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FactSet (FDS) Up 6.2% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for FactSet Research (FDS - Free Report) . Shares have added about 6.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is FactSet due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
FactSet’s Q1 Earnings Beat, Revenues Miss
FactSet Research Systems reported mixed first-quarter fiscal 2023 results with earnings beating the Zacks Consensus Estimate but revenues missing the same.
Adjusted earnings per share of $3.99 beat the Zacks Consensus Estimate by 10.8% and increased 22.8% year over year. The bottom line was driven by higher revenues. There has been no impact of the earnings performance on the stock so far since the results released on Dec 20.
FactSet’s revenues of $504.8 million in the quarter lagged the Zacks Consensus Estimate by 1.2% but increased 18.9% year over year. The uptick was driven by the addition of CUSIP Global Services.
Revenues in Detail
Organic revenues increased 9.8% year over year to $452.5 million. Region-wise, organic revenue growth from the Americas, EMEA and the Asia Pacific was 9.1%, 8.5% and 17.8%, respectively.
ASV Plus Professional Services
FactSet’s Annual Subscription Value (ASV) plus professional services were $2 billion, up 18.2% year over year. Organic ASV plus professional services were $1.8 billion, up 8.8% from the prior-year quarter’s level. Buy-side and sell-side organic ASV growth rates were 8% and 14.4%, respectively. Nearly 83% of organic ASV was generated by the buy-side and the rest by sell-side firms.
Organic ASV generated from the United States was $1.2 billion, up 8.5% from the prior-year quarter’s level. Organic ASV from EMEA and the Asia Pacific regions were $487 million and $189.9 million, up 8.8% and 11.1% year over year, respectively.
FactSet added 93 clients in the reported quarter, driven by an increase in corporate and wealth clients, taking the total to 7,631. The annual client retention rate was 92%. At the end of the said quarter, the total employee count was 11,627, up 6.7% from the figure registered in the last 12 months, driven primarily by an increase in content, analytics and trading, and sales organizations.
Operating Results
Adjusted operating income came in at $193.4 million, up 35.5% from the year-ago quarter’s reported figure. Adjusted operating margin increased to 38.3% from 33.6% in the year-ago quarter.
Balance Sheet and Cash Flow
FactSet exited the quarter with a cash and cash equivalents balance of $437.1 million compared with $503.3 million in the previous quarter. Long-term debt was $1.9 billion compared with the prior quarter’s figure of $2 billion. In the reported quarter, FDS generated $106.6 million of cash from operating activities, while capital expenditures were $18 million. Free cash flow was $88.7 million.
Fiscal 2023 Outlook
GAAP revenues are expected in the range of $2,100-$2,115 million. Adjusted operating margin is expected in the range of 34-35%. FactSet's annual effective tax rate is expected in the range of 12.5-13.5%.
Adjusted EPS is expected in the range of $14.5-$14.9.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
VGM Scores
Currently, FactSet has a nice Growth Score of B, a grade with the same score on the momentum front. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions looks promising. Notably, FactSet has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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FactSet (FDS) Up 6.2% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for FactSet Research (FDS - Free Report) . Shares have added about 6.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is FactSet due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
FactSet’s Q1 Earnings Beat, Revenues Miss
FactSet Research Systems reported mixed first-quarter fiscal 2023 results with earnings beating the Zacks Consensus Estimate but revenues missing the same.
Adjusted earnings per share of $3.99 beat the Zacks Consensus Estimate by 10.8% and increased 22.8% year over year. The bottom line was driven by higher revenues. There has been no impact of the earnings performance on the stock so far since the results released on Dec 20.
FactSet’s revenues of $504.8 million in the quarter lagged the Zacks Consensus Estimate by 1.2% but increased 18.9% year over year. The uptick was driven by the addition of CUSIP Global Services.
Revenues in Detail
Organic revenues increased 9.8% year over year to $452.5 million. Region-wise, organic revenue growth from the Americas, EMEA and the Asia Pacific was 9.1%, 8.5% and 17.8%, respectively.
ASV Plus Professional Services
FactSet’s Annual Subscription Value (ASV) plus professional services were $2 billion, up 18.2% year over year. Organic ASV plus professional services were $1.8 billion, up 8.8% from the prior-year quarter’s level. Buy-side and sell-side organic ASV growth rates were 8% and 14.4%, respectively. Nearly 83% of organic ASV was generated by the buy-side and the rest by sell-side firms.
Organic ASV generated from the United States was $1.2 billion, up 8.5% from the prior-year quarter’s level. Organic ASV from EMEA and the Asia Pacific regions were $487 million and $189.9 million, up 8.8% and 11.1% year over year, respectively.
FactSet added 93 clients in the reported quarter, driven by an increase in corporate and wealth clients, taking the total to 7,631. The annual client retention rate was 92%. At the end of the said quarter, the total employee count was 11,627, up 6.7% from the figure registered in the last 12 months, driven primarily by an increase in content, analytics and trading, and sales organizations.
Operating Results
Adjusted operating income came in at $193.4 million, up 35.5% from the year-ago quarter’s reported figure. Adjusted operating margin increased to 38.3% from 33.6% in the year-ago quarter.
Balance Sheet and Cash Flow
FactSet exited the quarter with a cash and cash equivalents balance of $437.1 million compared with $503.3 million in the previous quarter. Long-term debt was $1.9 billion compared with the prior quarter’s figure of $2 billion. In the reported quarter, FDS generated $106.6 million of cash from operating activities, while capital expenditures were $18 million. Free cash flow was $88.7 million.
Fiscal 2023 Outlook
GAAP revenues are expected in the range of $2,100-$2,115 million. Adjusted operating margin is expected in the range of 34-35%. FactSet's annual effective tax rate is expected in the range of 12.5-13.5%.
Adjusted EPS is expected in the range of $14.5-$14.9.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
VGM Scores
Currently, FactSet has a nice Growth Score of B, a grade with the same score on the momentum front. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions looks promising. Notably, FactSet has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.