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A month has gone by since the last earnings report for FactSet Research (FDS). Shares have added about 2.2% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is FactSet due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
FactSet Beats Q1 Earnings Estimates, Lags Revenues
FactSet Research Systems reported mixed first-quarter fiscal 2020 results, wherein earnings topped the Zacks Consensus Estimate but revenues missed the same.
The company reported adjusted earnings per share of $2.58, which surpassed the Zacks Consensus Estimate by 6.6% and increased 9.8% on a year-over-year basis driven by strong operating performance.
Revenues in Detail
FactSet’s revenues of $366.7 million missed the Zacks Consensus Estimate by 0.2% and increased 4.3% year over year. The uptick was driven by higher sales of analytics, content and technology solutions (CTS) as well as wealth management solutions.
Organic revenues increased 4.2% year over year to $367.9 million. Region-wise, U.S. revenues increased to $231.3 million from $222.2 million in the year-ago quarter. International revenues were $135.3 million compared with $129.4 million in the year-ago quarter.
ASV Plus Professional Services
FactSet’s Annual Subscription Value (ASV) plus professional services of $1.48 billion was flat year over year. Organically, it increased 4.1% year over year. Buy-side and sell-side ASV growth rates were 4% and 4%, respectively. Nearly 83.9% of organic ASV was generated by buy-side clients. The rest were derived from sell-side firms performing functions like mergers and acquisitions advisory work, equity research and capital markets services.
ASV generated from the United States was $907.5 million, up 3.5% from the prior-year quarter’s level. Internationally, ASV was $546.2 million, up 4.8% year over year. FactSet added 119 clients in the reported quarter, taking the total number to 5,574. Annual client retention was 89%. At the end of the quarter, total employee count was 9,681, up 1.1% year over year.
Operating Results
Adjusted operating income came in at $124.7 million, up 12.1% from the year-ago quarter’s figure. Adjusted operating margin increased 240 basis points (bps) to 33.9%. Selling, general and administration expenses increased 4.9% to $88.5 million. Total operating expenses increased 0.9% to $253.5 million.