On June 21, 2024, FactSet Research Systems Inc (FDS, Financial) released its 8-K filing detailing the financial results for the third quarter of fiscal 2024, which ended on May 31, 2024. FactSet, a global financial digital platform and enterprise solutions provider, reported notable growth in both revenue and earnings, surpassing analyst estimates.
Company Overview
FactSet provides financial data and portfolio analytics to the global investment community. The company aggregates data from third-party data suppliers, news sources, exchanges, brokerages, and contributors into its workstations. Additionally, it offers essential portfolio analytics that companies use to monitor portfolios and address reporting requirements. Buy-side clients account for 82% of FactSet's annual subscription value. The company has expanded its capabilities through acquisitions, including Portware in 2015, BISAM in 2017, and CUSIP Global Services in 2022.
Performance Highlights
FactSet reported GAAP revenues of $552.7 million for Q3 2024, a 4.3% increase from $529.8 million in Q3 2023. Organic revenues grew by 4.5% year-over-year to $553.4 million. The growth was driven by institutional asset managers, asset owners, partners, and corporates.
Annual Subscription Value (ASV) plus professional services reached $2,219.2 million as of May 31, 2024, up from $2,120.1 million a year earlier. Organic ASV plus professional services increased by 5.0% year-over-year to $2,220.4 million.
Financial Achievements
FactSet's GAAP operating margin improved to 36.6%, up from 32.5% in the prior year, primarily due to a reduction in bonus accruals, a one-time payroll tax adjustment, and a higher capitalization benefit. The adjusted operating margin also increased to 39.4% from 36.0% in the previous year.
GAAP diluted earnings per share (EPS) rose by 18.2% to $4.09, compared to $3.46 in Q3 2023. Adjusted diluted EPS increased by 15.3% to $4.37, up from $3.79 in the prior year period. Adjusted EBITDA grew by 16.9% to $239.9 million, compared to $205.3 million in Q3 2023.
Income Statement and Key Metrics
| Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Revenues | $552.7 million | $529.8 million | 4.3% |
| Operating Income | $202.5 million | $172.0 million | 17.7% |
| Net Income | $158.1 million | $134.7 million | 17.4% |
| Diluted EPS | $4.09 | $3.46 | 18.2% |
| Adjusted Diluted EPS | $4.37 | $3.79 | 15.3% |
Operational Highlights
FactSet's client count increased to 8,029 as of May 31, 2024, with a net addition of 9 clients over the past three months. The user count rose by 1,662 to 208,140, driven mainly by wealth clients. The company's annual ASV retention rate remained above 95%, with an employee count of 12,262, up 1.6% over the last twelve months.
Net cash provided by operating activities increased to $238.2 million, up from $218.6 million in Q3 2023. Free cash flow also rose by 12.6% to $216.9 million.
Commentary and Outlook
FactSet has a long history of providing exceptional value to our clients,” said Phil Snow, CEO of FactSet. "We maintain an optimistic outlook as we further invest in our platform and harness the power of generative AI to accelerate our clients' efficiency and decrease their total cost of ownership."
We continue to deliver value for our shareholders through increased EPS and adjusted operating margin, offsetting softness on the top line," said Linda Huber, FactSet’s CFO.
Conclusion
FactSet Research Systems Inc (FDS, Financial) has demonstrated robust financial performance in Q3 2024, surpassing analyst estimates and showing significant growth in key metrics. The company's strategic investments and focus on enhancing its platform have positioned it well for continued success in the capital markets industry. For more detailed insights and analysis, visit GuruFocus.com.
Explore the complete 8-K earnings release (here) from FactSet Research Systems Inc for further details.
