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FactSet Reports Results for First Quarter 2024

NORWALK, Conn., Dec. 19, 2023 (GLOBE NEWSWIRE) — FactSet (“FactSet” or the “Company”) (NYSE:FDS) (NASDAQ:FDS), a global financial digital platform and enterprise solutions provider, today announced results for its first fiscal 2024 quarter ended November 30, 2023.

First Quarter Fiscal 2024 Highlights

“In an environment of continued macroeconomic uncertainty, I remain confident in the health of our business and our strategy, and I am optimistic about our ability to grow our business,” said Phil Snow, FactSet CEO. “We are harnessing the power of generative AI to transform our products while expanding the breadth of data and analytics on our open platform.”

(1) References to “organic” figures in this press release exclude the current year impact of acquisitions and dispositions completed within the past twelve months and the current year impact from changes in foreign currency. For year to date comparisons, organic revenues excludes current year revenues that were incurred prior to the the first anniversary date of an acquisition.

Key Financial Measures*

(Condensed and Unaudited) Three Months Ended  
  November 30,  
(In thousands, except per share data)   2023     2022   Change
Revenues $ 542,216   $ 504,815   7.4 %
Organic revenues $ 541,393   $ 504,815   7.2 %
Operating income $ 189,040   $ 171,895   10.0 %
Adjusted operating income $ 203,965   $ 193,402   5.5 %
Operating margin   34.9 %   34.1 % 81bps  
Adjusted operating margin   37.6 %   38.3 % (69bps)  
Net income $ 148,555   $ 136,798   8.6 %
Adjusted net income $ 159,127   $ 155,171   2.5 %
EBITDA $ 219,002   $ 200,419   9.3 %
Diluted EPS $ 3.84   $ 3.52   9.1 %
Adjusted diluted EPS $ 4.12   $ 3.99   3.3 %

* See reconciliation of U.S. GAAP to adjusted key financial measures in the back of this press release.

“We remain vigilant about evolving market conditions as we direct investment toward our most competitive offerings, including AI,” said Linda Huber, FactSet CFO. “Also, we are updating our organic ASV guidance for fiscal 2024. We now expect that our organic ASV growth will be in the range of $110 million to $150 million for fiscal 2024, reduced from our previous guidance of $130 million to $175 million, representing ASV growth of 6% at the midpoint.”

Annual Subscription Value (ASV) + Professional Services

ASV at any given point in time represents the forward-looking revenues for the next twelve months from all subscription services currently supplied to clients. Professional services are revenues derived from project-based consulting and implementation.

ASV plus professional services was $2,184.6 million at November 30, 2023, compared with $2,039.0 million at November 30, 2022. Organic ASV plus professional services was $2,185.0 million at November 30, 2023, up $145.3 million from the prior year, for a growth rate of 7.1%. Organic ASV plus professional services increased $14.3 million over the last three months.

Buy-side and sell-side organic ASV growth rates for the first quarter of fiscal 2024 were 7.2% and 7.6%, respectively. Buy-side clients, including asset managers, wealth managers, asset owners, hedge funds, partners, and corporate clients, accounted for 82% of organic ASV. The remaining organic ASV came from sell-side firms, including broker-dealers, banking and advisory, private equity and venture capital firms. Supplementary tables covering organic buy-side and sell-side ASV growth rates may be found on the last page of this press release.

Segment Revenues and ASV

ASV from the Americas region was $1,395.0 million compared with ASV in the prior year period of $1,293.1 million. Organic ASV increased 7.9% to $1,395.1 million. Americas revenues for the quarter increased to $348.3 million compared with $323.4 million in the first quarter of last year. The Americas region’s organic revenues growth rate was 7.7%.

ASV from the EMEA region was $552.4 million compared with ASV in the prior year period of $522.0 million. Organic ASV increased 5.4% to $552.2 million. EMEA revenues were $139.6 million compared with $130.7 million in the first quarter of fiscal 2023. The EMEA region’s organic revenues growth rate was 6.1%.

ASV from the Asia Pacific region was $215.0 million compared with ASV in the prior year period of $201.0 million. Organic ASV increased 8.0% to $215.5 million. Asia Pacific revenues were $54.3 million compared with $50.7 million in the first quarter of fiscal 2023. The Asia Pacific region’s organic revenues growth rate was 7.5%.

Segment ASV does not include professional services, which totaled $22.2 million at November 30, 2023

Operational Highlights – First Quarter Fiscal 2024

Share Repurchase Program

FactSet repurchased 135,950 shares of its common stock for $59.9 million at an average price of $440.67 during the first quarter under the Company’s share repurchase program. As of November 30, 2023, $240.1 million remained available for share repurchases under this program.

Annual Business Outlook

FactSet is updating its outlook for fiscal 2024. The following forward-looking statements reflect FactSet’s expectations as of today’s date. Given the risk factors, uncertainties, and assumptions discussed below, actual results may differ materially. FactSet does not intend to update its forward-looking statements prior to its next quarterly results announcement.

Fiscal 2024 Expectations (with reference to previous guidance)

As part of FactSet’s continuing focus on cost optimization, the Company expects to take a $10 to 15 million charge during the second quarter of fiscal 2024. Cost reduction items will include both variable costs and personnel-related costs.

Adjusted operating margin and adjusted diluted EPS guidance do not include certain effects of any non-recurring benefits or charges that may arise in fiscal 2024. Please see the back of this press release for a reconciliation of GAAP to adjusted metrics.

Conference Call

First Quarter 2024 Conference Call Details

Please register for the conference call using the above link before the call start time. The conference call platform will register your name and organization and provide dial-in numbers and a unique access pin. The conference call will have a live Q&A session.

A replay will be available on the Company’s investor relations website after 1:00 p.m. Eastern Time on December 19, 2023, through December 19, 2024. The earnings call transcript will be available via FactSet CallStreet.

Forward-looking Statements

This news release contains forward-looking statements based on management’s current expectations, estimates, forecasts and projections about industries in which FactSet operates and the beliefs and assumptions of management. All statements that address expectations, guidance, outlook or projections about the future, including statements about the Company’s strategy for growth, product development, revenues, future financial results, anticipated growth, market position, subscriptions, expected expenditures, trends in FactSet’s business and financial results, are forward-looking statements. Forward-looking statements may be identified by words like “expects,” “believes,” “anticipates,” “plans,” “intends,” “estimates,” “projects,” “should,” “indicates,” “continues,” “may” and similar expressions. These statements are not guarantees of future performance and involve a number of risks, uncertainties and assumptions. Many factors, including those discussed more fully elsewhere in this release and in FactSet’s filings with the Securities and Exchange Commission, particularly its latest annual report on Form 10-K and quarterly reports on Form 10-Q, as well as others, could cause results to differ materially from those stated. Forward-looking statements speak only as of the date they are made, and FactSet assumes no duty to and does not undertake to update forward-looking statements. Actual results could differ materially from those anticipated in forward-looking statements and future results could differ materially from historical performance.

About Non-GAAP Financial Measures

Financial measures in accordance with U.S. GAAP including revenues, operating income and margin, net income, diluted earnings per share and cash provided by operating activities have been adjusted.

FactSet uses these adjusted financial measures both in presenting its results to stockholders and the investment community and in its internal evaluation and management of the business. The Company believes that these adjusted financial measures and the information they provide are useful to investors because they permit investors to view the Company’s performance using the same tools that management uses to gauge progress in achieving its goals. Investors may benefit from referring to these adjusted financial measures in assessing the Company’s performance and when planning, forecasting and analyzing future periods and may also facilitate comparisons to its historical performance. The presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP.

Organic revenues excludes the effects of acquisitions and dispositions completed in the last twelve months and foreign currency movements in all periods presented. Adjusted operating income and margin, adjusted net income, and adjusted diluted earnings per share exclude acquisition-related intangible asset amortization and non-recurring items. EBITDA excludes interest expense, provision for income taxes and depreciation and amortization expense. The Company believes that these adjusted financial measures help to fully reflect the underlying economic performance of FactSet.

Cash flows provided by operating activities has been reduced by purchases of property, equipment, leasehold improvements and capitalized internal-use software to report non-GAAP free cash flow. FactSet uses this financial measure both in presenting its results to stockholders and the investment community and in the Company’s internal evaluation and management of the business. Management believes that this financial measure is useful to investors because it permits investors to view the Company’s performance using the same metric that management uses to gauge progress in achieving its goals and is an indication of cash flow that may be available to fund further investments in future growth initiatives.

About FactSet

FactSet (NYSE:FDS | NASDAQ:FDS) helps the financial community to see more, think bigger, and work better. Our digital platform and enterprise solutions deliver financial data, analytics, and open technology to nearly 8,000 global clients, including over 207,000 individual users. Clients across the buy-side and sell-side as well as wealth managers, private equity firms, and corporations achieve more every day with our comprehensive and connected content, flexible next-generation workflow solutions, and client-centric specialized support. As a member of the S&P 500, we are committed to sustainable growth and have been recognized amongst the Best Places to Work in 2023 by Glassdoor as a Glassdoor Employees’ Choice Award winner. Learn more at www.factset.com and follow us on Twitter and LinkedIn. 

FactSet
Investor Relations Contact:
Ali van Nes
+1.203.810.2273
avannes@factset.com

Media Contact
Megan Kovach
+1.512.736.2795
megan.kovach@factset.com

                                

Consolidated Statements of Income (Unaudited)  
  Three Months Ended
  November 30,
(In thousands, except per share data)   2023       2022  
Revenues $ 542,216     $ 504,815  
Operating expenses      
Cost of services   251,621       227,042  
Selling, general and administrative   100,711       105,596  
Asset impairments   844       282  
Total operating expenses   353,176       332,920  
       
Operating income   189,040       171,895  
       
Other income (expense), net      
Interest income   3,012       2,205  
Interest expense   (16,738 )     (16,537 )
Other income (expense), net   (118 )     322  
Total other income (expense), net   (13,844 )     (14,010 )
       
Income before income taxes   175,196       157,885  
       
Provision for income taxes   26,641       21,087  
Net income $ 148,555     $ 136,798  
       
Basic earnings per common share $ 3.91     $ 3.59  
Diluted earnings per common share $ 3.84     $ 3.52  
       
Basic weighted average common shares   38,016       38,122  
Diluted weighted average common shares   38,643       38,914  
Consolidated Balance Sheets (Unaudited)  
     
     
(In thousands) November 30, 2023 August 31, 2023
ASSETS    
Cash and cash equivalents $ 411,855 $ 425,444
Investments   32,072   32,210
Accounts receivable, net of reserves of $9,328 at November 30, 2023 and $7,769 at August 31, 2023   245,318   237,665
Prepaid taxes   25,678   24,206
Prepaid expenses and other current assets   50,848   50,610
Total current assets   765,771   770,135
     
Property, equipment and leasehold improvements, net   83,168   86,107
Goodwill   1,005,269   1,004,736
Intangible assets, net   1,848,051   1,859,202
Deferred taxes   23,839   27,229
Lease right-of-use assets, net   138,262   141,837
Other assets   86,866   73,676
TOTAL ASSETS $ 3,951,226 $ 3,962,922
     
LIABILITIES    
Accounts payable and accrued expenses $ 150,191 $ 121,816
Current lease liabilities   28,834   28,839
Accrued compensation   52,407   112,892
Deferred revenues   150,152   152,430
Current taxes payable   37,003   31,009
Dividends payable   37,299   37,265
Total current liabilities   455,886   484,251
     
Long-term debt   1,551,134   1,612,700
Deferred taxes   9,326   6,737
Deferred revenues, non-current   3,470   3,734
Taxes payable   31,256   30,344
Long-term lease liabilities   192,647   198,382
Other liabilities   6,767   6,844
TOTAL LIABILITIES $ 2,250,486 $ 2,342,992
     
STOCKHOLDERS’ EQUITY    
TOTAL STOCKHOLDERS’ EQUITY $ 1,700,740 $ 1,619,930
     
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 3,951,226 $ 3,962,922
Consolidated Statements of Cash Flows (Unaudited)  
  Three Months Ended
  November 30,
(In thousands)   2023     2022  
CASH FLOWS FROM OPERATING ACTIVITIES    
Net income $ 148,555   $ 136,798  
Adjustments to reconcile net income to net cash provided by operating activities    
Depreciation and amortization   27,068     25,997  
Amortization of lease right-of-use assets   7,618     9,697  
Stock-based compensation expense   14,310     12,175  
Deferred income taxes   6,703     (745 )
Asset impairments   844     282  
Changes in assets and liabilities, net of effects of acquisitions    
Accounts receivable, net of reserves   (9,758 )   (23,647 )
Accounts payable and accrued expenses   31,284     18,744  
Accrued compensation   (60,348 )   (66,796 )
Deferred revenues   (2,542 )   (290 )
Taxes payable, net of prepaid taxes   5,341     6,995  
Lease liabilities, net   (9,783 )   (11,237 )
Other, net   (4,148 )   (1,337 )
Net cash provided by operating activities   155,144     106,636  
     
CASH FLOWS FROM INVESTING ACTIVITIES    
Purchases of property, equipment, leasehold improvements and capitalized internal-use software   (16,466 )   (17,960 )
Purchases of investments   (8,753 )   (9,892 )
Net cash provided by (used in) investing activities   (25,219 )   (27,852 )
     
CASH FLOWS FROM FINANCING ACTIVITIES    
Repayments of debt   (62,500 )   (125,000 )
Dividend payments   (37,053 )   (33,665 )
Proceeds from employee stock plans   28,404     23,423  
Repurchases of common stock   (59,910 )    
Other financing activities   (13,505 )   (10,990 )
Net cash provided by (used in) financing activities   (144,564 )   (146,232 )
     
Effect of exchange rate changes on cash and cash equivalents   1,050     1,317  
Net increase (decrease) in cash and cash equivalents   (13,589 )   (66,131 )
Cash and cash equivalents at beginning of period   425,444     503,273  
Cash and cash equivalents at end of period $ 411,855   $ 437,142  

Reconciliation of U.S. GAAP Results to Adjusted Financial Measures

Financial measures in accordance with U.S. GAAP, including revenues, operating income and margin, net income, diluted EPS and cash provided by operating activities, have been adjusted below. FactSet uses these adjusted financial measures both in presenting its results to stockholders and the investment community and in its internal evaluation and management of the business. The Company believes that these adjusted financial measures and the information they provide are useful to investors because they permit investors to view the Company’s performance using the same tools that management uses to gauge progress in achieving its goals. Adjusted measures may also facilitate comparisons to FactSet’s historical performance.

Revenues

The table below provides a reconciliation of revenues to organic revenues.

(Unaudited) Three Months Ended  
  November 30,  
(In thousands)   2023     2022 Change
Revenues $ 542,216   $ 504,815 7.4 %
Acquired revenues (a)   (174 )    
Currency impact (b)   (649 )    
Organic revenues $ 541,393   $ 504,815 7.2 %

(a) Removes acquisition-related revenues recognized during the first quarter of fiscal 2024 in which the comparable prior year period predated the acquisition.

(b) The current year impact from foreign currency movements.

Non-GAAP Financial Measures

The table below provides a reconciliation of operating income, operating margin, net income and diluted EPS to adjusted operating income, adjusted operating margin, adjusted net income, EBITDA and adjusted diluted EPS.

  Three Months Ended  
  November 30,  
(dollar amounts in thousands, except per share data)   2023     2022   % Change
Operating income $ 189,040   $ 171,895   10.0 %
Intangible asset amortization   17,344     18,008    
Restructuring / severance   (2,419 )      
Business acquisition / integration costs(1)       3,499    
Adjusted operating income $ 203,965   $ 193,402   5.5 %
Operating margin   34.9 %   34.1 % 81bps  
Adjusted operating margin(2)   37.6 %   38.3 % (69bps)  
Net income $ 148,555   $ 136,798   8.6 %
Intangible asset amortization   12,368     15,577    
Restructuring / severance   (1,725 )      
Business acquisition / integration costs(1)       3,026    
Income tax items   (71 )   (230 )  
Adjusted net income(3) $ 159,127   $ 155,171   2.5 %
Net income   148,555     136,798   8.6 %
Interest expense   16,738     16,537    
Income taxes   26,641     21,087    
Depreciation and amortization expense   27,068     25,997    
EBITDA $ 219,002   $ 200,419   9.3 %
Diluted EPS $ 3.84   $ 3.52   9.1 %
Intangible asset amortization   0.32     0.40    
Restructuring / severance   (0.04 )      
Business acquisition / integration costs(1)       0.08    
Income tax items   0.00     (0.01 )  
Adjusted Diluted EPS(3) $ 4.12   $ 3.99   3.3 %
Weighted average common shares (Diluted)   38,643     38,914    

(1) Related to acquisition and integration costs of the CUSIP Global Services acquisition.

(2) Adjusted operating margin is calculated as Adjusted operating income divided by Revenues.

(3) For purposes of calculating Adjusted net income and Adjusted diluted earnings per share, all adjustments for the three months ended November 30, 2023 and November 30, 2022 were taxed at an adjusted tax rate of 28.7% and 13.5%, respectively.

Business Outlook Operating Margin, Net Income and Diluted EPS

(Unaudited)    
Figures may not foot due to rounding Annual Fiscal 2024 Guidance
(In millions, except per share data) Low end of range High end of range
Revenues $ 2,200   $ 2,210  
Operating income $ 715   $ 729  
Operating margin   32.5 %   33.0 %
Intangible asset amortization   84     82  
Adjusted operating income $ 799   $ 811  
Adjusted operating margin(a)   36.3 %   36.7 %
     
Net income $ 540   $ 556  
Intangible asset amortization   70     68  
Discrete tax items   (6 )   (5 )
Adjusted net income $ 604   $ 618  
     
Diluted earnings per common share $ 13.95   $ 14.35  
Intangible asset amortization   1.81     1.75  
Discrete tax items   (0.16 )   (0.13 )
Adjusted diluted earnings per common share $ 15.60   $ 16.00  

(a) Adjusted operating margin is calculated as Adjusted operating income divided by Revenues.

Free Cash Flow

(Unaudited) Three Months Ended  
  November 30,  
(In thousands)   2023     2022   Change
Net Cash Provided for Operating Activities $ 155,144   $ 106,636    
Less: purchases of property, equipment, leasehold improvements and capitalized internal-use software   (16,466 )   (17,960 )  
Free Cash Flow $ 138,678   $ 88,676   56.4 %

Supplementary Schedules of Historical ASV by Client Type

The following table presents the percentages and growth rates of organic ASV by client type, excluding the impact of currency movements, and may be useful to facilitate historical comparisons. Organic ASV excludes acquisitions and dispositions completed within the last twelve months and the effects of foreign currency movements. The numbers below do not include professional services or issuer fees.

  Q1’24 Q4’23 Q3’23 Q2’23 Q1’23 Q4’22 Q3’22 Q2’22
% of ASV from buy-side clients 82.0% 81.8% 82.1% 82.8% 82.8% 82.9% 83.7% 83.6%
% of ASV from sell-side clients 18.0% 18.2% 17.9% 17.2% 17.2% 17.1% 16.3% 16.4%
                 
ASV Growth rate from buy-side clients 7.2% 6.9% 7.3% 8.1% 8.0% 8.5% 9.6% 8.4%
ASV Growth rate from sell-side clients 7.6% 9.3% 12.3% 15.8% 14.4% 13.8% 12.9% 12.6%

The following table presents the calculation of organic ASV plus professional services.
(Details may not sum to total due to rounding)

(In millions) Q1’24
As reported ASV plus Professional Services (a) $ 2,184.6  
Currency impact (b)   0.4  
Organic ASV plus Professional Services $ 2,185.0  
Organic ASV plus Professional Services growth rate   7.1 %

(a)   Includes $22.2 million in professional services as of November 30, 2023.

(b)   The impact of foreign currency movements.


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