Q4 GAAP revenues of $562.2 million, up 4.9% from Q4 2023.
Organic Q4 ASV plus professional services of $2,272.8 million, up 4.8% year over year.
Q4 GAAP operating margin of 22.7%, up approximately 110 bps year over year, and adjusted operating margin of 35.8%, up 240 bps from the prior year.
Q4 GAAP diluted EPS of $2.32, up 38.1% from the prior year, and adjusted diluted EPS of $3.74, up 23.8% year over year.
FactSet is providing fiscal 2025 guidance, with expected organic ASV growth of 4% - 6%, GAAP revenues in the range of $2,285 to $2,305 million, adjusted operating margin in the range of 36% - 37%, and adjusted diluted EPS in the range of $16.80 - $17.40.
NORWALK, Conn., Sept. 19, 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 fourth quarter fiscal 2024 ended August 31, 2024.
Fourth Quarter Fiscal 2024 Highlights
GAAP revenues increased 4.9%, or $26.4 million, to $562.2 million for the fourth quarter of fiscal 2024 compared with $535.8 million in the prior year period. Organic(1) revenues grew 5.0% year over year to $562.8 million during the fourth quarter of fiscal 2024. Growth in GAAP and Organic revenues this quarter was driven by wealth, banking, institutional asset managers and asset owners.
Annual Subscription Value ("ASV") plus professional services was $2,276.0 million at August 31, 2024, compared with $2,174.6 million at August 31, 2023. Organic ASV plus professional services was $2,272.8 million at August 31, 2024, up 4.8% or $104.4 million year over year.
Organic ASV plus professional services increased $53.5 million over the last three months. Please see the "ASV + Professional Services" section of this press release for details.
GAAP operating margin increased to 22.7% compared with 21.7% for the prior year period, mainly due to a decrease in employee compensation costs, growth in revenues and lapping of the prior year's facilities impairment, partially offset by charges related to the Massachusetts sales tax dispute. Adjusted operating margin improved to 35.8% compared with 33.4% in the prior year period due to lower bonus accrual and salary costs due to lower headcount, partially offset by higher technology expenses from amortization of internal use software.
During the fourth quarter, FactSet took a charge of approximately $54 million related to our previously disclosed Massachusetts sales tax dispute. In addition to reserves taken in prior fiscal years, this brings our total charge with respect to this matter to approximately $64 million. FactSet does not anticipate taking additional material charges with respect to this matter.
GAAP diluted earnings per share ("EPS") increased 38.1% to $2.32 compared with $1.68 for the same period in fiscal 2023, due to a decrease in employee compensation costs and an increase in revenues, partially offset by charges related to the Massachusetts sales tax dispute. Adjusted diluted EPS increased 23.8% to $3.74 compared with $3.02 in the prior year period, driven by growth in revenues, margin expansion, and a lower tax rate.
Net cash provided by operating activities was $163.2 million for the fourth quarter of fiscal 2024, driven by net income and timing of payments to vendors. Free cash flow decreased to $137.2 million for the fourth quarter of fiscal 2024, compared with $156.3 million for the same period in fiscal 2023, a decrease of 12.2%, primarily due to lower net cash provided by operating activities and an increase in capital expenditures.
GAAP effective tax rate for the fourth quarter of fiscal 2024 decreased to 23.6% compared with 39.3% for the three months ended August 31, 2023. The primary driver of the lower GAAP rate in the fourth quarter of fiscal 2024 is the inclusion of a prior year tax adjustment in the fourth quarter of fiscal 2023.
(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.
"During a time of technological change and an external environment marked by both uncertainty and opportunity, FactSet's open platform strategy is resonating with clients seeking growth and efficiency," said Phil Snow, CEO of FactSet. "Our commitment to innovation ensures our comprehensive data and analytical tools are fully available to our clients, empowering them to achieve their goals."
Key Financial Measures*
(Condensed and Unaudited)
Three Months Ended
Twelve Months Ended
Latest
August 31,
August 31,
August 31,
August 31,
FY2024
(In thousands, except per share data)
2024
2023
Change
2024
2023
Change
Guidance
Revenues
$
562,187
$
535,797
4.9
%
$
2,203,056
$
2,085,508
5.6
%
$2,180 - $2,190
Organic revenues
$
562,781
$
535,797
5.0
%
$
2,203,736
$
2,085,508
5.7
%
Operating income
$
127,858
$
116,103
10.1
%
$
701,299
$
629,207
11.5
%
Adjusted operating income
$
201,402
$
179,134
12.4
%
$
832,653
$
754,188
10.4
%
Operating margin
22.7
%
21.7
%
31.8
%
30.2
%
33.7% - 34.0%
Adjusted operating margin
35.8
%
33.4
%
37.8
%
36.2
%
37.0% - 37.5%
Net income
$
89,496
$
65,119
37.4
%
$
537,126
$
468,173
14.7
%
Adjusted net income
$
144,089
$
117,225
22.9
%
$
635,073
$
569,722
11.5
%
Adjusted EBITDA
$
170,494
$
171,207
(0.4
)%
$
847,538
$
776,620
9.1
%
Diluted EPS
$
2.32
$
1.68
38.1
%
$
13.91
$
12.04
15.5
%
$14.55 - $14.95
Adjusted diluted EPS
$
3.74
$
3.02
23.8
%
$
16.45
$
14.65
12.3
%
$16.00 - $16.40
* See reconciliation of U.S. GAAP to adjusted key financial measures in the back of this press release.
"We are pleased with our results this quarter, which reflect our strong execution and operating discipline," said Helen Shan, FactSet's CFO. "By protecting our operating margin through aligning variable expenses with revenues, we achieved solid earnings growth and wrapped up the year effectively, positioning us well for fiscal 2025."
Full Year Fiscal 2024 Highlights
GAAP revenues increased 5.6% to $2.20 billion, up 5.7% on an organic basis, based primarily on growth in organic revenues driven by wealth, CUSIP Global Services ("CGS") subscriptions, and higher transactional revenue. This marked the 44th consecutive year of increased revenues for the Company.
GAAP operating margin increased to 31.8% compared with 30.2% for the prior year, primarily due to growth in revenues, a decrease in employee compensation costs and lapping of the prior year's facilities impairment, partially offset by charges related to the Massachusetts sales tax dispute. Adjusted operating margin improved to 37.8% compared with 36.2% in the prior year driven by lower bonus accrual and salary due to headcount reductions, partially offset by increased technology expenses from amortization and software licenses.
GAAP diluted EPS increased 15.5% to $13.91, mainly driven by growth in revenues, partially offset by charges related to the Massachusetts sales tax dispute. Adjusted diluted EPS increased 12.3% to $16.45, primarily driven by growth in revenues, margin expansion and a lower tax rate. Fiscal 2024 marks the 28th consecutive year that FactSet has increased its adjusted diluted EPS.
Net cash provided by operating activities was $700.3 million for fiscal 2024, driven by net income and timing of payments to vendors. Free cash flow increased to $614.7 million for fiscal 2024 compared with $584.8 million for fiscal 2023, an increase of 5.1%, primarily due to higher net cash provided by operating activities, partially offset by an increase in capital expenditures.
Adjusted EBITDA increased to $847.5 million, up 9.1%, for fiscal 2024, compared with $776.6 million for fiscal 2023, due to an increase in operating income primarily driven by higher revenues, partially offset by charges related to the Massachusetts sales tax dispute.
GAAP effective tax rate for fiscal 2024 decreased to 17.6% compared with 19.8% for the twelve months ended August 31, 2023. The primary driver of the lower GAAP rate in fiscal 2024 is the inclusion of a prior year tax adjustment in the fourth quarter of fiscal 2023.
Client count increased by 3.7% or 296 during the fiscal year, while users grew by 13.9% or 26,409 from the prior year.
In May 2024, FactSet increased its quarterly cash dividend by 6% to $1.04 per share. The $0.06 per share increase marks the 25th consecutive year the Company has increased dividends, highlighting FactSet's continued commitment to return value to its shareholders.
The Company returned $385.9 million to shareholders in the form of share repurchases and dividends during fiscal 2024, for a return of 55% as a percentage of free cash flow and proceeds from employee stock plans.
Annual Subscription Value (ASV) + Professional Services
ASV at any given point in time represents the forward-looking revenues for the next 12 months from all subscription services currently supplied to clients. Professional services are revenues derived from project-based consulting and implementation services.
ASV plus professional services was $2,276.0 million at August 31, 2024, compared with $2,174.6 million at August 31, 2023. Organic ASV plus professional services was $2,272.8 million at August 31, 2024, up $104.4 million from the prior year, for a growth rate of 4.8%. Organic ASV plus professional services increased $53.5 million over the last three months.
The buy-side and sell-side organic ASV annual growth rates as of August 31, 2024 were 4.9% and 3.8%, respectively. Buy-side clients, including institutional 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, and 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 $1,456.8 million compared with ASV in the prior year period of $1,376.9 million. Organic ASV increased 6.1% to $1,456.8 million. Americas revenues for the quarter increased to $362.5 million compared with $343.3 million in the fourth quarter of last year. The Americas region's quarterly organic revenues growth rate was 5.6% over the prior year period.
ASV from the EMEA region was $570.3 million compared with ASV in the prior year period of $559.6 million. Organic ASV increased 1.8% to $569.3 million. EMEA revenues were $143.1 million compared with $138.6 million in the fourth quarter of fiscal 2023. The EMEA region's quarterly organic revenues growth rate was 3.3% over the prior year period.
ASV from the Asia Pacific region was $230.6 million compared with ASV in the prior year period of $215.4 million. Organic ASV increased 7.1% to $228.4 million. Asia Pacific revenues were $56.6 million compared with $53.9 million in the fourth quarter of fiscal 2023. The Asia Pacific region's quarterly organic revenues growth rate was 6.1% over the prior year period.
Segment ASV does not include professional services, which totaled $18.3 million at August 31, 2024.
Operational Highlights – Fourth Quarter Fiscal 2024
Client count as of August 31, 2024 was 8,217, a net increase of 188 clients in the past three months, with increases driven by wealth, corporates, hedge funds and partners. The count includes clients with ASV of $10,000 and more.
User count increased by 8,241 to 216,381 in the past three months driven primarily by wealth and seasonal bank hiring.
Annual ASV retention was greater than 95%. When expressed as a percentage of clients, annual retention was 90%.
Employee count was 12,398 as of August 31, 2024, up 1.3% over the last twelve months, with the increase primarily in the content group. FactSet's Centers of Excellence account for approximately 69% of the Company's employees.
The Company announced that its Board of Directors approved a regular quarterly cash dividend of $1.04 per share. The cash dividend will be paid on September 19, 2024, to holders of record of FactSet's common stock at the close of business on August 30, 2024.
FactSet announced that it will host an Investor Day on Thursday, November 14, 2024, from 8:00 a.m. to 2:00 p.m. EST. The event will be dually hosted in New York City and via live stream.
FactSet announced its suite of solutions designed to enable technologists and developers to build proprietary workflows and accelerate their AI-powered innovations.
Kristina Karnovsky has been appointed Executive Vice President and Head of the Dealmakers and Wealth group, effective September 1, 2024. Ms. Karnovsky is a veteran FactSet executive who previously served as FactSet's Executive Vice President and Chief Product Officer. Ms. Karnovsky succeeds Goran Skoko, who became the Company's Chief Revenue Officer effective September 1, 2024.
Share Repurchase Program
FactSet repurchased 153,650 shares of its common stock for $63.3 million at an average price of $412.09 during the fourth quarter of fiscal 2024 under the Company's share repurchase program. As of August 31, 2024, the remaining $64.8 million under this program was no longer available for share repurchases. On September 17, 2024, the Board of Directors of FactSet approved a new share repurchase authorization of up to $300 million in the aggregate, which will be available during fiscal 2025.
Annual Business Outlook
FactSet is providing its outlook for fiscal 2025. 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 2025 Expectations
Beginning in fiscal 2025, FactSet will report Organic ASV, rather than Organic ASV plus Professional Services, to more accurately reflect the recurring nature of its revenues. This underscores the shift of FactSet's offerings toward providing more managed services and less project-based services.
Organic ASV is expected to grow in the range of $90 million to $140 million during fiscal 2025.
GAAP revenues are expected to be in the range of $2,285 million to $2,305 million.
GAAP operating margin is expected to be in the range of 32.5% to 33.5%.
Adjusted operating margin is expected to be in the range of 36.0% to 37.0%.
FactSet's annual effective tax rate is expected to be in the range of 17% to 18%.
GAAP diluted EPS is expected to be in the range of $15.10 to $15.70.
Adjusted diluted EPS is expected to be in the range of $16.80 to $17.40.
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 2025. Please see the back of this press release for a reconciliation of GAAP to adjusted metrics.
Conference Call
Fourth Quarter 2024 Conference Call Details
Date:
Thursday, September 19, 2024
Time:
11:00 a.m. Eastern Time
Participant Registration:
FactSet Q4 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 September 19, 2024, through September 19, 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.
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 8,200 global clients, including over 216,000 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 X and LinkedIn.
FactSet Investor Relations Contact:Ali van ContactMegan
Consolidated Statements of Income (Unaudited)
Three Months Ended
Twelve Months Ended
August 31,
August 31,
August 31,
August 31,
(In thousands, except per share data)
2024
2023
2024
2023
Revenues
$
562,187
$
535,797
$
2,203,056
$
2,085,508
Operating expenses
Cost of services
258,196
263,688
1,011,945
973,225
Selling, general and administrative
172,519
131,227
485,135
457,130
Asset impairments
3,614
24,779
4,677
25,946
Total operating expenses
434,329
419,694
1,501,757
1,456,301
Operating income
127,858
116,103
701,299
629,207
Other income (expense), net
Interest income
4,020
4,618
14,447
12,809
Interest expense
(15,547
)
(16,691
)
(65,778
)
(66,319
)
Other income (expense), net
799
3,279
1,535
8,257
Total other income (expense), net
(10,728
)
(8,794
)
(49,796
)
(45,253
)
Income before income taxes
117,130
107,309
651,503
583,954
Provision for income taxes
27,634
42,190
114,377
115,781
Net income
$
89,496
$
65,119
$
537,126
$
468,173
Basic earnings per common share
$
2.35
$
1.71
$
14.11
$
12.26
Diluted earnings per common share
$
2.32
$
1.68
$
13.91
$
12.04
Basic weighted average common shares
38,007
38,092
38,059
38,194
Diluted weighted average common shares
38,517
38,784
38,618
