FactSet Research Systems Inc (FDS) Reports Solid Revenue and Earnings Growth in Q1 2024
Q1 GAAP revenue increased by 7.4% year over year to $542.2 million.
GAAP diluted EPS rose by 9.1% to $3.84, while adjusted diluted EPS grew by 3.3% to $4.12.
Organic ASV plus professional services reached $2,185.0 million, marking a 7.1% increase from the previous year.
FactSet updates fiscal 2024 guidance, anticipating ASV plus professional services growth of 5-7%.
On December 19, 2023, FactSet Research Systems Inc (NYSE:FDS) released its 8-K filing, announcing financial results for the first quarter of fiscal year 2024. The company reported a robust 7.4% increase in GAAP revenue, reaching $542.2 million, compared to $504.8 million in the same period last year. Organic revenue, which excludes the impact of acquisitions, dispositions, and currency movements, also saw a healthy growth of 7.2% year over year.
Financial Highlights and Performance
FactSet's GAAP operating margin improved by approximately 80 basis points to 34.9%, while the adjusted operating margin experienced a slight decline of approximately 70 basis points to 37.6%. The GAAP diluted earnings per share (EPS) increased by 9.1% to $3.84, and the adjusted diluted EPS grew by 3.3% to $4.12, driven by revenue growth and margin expansion, partially offset by a higher tax rate.
The company's Annual Subscription Value (ASV) plus professional services was reported at $2,184.6 million as of November 30, 2023, a 7.1% increase from the previous year's $2,039.0 million. This growth reflects the company's strong sales performance, particularly in the Wealth segment and increased sales of data.
Segment Performance and Operational Highlights
FactSet's client count stood at 7,945, with a net increase of 24 clients over the past three months. The user count also saw a significant increase, adding 17,111 users, largely driven by wealth management clients. The company's annual ASV retention rate remained high at over 95%.
From a regional perspective, the Americas led with an organic ASV increase of 7.9%, followed by the Asia Pacific with an 8.0% increase, and EMEA with a 5.4% increase. These figures underscore FactSet's strong performance across its key markets.
Balance Sheet and Cash Flow
FactSet's balance sheet remains solid, with cash and cash equivalents totaling $411.9 million. The company generated $155.1 million in net cash from operating activities, a significant increase from the $106.6 million reported in the first quarter of fiscal 2023. Free cash flow also saw a substantial increase, rising by 56.4% to $138.7 million.
Guidance and Strategic Initiatives
Looking ahead, FactSet has updated its fiscal 2024 guidance. The company now expects organic ASV plus professional services growth in the range of $110 million to $150 million, representing a 6% growth at the midpoint. FactSet's CEO, Phil Snow, expressed confidence in the company's strategy and its ability to grow amidst macroeconomic uncertainty. He highlighted the company's focus on harnessing generative AI to transform its products and expand its data and analytics offerings.
FactSet's CFO, Linda Huber, emphasized the company's vigilance in evolving market conditions and its commitment to investing in competitive offerings, including AI technologies. The company has also launched FactSet Mercury, a large language model-based workflow tool for junior bankers, as part of its AI Blueprint initiative.
In conclusion, FactSet Research Systems Inc (NYSE:FDS) has demonstrated a strong start to fiscal 2024, with solid revenue and earnings growth. The company's strategic investments in AI and its robust client and user base growth position it well for continued success in the evolving financial data and analytics market.
Explore the complete 8-K earnings release (here) from FactSet Research Systems Inc for further details.
This article first appeared on GuruFocus.
