Why Is FactSet Research Systems Stock Trading Lower Thursday?

FactSet Research Systems Inc FDS reported second-quarter fiscal 2024 sales growth of 6.0% Y/Y to $545.95 million, marginally missing the consensus of $546.80 million. 

Organic revenue rose 6.0% Y/Y to $546.13 million, aided by asset owners, corporates, hedge funds, and private equity and venture capital clients.

Adjusted EPS of $4.22 beat the consensus of $3.88. The stock price dropped after the results.

As of February 29, 2024, the client count was 8,020, a net increase of 75 clients in the past three months, primarily driven by the rise in private equity/venture capital, corporates, and wealth management clients. The count includes clients with ASV of $10,000 and more.

Adjusted operating margin improved to 38.3% (+130 bps Y/Y). 

Adjusted EBITDA increased to $218.1 million, up 9.2% for the second quarter of fiscal 2024 Y/Y, due to higher operating income.

The company held $450.23 million in cash and equivalents as of February 29, 2024. 

“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.

FY24 Outlook: FactSet reiterated the fiscal 2024 revenue outlook of $2.20 billion – $2.21 billion vs. $2.21 billion estimate and adjusted EPS of $15.60 – $16.00 vs. consensus of $15.94.

The company reiterated adjusted operating margin guidance of 36.3% – 36.7%.

FDS stock has gained over 10% in 2023. Investors can gain exposure to the stock via AdvisorShares Focused Equity ETF CWS and Gabelli ETFs Trust Gabelli Financial Services Opportunities ETF GABF.

Price Action: FDS shares traded lower by 5.40% at $463.04 on the last check Thursday.

Photo via Shutterstock