FactSet (NYSE:FDS), a global financial digital platform and enterprise solutions provider, reported its first-quarter fiscal 2025 results, showcasing a positive trajectory in its financial performance. The company experienced a 4.9% increase in GAAP revenues, reaching $568.7 million, compared to $542.2 million in the same period last year.
This growth was primarily driven by the contributions from wealth, asset owners, and institutional asset managers. Organic revenues, excluding the impact of recent acquisitions and currency fluctuations, also saw a 4.7% rise, amounting to $567.7 million for the quarter.
The company’s annual subscription value (ASV) rose to $2,265.9 million as of November 30, 2024, reflecting a 4.5% increase from the previous year. Organic ASV, a key indicator of the recurring nature of FactSet’s revenue, increased by $98.1 million year-over-year, highlighting the company’s success in securing long-term client engagements.
Despite these positive trends, FactSet’s GAAP operating margin declined to 33.6% from 34.9% in the prior year, primarily due to increased amortization of intangible assets and professional fees, which were partly offset by revenue growth and reduced employee compensation costs.
FactSet Beats Market Expectations in First Quarter FY’25
FactSet’s first-quarter performance was a mixed bag when compared to market expectations. The company’s GAAP diluted earnings per share (EPS) stood at $3.89, marking a 1.3% increase from the previous year. However, this fell short of the anticipated EPS of $4.25. On a brighter note, FactSet’s adjusted diluted EPS exceeded expectations, reaching $4.37, a 6.1% increase compared to the $4.12 reported in the prior year. This growth was fueled by revenue expansion, although it was tempered by higher operating expenses and an increased tax rate.
Revenue-wise, FactSet outperformed expectations, with GAAP revenues of $568.7 million surpassing the forecasted $565.1 million. This revenue growth was largely attributed to the company’s strong performance in the Americas, where organic revenues grew by 5.2% year-over-year. The EMEA and Asia Pacific regions also contributed to the overall revenue increase, with organic growth rates of 2.7% and 6.2%, respectively. Despite these positive revenue figures, FactSet faced challenges in maintaining its operating margins due to rising costs associated with intangible asset amortization and professional fees.
FactSet Reaffirms Fiscal 2025 Outlook
FactSet has reaffirmed its fiscal 2025 outlook, maintaining a cautious yet optimistic stance. The company expects organic ASV to grow between $90 million and $140 million during the fiscal year, underscoring its commitment to expanding its subscription-based services. FactSet projects GAAP revenues to range from $2,285 million to $2,305 million, reflecting steady growth across its diverse portfolio of solutions.
In terms of profitability, FactSet anticipates a GAAP operating margin between 32.5% and 33.5%, while its adjusted operating margin is expected to be in the range of 36.0% to 37.0%. The company’s annual effective tax rate is projected to be between 17% and 18%.
For the full fiscal year, FactSet forecasts GAAP diluted EPS to be in the range of $15.10 to $15.70, with adjusted diluted EPS expected to fall between $16.80 and $17.40. These projections reflect FactSet’s strategic focus on sustaining growth and profitability amid evolving market conditions.
Disclaimer: The author does not hold or have a position in any securities discussed in the article.
About the author
Tim Fries is the cofounder of The Tokenist. He has a B. Sc. in Mechanical Engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim served as a Senior Associate on the investment team at RW Baird’s US Private Equity division, and is also the co-founder of Protective Technologies Capital, an investment firm specializing in sensing, protection and control solutions.
