FactSet Reports Results for Second Quarter 2024
-- Q2 GAAP revenues of $545.9 million, up 6.0% from Q2 2023.
-- Organic Q2 ASV plus professional services of $2,209.5 million, up 5.4%
year over year.
-- Q2 GAAP operating margin of 33.3%, up approximately 50 bps year over year,
and adjusted operating margin of 38.3%, up approximately 130 bps from the
prior year.
-- Q2 GAAP diluted EPS of $3.65, up 8.0% from the prior year, and adjusted
diluted EPS of $4.22, up 11.1% year over year.
-- Top-line growth expected at the lower end of the previously published
guidance ranges for the fiscal year: ASV plus professional services
growth of $110 - $150 million and GAAP revenues between $2,200 - $2,210
million.
NORWALK, Conn., March 21, 2024 (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 second quarter fiscal 2024 ended February 29, 2024.
Second Quarter Fiscal 2024 Highlights
-- GAAP revenues increased 6.0%, or $30.9 million, to $545.9 million for the
second quarter of fiscal 2024 compared with $515.1 million in the prior
year period. Organic(1) revenues grew 6.0% year over year to $546.1
million during the second quarter of fiscal 2024. Growth in GAAP and
Organic revenues this quarter was driven by asset owners, corporates,
hedge funds and private equity and venture capital clients.
-- Annual Subscription Value ("ASV") plus professional services was $2,208.8
million at February 29, 2024, compared with $2,096.2 million at
February 28, 2023(2). Organic ASV plus professional services was $2,209.5
million at February 29, 2024, up 5.4% or $113.8 million year over year.
-- Organic ASV plus professional services increased $24.9 million over the
last three months. Please see the "ASV + Professional Services" section
of this press release for details.
-- GAAP operating margin increased to 33.3% compared with 32.9% for the
prior year, mainly due to higher revenues, lower personnel expenses on a
lower bonus accrual, and a higher capitalization benefit. These were
partially offset by an approximately $11 million restructuring charge
taken in the second quarter of fiscal 2024 in connection with personnel
reductions. Adjusted operating margin improved to 38.3% compared with
37.0% in the prior year period driven by similar drivers contributing to
higher GAAP operating margin, partially offset by increased bad debt
expenses.
-- GAAP diluted earnings per share ("EPS") increased 8.0% to $3.65 compared
with $3.38 for the same period in fiscal 2023 due to higher revenues and
margin expansion, partially offset by a higher tax rate. Adjusted diluted
EPS increased 11.1% to $4.22 compared with $3.80 for the prior year,
driven by revenue growth and margin expansion partially offset by a
higher tax rate.
-- Adjusted EBITDA increased to $218.1 million, up 9.2% for the second
quarter of fiscal 2024 compared with $199.7 million for the same period
in fiscal 2023, due to higher operating income.
-- The Company's effective tax rate for the second quarter of fiscal 2024
increased to 16.4% compared with 16.1% for the three months ended
February 28, 2023, due to higher taxable income, offset by higher stock
option exercises and higher foreign credits, which reduce the tax rate.
“FactSet is an anchor partner for our clients in all market conditions.” said Phil Snow, CEO of FactSet. “We remain optimistic about our growth potential as we continue to invest in our platform and leverage the power of generative AI to help our clients uncover new ideas and lower their total cost of ownership.”
(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 incurred prior to the first anniversary date of an acquisition.
(2) Prior year ASV has been revised to include certain CUSIP Global Services (“CGS”) revenues not previously reflected as ASV to better align with our legacy business.
Key Financial Measures*
(Condensed and Unaudited) Three Months Ended
February 29, February 28,
(In thousands, except per share
data) 2024 2023 Change
-------------------------------- -------- -------- --------
Revenues $ 545,945 $ 515,085 6.0%
Organic revenues $ 546,130 $ 515,085 6.0%
Operating income $ 181,942 $ 169,250 7.5%
Adjusted operating income $ 209,326 $ 190,721 9.8%
Operating margin 33.3% 32.9%
Adjusted operating margin 38.3% 37.0%
Net income $ 140,940 $ 131,593 7.1%
Adjusted net income $ 163,067 $ 148,114 10.1%
Adjusted EBITDA $ 218,111 $ 199,710 9.2%
Diluted EPS $ 3.65 $ 3.38 8.0%
Adjusted diluted EPS $ 4.22 $ 3.80 11.1%
-------------------------------- -------- -------- ----
(* See reconciliation of U.S. GAAP to adjusted key financial measures in the back of this press release.)
“Careful expense management continues to provide us with an opportunity to invest in our top strategic opportunities, such as generative AI,” said Linda Huber, CFO of FactSet.
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 $2,208.8 million at February 29, 2024, compared with $2,096.2 million at February 28, 2023. Organic ASV plus professional services was $2,209.5 million at February 29, 2024, up $113.8 million from the prior year, for a growth rate of 5.4%. Organic ASV plus professional services increased $24.9 million over the last three months.
Buy-side and sell-side organic ASV growth rates for the second quarter of fiscal 2024 were 5.6% and 5.5%, 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 $1,415.4 million compared with ASV in the prior year period of $1,336.6 million. Organic ASV increased 5.9% to $1,415.4 million. Americas revenues for the quarter increased to $352.6 million compared with $331.1 million in the second quarter of last year. The Americas region’s organic revenues growth rate was 6.5%.
ASV from the EMEA region was $557.2 million compared with ASV in the prior year period of $529.3 million. Organic ASV increased 5.0% to $557.5 million. EMEA revenues were $139.2 million compared with $132.5 million in the second quarter of fiscal 2023. The EMEA region’s organic revenues growth rate was 4.8%.
ASV from the Asia Pacific region was $215.9 million compared with ASV in the prior year period of $207.1 million. Organic ASV increased 5.6% to $216.3 million. Asia Pacific revenues were $54.1 million compared with $51.5 million in the second quarter of fiscal 2023. The Asia Pacific region’s organic revenues growth rate was 6.4%.
Segment ASV does not include professional services, which totaled $20.3 million at February 29, 2024.
Operational Highlights — Second Quarter Fiscal 2024
-- Client count as of February 29, 2024 was 8,020, a net increase of 75
clients in the past three months, driven by an increase in private
equity/venture capital, corporates and wealth management clients. The
count includes clients with ASV of $10,000 and more.
-- User count decreased by 605 to 206,478 in the past three months, driven
by a decrease in banking and wealth management users.
-- Annual ASV retention was greater than 95%. When expressed as a percentage
of clients, annual retention was 90%.
-- Employee count was 12,279 as of February 29, 2024, up 3.2% over the last
twelve months, with the increase primarily in FactSet's Centers of
Excellence. Growth was driven by an increase in the content group. 68% of
FactSet employees are located in the Centers of Excellence.
-- Net cash provided by operating activities decreased to $143.8 million
compared with $164.7 million for the second quarter of fiscal 2023,
primarily due to the timing of remitted payroll taxes related to employee
stock compensation as well as income tax payments made in the period.
Quarterly free cash flow decreased to $121.9 million compared with $147.2
million a year ago, a decrease of 17.2%, driven by a decrease in net cash
provided by operating activities and higher capital expenditures.
-- A quarterly dividend of $37.4 million, or $0.98 per share, will be paid
on March 21, 2024, to holders of record of FactSet's common stock at the
close of business on February 29, 2024.
-- FactSet announced the release of Transcript Assistant, a GenAI-powered,