FactSet Research Q1 Results Miss Estimates, Guides Q2 In Line

(RTTNews) - Financial data provider FactSet Research Systems, Inc. (FDS) reported Tuesday a profit for the first quarter that increased seven percent from last year, reflecting revenue growth. Both adjusted earnings per share and quarterly revenues missed analysts' expectations. The company also provided earnings and revenue guidance for the second quarter, in line with Street view.

"Our investment discipline and proven business model continues to generate shareholder value as illustrated by our 10% adjusted EPS growth. Our buy-side client base is experiencing a healthy business cycle, but we are facing a challenging sell-side environment, which reduced organic ASV," Chairman and CEO Philip Hadley said.

The Norwalk, Connecticut-based company reported net income of $52.18 million or $1.19 per share for the first quarter, higher than $49.77 million or $1.11 per share in the prior-year quarter.

Excluding items, adjusted net income for the quarter was $53.29 million or $1.22 per share, compared to $49.77 million or $1.11 per share in the year-ago quarter.

On average, 15 analysts polled by Thomson Reuters expected the company to report earnings of $1.24 per share for the quarter. Analysts' estimates typically exclude special items.

Revenue for the quarter increased 6 percent to $222.98 million from $211.09 million in the same quarter last year, but missed twelve Wall Street analysts' consensus estimate of $223.63 million by a whisker.

Domestic revenues for the quarter grew 6 percent to $152.9 million, and international revenues increased 4 percent or 6 percent in constant currency, to $70.1 million from the prior-year quarter.

Annual Subscription Value or ASV for the first quarter increased 5 percent organically to $890 million from last year. ASV from FactSet's U.S. operations was $609 million, and $281 million were related to international operations.

The company noted that about 82.2 percent of ASV is derived from buy-side clients and the remainder from the sell-side firms who perform merger and acquisition advisory work and equity research.

ASV represents the forward-looking revenues for the next 12 months from all annual subscription services currently being supplied to clients.

Client count at the end of the first quarter totaled 2,525, a net increase of 25 clients during the quarter. Annual client retention rate was greater than 95 percent of ASV and 92 percent of clients.

However, operating margin for the quarter contracted 20 basis points to 33.5 percent from last year.

The company noted that it also completed the acquisition of Revere Data, LLC for $15.3 million on September 5, and acquired a 60 percent ownership interest in U.K.-based Matrix Data Ltd. on December 10.

Additionally, the company said it has paid a regular quarterly dividend of $15.1 million or $0.35 per share today to common stockholders of record as of November 29, 2013.

Quarterly free cash flow growth was 18 percent to a record $53 million. The company on Monday approved the expansion of its existing share repurchase program by $300 million.

Looking ahead to the second quarter, FactSet expects adjusted earnings in a range of $1.23 to $1.26 per share, on projected revenues between $225 million and $228 million.

Street is currently looking for earnings of $1.25 per share on revenues of $226.87 million for the second quarter.

FDS closed Monday's regular trading session at $117.07, down $1.70 on a volume of 0.42 million shares. In the past 52-week period, the stock has been trading in a range of $86.88 to $119.08.