So, you know how the market loves a good beat-and-raise story? Well, FactSet Research Systems Inc. (FDS) just delivered one with some extra flair, including a new AI partnership and a hefty dose of share buybacks.
The financial data and analytics provider reported second-quarter sales of $611.02 million, which wasn't just a beat—it was a 7.1% jump from the same period last year and comfortably above the $604.51 million analysts were expecting. On the bottom line, adjusted earnings per share came in at $4.46, also topping the street view of $4.37.
It's the kind of performance that makes management feel confident enough to raise their hand and say, "Actually, we think the rest of the year will be even better than we previously thought."
The Growth Engine: Clients and Subscriptions
Digging into the details, the growth looks solid and organic. Revenues that strip out the noise of acquisitions grew 6.8% year-over-year to $606.18 million. More importantly, the company is signing up new customers. As of the end of February, FactSet's client count hit 9,101, a net increase of 98 clients in just three months, with corporate and wealth management clients leading the charge.
The big number to watch for subscription businesses like FactSet is the Annual Subscription Value, or ASV. It's a forward-looking measure of the revenue already locked in from existing clients. That figure stood at $2.45 billion at quarter-end, up from $2.31 billion a year ago. Even better, the organic ASV—the growth from existing business, not new acquisitions—increased by $38.0 million over the last three months.
Not everything was up, though. The adjusted operating margin dipped to 35.0% from 37.3% a year ago. The company pointed to higher compensation, technology-related expenses, and professional fees as the culprits. It's a common trade-off in growth phases: spending more to fuel future expansion.
Returning Cash and a Strategic AI Bet
FactSet is also busy returning cash to shareholders. It paid out a quarterly dividend of $40.3 million, or $1.10 per share, in March. More aggressively, the company bought back 651,750 of its own shares in the second quarter for a total of $163.0 million. And it's not done yet—as of February 28, there was still $697.1 million left in the buyback authorization kitty.
On the balance sheet, FactSet exited the quarter with $285.27 million in cash and equivalents against long-term debt of $1.37 billion.
While managing the core business, FactSet is also placing a strategic bet on the future. The company separately announced it is unlocking value by partnering with, and investing in, Finster AI. The goal is to use that technology to power a new AI-native banking platform. The idea is to weave "agentic AI" into a unified system to automate complex deal workflows, streamline banking processes, and help clients execute transactions more efficiently. It's a move to stay ahead in the data and analytics arms race.
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