UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 19, 2024
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of | (Commission | (I.R.S. Employer | ||||||||||||
| incorporation) | File Number) | Identification No.) | ||||||||||||
(Address of principal executive offices) (Zip code)
Registrant’s telephone number, including area code: (203 ) 810-1000
Former name or former address, if changed since last report: None
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbols(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter). Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition
On March 21, 2024, FactSet Research Systems Inc. ("FactSet" or the "Company") issued a press release announcing its results for the three months ended February 29, 2024. A copy of the press release is furnished as Exhibit 99.1 hereto and incorporated by reference herein. The information furnished pursuant to this Item 2.02 (Results of Operations and Financial Condition), including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Exhibit 99.1 to this Report contains certain financial measures that are considered non-GAAP financial measures as defined in the rules issued by the Securities and Exchange Commission (the "Commission"). Exhibit 99.1 to this Report also contains the reconciliation of these non-GAAP financial measures to their most directly comparable financial measures calculated and presented in accordance with generally accepted accounting principles, as well as the reasons why the Company’s management believes that presentation of the non-GAAP financial measures provides useful information to investors regarding FactSet’s results of operations and, to the extent material, a statement disclosing any other additional purposes for which the Company’s management uses the non-GAAP financial measures.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
On March 19, 2024, the Board of Directors of the Company elected Laurie Hylton as a director of the Company. In conjunction with her election to the Board, Ms. Hylton was appointed to serve as a member of the Company’s Audit Committee.
Ms. Hylton has more than 25 years of experience as a senior finance executive in the asset management industry, including serving as Chief Financial Officer and Chief Accounting Officer for Eaton Vance Corp., a global asset manager. She previously worked as an auditor at Deloitte. Ms. Hylton serves on the board of Sun Life Financial Inc., an international financial services organization. She also serves on the board of Newbury Art Association and Theater in the Open. Ms. Hylton graduated with a bachelor’s degree in English from Dartmouth College and holds a Master of Business Administration from the University of New Hampshire’s Peter T. Paul College of Business and Economics.
There are no arrangements or understandings between Ms. Hylton and any other persons pursuant to which Ms. Hylton was selected as a director. Ms. Hylton has no direct or indirect material interest in any currently proposed transaction to which the Company is to be party, nor did she have a direct or indirect material interest in any such transaction since the beginning of the Company’s last fiscal year.
A copy of the press release, dated March 20, 2024, announcing the election of Ms. Hylton is filed as Exhibit 99.2 to this Current Report on Form 8-K and is incorporated by reference herein.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
Exhibit No. | Description | |||||||
| Press Release of FactSet Research Systems Inc., dated March 21, 2024, announcing its results for the three months ended February 29, 2024 | ||||||||
Press Release of FactSet Research Systems Inc., dated March 20, 2024, announcing the election of Laurie Hylton to the Board of Directors | ||||||||
| 104 | Cover page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | |||||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
FACTSET RESEARCH SYSTEMS INC. (Registrant) | |||||||||||||||||
| March 21, 2024 | By: | /s/ LINDA S. HUBER | |||||||||||||||
| Linda S. Huber Executive Vice President, Chief Financial Officer (Principal Financial Officer) | |||||||||||||||||
News Release I For Immediate Release
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 - 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, 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 period, driven by growth in revenues, 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.
1
News Release I For Immediate Release
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.
2
News Release I For Immediate Release
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, conversational chatbot that accelerates in-depth research and analysis of earnings call transcripts. Transcript Assistant leverages generative AI to help users search, analyze, and extract valuable, actionable insights from all transcripts in FactSet, ultimately enhancing the investment research process in the FactSet Workstation.
•The Company announced the appointment of Laurie Hylton, an experienced senior finance executive with more than 30 years of expertise in asset management and public accounting, to its Board of Directors. Before her retirement, Hylton served as Chief Financial Officer as well as Chief Accounting Officer at Eaton Vance Corp., a leading global asset manager. At Eaton Vance, Hylton was a member of the Executive Management Committee and played a pivotal role in shaping the company's strategic direction.
Share Repurchase Program
FactSet repurchased 113,050 shares of its common stock for $52.3 million at an average price of $462.23 during the second quarter under the Company’s share repurchase program. As of February 29, 2024, $187.8 million remained available for share repurchases under this program.
Annual Business Outlook
FactSet is reaffirming its outlook for fiscal 2024, originally provided on December 19, 2024, but anticipates finishing fiscal 2024 at the lower end of the guidance range for Organic ASV plus professional services growth and GAAP revenues. The following forward-looking statements reflect FactSet's expectations as of today's date. Given the risk factors, uncertainties, and assumptions discussed below, actual results may differ materially. FactSet does not intend to update its forward-looking statements prior to its next quarterly results announcement.
Fiscal 2024 Expectations
•Organic ASV plus professional services is expected to grow in the range of $110 million to $150 million during fiscal 2024 This represents ASV growth of 6% at the midpoint.
•GAAP revenues are expected to be in the range of $2,200 million to $2,210 million.
•GAAP operating margin is expected to be in the range of 32.5% to 33.0%.
•Adjusted operating margin is expected to be in the range of 36.3% to 36.7%.
•FactSet's annual effective tax rate is expected to be in the range of 16.5% to 17.5%.
3
News Release I For Immediate Release
•GAAP diluted EPS is expected to be in the range of $13.95 to $14.35.
•Adjusted diluted EPS is expected to be in the range of $15.60 to $16.00.
As previously announced, the Company incurred an approximately $11 million personnel related charge during the second quarter of fiscal 2024 as part of a broader cost optimization program. FactSet anticipates this action will result in $25 - $30 million of annualized cost savings going forward.
Adjusted operating margin and adjusted diluted EPS guidance do not include certain effects of any non-recurring benefits or charges that may arise in fiscal 2024. Please see the back of this press release for a reconciliation of GAAP to adjusted metrics.
Conference Call
Second Quarter 2024 Conference Call Details
Date: Thursday, March 21, 2024
Time: 11:00 a.m. Eastern Time
Participant Registration: FactSet Q2 2024 Earnings Call Registration
Please register for the conference call using the above link before the call start time. The conference call platform will register your name and organization and provide dial-in numbers and a unique access pin. The conference call will have a live Q&A session.
A replay will be available on the Company’s investor relations website after 1:00 p.m. Eastern Time on March 21, 2024 through March 21, 2025. The earnings call transcript will be available via FactSet CallStreet.
Forward-looking Statements
This news release contains forward-looking statements based on management's current expectations, estimates, forecasts and projections about industries in which FactSet operates and the beliefs and assumptions of management. All statements that address expectations, guidance, outlook or projections about the future, including statements about the Company's strategy for growth, product development, revenues, future financial results, anticipated growth, market position, subscriptions, expected expenditures, trends in FactSet’s business and financial results, are forward-looking statements. Forward-looking statements may be identified by words like "expects," "believes," "anticipates," "plans," "intends," "estimates," "projects," "should," "indicates," "continues," "may" and similar expressions. These statements are not guarantees of future performance and involve a number of risks, uncertainties and assumptions. Many factors, including those discussed more fully elsewhere in this release and in FactSet's filings with the Securities and Exchange Commission, particularly its latest annual report on Form 10-K and quarterly reports on Form 10-Q, as well as others, could cause results to differ materially from those stated. Forward-looking statements speak only as of the date they are made, and FactSet assumes no duty to and does not undertake to update forward-looking statements. Actual results could differ materially from those anticipated in forward-looking statements and future results could differ materially from historical performance.
About Non-GAAP Financial Measures
Financial measures in accordance with U.S. GAAP including revenues, operating income and margin, net income, diluted earnings per share and cash provided by operating activities have been adjusted.
FactSet uses these adjusted financial measures both in presenting its results to stockholders and the investment community and in its internal evaluation and management of the business. The Company believes that these adjusted financial measures and the information they provide are useful to investors because they permit investors to view the Company’s performance using the same tools that management uses to gauge progress in achieving its goals. Investors may benefit from referring to these adjusted financial measures in assessing the Company’s performance and when planning, forecasting and analyzing future periods and may also facilitate comparisons to its historical performance. The presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP.
Organic revenues excludes from revenues the current year impact of revenues from acquisitions and dispositions completed within the past twelve months and the current year impact from changes in foreign currency. Adjusted operating income and margin, adjusted net income, and adjusted diluted earnings per share exclude acquisition-related intangible asset amortization and non-recurring items. EBITDA and adjusted EBITDA represent earnings before interest expense, provision for income taxes and depreciation and amortization expense, while Adjusted EBITDA further excludes non-recurring non-cash expenses. The Company believes that these adjusted financial measures help to fully reflect the underlying economic performance of FactSet.
4
News Release I For Immediate Release
Cash flows provided by operating activities has been reduced by purchases of property, equipment, leasehold improvements and capitalized internal-use software to report non-GAAP free cash flow. FactSet uses this financial measure both in presenting its results to stockholders and the investment community and in the Company’s internal evaluation and management of the business. Management believes that this financial measure is useful to investors because it permits investors to view the Company’s performance using the same metric that management uses to gauge progress in achieving its goals and is an indication of cash flow that may be available to fund further investments in future growth initiatives.
About FactSet
FactSet (NYSE:FDS | NASDAQ:FDS) helps the financial community to see more, think bigger, and work better. Our digital platform and enterprise solutions deliver financial data, analytics, and open technology to more than 8,000 global clients, including over 206,000 individual users. Clients across the buy-side and sell-side as well as wealth managers, private equity firms, and corporations achieve more every day with our comprehensive and connected content, flexible next-generation workflow solutions, and client-centric specialized support. As a member of the S&P 500, we are committed to sustainable growth and have been recognized amongst the Best Places to Work in 2023 by Glassdoor as a Glassdoor Employees’ Choice Award winner. Learn more at www.factset.com and follow us on Twitter and LinkedIn.
FactSet
Investor Relations Contact:
Ali van Nes
+1.203.810.2273
avannes@factset.com
Media Contact
Megan Kovach
+1.512.736.2795
megan.kovach@factset.com
5
News Release I For Immediate Release
Consolidated Statements of Income (Unaudited) | |||||||||||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| February 29, | February 28, | February 29, | February 28, | ||||||||||||||||||||
| (In thousands, except per share data) | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
| Revenues | $ | 545,945 | $ | 515,085 | $ | 1,088,161 | $ | 1,019,900 | |||||||||||||||
| Operating expenses | |||||||||||||||||||||||
| Cost of services | 255,142 | 240,806 | 506,763 | 467,848 | |||||||||||||||||||
| Selling, general and administrative | 108,807 | 104,582 | 209,518 | 210,178 | |||||||||||||||||||
| Asset impairments | 54 | 447 | 898 | 729 | |||||||||||||||||||
| Total operating expenses | 364,003 | 345,835 | 717,179 | 678,755 | |||||||||||||||||||
| Operating income | 181,942 | 169,250 | 370,982 | 341,145 | |||||||||||||||||||
| Other income (expense), net | |||||||||||||||||||||||
| Interest income | 2,847 | 2,903 | 5,859 | 5,108 | |||||||||||||||||||
| Interest expense | (16,599) | (16,737) | (33,337) | (33,274) | |||||||||||||||||||
| Other income (expense), net | 455 | 1,346 | 337 | 1,668 | |||||||||||||||||||
| Total other income (expense), net | (13,297) | (12,488) | (27,141) | (26,498) | |||||||||||||||||||
| Income before income taxes | 168,645 | 156,762 | 343,841 | 314,647 | |||||||||||||||||||
| Provision for income taxes | 27,705 | 25,169 | 54,346 | 46,256 | |||||||||||||||||||
| Net income | $ | 140,940 | $ | 131,593 | $ | 289,495 | $ | 268,391 | |||||||||||||||
| Basic earnings per common share | $ | 3.70 | $ | 3.44 | $ | 7.61 | $ | 7.03 | |||||||||||||||
| Diluted earnings per common share | $ | 3.65 | $ | 3.38 | $ | 7.49 | $ | 6.89 | |||||||||||||||
| Basic weighted average common shares | 38,103 | 38,281 | 38,059 | 38,201 | |||||||||||||||||||
| Diluted weighted average common shares | 38,650 | 38,981 | 38,646 | 38,947 | |||||||||||||||||||
6
News Release I For Immediate Release
Consolidated Balance Sheets (Unaudited) | ||||||||
| (In thousands) | February 29, 2024 | August 31, 2023 | ||||||
| ASSETS | ||||||||
| Cash and cash equivalents | $ | 381,708 | $ | 425,444 | ||||
| Investments | 68,519 | 32,210 | ||||||
| Accounts receivable, net of reserves of $10,787 at February 29, 2024 and $7,769 at August 31, 2023 | 272,177 | 237,665 | ||||||
| Prepaid taxes | 42,570 | 24,206 | ||||||
| Prepaid expenses and other current assets | 58,047 | 50,610 | ||||||
| Total current assets | 823,021 | 770,135 | ||||||
| Property, equipment and leasehold improvements, net | 80,971 | 86,107 | ||||||
| Goodwill | 1,003,883 | 1,004,736 | ||||||
| Intangible assets, net | 1,860,609 | 1,859,202 | ||||||
| Deferred taxes | 24,345 | 27,229 | ||||||
| Lease right-of-use assets, net | 133,917 | 141,837 | ||||||
| Other assets | 64,120 | 73,676 | ||||||
| TOTAL ASSETS | $ | 3,990,866 | $ | 3,962,922 | ||||
| LIABILITIES | ||||||||
| Accounts payable and accrued expenses | $ | 128,155 | $ | 121,816 | ||||
| Current lease liabilities | 28,965 | 28,839 | ||||||
| Accrued compensation | 72,319 | 112,892 | ||||||
| Deferred revenues | 175,121 | 152,430 | ||||||
| Current taxes payable | 17,832 | 31,009 | ||||||
| Dividends payable | 37,360 | 37,265 | ||||||
| Total current liabilities | 459,752 | 484,251 | ||||||
| Long-term debt | 1,489,488 | 1,612,700 | ||||||
| Deferred taxes | 8,232 | 6,737 | ||||||
| Deferred revenues, non-current | 3,177 | 3,734 | ||||||
| Taxes payable | 35,734 | 30,344 | ||||||
| Long-term lease liabilities | 185,759 | 198,382 | ||||||
| Other liabilities | 6,970 | 6,844 | ||||||
| TOTAL LIABILITIES | $ | 2,189,112 | $ | 2,342,992 | ||||
| STOCKHOLDERS’ EQUITY | ||||||||
| TOTAL STOCKHOLDERS’ EQUITY | $ | 1,801,754 | $ | 1,619,930 | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 3,990,866 | $ | 3,962,922 | ||||
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News Release I For Immediate Release
Consolidated Statements of Cash Flows (Unaudited) | ||||||||
| Six Months Ended | ||||||||
| February 29, | February 28, | |||||||
| (In thousands) | 2024 | 2023 | ||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net income | $ | 289,495 | $ | 268,391 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities | ||||||||
| Depreciation and amortization | 58,650 | 52,208 | ||||||
| Amortization of lease right-of-use assets | 15,263 | 19,596 | ||||||
| Stock-based compensation expense | 30,962 | 27,500 | ||||||
| Deferred income taxes | 5,632 | (6,470) | ||||||
| Asset impairments | 898 | 729 | ||||||
| Changes in assets and liabilities, net of effects of acquisitions | ||||||||
| Accounts receivable, net of reserves | (39,468) | (54,294) | ||||||
| Accounts payable and accrued expenses | 10,377 | 12,102 | ||||||
| Accrued compensation | (40,456) | (51,714) | ||||||
| Deferred revenues | 22,133 | 11,069 | ||||||
| Taxes payable, net of prepaid taxes | (26,150) | (2,576) | ||||||
| Lease liabilities, net | (19,840) | (22,877) | ||||||
| Other, net | (8,554) | 17,650 | ||||||
| Net cash provided by operating activities | 298,942 | 271,314 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Purchases of property, equipment, leasehold improvements and capitalized internal-use software | (38,383) | (35,416) | ||||||
| Purchases of investments | (44,936) | (10,889) | ||||||
| Net cash provided by (used in) investing activities | (83,319) | (46,305) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Repayments of debt | (125,000) | (250,000) | ||||||
| Dividend payments | (74,141) | (67,478) | ||||||
| Proceeds from employee stock plans | 66,544 | 43,605 | ||||||
| Repurchases of common stock | (112,165) | — | ||||||
| Other financing activities | (14,465) | (11,781) | ||||||
| Net cash provided by (used in) financing activities | (259,227) | (285,654) | ||||||
| Effect of exchange rate changes on cash and cash equivalents | (132) | 2,698 | ||||||
| Net increase (decrease) in cash and cash equivalents | (43,736) | (57,947) | ||||||
| Cash and cash equivalents at beginning of period | 425,444 | 503,273 | ||||||
| Cash and cash equivalents at end of period | $ | 381,708 | $ | 445,326 | ||||
8
News Release I For Immediate Release
Reconciliation of U.S. GAAP Results to Adjusted Financial Measures
Financial measures in accordance with U.S. GAAP, including revenues, operating income and margin, net income, diluted EPS and cash provided by operating activities, have been adjusted below. FactSet uses these adjusted financial measures both in presenting its results to stockholders and the investment community and in its internal evaluation and management of the business. The Company believes that these adjusted financial measures and the information they provide are useful to investors because they permit investors to view the Company’s performance using the same tools that management uses to gauge progress in achieving its goals. Adjusted measures may also facilitate comparisons to FactSet’s historical performance.
Revenues
The table below provides a reconciliation of revenues to organic revenues.
| (Unaudited) | Three Months Ended | ||||||||||
| February 29, | February 28, | ||||||||||
| (In thousands) | 2024 | 2023 | Change | ||||||||
| Revenues | $ | 545,945 | $ | 515,085 | 6.0 | % | |||||
Acquisition revenues (a) | (137) | — | |||||||||
Currency impact (b) | 322 | — | |||||||||
| Organic revenues | $ | 546,130 | $ | 515,085 | 6.0 | % | |||||
(a)Removes the current quarter impact of revenues from acquisitions completed within the past twelve months.
(b)Removes the current quarter impact from changes in foreign currency.
9
News Release I For Immediate Release
Non-GAAP Financial Measures
The table below provides a reconciliation of operating income, operating margin, net income and diluted EPS to adjusted operating income, adjusted operating margin, adjusted net income, EBITDA, adjusted EBITDA and adjusted diluted EPS.
| Three Months Ended | |||||||||||
| February 29, | February 28, | ||||||||||
| (dollar amounts in thousands, except per share data) | 2024 | 2023 | % Change | ||||||||
Operating income | $ | 181,942 | $ | 169,250 | 7.5 | % | |||||
Intangible asset amortization | 16,674 | 17,709 | |||||||||
Restructuring / severance | 10,710 | 433 | |||||||||
Business acquisition / integration costs(1) | — | 3,329 | |||||||||
Adjusted operating income | $ | 209,326 | $ | 190,721 | 9.8 | % | |||||
Operating margin | 33.3% | 32.9% | |||||||||
Adjusted operating margin(2) | 38.3% | 37.0% | |||||||||
Net income | $ | 140,940 | $ | 131,593 | 7.1 | % | |||||
Intangible asset amortization | 12,579 | 14,717 | |||||||||
Restructuring / severance | 8,080 | 360 | |||||||||
Business acquisition / integration costs(1) | — | 2,766 | |||||||||
Income tax items | 1,468 | (1,322) | |||||||||
Adjusted net income(3) | $ | 163,067 | $ | 148,114 | 10.1 | % | |||||
Net income | 140,940 | 131,593 | 7.1 | % | |||||||
Interest expense | 16,599 | 16,737 | |||||||||
Income taxes | 27,705 | 25,169 | |||||||||
Depreciation and amortization expense | 31,582 | 26,211 | |||||||||
EBITDA | $ | 216,826 | $ | 199,710 | 8.6 | % | |||||
| Non-recurring non-cash expenses | 1,285 | — | |||||||||
| Adjusted EBITDA | $ | 218,111 | $ | 199,710 | 9.2 | % | |||||
Diluted EPS | $ | 3.65 | $ | 3.38 | 8.0 | % | |||||
Intangible asset amortization | 0.32 | 0.37 | |||||||||
Restructuring / severance | 0.21 | 0.01 | |||||||||
Business acquisition / integration costs(1) | — | 0.07 | |||||||||
Income tax items | 0.04 | (0.03) | |||||||||
Adjusted Diluted EPS(3) | $ | 4.22 | $ | 3.80 | 11.1 | % | |||||
Weighted average common shares (Diluted) | 38,650 | 38,981 | |||||||||
(1)Related to integration costs of the CGS acquisition.
(2)Adjusted operating margin is calculated as Adjusted operating income divided by Revenues.
(3)For purposes of calculating Adjusted net income and Adjusted diluted earnings per share, all adjustments for the three months ended February 29, 2024 and February 28, 2023 were taxed at an adjusted tax rate of 24.6% and 16.9%, respectively.
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News Release I For Immediate Release
Business Outlook Operating Margin, Net Income and Diluted EPS
| (Unaudited) | ||||||||
Figures may not foot due to rounding | Annual Fiscal 2024 Guidance | |||||||
| (In millions, except per share data) | Low end of range | High end of range | ||||||
| Revenues | $ | 2,200 | $ | 2,210 | ||||
| Operating income | $ | 715 | $ | 729 | ||||
| Operating margin | 32.5 | % | 33.0 | % | ||||
Intangible asset amortization | 84 | 82 | ||||||
| Adjusted operating income | $ | 799 | $ | 811 | ||||
Adjusted operating margin (a) | 36.3 | % | 36.7 | % | ||||
| Net income | $ | 540 | $ | 556 | ||||
Intangible asset amortization | 70 | 68 | ||||||
| Discrete tax items | (6) | (5) | ||||||
| Adjusted net income | $ | 604 | $ | 618 | ||||
| Diluted earnings per common share | $ | 13.95 | $ | 14.35 | ||||
| Intangible asset amortization | 1.81 | 1.75 | ||||||
| Discrete tax items | (0.16) | (0.13) | ||||||
| Adjusted diluted earnings per common share | $ | 15.60 | $ | 16.00 | ||||
(a)Adjusted operating margin is calculated as Adjusted operating income divided by Revenues.
Free Cash Flow
| (Unaudited) | Three Months Ended | ||||||||||
| February 29, | February 28, | ||||||||||
| (In thousands) | 2024 | 2023 | Change | ||||||||
| Net Cash Provided for Operating Activities | $ | 143,798 | $ | 164,678 | |||||||
| Less: purchases of property, equipment, leasehold improvements and capitalized internal-use software | (21,917) | (17,456) | |||||||||
| Free Cash Flow | $ | 121,881 | $ | 147,222 | (17.2) | % | |||||
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News Release I For Immediate Release
Supplementary Schedules of Historical ASV by Client Type
The following table presents the percentages and growth rates of organic ASV by client type, excluding the impact of currency movements, and may be useful to facilitate historical comparisons. Organic ASV excludes acquisitions and dispositions completed within the last twelve months and the effects of foreign currency movements.
The numbers below do not include professional services or issuer fees.
| Q2'24 | Q1'24 | Q4'23 | Q3'23 | Q2'23 | Q1'23 | Q4'22 | Q3'22 | |||||||||||||||||||
| % of ASV from buy-side clients | 82.0% | 82.0% | 81.8% | 82.1% | 82.8% | 82.8% | 82.9% | 83.7% | ||||||||||||||||||
| % of ASV from sell-side clients | 18.0% | 18.0% | 18.2% | 17.9% | 17.2% | 17.2% | 17.1% | 16.3% | ||||||||||||||||||
| ASV Growth rate from buy-side clients | 5.6% | 7.2% | 6.9% | 7.3% | 8.1% | 8.0% | 8.5% | 9.6% | ||||||||||||||||||
| ASV Growth rate from sell-side clients | 5.5% | 7.6% | 9.3% | 12.3% | 15.8% | 14.4% | 13.8% | 12.9% | ||||||||||||||||||
The following table presents the calculation of organic ASV plus professional services.
(Details may not sum to total due to rounding)
| (In millions) | Q2'24 | ||||
As reported ASV plus Professional Services (a) | $ | 2,208.8 | |||
Currency impact (b) | 0.7 | ||||
| Organic ASV plus Professional Services | $ | 2,209.5 | |||
| Organic ASV plus Professional Services growth rate | 5.4 | % | |||
(a)Includes $20.3 million in professional services as of February 29, 2024.
(b)The impact of foreign currency movements.
12
FactSet Appoints Laurie Hylton to Board of Directors
NORWALK, Conn., March 20, 2024 (GLOBE NEWSWIRE) -- FactSet (NYSE: FDS | NASDAQ: FDS), a global financial digital platform and enterprise solutions provider, today announced the appointment of Laurie Hylton to its Board of Directors. Hylton also will serve on FactSet’s Audit Committee.
Hylton is a highly skilled and experienced senior finance executive with over 30 years of expertise in asset management and public accounting. Before retirement, she served as Chief Financial Officer as well as Chief Accounting Officer at Eaton Vance Corp., a leading global asset manager. At Eaton Vance, Hylton was a member of the Executive Management Committee and played a pivotal role in shaping the company's strategic direction. Before joining Eaton Vance, Hylton worked as an auditor at Deloitte.
Hylton was appointed to the Board of Sun Life Financial Inc. in December 2022. She also serves on the boards of Newbury Art Association and Theater in the Open. Hylton earned a Bachelor's Degree in English from Dartmouth College and a Master of Business Administration degree from the University of New Hampshire's Peter T. Paul College of Business and Economics. She was a Certified Public Accountant from 1994 to 2022.
“It is an exciting time to join the board of a company that is working to harness the power of generative AI to transform its products,” said Hylton. “It is a privilege to be part of this journey to transform and enhance the user experience.”
“I am pleased to welcome Laurie Hylton to our board and look forward to partnering with her as FactSet continues to drive the investment community to see more, think bigger, and do their best work,” said Robin Abrams, Chair of the Board of Directors. “Her extensive financial industry experience in asset management, insurance, and accounting will be a tremendous asset as FactSet continues to deliver value to our employees, clients, and shareholders.”
About FactSet
FactSet (NYSE:FDS | NASDAQ:FDS) helps the financial community to see more, think bigger, and work better. Our digital platform and enterprise solutions deliver financial data, analytics, and open technology to nearly 8,000 global clients, including over 207,000 individual users. Clients across the buy-side and sell-side, as well as wealth managers, private equity firms, and corporations, achieve more every day with our comprehensive and connected content, flexible next-generation workflow solutions, and client-centric specialized support. As a member of the S&P 500, we are committed to sustainable growth and have been recognized amongst the Best Places to Work in 2023 by Glassdoor as a Glassdoor Employees’ Choice Award winner. Learn more at www.factset.com and follow us on Twitter and LinkedIn.
FactSet
Investor Relations Contact:
Ali van Nes
+1.203.810.2273
Avannes@factset.com
Media Contact
Megan Kovach
+1.512.736.2795
megan.kovach@factset.com