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FactSet Research Systems Inc. (FDS - Free Report) reported mixed third-quarter fiscal 2020 results, wherein earnings topped the Zacks Consensus Estimate but revenues missed the same.
The company reported adjusted earnings per share of $2.86, which surpassed the Zacks Consensus Estimate by 17.2% and increased 9.2% on a year-over-year basis driven by lower employee-related operating expenses in response to the coronavirus pandemic.
FactSet’s revenues of $374.1 million marginally missed the Zacks Consensus Estimate and increased 2.6% year over year. The uptick was driven by higher sales of analytics, content and technology solutions, and wealth management solutions.
Notably, FactSet’s shares have gained 21.8% year to date, significantly outperforming the 6.8% rally of the industry it belongs to.
Revenues in Detail
Organic revenues increased 2.6% year over year to $375.3 million. Region-wise, U.S. revenues increased to $231 million from $227 million in the year-ago quarter. EMEA revenues were $105.4 million compared with $102.5 million in the year-ago quarter. Asia Pacific revenues were $37.7 million compared with $35.1 million in the year-ago quarter.
FactSet’s Annual Subscription Value (“ASV”) plus professional services was $1.5 billion, up 5% organically. Buy-side and sell-side ASV growth rates were 4.8% and 5.6%, respectively. Nearly 84% of organic ASV was generated by buy-side and the rest by sell-side firms performing functions like mergers and acquisitions advisory work,equity research and capital markets services.
ASV generated from the United States was $931.5 million, up 5% from the prior-year quarter’s level. ASV from EMEA and Asia pacific regions were $411.9 million and 150.4 million, up 3.7% and 8.9% year over year, respectively. FactSet added 55 clients in the reported quarter, taking the total number to 5,743. Annual client retention was 89%. At the end of the quarter, total employee count was 10,065, up 7.5% year over year.
Operating Results
Adjusted operating income came in at $133.4 million, up 8.6% from the year-ago quarter’s figure. Adjusted operating margin increased to 35.5% from 34% in the year-ago quarter. Selling, general and administration expenses decreased 2.1% to $81.7 million. Total operating expenses increased 2.1% to $252.4 million.
Balance Sheet and Cash Flow
FactSet exited third-quarter with cash and cash equivalents of $457.7 million compared with $343.5 million in the previous quarter. Long-term debt of $574.3 million was flat with the prior quarter figure. In the quarter, the company generated $151 million of cash from operating activities and capital expenditure was $11 million. Free cash flow was $139.9 million.
Fiscal 2020 Outlook
FactSet updated its fiscal 2020 outlook provided previously on Sep 26, 2019.
The company now anticipates adjusted EPS in the range of $10.4 and $10.6, compared with the previous anticipation of $9.85 to $10.15. The updated range is above the Zacks Consensus Estimate of $10.34.
The company expects revenues between $1.485 billion and $1.49 billion, compared with the previous expectation of $1.49 billion to $1.50 billion. The Zacks Consensus Estimate is pegged at $1.49 billion.
Organic ASV plus professional services for fiscal 2020 is projected to increase in the range of $60-$75 million over fiscal 2019. The prior expectation was an increase of $65-$85 million. Adjusted operating margin is projected in the range of 33%-33.5%, compared with the previous projection of 28.5%-29.5%. The annual effective tax rate is expected between 15.5% and 16.5%.
S&P Global’s (SPGI - Free Report) first-quarter 2020 adjusted earnings per share of $2.73 beat the consensus mark by 15.7% and improved 29.4% year over year on the back of revenue growth, benefits of productivity initiatives and reduced business travel. The stock currently carries a Zacks Rank #2 (Buy).
IQVIA Holdings’ (IQV - Free Report) first-quarter 2020 adjusted earnings per share of $1.50 beat the consensus mark by 1.4% but decreased 1.9% on a year-over-year basis. The reported figure lies within the guided range of $1.46-$1.51. The stock currently carries a Zacks Rank #4 (Sell).
Insperity’s (NSP - Free Report) first-quarter 2020 adjusted earnings of $1.70 per share beat the consensus mark by 5.6% but decreased 14.1% year over year. The reported figure matched the higher end of the guided range of $1.61-$1.70. The stock currently carries a Zacks Rank #4.
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A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
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FactSet (FDS) Beats Q3 Earnings Estimates, Lags Revenues
FactSet Research Systems Inc. (FDS - Free Report) reported mixed third-quarter fiscal 2020 results, wherein earnings topped the Zacks Consensus Estimate but revenues missed the same.
The company reported adjusted earnings per share of $2.86, which surpassed the Zacks Consensus Estimate by 17.2% and increased 9.2% on a year-over-year basis driven by lower employee-related operating expenses in response to the coronavirus pandemic.
FactSet’s revenues of $374.1 million marginally missed the Zacks Consensus Estimate and increased 2.6% year over year. The uptick was driven by higher sales of analytics, content and technology solutions, and wealth management solutions.
Notably, FactSet’s shares have gained 21.8% year to date, significantly outperforming the 6.8% rally of the industry it belongs to.
Revenues in Detail
Organic revenues increased 2.6% year over year to $375.3 million. Region-wise, U.S. revenues increased to $231 million from $227 million in the year-ago quarter. EMEA revenues were $105.4 million compared with $102.5 million in the year-ago quarter. Asia Pacific revenues were $37.7 million compared with $35.1 million in the year-ago quarter.
FactSet Research Systems Inc. Revenue (TTM)
FactSet Research Systems Inc. revenue-ttm | FactSet Research Systems Inc. Quote
ASV Plus Professional Services
FactSet’s Annual Subscription Value (“ASV”) plus professional services was $1.5 billion, up 5% organically. Buy-side and sell-side ASV growth rates were 4.8% and 5.6%, respectively. Nearly 84% of organic ASV was generated by buy-side and the rest by sell-side firms performing functions like mergers and acquisitions advisory work,equity research and capital markets services.
ASV generated from the United States was $931.5 million, up 5% from the prior-year quarter’s level. ASV from EMEA and Asia pacific regions were $411.9 million and 150.4 million, up 3.7% and 8.9% year over year, respectively. FactSet added 55 clients in the reported quarter, taking the total number to 5,743. Annual client retention was 89%. At the end of the quarter, total employee count was 10,065, up 7.5% year over year.
Operating Results
Adjusted operating income came in at $133.4 million, up 8.6% from the year-ago quarter’s figure. Adjusted operating margin increased to 35.5% from 34% in the year-ago quarter. Selling, general and administration expenses decreased 2.1% to $81.7 million. Total operating expenses increased 2.1% to $252.4 million.
Balance Sheet and Cash Flow
FactSet exited third-quarter with cash and cash equivalents of $457.7 million compared with $343.5 million in the previous quarter. Long-term debt of $574.3 million was flat with the prior quarter figure. In the quarter, the company generated $151 million of cash from operating activities and capital expenditure was $11 million. Free cash flow was $139.9 million.
Fiscal 2020 Outlook
FactSet updated its fiscal 2020 outlook provided previously on Sep 26, 2019.
The company now anticipates adjusted EPS in the range of $10.4 and $10.6, compared with the previous anticipation of $9.85 to $10.15. The updated range is above the Zacks Consensus Estimate of $10.34.
The company expects revenues between $1.485 billion and $1.49 billion, compared with the previous expectation of $1.49 billion to $1.50 billion. The Zacks Consensus Estimate is pegged at $1.49 billion.
Organic ASV plus professional services for fiscal 2020 is projected to increase in the range of $60-$75 million over fiscal 2019. The prior expectation was an increase of $65-$85 million. Adjusted operating margin is projected in the range of 33%-33.5%, compared with the previous projection of 28.5%-29.5%. The annual effective tax rate is expected between 15.5% and 16.5%.
FactSet currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Performance of Other Business Services Companies
S&P Global’s (SPGI - Free Report) first-quarter 2020 adjusted earnings per share of $2.73 beat the consensus mark by 15.7% and improved 29.4% year over year on the back of revenue growth, benefits of productivity initiatives and reduced business travel. The stock currently carries a Zacks Rank #2 (Buy).
IQVIA Holdings’ (IQV - Free Report) first-quarter 2020 adjusted earnings per share of $1.50 beat the consensus mark by 1.4% but decreased 1.9% on a year-over-year basis. The reported figure lies within the guided range of $1.46-$1.51. The stock currently carries a Zacks Rank #4 (Sell).
Insperity’s (NSP - Free Report) first-quarter 2020 adjusted earnings of $1.70 per share beat the consensus mark by 5.6% but decreased 14.1% year over year. The reported figure matched the higher end of the guided range of $1.61-$1.70. The stock currently carries a Zacks Rank #4.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
See 8 breakthrough stocks now>>