FactSet’s AI Sales More Than Double, Stock Reverses Early Losses

FactSet Research Systems Inc. (NYSE:FDS) stock reversed early losses Wednesday after falling more than 2% in premarket trading. Investors weighed weaker-than-expected fiscal 2027 guidance against better-than-expected fiscal 2026 fourth-quarter results.

FactSet reported adjusted earnings of $4.52 per share, beating the analyst consensus estimate of $4.33.

Revenue rose 6.3% year over year to $634.7 million, beating the consensus estimate of $629.8 million. Organic revenue increased 7.1% to $635.5 million.

FactSet Margins Narrow As Costs Rise

Adjusted operating income increased 3.8% to $209.4 million from $201.7 million a year earlier.

However, the adjusted operating margin fell to 33% from 33.8%. FactSet attributed the decline mainly to higher compensation tied to annual subscription value, or ASV, incentive plans and increased technology expenses.

GAAP diluted earnings fell to $3.41 per share from $4.03 a year earlier. Higher operating expenses and other nonrecurring items weighed on results.

Free cash flow decreased 0.5% year over year to $177.3 million.

FactSet ended the quarter with $233.3 million in cash and cash equivalents and $870.6 million in long-term debt.

The company returned more than $179 million to shareholders during the quarter, including $138 million through share repurchases and more than $41 million in dividends.

Subscription Value Reaches $2.6 Billion

ASV reached $2.6 billion as of Aug. 31, up from $2.4 billion a year earlier.

Organic ASV grew 7% during fiscal 2026. FactSet said strong commercial execution and growing demand for its artificial intelligence and data products supported the increase.

The Americas accounted for nearly 65% of ASV, followed by Europe, the Middle East and Africa at 24% and Asia-Pacific at 10%.

Annual ASV retention remained above 95%. Meanwhile, the average renewal contract length increased nearly 30% during the quarter. ASV added from AI solutions more than doubled from a year earlier.

CEO Sanoke Viswanathan pointed to continued momentum in FactSet’s AI and data products, along with faster innovation and productivity improvements.

FactSet Fiscal 2027 Outlook Falls Short

FactSet expects fiscal 2027 revenue of $2.60 billion to $2.625 billion. The midpoint of the range is below the $2.616 billion analyst estimate.

The company expects organic ASV growth of 5% to 6.5%.

FactSet forecast a GAAP operating margin of 31% to 32% and an adjusted operating margin of 34.75% to 35.25%.

GAAP earnings are expected to range from $17 to $17.50 per share, below the $17.85 analyst estimate.

Adjusted earnings are forecast at $19.25 to $19.65 per share, compared with the $19.68 consensus estimate.

FDS Stock Price Activity: FactSet Research Systems shares are trading higher by 1.37% at $263.54 at the time of publication on Wednesday, according to Benzinga Pro data.

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