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FactSet (FDS) Q3 Earnings Surpass Estimates, Revenues Miss

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FactSet Research Systems, Inc. (FDS - Free Report) has reported mixed third-quarter fiscal 2024 results, wherein earnings beat the Zacks Consensus Estimate, but revenues missed the same.

FDS’s earnings per share (excluding 28 cents from non-recurring items) of $4.4 beat the consensus mark by 11.8% and increased 15.3% from the year-ago quarter. Then again, revenues of $552.7 million missed the Zacks Consensus Estimate by a slight margin but rose 4.3% from the year-ago quarter.

FactSet Research Systems Inc. Price and EPS Surprise


FactSet Research Systems Inc. Price and EPS Surprise

FactSet Research Systems Inc. price-eps-surprise | FactSet Research Systems Inc. Quote

Revenues in Detail

Organic revenues increased 4.5% year over year to $553.4 million. Region-wise, organic revenue growth from the Americas, EMEA and the Asia Pacific was 5.5%, 2.4% and 3%, respectively.

Revenues generated from the Americas segment were $356.5 million, up 5.6% from the year-ago quarter, beating our estimate of $353.7 million. Revenues from the EMEA were $141.2 million, an increase of 2.3% from the year-ago quarter. The figure missed our estimate of $143.3 million. Revenues from the Asia Pacific were $55 million, marking 1.7% growth on a year-over-year basis but missing our estimate of $58.6 million.

ASV Plus Professional Services

FactSet’s Annual Subscription Value (“ASV”) plus professional services was $2.2 billion. Organic ASV plus professional services were $2.2 billion, up 5% year over year. Buy-side and sell-side organic ASV growth rates were 5.3% and 3.7%, respectively. Nearly 82% of organic ASV was generated by the buy-side and the rest by sell-side firms.

Organic ASV generated from the United States was $1.4 billion, rising 5.7% from the year-ago quarter. Organic ASV from the EMEA and the Asia Pacific was $565.7 million and $219.2 million, up 4.4% and 6.1% on a year-over-year basis, respectively.

FactSet added nine clients in the third quarter of fiscal 2024, driven by an increase in corporate, wealth and partners, thus taking the total to more than 8,029. The annual client retention rate was 90%.

Operating Results

The adjusted operating income was $218 million, which grew 14.2% from the year-ago quarter and beat our estimate of $201.1 million. The adjusted operating margin of 39.4% increased 340 basis points year over year. Adjusted EBITDA was $239.9 million, marking 16.9% growth from the year-ago quarter and beating our estimate of $209.3 million.

Balance Sheet & Cash Flow

FactSet exited the quarter with a cash and cash-equivalent balance of $453.1 million compared with $381.7 million in the second quarter of fiscal 2024. The long-term debt was $1.5 billion compared with $1.6 billion in the preceding quarter.

FDS generated $238.2 million in cash from operating activities. However, its capital expenditure was $21.3 million. The free cash flow utilized was $95 million.

FY24 Guidance

For fiscal 2024, the company has reduced its revenue guidance to $2.18-$2.19 billion from the $2.2-$2.21 billion mentioned previously. The revised guided range is lower than the Zacks Consensus Estimate of $2.2 billion.

FactSet has raised its guidance for adjusted earnings per share to $16-$16.4 from the $15.6-$16 mentioned previously. The revised guided range is higher than the Zacks Consensus Estimate for earnings of $15.95. The adjusted operating margin guidance has been raised to 37-37.5% from 36.3%-36.7% stated earlier.

Currently, FactSet carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Earnings Snapshot of Peers

ManpowerGroup Inc. (MAN - Free Report) reported mixed first-quarter 2024 results.

MAN’s quarterly adjusted earnings of 94 cents per share surpassed the consensus mark by 4.4% but declined 41.6% year over year mainly due to run-off Proservia Germany business and Argentina-related currency translation losses. Revenues of $4.4 billion lagged the consensus mark by 0.6% and dipped 7% year over year on a reported basis and 5% on a constant-currency basis.

Stantec Inc. (STN - Free Report) posted impressive first-quarter 2024 results.

STN’s quarterly earnings came in at 67 cents per share, surpassing the Zacks Consensus Estimate by 6.4% and increasing 24.1% on a year-over-year basis. Revenues of $1.02 billion beat the consensus mark by 2% but declined 10.7% from the year-ago quarter.

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