EPS of $2.32 increased by 35.7% from previous year
Gross margin of 54.1%
Net income of 89.50M
"“We ended fiscal 2024 with organic ASV plus Professional Services growth of $104 million or 4.8%, which is just above the midpoint of our guidance range provided in June.”" - Philip Snow
FactSet Research Systems Inc (FDS) QQ4 2024 Results Analysis – Solid Q4 execution, GenAI monetization trajectory, and 2025 guidance targeting mid-single digit ASV growth with margin normalization
Executive Summary
FactSet reported a solid Q4 2024 that capped a resilient fiscal year, delivering 4.93% revenue growth year over year to $562.19 million for the quarter and a full-year revenue run-rate around $2.2 billion. Organic ASV plus Professional Services grew by $104 million, or 4.8%, in fiscal 2024, landing above the guidance midpoint and signaling continued demand for FactSet’s data, analytics, and workflow solutions. The quarter featured a GAAP operating margin of 22.7% and an adjusted operating margin of 35.8%, with the adjusted metric benefiting from lower bonus accruals and stronger top-line growth, partly offset by higher technology-related spending and a one-time Massachusetts sales tax charge. Net income rose 37.4% YoY in the quarter to $89.5 million, and quarterly EPS was $2.32.
Key Performance Indicators
Revenue
562.19M
QoQ: 1.72% | YoY:4.93%
Gross Profit
303.99M
54.07% margin
QoQ: -0.57% | YoY:11.72%
Operating Income
127.86M
QoQ: -36.69% | YoY:9.18%
Net Income
89.50M
QoQ: -43.41% | YoY:37.43%
EPS
2.32
QoQ: -44.10% | YoY:35.67%
Revenue Trend
Margin Analysis
Key Insights
Revenue: $562.187 million in Q4 2024; YoY growth 4.93% and QoQ growth 1.72% (Gross Profit Margin 54.1% in the quarter; Gross Profit $303.991 million).
Profitability: GAAP operating income $127.858 million; GAAP operating margin 22.7%; Adjusted operating margin 35.8% (up 240 bps YoY); Net income $89.496 million; Net income margin 15.9%; Adjusted EPS $3.74 (+23.8% YoY).
ASV and client metrics: Q4 organic ASV growth of $53.5 million, in line with prior-year level; annual organic ASV growth of 4.8% (total ASV growth for 2024 $104.4 million); client base >8,200 with 296 new logos; wealth users >100,000 and advisor desktops added >23,000 in 2024 (~30% seat growth).
Cash flow and leverage: Free cash flow for the quarter $137.2 million; fiscal 2024 FCF $615 million (+5% YoY); cash $422.98 million at period end; gross leverage 1.6x after debt paydowns; plan to repay term loan in full by Q2 2025; share repurchases $63 million in Q4 (153,650 shares) and $235 million in FY2024 (537,800 shares); quarterly dividend of $1.04 per share.
Guidance(2025): organic ASV growth of 5% at the midpoint; incremental organic ASV of $90m–$140m; adjusted operating margin targeted at 36%–37%; adjusted EPS guidance $16.80–$17.40; interest expense $44m–$48m; capex $95m–$105m. Management emphasizes GenAI monetization and data-content expansion as growth accelerants.
Financial Highlights
Key Q4/Q4-annual metrics and notable trends:
- Revenue: $562.187 million in Q4 2024; YoY growth 4.93% and QoQ growth 1.72% (Gross Profit Margin 54.1% in the quarter; Gross Profit $303.991 million).
- Profitability: GAAP operating income $127.858 million; GAAP operating margin 22.7%; Adjusted operating margin 35.8% (up 240 bps YoY); Net income $89.496 million; Net income margin 15.9%; Adjusted EPS $3.74 (+23.8% YoY).
- ASV and client metrics: Q4 organic ASV growth of $53.5 million, in line with prior-year level; annual organic ASV growth of 4.8% (total ASV growth for 2024 $104.4 million); client base >8,200 with 296 new logos; wealth users >100,000 and advisor desktops added >23,000 in 2024 (~30% seat growth).
- Cash flow and leverage: Free cash flow for the quarter $137.2 million; fiscal 2024 FCF $615 million (+5% YoY); cash $422.98 million at period end; gross leverage 1.6x after debt paydowns; plan to repay term loan in full by Q2 2025; share repurchases $63 million in Q4 (153,650 shares) and $235 million in FY2024 (537,800 shares); quarterly dividend of $1.04 per share.
- Guidance(2025): organic ASV growth of 5% at the midpoint; incremental organic ASV of $90m–$140m; adjusted operating margin targeted at 36%–37%; adjusted EPS guidance $16.80–$17.40; interest expense $44m–$48m; capex $95m–$105m. Management emphasizes GenAI monetization and data-content expansion as growth accelerants.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
562.19M
4.93%
1.72%
Gross Profit
303.99M
11.72%
-0.57%
Operating Income
127.86M
9.18%
-36.69%
Net Income
89.50M
37.43%
-43.41%
EPS
2.32
35.67%
-44.10%
Key Financial Ratios
currentRatio
1.25
grossProfitMargin
54.1%
operatingProfitMargin
22.7%
netProfitMargin
15.9%
returnOnAssets
2.21%
returnOnEquity
4.68%
debtEquityRatio
0.82
operatingCashFlowPerShare
$4.23
freeCashFlowPerShare
$3.55
dividendPayoutRatio
44%
priceToBookRatio
8.54
priceEarningsRatio
45.61
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Key takeaways from the earnings call and management Q&A, grouped by theme:
- Strategy and AI roadmap: Phil Snow outlined three strategic pillars: (1) continued data expansion (deep sector, private markets, real-time), (2) embedding FactSet deeper into client workflows (front-office, wealth advisories, dealmaking automation), and (3) accelerating innovation through generative AI (FactSet Mercury, Portfolio Commentary, Transcript Assistance, Conversational API). Snow stated: There are three main pillars driving our focus. First, the continued data expansion to finish what we started... Secondly, embed FactSet deeper into client workflows... And finally, accelerat[ing] innovation through generative AI. He also highlighted the Investor Day on November 14 to showcase AI progress and beta products via FactSet Explorer.
- GenAI monetization and pricing: Helen Shan outlined that AI offerings will be priced on a usage basis with a mix of bundled and modular options; initial GenAI impact on ASV is expected to be modest (30–50 bps) with upside from higher adoption. Snow added that products like conversational API and portfolio commentary are already live, with enterprise adoption expected to rise in H2 2025 as the pipeline matures.
- Customer wins and competitive dynamics: Snow emphasized strength in wealth and dealmakers with multiple seven-figure, multi-year wins and substantial seat additions (e.g., 4Q large displacements in banking and wealth). He provided context on top-10 wins, noting nine against competitors and four with >700 seats added, while acknowledging ongoing price competition and the importance of enterprise-level selling. Goran Skoko added that the open-ecosystem and federated API approach supports rapid client-native GenAI deployments.
- Demand environment and macro: Snow described a cautious but improving backdrop, with “green shoots” evident in Q4 and a modest uptick in banking hiring in 4Q. The 2H 2025 acceleration is tied to a healthier macro, renewed client budgets, and execution on long-dated opportunities. Helen Shan cited a high ASV retention rate (>95%) and client retention (~90%), signaling stickiness even in headwinds.
- Financial discipline and capital returns: Both Snow and Shan stressed expense discipline and self-funding of technology investments. Shan outlined that technology costs rose due to amortization and AI investments, while employee costs improved with lower bonus accruals. Management reiterated plans to self-fund investments while maintaining margins, with a clear objective to return capital (dividends and buybacks) and to reduce debt toward a full repayment of the term loan by mid-2025.
“We ended fiscal 2024 with organic ASV plus Professional Services growth of $104 million or 4.8%, which is just above the midpoint of our guidance range provided in June.”
— Philip Snow
“There are three main pillars driving our focus. First, the continued data expansion to finish what we started. Second, embed FactSet deeper into client workflows. And finally, accelerating innovation through generative AI.”
— Philip Snow
Forward Guidance
Forecast and rationale for the 2025 outlook:
- Revenue trajectory: The company expects a more gradual top-line recovery with a 5% organic ASV growth midpoint, implying a steady but moderating pace of revenue expansion relative to 2024. The Q4 strength was driven by large renewals and displacements; ongoing macro headwinds persist but are expected to moderate in the second half as budgets reset and new AI-driven products scale.
- Margin and earnings: FactSet targets adjusted operating margins of 36%–37% in fiscal 2025, reflecting investments in AI, content, and front-office workflow enhancements, offset by continued cost discipline (lower discretionary costs, real estate optimizations). EPS guidance is $16.80–$17.40, implying continued earnings growth supported by better cost control and higher mix from GenAI-enabled revenue.
- Investment cadence and AI economics: Management indicates GenAI investments are partially self-funded and expected to contribute meaningfully in the second half of 2025 as product suites reach maturity. Pricing is expected to remain resilient, with annual price increases tied to CPI/RPI or 3%, plus high rate of price realization (above 80%) on rate cards. The company anticipates 30–50 bps of incremental ASV from GenAI in the near term, with larger contributions as adoption accelerates.
- Factors investors should monitor: (1) GenAI product monetization and enterprise adoption rate, (2) pipeline progression for wealth, buy-side, and dealmakers, (3) timing of renewal wins versus erosion, (4) macro stabilization and hiring trends in both buy-side and sell-side, and (5) progress toward debt reduction and capital return cadence. Overall, the 2025 guidance is achievable but hinges on AI-driven revenue acceleration and continued operational efficiency.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
FDS Focus
54.07%
22.70%
4.68%
45.61%
DNB
62.70%
12.50%
0.24%
172.80%
MCO
70.30%
33.60%
11.10%
54.47%
MSCI
82.30%
54.50%
-32.50%
38.65%
ICE
53.40%
35.50%
2.52%
30.63%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
FactSet enters fiscal 2025 with a constructive growth signal: a solid Q4 2024, a 4.8% annual ASV growth, and a guided 5% mid-point organic ASV growth for 2025, underpinned by a diversified data/content expansion and a multi-pillar GenAI strategy. The company is balancing investment and margin by self-funding AI/content initiatives while aiming to preserve a 36–37% adjusted operating margin and high single-digit to low double-digit earnings growth. The near-term catalysts include monetization of GenAI assets (especially in front-office workflows) and stronger renewal momentum, with the potential for outsized upside if AI-driven product suites gain rapid corporate adoption and reduce erosion in spend on the buy-side.
Risks to the outlook include persistent macro headwinds, potential further erosion in asset-manager budgets, and competitive pricing dynamics. Investors should monitor the evolution of the GenAI revenue stream, the rate of conversion of the H1 pipeline into H2 revenue, rate of AI-driven cross-sell into wealth and dealmaking, and management’s ability to sustain expense discipline while continuing to invest in high-return AI-enabled products. Overall, the case for FactSet remains favorable given its entrenched platform, expanding data universe, and a clearly defined AI-enabled growth trajectory, with a probable re-acceleration in H2 2025 that could drive margins higher as the AI value proposition matures.
Key Investment Factors
Growth Potential
Growth opportunities from three pillars: continued data expansion (deep sector, private markets, real-time), tighter integration of FactSet into client workflows (front-office, wealth prospecting, digital reporting, and dealmaking automation), and monetization of GenAI (Mercury-powered solutions with usage-based pricing). Expect acceleration in H2 2025 driven by a broader AI-enabled product suite (Portfolio Commentary, Transcript Intelligence, Conversational API) and higher penetration in wealth and buy-side workflows. Potential upside from new partnerships and selective inorganic opportunities.
Profitability Risk
Key risk factors include: (1) macro deterioration or slower budget normalization delaying enterprise deals, (2) competition-induced price pressure and elongation of sales cycles in large, multi-year deployments, (3) execution risk around GenAI monetization (adoption, pricing, and integration with client workflows), (4) potential one-time items or tax disputes (Massachusetts tax matter had a $54m charge in 4Q 2024), and (5) reliance on large, high-value renewals that can be lumpy from quarter to quarter. Regulatory, geopolitical, and FX movements could also impact results.
Financial Position
Solid balance sheet with cash and equivalents of $423m and total assets of ~$4.06b. Total debt $1.575b and net debt ~$1.156b, with gross leverage at 1.6x after 4Q2024 repayments; plan to repay the term loan in full by Q2 2025. Strong free cash flow generation: $615m in fiscal 2024 and $137.2m in the December quarter. Dividend yield around 0.24% and a robust share repurchase program (FY2024: $235m repurchases; new authorization up to $300m). FactSet’s cash flow, leverage, and ongoing buybacks support a durable capital return framework even as the company invests in AI-enabled growth.
SWOT Analysis
Strengths
Large and expanding installed base across wealth, dealmakers, and institutional buy-side with retention >95% for ASV and ~90% client retention in Q4 2024.
Leading data and analytics platform with ongoing content expansions (deep sector, private markets, real-time) that differentiate from competitors.
Enterprise-level selling capabilities and entrenched desktop solutions that drive high switching costs.
Strong free cash flow generation and capital return discipline (dividends + buybacks, debt repayment plan).
Strategic focus on GenAI (Mercury) and an open ecosystem that enables third-party developers and peers to leverage FactSet data.
Weaknesses
Revenue growth deceleration risk if macro remains weak; dependence on large enterprise deals which can be lumpy (e.g., a large buy-side cancellation noted in 4Q).
GAAP margin pressure from one-time tax charge and higher technology costs tied to AI/content investments.
Longer lead times for enterprise deployments can dampen near-term revenue acceleration.
Opportunities
monetization of GenAI-driven products (Portfolio Commentary, Transcript Intelligence, Conversational API) with usage-based pricing.
Expansion into adjacent workflows within wealth and buy-side (prospecting, digital reporting, performance analytics).
Potential partnerships and selective M&A to accelerate growth in wealth and front-office automation.
Continued data expansion (real-time, private markets) enabling renewals and competitive displacement.
Threats
Competitive pricing pressure and consolidation in asset management and banking vendor space.
Macro uncertainty affecting discretionary IT budgets and hiring in buy-side and sell-side.
Regulatory or tax-related charges (e.g., Massachusetts tax) that could re-emerge or influence cost structure.
FX movements and foreign market dynamics impacting reported organic growth and mix.
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