NORWALK: Shares of FactSet Research Systems Inc. FDS went down around 4% yesterday, after the company reported lower-than-expected first quarter fiscal 2016 results.
The company reported adjusted earnings per share of $1.44 per share, which missed the Zacks Consensus Estimate of $1.46 per share. However, earnings increased from $1.32 per share reported in the year-ago quarter.
Though FactSet’s revenues of $270.5 million increased 11.5% from the year-ago quarter, it lagged the Zacks Consensus Estimate of $273 million. Reported revenues however surpassed management’s guided range of $265 million to $269 million. Better-than-expected growth across products and geographic regions positively impacted quarterly revenues. Also, synergies from acquisitions completed within the last 12 months and positive effects of foreign currency aided the quarter’s revenues.
During the quarter, FactSet’s revenues from the U.S. grew 8.2% year over year to $182.2 million, while its non-U.S. revenues grew to $88.3 million. Excluding the impact of foreign currency and acquired revenues from acquisition completed in the past 12 months, international revenues grew 10.6% on a year-over-year basis.
The company’s Annual Subscription Value (ASV) increased 9.4% and reached $1.109 billion as of Nov 30, 2015. Nearly 83.2% of this total figure is generated from buy-side clients while the rest comes from sell-side firms performing functions like mergers & acquisition, advisory work and equity research.
FactSet added 30 new clients this quarter, taking the tally to 3,006. The company retained 95% of the clients and the client retention percentage was also more than 95% of ASV.
During the quarter, FactSet purchased all the issued and outstanding membership interests of Portware, LLC. for $265 million in an all-cash transaction.
Coming to the operational metrics, FactSet reported a 12.8% increase in total operating expenses, primarily due to an increase in cost of services (up 17.6% on a year-over- year basis) and higher compensation expense. As a percentage of revenues, its operating expenses increased 79 basis points (bps) during the quarter to 67.7%.
FactSet’s adjusted operating income increased 9.6% from the year-ago quarter to $87.9 million. However, operating margin decreased 54 bps from the year-ago quarter to 32.5%, mainly due to higher operating expenses as a percentage of revenues.
Adjusted net income during the quarter came in at $60.4 million or $1.44 per share, which improved from $55.9 million or $1.32 per share in the year-ago quarter.
FactSet exited the quarter with $180.1 million in cash and cash equivalents, compared with $158.9 million in the previous quarter. Long-term debt during the quarter amounted to $300 million.
Cash flow from operations during the quarter came in at $71.1 million. The company generated free cash flow of $56.7 million during the quarter. FactSet purchased approximately 250K shares for $41.9 million during the quarter. The company also paid a quarterly dividend of $18.1 million.
