Why Financial Digital Platform FactSet Research Shares Are Declining Today

FactSet Research Systems Inc FDS reported Q1 FY24 sales growth of 7.4% Y/Y to $542.2 million, marginally beating the consensus of $540.36 million. 

Organic revenue rose 7.2% Y/Y to $541.4 million, aided by higher Wealth sales and increased data sales.

Adjusted EPS of $4.12 beat the consensus of $4.11.

As of November 30, 2023, the client count was 7,945, a net increase of 24 clients in the past three months, primarily driven by the rise in private equity/venture capital, corporates, and wealth management clients.

Adjusted operating margin contracted to 37.6% (-69 bps Y/Y) due to higher technology expenses. EBITDA was $219.0 million, up 9.3% Y/Y. 

The company exited the quarter with $411.86 million in cash and equivalents. 

Related: FactSet Research Gears Up For Q1 Print; Here's A Look At Recent Price Target Changes By The Most Accurate Analysts

Share Repurchase: FactSet repurchased 135,950 shares of its common stock for $59.9 million in Q1. As of November 30, 2023, the company had $240.1 million worth of shares available for repurchases under this program.

The company declared a quarterly dividend of $37.3 million, or $0.98 per share, to be paid on December 21, 2023, to shareholders of record as of November 30, 2023.

Outlook: FactSet lowered FY24 revenue outlook to $2.20 billion-$2.21 billion (from $2.21 billion-$2.23 billion) vs. $2.22 billion estimate and adj. EPS to $15.60-$16.00 (from $15.65-$16.15) vs. consensus of $16.08.

Adjusted operating margin guidance is reiterated at 36.3%-36.7%.

"Also, we are updating our organic ASV guidance for fiscal 2024. We now expect that our organic ASV growth will be in the range of $110 million to $150 million for fiscal 2024, reduced from our previous guidance of $130 million to $175 million, representing ASV growth of 6% at the midpoint," said Linda Huber, FactSet CFO.

Apart from this, as a part of cost reduction efforts, the company expects charges of $10 million to $15 million in Q2 FY24. 

Also Read: FactSet's Subscription Model Offers Buffers Against Economic Cyclicality, Analyst Boosts Price Target

Price Action: FDS shares traded lower by 1.22% at $452.88 on the last check Tuesday.