) reported second quarter 2012 earnings per share (
) of $1.05, ahead of the Zacks Consensus Estimate of $1.00.
FactSet reported total revenue of $199.4 million in the second
quarter of 2012, up 12.2% from $177.6 million delivered in the
year-ago quarter. The company experienced strong growth in Annual
Subscription Value (ASV), which is mostly derived from the
company's buy-side clients and the remaining from the company's
sell-side firms conducting M&A advisory work and equity
Annual client retention was greater than 95.0% of the AVS,
almost flat with the year-ago ASV. On a client basis, annual
retention rate improved to 92.0% compared with 90.0% in the
year-ago period, thereby reflecting a reduction in the client
Annual Subscription Value
ASV for the month of February was $803.0 million, up 11.0% year
over year. 81.0% of the total ASV was derived from buy-side
clients, while the remainder came from the sell-side firms. ASV
from U.S. operations was $548.0 million, while the same from
international operations was $225.0 million.
FactSet's operating margin was 33.7% in the quarter versus 32.7%
in the year-ago quarter. Cost of services, as a percentage of
revenue, remained flat year over year as higher compensation
expense due to new hirings in consulting, engineering and content
was offset by lower depreciation and third-party data costs.
Moreover, the company succeeded in reducing its SG&A expense
margin by 95 basis points from the year-ago quarter, attributable
to lower stock-based compensation and monetization of state tax
credits. The company also increased its headcount by 66 employees
to over 5,500 employees at the end of the quarter, thereby
registering an annualized growth of 16.0%.
Net income during the quarter came in at $46.7 million, up 3.3%
from $45.2 million in the year-ago period. On a fully-diluted
basis, quarterly EPS was $1.02 versus 95 cents in the year-ago
quarter. Adjusted net income (excluding amortization of intangible
assets from acquisitions, but including stock based compensation)
of $1.05 per share was ahead of the year-ago level of $1.00 per
Balance Sheet & Cash Flow
FactSet exited the quarter with $184.9 million in cash and cash
equivalents, compared with $193.7 million in the previous quarter.
The company has no long-term debt.
During the second quarter, capital expenditures were $4.6
million. The company repurchased 507,800 shares for $45.1 million
during the second quarter. At February 29, 2012, the company had
$83.0 million remaining under its existing share repurchase
The company expects third quarter 2012 revenues between $200.0
million and $204.0 million, representing a year-over-year growth of
9.0% to 11.0%. Operating margin is expected in the range between
33.5% and 34.0%. GAAP diluted EPS is estimated in the range of
$1.03 to $1.05, while non-GAAP diluted EPS is expected between
$1.14 and $1.16, reflecting a year-over-year growth of 12.0% to
FactSet reported decent second quarter results, with revenue
increasing on a year-over-year basis and earnings exceeding the
Zacks Consensus Estimate. The company is witnessing a decline in
cash balance despite an improvement in operating performance.
On the other hand, the recent economic turmoil in the European
markets had a negative impact on the financial services companies,
thereby restricting spending on investment tools. Moreover, FactSet
faces competition from
), which might rationalize the growth prospects of the company in
the coming quarters.
FactSet holds a Zacks #4 Rank, implying a short-term Sell
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): Free Stock Analysis Report
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