FactSet Research Systems Inc.
) reported second-quarter 2013 earnings per share of 89 cents,
below the Zacks Consensus Estimate of $1.13.
FactSet reported total revenue of $213.1 million in the second
quarter of 2013, up 6.9% from $199.4 million in the year-ago
quarter. This includes $2.7 million contribution from
StreetAccount (Acquired on July 2012).
The company witnessed an increase in its client count, which
increased by 35 to reach a level of 2,436.
On the other hand, the number of users for FactSet declined by
150 sequentially, to a level of 49,455 professionals. Total
clients witnessed additions from the buy-side clients, which was
offset to a considerable extent by declines on the sell-side.
The U.S. revenues for the company were $2.7 billion, which
included a $146.0 million contribution from StreetAccount, up
7.0% from the year-ago quarter. Moreover, the Non-U.S. revenues
were $67.1 million, up 7.0% compared with the year-ago
Annual Subscription Value
The company's Annual Subscription Value (ASV) grew $17.3
million in the reported quarter to $863.2 million. Of this total
amount, 82% was derived from buy-side clients while the remainder
was from the sell-side firms, mostly conducting the M&A
advisory work and equity research.
FactSet's revenue growth rate was slower than that of
operating expenses. This led to a 30 basis points decline in
operating margin. Operating margin was 26.3% in the quarter
versus 33.6% in the year-ago quarter. Operating expenses,
excluding the non-cash charge, were $157 million, up 7.0% year
The increase resulted from higher compensation expense due to
an increase in headcount in the software engineering, consultant
and content collection, as well as new employees from
StreetAccount, which was offset to a considerable extent by lower
computer maintenance costs and a dip in the depreciation from
Net income during the quarter came in at $44.5 million, down
4.9% from $46.7 million in the year-ago period. Quarterly
earnings per share were $1.00 versus $1.02 in the year-ago
quarter. Adjusted net income (excluding amortization of
intangible assets from acquisitions, but including stock-based
compensation) of 89 cents per share was below the year-ago
quarter's $1.02 per share.
Balance Sheet, Cash Flow
FactSet exited the quarter with $166.1 million in cash and
cash equivalents, compared with $210.7 million in the previous
quarter. The company has no long-term debt. The company generated
cash flow from operations of $46.4 million, down from $47.5
million in the previous quarter.
For the third quarter of fiscal 2013, revenues are expected
between $213 million and $216 million, while operating margin is
expected to hover around 33% and 34%. GAAP EPS should range
between $1.14 and $1.16.
FactSet reported modest second-quarter 2013 results since
revenue grew on a year-over-year basis, but earnings per share
remained below the Zacks Consensus Estimate due to some
unexpected increase in operating expense. Although revenue grew
on the back of an increase in clients, number of users declined.
The company witnessed revenue growth in most of its business
FactSet continues to launch new products and applications
across its segments with special emphasis on financial services
to gain more customers.
The company is offering new products and services on a regular
basis. However, adding new customers is still a challenge due to
the sluggish European market, which led to a slowdown in
business. Moreover, FactSet faces stiff competition from
), which is also coming up with new solutions to increase its
FactSet carries a Zacks Rank #2 (Buy).
Investors can also consider other stocks in the technology
space such as:
FACTSET RESH (FDS): Free Stock Analysis
LIFELOCK INC (LOCK): Free Stock Analysis
MSCI INC-A (MSCI): Free Stock Analysis Report
NIELSEN HOLDNGS (NLSN): Free Stock Analysis
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) Zacks Rank #2 (Buy)
) Zacks Rank #2 (Buy)