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FACTSET RESEARCH SYSTEMS INC (FDS)·Q3 2025 Earnings Summary

Executive Summary

  • Revenue beat, EPS slight miss; guidance reaffirmed. Q3 revenue was $585.5M vs ~$580.9M consensus (beat), while adjusted EPS was $4.27 vs ~$4.30 consensus (slight miss). Management reaffirmed FY25 guidance across revenue, margins, tax rate, and EPS, highlighting a solid Q4 pipeline and momentum in enterprise solutions and wealth . Consensus values retrieved from S&P Global.*
  • Mixed margin picture as investment ramps. GAAP operating margin fell 350 bps YoY to 33.2% and adjusted margin declined 270 bps to 36.8%, driven by lapping a lower bonus accrual and a one-time payroll tax benefit last year, plus higher technology spend and acquisition-related costs .
  • KPIs improved: organic ASV accelerated and free cash flow rose. Organic ASV grew $22.6M QoQ (+4.5% YoY to $2.30B), client count rose to 8,811, and FCF increased 5% YoY to $228.6M; annual ASV retention remained >95% .
  • Catalysts: revenue beat and reaffirmed guidance; accelerating organic ASV; CEO succession effective early September; dividend raised 6% and new $400M buyback authorization—supporting confidence and capital returns .

What Went Well and What Went Wrong

  • What Went Well

    • Top-line outperformance and pipeline strength: revenue +5.9% YoY to $585.5M; management emphasized strong enterprise solutions momentum and visibility into Q4 deals; guidance reaffirmed .
    • Wealth and data solutions traction: management cited double‑digit wealth ASV growth and improving data feeds demand, including real-time and reference data; Pitch Creator gained 10 signed deals within ~6 months of launch, with >45 opportunities .
    • Cash generation and returns: FCF rose to $228.6M; dividend increased to $1.10 (26th consecutive annual raise) and new $400M buyback authorization effective Sept 1, 2025 .

  • What Went Wrong

    • Margin compression continued: GAAP operating margin 33.2% (−350 bps YoY) and adjusted 36.8% (−270 bps YoY), reflecting normalized bonus accruals, higher payroll/tax compares, tech investment, and M&A amortization .
    • Pricing headwind from lower CPI: Q3 annual price increase captured ~$11M, but below last year, pressuring ASV growth; similar CPI-linked pricing impact internationally .
    • Buy-side headwinds and EMEA softness: asset owners remained cost-focused; EMEA buy-side pressures and lower price uplift weighed on results (though management expects Q4 improvement) .

Financial Results

MetricQ3 2024Q2 2025Q3 2025Q3 2025 Consensus*
Revenue ($MM)$552.7 $570.7 $585.5 $580.9*
GAAP Diluted EPS ($)$4.09 $3.76 $3.87 —
Adjusted Diluted EPS ($)$4.37 $4.28 $4.27 $4.30*
GAAP Operating Margin (%)36.6 32.5 33.2 —
Adjusted Operating Margin (%)39.4 37.3 36.8 —
EBITDA ($MM)$239.9 $224.6 $235.9 $230.3*
  • Consensus values retrieved from S&P Global.*

Segment/Geographic revenue

Region Revenue ($MM)Q3 2024Q3 2025
Americas$356.5 $380.5
EMEA$141.2 $145.7
Asia Pacific$55.0 $59.3

KPIs and operating metrics

KPIQ1 2025Q2 2025Q3 2025
ASV ($MM, reported)$2,265.9 $2,306.1 $2,335.1
Organic ASV ($MM)$2,258.8 $2,276.2 $2,296.9
Organic ASV Δ QoQ ($MM)+$3.4 +$19.6 +$22.6
Client count8,249 8,645 8,811
User count218,267 219,141 220,496
Annual ASV retention>95% >95% >95%
Net cash from ops ($MM)$86.4 $174.0 $253.8
Free cash flow ($MM)$60.5 $150.2 $228.6

Non-GAAP adjustments (Q3 2025)

  • Adjusted EPS excludes ~$0.36/share intangible amortization and ~$0.04/share acquisition-related costs .

Guidance Changes

MetricPeriodPrevious Guidance (Mar 20, 2025)Current (Jun 23, 2025)Change
Organic ASV growth ($)FY25$100–$130M $100–$130M Maintained
GAAP RevenuesFY25$2,305–$2,325M $2,305–$2,325M Maintained
GAAP Operating MarginFY2532.0%–33.0% 32.0%–33.0% Maintained
Adjusted Operating MarginFY2536.0%–37.0% 36.0%–37.0% Maintained
Annual Effective Tax RateFY2517%–18% 17%–18% Maintained
GAAP Diluted EPSFY25$14.80–$15.40 $14.80–$15.40 Maintained
Adjusted Diluted EPSFY25$16.80–$17.40 $16.80–$17.40 Maintained
Quarterly Dividend/ShareOngoing$1.04 (prior) $1.10 (raised May 1) Raised
Share Repurchase AuthorizationNew from 9/1/25$300M prior authorization capacity remaining $106.2M at 5/31/25 New $400M authorization effective 9/1/25 Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
AI/Technology & GenAI monetizationTargeting 30–50 bps ASV from GenAI; 6 SKUs monetized; strong interest in conversational API, portfolio commentary; Pitch Creator pipeline >50 opps; AI used internally for productivity 10 Pitch Creator deals signed; >45 opps; expecting Q4 contributions; continued investment; Q4 expenses highest on GenAI/infra Accelerating
Pricing/CPILower CPI reduced annual price uplift, ~−$7M ASV headwind in Q2; global pricing mixed; selective rate card increases Q3 captured ~$11M annual price increase; CPI headwind persists; international pricing aligned with Americas Headwind
Regional trendsQ1/2: Americas 4–5% organic revenue growth; EMEA mixed with buy-side/banking erosion; APAC ~7% growth Q3: Americas strong; EMEA soft but expected Q4 reacceleration; APAC ~6–7% organic revenue growth Stabilizing
Product performance (Wealth, Data feeds)Wealth double‑digit growth, major wins; data feeds rebound with real-time/reference/benchmarks; UBS enterprise win booked Wealth attach rising; hedge fund/data demand strong; feeds gaining with real-time/reference; Pitch Creator driving banker productivity Positive
Buy‑side headwinds (Asset owners)Ongoing cost rationalization; managed services gaining traction; JPMorgan partnership Asset owner headwinds noted; expect improvement; managed services/PLC solutions offset costs Mixed

Management Commentary

  • “We are pleased with our third quarter performance, which reflects the execution of our enterprise solution strategy… well‑positioned to finish the fiscal year with strength.” — Phil Snow, CEO .
  • “The second half in fiscal 2025 is showing improved results… organic ASV growth accelerating as we meet client demands… we are reaffirming our fiscal 2025 guidance.” — Helen Shan, CFO .
  • On investment cadence: “We anticipate Q4 to be the highest quarter for expense this fiscal year, with investments concentrated on our GenAI and infrastructure projects alongside go‑to‑market initiatives.” — CFO .
  • On macro and growth drivers: “We’re significantly ahead of where we were… strength is really coming from enterprise solutions… the buy‑side looks really strong for Q4.” — CEO .

Q&A Highlights

  • Macro vs execution: Management sees little macro change; momentum attributed primarily to product execution (data solutions, GenAI) and a more positive client tone; buy-side expected to drive Q4 .
  • Q4 setup and pipeline: Booked ASV/commitments ahead of prior years; improved retention and diverse pipeline reduce reliance on any single large deal .
  • Margins and investments: To land within 36–37% adjusted operating margin for FY; Q4 expenses step up for GenAI, infra, and acquisitions integration .
  • EMEA outlook: Despite Q3 softness and lower price uplift, management expects Q4 reacceleration driven by pipeline breadth; annual price headwind normalizes YoY compare .
  • GenAI commercialization: 10 Pitch Creator deals signed; strong traction for conversational API; early contribution from portfolio commentary; pricing framed as subscription plus usage to ensure cost visibility for clients .

Estimates Context

  • Q3 2025: Revenue beat; EPS slight miss. Revenue $585.5M vs ~$580.9M consensus; adjusted EPS $4.27 vs ~$4.30 consensus . Consensus values retrieved from S&P Global.*
  • Trajectory vs prior quarters: Q1 and Q2 each modestly exceeded revenue consensus; EPS outperformed in Q1/Q2, then slightly missed in Q3 . Consensus values retrieved from S&P Global.*

Consensus vs actuals (recent quarters)

MetricQ1 2025Q2 2025Q3 2025
Revenue Consensus ($MM)*565.0*570.7*580.9*
Revenue Actual ($MM)568.7 570.7 585.5
Primary EPS Consensus ($)*4.277*4.180*4.295*
EPS Actual ($)4.37 (Adj) 4.28 (Adj) 4.27 (Adj)
  • Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Revenue resilience with improving momentum: Q3 revenue beat and accelerating organic ASV support confidence into seasonally strong Q4; buy‑side enterprise solutions and wealth remain core growth engines .
  • Investment phase weighing on margins tactically: Margin compression reflects normalization of bonus accruals, tech spend, and M&A amortization; management remains committed to 36–37% adjusted margin for FY25 .
  • AI monetization is real and broadening: Early but tangible revenue from GenAI (Pitch Creator, conversational API, portfolio commentary) with >45 active opportunities; expect incremental Q4 contribution .
  • Pricing normalization is a manageable headwind: Lower CPI reduces annual uplift, but offset by volume, rate card adjustments, and enterprise wins; watch EMEA reacceleration in Q4 .
  • Capital returns signal confidence: Dividend raised 6% and new $400M buyback authorization add support to the equity story alongside sustained FCF generation .
  • CEO transition viewed as constructive: Incoming CEO with deep financial/tech pedigree (JPMorgan) aligns with enterprise strategy and AI focus .

References:

  • Q3 2025 press release and exhibits:
  • Q3 2025 8‑K and press release exhibit:
  • Q3 2025 earnings call transcript:
  • Q2 2025 press release/8‑K/call:
  • Q1 2025 press release/8‑K/call:
  • Dividend and CEO succession releases:

Note: Consensus estimates marked with an asterisk (*) are values retrieved from S&P Global.