FactSet (FDS) Q3 2024 earnings summary

Executive summary

• Q3 FY24 revenues rose 4.3% year-over-year to $552.7M, with organic revenue growth of 4.5%–5% and strong contributions from institutional asset managers, asset owners, partners, and corporates.

• Adjusted operating margin increased to 39.4% (up 340bps), and GAAP operating margin reached 36.6% (up 420bps), driven by lower bonus accruals, cost rationalization, and a one-time payroll tax adjustment.

• Adjusted diluted EPS grew 15.3% to $4.37, and GAAP diluted EPS rose 18.2% to $4.09, reflecting higher revenues, margin expansion, and reduced share count.

• Client count reached 8,029, user count exceeded 208,000, and annual ASV retention remained above 95% with 90% client retention.

• Innovation in generative AI and cloud-native solutions, including new product launches and investments, drove client wins and performance.

Financial highlights

• Q3 net income was $158.1M (up 17.4% YoY); adjusted EBITDA rose 16.9% to $239.9M; free cash flow increased 12.6% to $216.9M.

• Share repurchases totaled $60M in Q3, with $128.1M remaining authorized; quarterly dividend increased 6% for the 25th consecutive year.

• GAAP operating expenses decreased 2% YoY, driven by lower compensation and real estate costs, partially offset by higher technology and third-party content expenses.

• Technology costs rose 26% YoY, now 9.5% of revenue; employee expenses down 8.6%.

• Gross leverage reduced to 1.7x after $62.5M term loan repayment; total debt at $1.24B–$1.43B as of May 31, 2024.

Outlook and guidance

• FY24 organic ASV plus professional services growth expected at 4%–5.5% ($85M–$120M incremental), with revenue guidance of $2.18B–$2.19B.

• Adjusted operating margin guidance raised to 37%–37.5%; adjusted EPS guidance increased to $16.00–$16.40.

• GAAP diluted EPS guidance increased to $14.55–$14.95.

• Effective tax rate expected at 16.5%–17.5%.

• Guidance reflects risks from market conditions, client demand, and non-recurring items.