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FactSet Research Systems Inc. is a global financial digital platform and enterprise solutions provider that offers expansive data, sophisticated analytics, and flexible technology to power critical investment workflows for financial professionals. The company's primary revenue source is subscriptions to its multi-asset class data and solutions, which are delivered through its connected data and technology platform . FactSet operates through three reportable segments: the Americas, EMEA, and Asia Pacific, with solutions spanning the investment lifecycle, including investment research, portfolio construction and analysis, trade execution, performance measurement, risk management, and reporting . The company's business strategy focuses on building a leading open content and analytics platform, offering personalized digital products, and delivering insights tailored to clients' specific business models .
- Workstations - Provides financial professionals with integrated tools for investment research, portfolio management, and trade execution.
- Portfolio Analytics - Offers solutions for performance measurement, risk management, and portfolio analysis to optimize investment strategies.
- Enterprise Data Solutions - Delivers comprehensive data services that support data integration, management, and analysis across various financial workflows.
- Managed Services - Supports data, performance, risk, and reporting workflows with tailored services to enhance operational efficiency.
- Americas Segment - Generates significant revenue by delivering FactSet's products and services across the American markets.
- EMEA Segment - Contributes to revenue through the provision of FactSet's offerings in Europe, the Middle East, and Africa.
- Asia Pacific Segment - Expands FactSet's reach and revenue in the Asia Pacific region by offering its comprehensive suite of financial solutions.
- Your guidance indicates a more optimistic outlook for the second half of fiscal 2025, similar to last year's expectations; what specific factors give you more confidence this year compared to last year, beyond macroeconomic assumptions like Fed rate cuts?
- With the guidance for margins to be down sequentially, is there a strategic shift happening where you are pivoting from focusing on margin expansion to prioritizing growth, and could you elaborate on this change?
- Given the headwinds in your annual price increases due to lower CPI or RPI, how do you plan to mitigate the impact of potentially lower pricing on your revenue growth in fiscal 2025?
- Can you provide more clarity on the performance of CUSIP and how it is contributing to your overall growth, especially since it drove growth in the partnerships business but specific figures were not disclosed?
- Considering the competitive environment and observations of aggressive pricing by competitors, how are you balancing the need to win market share with the potential impact on margins, and what is your approach to pricing in this context?
Competitors mentioned in the company's latest 10K filing.
- Bloomberg L.P. - Mentioned as one of the largest competitors in the financial information services industry .
- S&P's Market Intelligence division - Listed as a major competitor .
- London Stock Exchange Group's (LSEG's) Data & Analytics division (formerly known as Refinitiv) - Identified as a significant competitor .
- BlackRock Aladdin - Mentioned as a competitive product .
- MSCI Inc. - Listed as a competitor .
- Morningstar Inc. - Included as a competitor .
Recent developments and announcements about FDS.
Financial Reporting
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Revenue and Profit Performance: FactSet reported a 4.9% increase in GAAP revenue to $569 million and a 4.7% increase in organic revenue to $568 million. The growth was driven by sales to wealth firms, asset owners, and institutional asset managers. The GAAP operating expenses increased by 6.8% year-over-year, primarily due to amortization of intangible assets and compensation-related expenses. The GAAP operating margin decreased by approximately 120 basis points to 33.6%, while the adjusted operating margin remained flat at 37.6% .
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Management’s Forward Guidance: FactSet reaffirmed its fiscal 2025 guidance, expecting ASV growth to be second half-weighted. The company is optimistic about its pipeline and expects improved performance in the second half of the year, particularly in wealth management and banking sectors .
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Market Conditions and Strategic Initiatives: FactSet is experiencing a constructive market environment despite macroeconomic uncertainties. The company is focusing on investing in technology and products to maintain market leadership. It has also seen increased client engagement and a robust pipeline, particularly in banking and data solutions .
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Analyst Questions and Management Responses: Analysts inquired about various topics, including margin expectations, pricing strategies, and client budget trends. Management indicated that margins might compress due to increased expenses, but they are optimistic about revenue acceleration in the second half of the year. They also noted that client budgets are expected to remain flat, but there is potential for market share gains .
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AI and Technology Investments: FactSet is investing in generative AI and other technologies to enhance its product offerings. The company has launched several AI-powered products, such as the Pitch Creator, which have received positive feedback and are expected to contribute to revenue growth .
Earnings Call
FactSet (FDS) recently released its earnings call transcript for the first fiscal quarter of 2025. Here are the key points from the call:
Overall, FactSet is focusing on strategic investments and maintaining operational discipline to drive growth in a challenging market environment.
Earnings Report
FactSet has released its earnings results for the first quarter of fiscal 2025, ending November 30, 2024. GAAP revenues increased by 4.9% to $568.7 million, compared to the same period last year. The organic Annual Subscription Value (ASV) rose by 4.5% year-over-year to $2,258.8 million. The GAAP operating margin decreased to 33.6%, while the adjusted operating margin remained consistent at 37.6%. GAAP diluted EPS increased by 1.3% to $3.89, and adjusted diluted EPS rose by 6.1% to $4.37. The company experienced a significant decrease in free cash flow, down 56.4% to $60.5 million, primarily due to lower net cash provided by operating activities and increased capital expenditures .
Corporate Leadership
Board Change
Barak Eilam has been elected as a director of FactSet Research Systems Inc. and appointed to the company's Compensation and Talent Committee as of December 17, 2024. Eilam brings nearly three decades of experience in scaling enterprise software companies, having served as CEO of NICE Ltd. from 2014 to 2024 .