Factset Research Systems Inc (FDS)

FactSet operates in the financial information services industry, focused on delivering expansive data, sophisticated analytics, and flexible technology through an open platform. The industry is highly competitive, comprised of both large, well-capitalized companies and smaller, niche firms including market data suppliers, vertical AI solution providers, news and information providers, technology firms, and many third-party content providers that also supply financial information included in FactSet's products. The financial market data environment is competitive and includes many firms that provide products and services similar to FactSet's offerings. The predominant investment strategy today is no longer active investing, and a continued shift to passive investing, resulting in an increased outflow to passively managed index funds, could reduce demand for the services of active investment managers and consequently the demand of FactSet's clients for its products and services. Demand for data center capacity, power and computing resources has grown rapidly across the industry, driven in significant part by AI, and has contributed to constrained availability and rising costs.

FactSet's current competitive market includes Bloomberg L.P., S&P, London Stock Exchange Group, BlackRock, MSCI Inc., and Morningstar Inc., in addition to clients with in-house teams developing their own solutions. FactSet believes the breadth and depth of its suite of products and applications offer benefits to its clients that are a competitive advantage, and its applications, client support and service offerings are entrenched in the workflow of many financial professionals given the data management, portfolio analysis and screening capabilities offered. FactSet is entrusted with significant amounts of its clients' own proprietary data, including portfolio holdings, and believes its products are central to its clients' analysis, decision-making and operations. Competitors may offer price incentives to attract new business, and future competitive pricing pressures may result in decreased sales volumes and price reductions, resulting in lower revenues and ASV. An increasing amount of free or relatively inexpensive information continues to become available, particularly through the internet and the deployment of AI technologies, which could cause demand for FactSet's products and services to be reduced.

FactSet generates most of its revenues by delivering client access to its multi-asset class data and solutions powered by its platform of connected data and technology available over the contractual term, referred to as the Hosted Platform, which is a subscription-based service providing client access to various combinations of products and services including workstations, portfolio analytics, enterprise data solutions, AI agents, and agentic workflow solutions. Revenues are primarily derived from subscriptions to multi-asset class data and solutions, and FactSet also offers managed services that operate as an extension of clients' internal teams to support data, performance, risk and reporting, and AI-enabled workflows. As of August 31, 2026, FactSet had more than 9,200 clients ¹ and over 260,000 professionals ² using its solutions, including institutional asset managers, bankers, wealth managers, asset owners, partners, hedge fund professionals, corporate users, private equity and venture capital professionals, and market infrastructure participants. FactSet serves clients in over 80 countries ³. ASV at any point in time represents forward-looking revenues for the next 12 months from all recurring services currently being supplied to clients. FactSet is actively moving client contracts to longer duration enterprise platform agreements that combine subscription-based minimums with consumption-based pricing components.

FactSet's product and solution portfolio spans workstations, portfolio analytics, enterprise data solutions, AI solutions, and managed services, delivered through a configurable desktop and mobile platform, comprehensive data solutions, cloud-based digital solutions, application programming interfaces, and model context protocol servers, with AI embedded throughout to enhance data discovery, automate routine workflows and improve the speed and accuracy of client insights. For institutional buyside clients, solutions span the investment lifecycle of investment research, portfolio construction and analysis, trade execution, performance measurement, risk management and reporting. Banking solutions facilitate company and market research, enabling clients to perform fundamental analysis, generate ideas, and build and distribute presentations through proprietary and third-party databases with global coverage of public and private markets, granular industry metrics, and deep historical data. Wealth solutions support home office, advisory, and client engagement workflows, providing financial advisors with tools to monitor markets and their book of business, prospect for new clients, and generate proposals. Through the CUSIP Global Services business, operating on behalf of the American Bankers Association, FactSet supports security master files and serves as the exclusive issuer of CUSIP and CINS identifiers globally.

FactSet operates through three reportable segments based on the geographic region where clients contract: the Americas, EMEA and Asia Pacific. Revenues from the Americas represented 65% of total revenues during fiscal 2026 ⁴, EMEA represented 24% ⁵, and Asia Pacific represented 11% ⁶. As of August 31, 2026, ASV from the Americas represented 65% of total ASV and was $1,678.2 million ⁷, an increase from $1,570.1 million ⁸ as of August 31, 2025, with Americas Organic ASV of $1,678.2 million ⁹, a 7.1% increase ¹⁰ from the prior year. ASV from EMEA represented 24% of total ASV and was $620.9 million ¹¹, an increase from $591.6 million ¹², with EMEA Organic ASV of $623.6 million ¹³, a 5.2% increase ¹⁴. ASV from Asia Pacific represented 11% of total ASV and was $266.1 million ¹⁵, an increase from $243.9 million ¹⁶, with Asia Pacific Organic ASV of $266.4 million ¹⁷, a 10.6% increase ¹⁸.

During fiscal 2026, FactSet completed the acquisition of Liquid Holdings LLC's LiquidityBook on February 7, 2025, and the acquisition of Platform Group Limited (Irwin) on November 5, 2024. FactSet returned $808.1 million ¹⁹ to stockholders in the form of share repurchases and dividends during fiscal 2026. On June 17, 2025, the Board of Directors authorized up to $400 million ²⁰ for share repurchases on or after September 1, 2025, and on December 16, 2025, the Board approved an additional $600 million ²¹ in share repurchase authority, which was available immediately with no expiration date. As of August 31, 2026, $356.0 million ²² remained authorized under the share repurchase program. In the third quarter of fiscal 2026, FactSet increased its quarterly cash dividend from $1.10 ²³ to $1.16 ²⁴ per share. FactSet appointed a new Chief Executive Officer, Chief Financial Officer, Chief People and Workforce Transformation Officer and Chief Technology Officer during fiscal 2026.

Revenues totaled $2,476.3 million ²⁵ for fiscal 2026, an increase of 6.7% ²⁶ compared to the prior year, driven by a corresponding 6.7% increase in organic revenues, which totaled $2,464.6 million ²⁷. Organic ASV totaled $2,568.2 million ²⁸ as of August 31, 2026, an increase of 7.0% ²⁹ over the prior year. Operating income decreased 6.5% ³⁰ to $700.0 million ³¹ in fiscal 2026, compared with $748.3 million ³² in fiscal 2025, and operating margin decreased to 28.3% ³³ from 32.2% ³⁴. Net income for fiscal 2026 was $533.5 million ³⁵, a decrease of 10.6% ³⁶ from the prior year, and Diluted EPS was $14.57 ³⁷, a decrease of 6.3% ³⁸ compared with the prior year. The decrease in Diluted EPS was partially offset by a reduction in the diluted weighted average common shares outstanding of approximately 1.8 million shares ³⁹. Adjusted operating margin was 34.5% ⁴⁰ for fiscal 2026 compared with 36.3% ⁴¹ for fiscal 2025, and adjusted net income was $659.5 million ⁴² compared with $651.6 million ⁴³. EBITDA was $885.2 million ⁴⁴ for fiscal 2026 compared with $935.0 million ⁴⁵ for fiscal 2025, and adjusted EBITDA was $911.4 million ⁴⁶ compared with $935.0 million ⁴⁷.

FactSet's business strategy is focused on three core pillars and primary areas of investment: expanding its data and analytics offerings and delivery capabilities, transforming client workflows with AI, and enhancing its commercial capabilities for the AI age. FactSet aims to continue to expand its delivery capabilities in the cloud and through other methods, including MCP, to advance its position as a leading enterprise data provider for its clients in the AI age, and aims to be a single, authoritative source by collecting, mapping, normalizing, and structuring data into formats that both professionals and AI systems can rely on. Through continued innovation, FactSet aims to help its clients re-design their core workflows with AI, including fundamentally re-imagining its core workstation product and building agentic solutions with specialized domain knowledge across firm types, including investment research, performance reporting, financial modeling, pitch creation, meeting preparation, and advisory client engagement. FactSet is developing the platform for clients to build, register, entitle, audit, and manage AI agents, whether developed by FactSet, its clients, or third parties, and to intelligently route work between deterministic systems and large language model systems to optimize quality.

FactSet is building a suite of AI products with a focus on trusted, high-quality data, secure integration with models and workflows, and deep domain expertise, and to deploy these new solutions and capture value, it is upgrading its commercial and go-to-market capabilities, including by actively moving client contracts to longer duration enterprise platform agreements that combine subscription-based minimums with consumption-based pricing components. FactSet's historical pricing has been based substantially on subscription and user-based models, and its efforts to introduce consumption-, usage- or outcome-based pricing that better aligns the price of its AI-enabled offerings with their underlying cost and value may not succeed or may not be accepted by clients. The cost of developing, delivering and operating AI capabilities, including model licensing, inference and compute costs and the consumption of AI tokens, can be significant and variable, and has increased as FactSet expands its use of AI. If client adoption or usage of FactSet's AI features exceeds expectations, or if FactSet is unable to accurately forecast usage, price its offerings appropriately, or pass through the associated costs, AI-related costs may exceed the revenues these offerings generate, and increased usage could adversely affect margins.

FactSet continues to invest in AI solutions that adapt as its clients' workflows evolve, helping professionals leverage automation, generative intelligence and dynamic analytics, while rapidly embracing new technologies to improve discoverability and usability of its products and services. A key aspect of FactSet's growth strategy is to offer new solutions and enhance existing products by making them faster and more robust with deeper data and insights. FactSet continues to expand its data and analytics to provide a comprehensive corpus of industry, proprietary, contributed, and third-party data and models, including granular data for key industry verticals, real-time market data, fund data and frontier unstructured data. In addition to using its growing data catalog to drive its AI-powered workstation products, FactSet aims to continue to expand its delivery capabilities in the cloud and through other methods, including MCP.

FactSet's ability to develop, commercialize and scale AI-enabled products and services depends in significant part on its ability to obtain and maintain sufficient rights to use data, including its own proprietary data, data licensed from third-party suppliers, and data contributed by or relating to its clients, for the training, fine-tuning, grounding, retrieval and output-generation functions of AI models and applications. If FactSet is unable to secure data rights on commercially reasonable terms and at the scale required, it may be unable to fully realize the anticipated benefits of, or generate the expected revenues from, its investments in AI, and its AI-enabled offerings may be delayed, constrained or rendered less competitive. Laws and regulations governing AI are proliferating rapidly across the jurisdictions in which FactSet operates, including the European Union's Artificial Intelligence Act and a growing and divergent set of national, state and local requirements, which makes it difficult and costly to design, deploy and operate common, globally consistent AI systems, products and controls, and may require FactSet to develop jurisdiction-specific approaches, restrict or delay the availability of certain AI capabilities in certain jurisdictions, or incur significant compliance costs.

FactSet is undertaking a number of significant organizational, operational and strategic transformation initiatives, including changes to its organizational structure, reporting lines, leadership, product development organization, go-to-market approach, pricing models, and technology and data operations, as well as ongoing investment in AI. These initiatives are complex, are being pursued concurrently, and place substantial demands on management attention and on FactSet's workforce. In fiscal 2026, FactSet appointed a new Chief Executive Officer, Chief Financial Officer, Chief People and Workforce Transformation Officer and Chief Technology Officer, among other leadership changes. Undertaking too many changes simultaneously, or failing to sequence, resource, prioritize or communicate them effectively, could overwhelm FactSet's capacity to execute, disrupt its ongoing business operations, degrade product quality, delivery or client service, and divert resources from revenue-generating activities. The costs and disruption associated with these initiatives may be greater than anticipated, and the anticipated benefits, efficiencies or growth may not be realized on the expected timeframe or at all.

FactSet's business, and in particular its growth and its increasing use of AI, depends on access to data center capacity, power and computing resources, including specialized hardware, whether provided through its own facilities or, increasingly, through third-party cloud and data center providers. Demand for these resources has grown rapidly across the industry, driven in significant part by AI, and has contributed to constrained availability and rising costs. As FactSet's needs increase, it may be unable to procure sufficient capacity, power or computing resources when needed, in the locations required, or on commercially acceptable terms, and it may face increased costs, delays in deploying new products and capabilities, or constraints on its ability to scale. FactSet currently uses several cloud providers; however, one supplier provided the majority of its cloud computing support for fiscal 2026, and FactSet has limited control over its performance.

FactSet's operations outside the U.S. involve additional requirements and burdens. In fiscal 2026, approximately 39% of FactSet's revenues related to operations located outside the U.S. ⁴⁸, and approximately 81% of its employees are located in offices outside the U.S. ⁴⁹, including India and the Philippines. FactSet expects its growth to continue outside the U.S. Approximately 68% of FactSet's employees are located in its global centers of excellence, primarily located in India and the Philippines ⁵⁰. Because FactSet's non-U.S. workforce and operations are concentrated in a limited number of locations, a local or regional disruption affecting one of these hubs, whether due to natural disaster, extreme weather or climate-related events, public health crises, power or telecommunications failures, civil or political unrest, labor disruption or security incidents, could interrupt or degrade its operations, including data collection, product delivery and client support.

FactSet's indebtedness could have important consequences for its business, including making it more difficult to satisfy its obligations, increasing its vulnerability to general adverse economic and industry conditions, limiting its flexibility in planning for, or reacting to, changes in its business and the industry in which it operates, and placing it at a competitive disadvantage compared to its peers. Certain of FactSet's borrowings are based upon variable interest rates, and, in the event of increases in interest rates, this could result in higher interest expense. FactSet is subject to certain covenants, including financial covenants and certain limitations on the incurrence of additional debt, the creation of liens, its ability to enter certain transactions, and other matters. A breach of any of these covenants or any other restrictive covenants contained in the definitive documentation governing FactSet's indebtedness would result in a default or an event of default, which could result in all of its debt becoming immediately due and payable.

Management's message to shareholders emphasizes that FactSet is a global data and AI solutions provider to the financial markets with open and flexible technologies that deliver financial intelligence to finance professionals worldwide, and that its platform delivers expansive data, sophisticated analytics, and flexible, AI-powered technologies used by global financial professionals to power their critical investment, dealmaking and advisory workflows. Management's strategic priorities center on three core pillars: expanding FactSet's data and analytics offerings and delivery capabilities, transforming client workflows with AI, and enhancing its commercial capabilities for the AI age. Management states that FactSet strives to be a trusted enterprise partner and service provider to its clients across the financial services spectrum, delivering relevant intelligence, insights and execution solutions tailored to its clients' business models. Management highlights that FactSet is actively moving client contracts to longer duration enterprise platform agreements that combine subscription-based minimums with consumption-based pricing components, and that it is developing the platform for clients to build, register, entitle, audit, and manage AI agents, whether developed by FactSet, its clients, or third parties. Management acknowledges that FactSet is undertaking a number of significant organizational, operational and strategic transformation initiatives that are complex, are being pursued concurrently, and place substantial demands on management attention and on its workforce, and that in fiscal 2026 FactSet appointed a new Chief Executive Officer, Chief Financial Officer, Chief People and Workforce Transformation Officer and Chief Technology Officer, among other leadership changes. Management notes that FactSet provides public, full-year financial guidance based upon assumptions regarding its expected financial performance, and that it can provide no assurances that it will be able to meet such financial guidance or maintain the levels of growth and profitability that it has experienced in the past.

Revenues totaled $2,476,256 thousand ⁵² for fiscal 2026, compared with $2,321,748 thousand ⁵³ for fiscal 2025, an increase of 6.7% ⁵⁴. Net income was $533,481 thousand ⁵⁵ for fiscal 2026, compared with $597,040 thousand ⁵⁶ for fiscal 2025, a decrease of 10.6% ⁵⁷. Diluted EPS was $14.57 ⁵⁸ for fiscal 2026, compared with $15.55 ⁵⁹ for fiscal 2025, a decrease of 6.3% ⁶⁰. Operating income was $699,957 thousand ⁶¹ for fiscal 2026, compared with $748,303 thousand ⁶² for fiscal 2025, a decrease of 6.5% ⁶³, and operating margin was 28.3% ⁶⁴ compared with 32.2% ⁶⁵. Adjusted operating income was $855,308 thousand ⁶⁶ for fiscal 2026 compared with $843,432 thousand ⁶⁷ for fiscal 2025, and adjusted operating margin was 34.5% ⁶⁸ compared with 36.3% ⁶⁹. Adjusted net income was $659,498 thousand ⁷⁰ for fiscal 2026 compared with $651,617 thousand ⁷¹ for fiscal 2025. EBITDA was $885,230 thousand ⁷² for fiscal 2026 compared with $934,973 thousand ⁷³ for fiscal 2025, and adjusted EBITDA was $911,407 thousand ⁷⁴ compared with $934,973 thousand ⁷⁵. Income before income taxes was $649,716 thousand ⁷⁶ for fiscal 2026 compared with $720,958 thousand ⁷⁷ for fiscal 2025, and the effective tax rate was 17.9% ⁷⁸ compared with 17.2% ⁷⁹. Significant one-time items affecting reported figures included intangible asset amortization of $76,205 thousand ⁸⁰, restructuring and severance of $46,200 thousand ⁸¹, CEO onboarding costs of $19,521 thousand ⁸², business disposition, acquisitions and related costs of $8,255 thousand ⁸³, India Labor Codes Reform of $2,883 thousand ⁸⁴, asset impairment of $887 thousand ⁸⁵, client bankruptcy charges of $750 thousand ⁸⁶, and a litigation reserve of $650 thousand ⁸⁷, all of which reduced headline metrics. Segment performance: the Americas generated revenues of $1,617,438 thousand ⁸⁸, an increase of 7.4% ⁸⁹, with operating income of $259,566 thousand ⁹⁰; EMEA generated revenues of $605,339 thousand ⁹¹, an increase of 4.3% ⁹², with operating income of $258,403 thousand ⁹³; and Asia Pacific generated revenues of $253,479 thousand ⁹⁴, an increase of 7.7% ⁹⁵, with operating income of $181,988 thousand ⁹⁶.

FactSet faces material risks specific to its business model and current situation. Advances in generative and agentic AI can lower the cost, time and technical expertise required to aggregate and analyze data and to build software, and may make it increasingly feasible for FactSet's clients and other third parties to develop their own tools, interfaces and workflows, or to rely on lower-cost or more generalized AI applications, in place of FactSet's offerings, potentially reducing the role of, or demand for, the application and delivery layers on which a substantial part of its business depends. The cost of developing, delivering and operating AI capabilities, including model licensing, inference and compute costs and the consumption of AI tokens, can be significant and variable, and has increased as FactSet expands its use of AI, and if client adoption or usage of AI features exceeds expectations, or if FactSet is unable to accurately forecast usage, price its offerings appropriately, or pass through the associated costs, AI-related costs may exceed the revenues these offerings generate. FactSet relies on a single provider for the majority of its cloud computing support, and two suppliers each represented more than 10% of its total third-party content costs during fiscal 2026 ⁵¹. FactSet is undertaking significant organizational, operational and strategic transformation initiatives being pursued concurrently, and in fiscal 2026 appointed a new Chief Executive Officer, Chief Financial Officer, Chief People and Workforce Transformation Officer and Chief Technology Officer. A continued shift to passive investing could reduce demand for the services of active investment managers and consequently the demand of FactSet's clients for its products and services. On March 4, 2022, plaintiffs filed a purported class action, Dinosaur Financial Group LLC et al. v. S&P Global, Inc. et al., against FactSet, S&P Global, Inc., and the American Bankers Association, and on August 28, 2026, the court granted certification of a class of certain subscribers to CGS data, and on September 10, 2026, the court vacated that order and scheduled additional class certification briefing.