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FACTSET RESEARCH SYSTEMS INC (FDS)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 FY2025 delivered steady topline growth and stable adjusted profitability: GAAP revenue $568.7M (+4.9% y/y), adjusted operating margin 37.6% (flat y/y), adjusted diluted EPS $4.37 (+6.1% y/y); GAAP operating margin compressed to 33.6% on higher amortization and professional fees .
  • Annual Subscription Value (ASV) rose to $2,265.9M (+$106.5M y/y); Organic ASV $2,258.8M (+4.5% y/y) increased $3.4M sequentially, reflecting seasonally low net adds; retention strong (>95% ASV, 91% client) .
  • Guidance reaffirmed: FY2025 GAAP revenue $2.285–$2.305B, GAAP op margin 32.5–33.5%, adjusted op margin 36–37%, GAAP EPS $15.10–$15.70, adjusted EPS $16.80–$17.40, Organic ASV growth $90–$140M; management expects 2H-weighted growth with pipeline traction and gen AI monetization (30–50 bps to growth) .
  • Cash generation was seasonally soft: CFO $86.4M and FCF $60.5M (–56% y/y) on tax dispute resolution, vendor payment timing, and higher capex; net share repurchases 104,475 shares for $48.8M; quarterly dividend $1.04/share paid Dec 19 .
  • Stock reaction catalyst: reaffirmed guidance and visible AI/Managed Services wins (e.g., gen AI Pitch Creator, JPM partnership) support narrative of back-half acceleration despite near-term budget caution .

What Went Well and What Went Wrong

What Went Well

  • Wealth momentum: “seat count continues to increase... sequentially adding over 2,000 users” with multiple seven‑figure opportunities and strong pipeline in marquee accounts .
  • AI initiatives gaining traction: launch of Pitch Creator; early monetization (conversational API, Portfolio Commentary), with expected 30–50 bps ASV uplift in FY2025; clients demand “workhorse solutions” to boost productivity .
  • Strategic partnerships and managed services: JPM collaboration to deliver performance/reporting via Fusion; landmark seven‑figure performance solutions win displacing incumbents, demonstrating enterprise and managed services capability .

What Went Wrong

  • Free cash flow down 56% y/y to $60.5M on sales tax dispute resolution, vendor payment timing, and higher capex; CFO $86.4M vs $155.1M in prior year .
  • GAAP margin pressure: operating margin 33.6% (–120 bps y/y) due to higher amortization and professional fees; adjusted margin flat y/y at 37.6% .
  • Buy-side erosion and budget caution: clients scrutinize spend and consolidate vendors; budgets seen as “flat” near term, with acceleration expected later in the year .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$552.7 $562.2 $568.7
GAAP Diluted EPS ($)$4.09 $2.32 $3.89
Adjusted Diluted EPS ($)$4.37 $3.74 $4.37
GAAP Operating Margin (%)36.6% 22.7% 33.6%
Adjusted Operating Margin (%)39.4% 35.8% 37.6%
EBITDA ($USD Millions)$239.93 $170.49 $229.86
Cash from Operations ($USD Millions)$238.24 $163.20 $86.37
Free Cash Flow ($USD Millions)$216.90 $137.20 $60.50

Segment Revenues and ASV (Q1 2025)

SegmentRevenue ($USD Millions)y/yASV ($USD Millions)
Americas$367.2 +5.4% vs $348.3 $1,464.5 (Organic $1,456.4)
EMEA$143.8 +3.0% vs $139.6 $572.4 (Organic $572.4)
Asia Pacific$57.7 +6.2% vs $54.3 $229.0 (Organic $230.0)

Key KPIs

KPIQ3 2024Q1 2025
Client Count8,029 8,249
User Count208,140 218,267
ASV Retention>95% >95%
Client Retention90% 91%
Dividend$1.04/share (paid Jun 20) $1.04/share (paid Dec 19)
Share Repurchases135,150 shares; $59.8M 104,475 shares; $48.8M

Notes: Adjusted results exclude acquisition-related amortization and non-recurring items; Q1 adjustments include intangible amortization, acquisition costs, sales tax dispute .

Guidance Changes

MetricPeriodPrevious Guidance (Q4 FY2024)Current Guidance (Q1 FY2025)Change
Organic ASV growthFY20254%–6% $90M–$140M (≈4%–6%) Maintained
GAAP RevenueFY2025$2,285–$2,305M $2,285–$2,305M Maintained
GAAP Operating MarginFY202532.5%–33.5% 32.5%–33.5% Maintained
Adjusted Operating MarginFY202536%–37% 36%–37% Maintained
GAAP Diluted EPSFY2025$15.10–$15.70 $15.10–$15.70 Maintained
Adjusted Diluted EPSFY2025$16.80–$17.40 $16.80–$17.40 Maintained
Effective Tax RateFY202517%–18% 17%–18% Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 FY2024)Previous Mentions (Q4 FY2024)Current Period (Q1 FY2025)Trend
AI/technology initiativesReleased Transcript Assistant, Portfolio Commentary; investment in gen AI AI Blueprint/Mercury; ecosystem approach; beta program expanding Launch of gen AI Pitch Creator; monetized conversational API; Portfolio Commentary first commitment; 30–50 bps ASV uplift expected Strengthening monetization/usage
Wealth segmentUsers up; demand driven by wealth Largest ASV contributor; enterprise wins; adviser desktop displacement Seat count +2,000 sequentially; deceleration seen as timing; confident in reacceleration Short-term timing pause; pipeline strong
Banking/dealmakersSoft earlier; reacceleration in Q4; competitive win Normalized hiring hoped; deep sector/private markets help Pitch Creator traction; trials/RFPs up; hiring outlook still uncertain Early signs improving activity
Buy-side budgetsVendor consolidation; pressure Large client cancellation; erosion pressure Budgets flat; cautious tone; managed services attach rising Continued pressure; service-led wins
Managed ServicesN/AEarly success; middle-office performance Landmark performance solutions win; JPM Fusion collaboration; attach rates strong Expanding enterprise engagements
PartnershipsN/AAI partner program; CUSIP strong JPM collaboration; Irwin acquisition for IR workflow Broadening ecosystem
Regional trendsAmericas +5.5% organic revenue; APAC +3.0% Americas +6% ASV; EMEA 2%; APAC 7% Americas +5.2% organic revenue; EMEA +2.7%; APAC +6.2% Consistent regional growth

Management Commentary

  • “Clients increasingly look to us as a partner of choice to bring greater productivity and unlock efficiencies across their enterprise workflows... a robust pipeline fueled by... innovative solutions that deliver value” — Phil Snow, CEO .
  • “We are off to a good start in fiscal 2025... solid operating performance through sustained cost discipline and execution against our growth initiatives and capital strategy” — Helen Shan, CFO .
  • “Gen AI monetization... we’re expecting 30 to 50 bps of growth in FY ’25… banking products (Pitch Creator)… are getting great feedback” — Phil Snow, CEO .
  • “Managed services attach rates… are quite good… clients turn to us to gain more scale” — Helen Shan, CFO .

Q&A Highlights

  • ASV cadence: Management anticipates acceleration in Q2 and beyond, with wealth comprising ~half of top deals; trials +23% in Americas and RFPs +30% y/y signal stronger activity .
  • ASV growth reconciliation: CGS issuance contributed ~25 bps, bridging buy-side 4.3% and sell-side 3.5% growth to total 4.5% .
  • Gen AI monetization: Portfolio Commentary and conversational API already monetized; management guides 30–50 bps ASV contribution in FY2025 with subscription plus consumption pricing models .
  • Margin trajectory: H1 margins closer to guidance midpoint as tech spend (cloud, internal software amortization) ramps and bonus pool resets; adjusted margin guided 36–37% .
  • Pricing tactics: More aggressive packaging in select new business and renewals to drive volume and enterprise wins while locking in longer-term contracts .

Estimates Context

  • Wall Street consensus estimates via S&P Global could not be retrieved due to a system limit (“Daily Request Limit of 250000 Exceeded”). As a result, comparisons to consensus EPS and revenue for Q1 FY2025 are unavailable at this time [functions.GetEstimates error].
  • Implication: Without SPGI consensus data, we cannot quantify beat/miss; however, management reaffirmed full-year guidance and indicated back-half growth weighting driven by pipeline, wealth momentum, and gen AI monetization .

Key Takeaways for Investors

  • Resilient topline and adjusted profitability: revenue +4.9% y/y, adjusted EPS +6.1% y/y, adjusted margin stable at 37.6% despite GAAP margin pressure from amortization/pro fees .
  • Back-half weighted year: Guidance maintained; management points to accelerating ASV in 2H on wealth wins, banking tooling, and managed services; monitor Q2 pipeline conversion .
  • AI as a tangible driver: New products (Pitch Creator, Portfolio Commentary) and APIs monetized with expected 30–50 bps uplift to growth; focus on repeatable, productivity-centric workflows .
  • Strong retention and expanding footprint: >95% ASV retention, client count +32 q/q, users +1,886 q/q; regional growth broad-based (Americas, EMEA, APAC) .
  • Cash dynamics and capital returns: Seasonal FCF/CFO softness from one-offs; continued buybacks ($48.8M) and dividends ($1.04/share) signal balanced capital deployment .
  • Watch buy-side budgets and pricing realization: Near-term caution persists; FactSet employing packaging/pricing strategies to win share and drive enterprise deals .
  • Strategic partnerships (JPM Fusion) and targeted M&A (Irwin) broaden addressable workflows, supporting enterprise-led growth narrative .

References: Q1 FY2025 8‑K and press release ; Q1 FY2025 earnings call transcript ; Q4 FY2024 8‑K/press release/call ; Q3 FY2024 press release .