• Organic ASV Growth: 4.1% year-over-year.
• Adjusted Operating Margin: 37.3%.
• Adjusted Diluted EPS: $4.28.
• ASV Retention: Greater than 95%.
• Client Retention: 91%.
• Client Base: Over 8,600 clients.
• User Count: Over 219,000 users.
• GAAP Revenue: $571 million, a 4.5% increase year-over-year.
• Organic Revenue Growth: 4% to $568 million.
• GAAP Operating Expenses: $385 million, a 5.8% increase year-over-year.
• GAAP Operating Margin: 32.5%, a decrease of approximately 80 basis points.
• GAAP Diluted EPS: $3.76, a 3% increase year-over-year.
• Free Cash Flow: $150 million, a 23% increase year-over-year.
• Share Repurchase: Nearly 137,000 shares for approximately $64 million.
• Quarterly Dividend: $1.04 per share.
• Gross Leverage Ratio: 1.7 times.
• Revised Revenue Guidance: $2.305 billion to $2.325 billion.
• Adjusted Operating Margin Guidance: 36% to 37%.
• Adjusted Diluted EPS Guidance: $16.80 to $17.40.

• Warning! GuruFocus has detected 2 Warning Sign with FDS.

Release Date: March 20, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• FactSet Research Systems Inc (NYSE:FDS) reported a 4.1% year-over-year growth in organic ASV, with a positive outlook for the second half of the fiscal year.
• The company achieved an adjusted operating margin of 37.3% and adjusted diluted EPS of $4.28, indicating strong financial performance.
• FactSet Research Systems Inc (NYSE:FDS) has a robust sales pipeline and is confident in reaching the midpoint of its 5% organic ASV growth guidance.
• The company has seen significant growth in its wealth segment, with notable wins such as UBS selecting FactSet to power their advisor desktops.
• Recent acquisitions, including LiquidityBook and Irwin, are expected to drive cross-selling opportunities and contribute to FactSet's growth.

Negative Points

• FactSet Research Systems Inc (NYSE:FDS) faced challenges in asset management and banking, with some large losses impacting overall results.
• Lower CPI resulted in a reduced year-over-year annual price increase, creating a headwind for ASV growth.
• The company experienced a seven-figure cancellation due to the proactive retirement of a legacy solution, affecting growth in the asset management segment.
• FactSet Research Systems Inc (NYSE:FDS) is operating in a challenging market environment with ongoing macroeconomic uncertainties.
• The banking sector remains tough, with no significant improvement in deal flow, impacting the company's reliance on this segment for growth.

Q & A Highlights

Q: Can you provide more color around the traction you've been gaining with clients, especially regarding Pitch Creator and other Gen AI products? How are you thinking about the pricing for these products? A: F. Philip Snow, CEO: We are pleased with the momentum and are on track to monetize these assets this year. Pitch Creator has gained significant traction, especially with banks, and we are seeing receptivity across all firm types for our conversational API. We are also beginning to monetize portfolio commentary. Goran Skoko, EVP, added that clients are reacting well to the pricing structure and realizing productivity gains, particularly with Pitch Creator.

Q: Is the environment getting better, or is the company doing better in a stable environment due to proactive measures? A: F. Philip Snow, CEO: We feel good about having derisked the big rocks for the year and have visibility into most of them. We are seeing strength across all markets, with a resurgence in asset management. The environment is not getting easier, but we are making progress in selling at the enterprise level. We are not relying on banking for our numbers, as the environment remains tough.

Q: Does the UBS Vault deal contribute to ASV this quarter, and can you quantify the proactive retirement of a legacy solution? A: Goran Skoko, EVP: The UBS deal was signed in the quarter, and implementation will occur over the next five to six months. The proactive retirement of a legacy solution impacted Q2, but no further retirements are planned for the rest of the year. Phil Snow, CEO, added that the ASV from UBS is not part of the second half pipeline.

Q: Can you provide color on pricing versus pricing realization for existing deals versus new and renewals? A: Helen Shan, CFO: Our standard contracts include annual price increases based on CPI or RPI, which are lower this year. We adjust rate cards throughout the year and have seen higher price realization in certain firm types. New business price realization is slightly lower year-over-year, but volume is up nearly 25%, driving total ASV from new business up nearly 10%.

Q: How are you managing the margin guide with tech costs and acquisitions? A: Helen Shan, CFO: We have benefited from lower people costs and are managing content and technology costs, including vendor credits and contract cancellations. We expect a ramp-up in expenses in the second half for strategic investments, but we are able to absorb the dilution from acquisitions, which is about 40 to 50 basis points.

Q: Is the market uncertainty helping your data feed business, and how does M&A impact your ASV guidance? A: F. Philip Snow, CEO: Factset performs well through all cycles, and the growth in data feeds is more about becoming an enterprise partner for clients. Goran Skoko, EVP, added that the quality of content and sales focus are driving improvement. Recent acquisitions like LiquidityBook and Irwin are expected to drive cross-sell opportunities and contribute to ASV growth.

Q: Can you outline the land-and-expand strategy for the wealth market? A: Goran Skoko, EVP: We see opportunities for regional expansion, more users, and additional services to support client workflows. We are focusing on geographic opportunities in Europe and Asia and expanding into portfolio management workflows.

Q: Are you anticipating a significant ramp-up in organic revenue growth due to technology investments? A: Helen Shan, CFO: Our three-year plan aims for mid-to-high single-digit growth, supported by consistent investment in technology and Gen AI. There is no additional large investment plan beyond our ongoing strategic investments.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.