FactSet Research Systems Inc.
) fourth-quarter 2013 earnings of $1.16 per share lagged the
Zacks Consensus Estimate of $1.19 per share.
FactSet reported revenues of $219.3 million, up 5.6% on a
year-over-year basis, 5.1 percentage points of which was organic
growth, with the balance from the StreetAccount acquisition.
FactSet's revenues marginally beat the Zacks Consensus Estimate
of $219.0 million.
During the quarter, FactSet's U.S. revenues grew 6.0% from the
year-ago quarter to $149.9 million, while its non-U.S. revenues
of $69.4 million were up 5.0% on a year-over-year basis. Revenues
from Europe and Asia Pacific recorded growth of 4% and 11%,
FactSet added 60 new clients this quarter taking its clients
tally to a total of 2500. The company retained 92% of clients,
amounting to 95% of the Annual Subscription Value (ASV).
The company's Annual Subscription Value (ASV) increased by
$6.0 million and reached a total figure of $888.0 million on Aug
31, 2013. Nearly 82% of this total figure is generated from
buy-side clients, with the rest coming from sell-side firms
performing functions like Mergers & Acquisition advisory work
and equity research.
FactSet's operating expenses increased 8.6% from the year-ago
quarter to $148.8 million primarily due to higher cost of
services (up 11.0% year over year and increased 180 bps as a
percentage of sales from the year-ago quarter) and selling,
general and administrative expenses (up 5.9% year over year and
increased 10 bps as a percentage of sales from the year-ago
quarter). As a percentage of revenues, operating expenses
increased 180 basis points (bps) on a year-over-year basis.
This increase in costs impacted operating income which was
down marginally (down 0.1% on a year-over-year basis) while
margins contracted 180 bps from the year-ago quarter to
Net income during the quarter came in at $50.9 million, up
5.0% from the year-ago period while net margin for the quarter
was 23.2% versus 23.4% in the year-ago quarter.
Balance Sheet, Cash Flow
FactSet exited the quarter with $196.6 million in cash and
cash equivalents, compared with $242.8 million in the previous
quarter. The company has no long-term debt.
FactSet generated free cash flow of $71.0 million during the
quarter and purchased 1.4 million shares for $144.0 million.
For the first quarter of fiscal 2014, FactSet expects revenues
in the range of $222.0 million to $225.0 million. Apart from
this, the operating margin is expected to range between 33.0% and
34.0%. While the GAAP earnings per share should range between
$1.21 and $1.24 (GAAP diluted earnings per share presumes the
enforcement of U.S. Federal R&D tax credit). Without the U.S.
Federal R&D tax credit reinforcement, the GAAP earnings per
share will be reduced by 3 cents.
FactSet reported modest fourth-quarter 2013 results since
revenues grew on a year-over-year basis but earnings lagged the
Zacks Consensus Estimate. However, the company provided a
positive guidance for the forthcoming quarter. Moreover, the ASV
increased compared to the year-ago quarter and FactSet added a
good number of clients.
FactSet continues to launch products and applications across
its segments with special emphasis on financial services to gain
more customers. Moreover, the company's acquisition of Revere
Data will help it to deliver innovative products to its clients
and evolve as a global financial database company. It will also
help FactSet to maximize value for its partners and provide
customers with exclusive content sets.
Nonetheless, competition from Bloomberg L.P., Dow Jones &
) and Thomson Reuters, which are also coming up with substitute
products at competitive prices, is a headwind for the
FactSet carries a Zacks Rank #4 (Sell). Investors may consider
other stocks in the technology space such as
). Both the stocks carry a Zacks Rank #2 (Buy).
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