Adjusted Financial Measures This section reconciles FactSet's GAAP results to adjusted financial measures, detailing adjustments for operating income, net income, and EPS, and providing a reconciliation of free cash flow and organic ASV by client type Reconciliation of Key Metrics FactSet's adjusted financial measures for Q3 2025 exclude items like intangible asset amortization and business acquisition costs, resulting in adjusted operating income of $215.3 million with a margin of 36.8%, adjusted net income of $163.9 million, and an adjusted diluted EPS of $4.27, compared to the GAAP figure of $3.87 Reconciliation of GAAP to Adjusted Financial Measures (in thousands, except per share) | (In thousands, except per share) | Q3 2025 GAAP | Adjustments | Q3 2025 Adjusted | | :--- | :--- | :--- | :--- | | Operating Income | $194,155 | $21,158 | $215,313 | | Net Income | $148,542 | $15,379 | $163,921 | | Diluted EPS | $3.87 | $0.40 | $4.27 | - The primary adjustments to derive non-GAAP figures are the exclusion of intangible asset amortization ($19.2 million) and business acquisition-related costs ($2.0 million)[35] Free Cash Flow Reconciliation In Q3 2025, FactSet generated $228.6 million in free cash flow, a 5.4% increase from the $216.9 million generated in the same period last year, calculated by subtracting $25.2 million in capital expenditures from the $253.8 million in net cash provided by operating activities Free Cash Flow Reconciliation (in thousands) | (In thousands) | Q3 2025 | Q3 2024 | Change | | :--- | :--- | :--- | :--- | | Net Cash Provided for Operating Activities | $253,833 | $238,235 | +6.5% | | Less: Capital Expenditures | ($25,230) | ($21,339) | - | | Free Cash Flow | $228,603 | $216,896 | +5.4% | Organic ASV Reconciliation and Client Type Analysis FactSet's organic ASV growth of 4.5% in Q3 2025 was driven by 4.0% growth from both its buy-side and sell-side client segments, with the buy-side representing 82.3% of total ASV and seeing its growth rate moderate from 5.3% in the prior year, while the reported ASV of $2,335.1 million is adjusted for a negative currency impact of $5.7 million and $32.5 million from recent acquisitions to arrive at the organic ASV of $2,296.9 million Organic ASV Growth Rate by Client Type | ASV Growth Rate | Q3'25 | Q3'24 | | :--- | :--- | :--- | | Buy-side clients | 4.0% | 5.3% | | Sell-side clients | 4.0% | 3.7% | Organic ASV Reconciliation (in millions) | (In millions) | As of May 31, 2025 | | :--- | :--- | | As reported ASV | $2,335.1 | | Currency impact | ($5.7) | | Acquisition ASV | ($32.5) | | Organic ASV | $2,296.9 |