FactSet Research Earnings Call Highlights AI-Driven Growth

Factset Research ((FDS)) has held its Q1 earnings call. Read on for the main highlights of the call.

FactSet Research Projects Confidence Amid Strong Growth and AI Momentum in Latest Earnings Call

The latest earnings call from FactSet Research carried a distinctly positive tone, underpinned by solid revenue growth, rising annual subscription value, and accelerating adoption of AI-driven products. Management balanced this optimism with a candid acknowledgment of higher operating expenses and modest net new client additions, but reiterated strong conviction in the firm’s strategic direction, competitive position, and ability to return capital to shareholders.

Strong ASP Growth Highlights Healthy Demand

FactSet’s annual subscription value (ASP) rose 5.9% to $2.4 billion, a clear sign of resilient demand for its data and analytics platforms. The growth reflects both healthy pricing power and successful customer wins across its core client segments. With ASP closely tied to the recurring nature of its contracts, this acceleration reinforces the visibility and durability of FactSet’s revenue stream, an important factor for investors focused on stable, subscription-based business models.

Expanded Share Repurchase Signals Confidence in Valuation

The company boosted its share repurchase authorization from $400 million to $1 billion, sending a strong signal of management’s confidence in FactSet’s financial strength and intrinsic value. This larger buyback capacity gives the company more flexibility to deploy excess cash toward shareholder returns alongside ongoing investments in technology and growth. For equity investors, this move suggests leadership sees the stock as an attractive long-term asset and is willing to commit meaningful capital to reduce share count.

Record Organic ASV Growth Across Regions and Firm Types

Organic annual subscription value (ASV) growth reached a record 5.9%, marking broad-based momentum across geographies and client categories. The Americas delivered 6% organic ASP growth, EMEA 4%, and Asia Pacific a standout 8%. By firm type, the institutional buy side grew 4%, wealth management 10%, deal makers 6%, and market infrastructure 7%. This spread indicates that FactSet’s solutions are resonating across the investment and capital markets ecosystem, rather than relying on any single segment.

Rapid AI Product Adoption Deepens Client Engagement

AI product adoption surged more than 45% sequentially, underscoring rising demand for AI-enabled tools within clients’ investment and workflow processes. FactSet is increasingly positioning its data and analytics as “AI-ready,” allowing clients to integrate the company’s content into their own models and decisioning engines. This traction not only supports upsell opportunities but also helps embed FactSet more deeply into client workflows, potentially strengthening retention and switching costs over time.

Asia Pacific Leads Regional Performance

Asia Pacific emerged as a growth leader, delivering 8% organic ASV growth, ahead of the Americas and EMEA. Management attributed this performance to strong demand for middle office solutions and AI-ready datasets. The region’s outperformance highlights the benefits of FactSet’s strategic investments outside its more mature markets and suggests further runway as financial institutions across Asia continue to modernize infrastructure and adopt advanced analytics.

Client Retention Remains a Key Strength

Retention metrics remained robust, with client retention at 91% and ASV retention above 95%. Combined with user growth to nearly 240,000, especially within wealth and asset management, these figures reinforce the stickiness of FactSet’s offerings. High retention is particularly important for a subscription-based model, as it supports steady recurring revenue and reduces pressure on constant new client acquisition to sustain growth.

Higher Headcount and Tech Spend Pressure Operating Expenses

Operating expenses increased 9% year over year, driven mainly by higher people-related costs and ongoing technology investments. FactSet continues to hire and invest in infrastructure to support AI, data capabilities, and platform enhancements. While this spending weighed on near-term profitability, management framed these costs as essential to sustaining product innovation and competitive differentiation in a rapidly evolving data and analytics landscape.

Margins Dip Slightly Amid Strategic Investment

Adjusted operating margin came in at 36.2%, reflecting a slight decline as FactSet prioritized growth and technology infrastructure over short-term margin expansion. The company still operates at an attractive profitability level compared with many software and data peers, and leadership emphasized that current margin levels leave room to fund innovation while maintaining strong earnings power. Adjusted diluted EPS grew 3% to $4.51, supported by both top-line gains and disciplined cost management despite the investment cycle.

Net New Client Growth Slows, but Seasonality Cited

Net new client additions totaled only seven for the quarter, the lowest figure in recent periods. Management attributed this softness largely to seasonal factors rather than a structural shift in demand. Given the strong retention rates and rising ASP and ASV metrics, the company appears more focused on expanding existing relationships and increasing wallet share than on aggressive client count growth, though sustaining a pipeline of new logos remains a metric to watch.

Guidance Affirms Confidence in Continued Growth

FactSet reaffirmed its fiscal 2026 guidance across all key metrics, signaling confidence in its outlook despite cost pressures and slower net new client additions. The company expects continued healthy client demand, supported by robust engagement and growing user numbers, particularly in wealth and asset management. Management plans to maintain disciplined investment in technology and infrastructure, funded from a strong balance sheet with a gross debt leverage ratio of 1.4x. Coupled with the expanded share repurchase authorization, FactSet’s guidance paints a picture of steady growth, solid margins, and ongoing capital returns to shareholders.

In sum, FactSet’s earnings call showcased a business delivering steady subscription growth, record organic ASV gains, and rapid AI adoption, while accepting some near-term margin pressure to invest in future capabilities. Strong retention, regional diversification, and a sizable new buyback authorization underlined management’s confidence in the company’s trajectory, leaving investors with a generally upbeat view of FactSet’s long-term positioning in the financial data and analytics market.