Executive Summary / Key Takeaways

• AI-Driven Transformation: FactSet is strategically leveraging its open architecture and deep data to become a leading AI-powered financial intelligence platform, with GenAI products contributing directly to revenue and enhancing client workflows.
• Robust Financial Performance: Fiscal Year 2025 saw strong top-line growth, with revenues increasing 5.4% to $2.32 billion and organic ASV rising 5.7% to $2.37 billion, driven by record Q4 ASV additions and double-digit growth in data solutions and wealth management.
• Strategic Investments and Acquisitions: Recent acquisitions like LiquidityBook and Irwin, alongside significant R&D in AI and data expansion, are deepening client integration across the portfolio lifecycle and enhancing productivity tools for bankers and IR professionals.
• Competitive Differentiation: FactSet's client-centric approach, superior data quality, and integrated technology solutions, particularly in banking and wealth, enable it to displace competitors and secure multi-year enterprise deals despite intense market competition.
• Conservative Yet Confident Outlook: Fiscal Year 2026 guidance projects organic ASV growth of 5% at the midpoint, reflecting a cautious market environment but underpinned by a strong pipeline, ongoing strategic investments, and expected productivity gains.

FactSet's Enduring Foundation and Evolving Landscape

FactSet Research Systems Inc., founded in 1978 and publicly traded since 1996, has established itself as a global financial digital platform and enterprise solutions provider, offering critical financial intelligence to investment professionals worldwide. Its core business revolves around subscription-based access to multi-asset class data and solutions, including workstations, portfolio analytics, and enterprise data solutions. This foundational strength, coupled with its CUSIP Global Services (CGS) business, which supports security master files, has positioned FactSet as a deeply embedded partner across the investment lifecycle.

The financial industry is undergoing a profound transformation, driven by AI and data-driven innovation. This shift is reshaping how financial institutions operate, invest, and serve clients, leading to an increased demand for high-quality, integrated data and advanced analytical tools. Clients are increasingly consolidating vendors and upgrading their technology stacks, with less than 30% having migrated to the cloud, creating significant opportunities for providers like FactSet that can offer comprehensive, AI-enhanced workflow solutions. FactSet's overarching strategy is to be a trusted enterprise partner, focusing on expanding its data offerings, embedding deeper into client workflows, and innovating with AI to deliver efficiency and innovation.

Technological Edge: Fueling Financial Intelligence with AI

FactSet's open architecture, cloud-native infrastructure, and API-first approach are foundational to its technological differentiation. This design enables clients to seamlessly combine their proprietary knowledge with FactSet's extensive data sets and insights, as well as integrate with other third-party data sources. This flexibility is a significant advantage in implementing AI and agentic workflows at scale, which often require numerous integration points across diverse technology stacks.

The company has strategically embedded AI across its offerings to enhance data discovery, automate routine workflows, and improve the speed and accuracy of client insights. FactSet's AI roadmap, driven by its AI Blueprint, is already generating usage, demand, and commercial transactions. For instance, the Pitch Creator product for banking streamlines the daily workload for junior bankers, saving tens of hours by automating tasks like arranging logos, running models, and building charts. The Conversational API allows clients to integrate FactSet's AI-powered search capabilities into their own environments, facilitating the combination of proprietary and FactSet data. Furthermore, Portfolio Commentary generates auditable insights on portfolio performance against benchmarks in under a minute, a task that traditionally takes significantly longer. Internally, AI is enhancing efficiency, with AI-generated fund descriptions being completed in one-third of the time and AI-assisted content collection increasing the speed and expanding coverage for products like StreetAccount and CallStreet.

FactSet's R&D initiatives, such as the "intelligent initiative" integrating conversational AI at the platform level via FactSet Mercury, aim to deliver next-generation search intelligence. These developments are designed to boost productivity, surface actionable insights throughout the portfolio lifecycle, and automate routine research and content processing tasks. For investors, this technological leadership translates into a robust competitive moat, driving operational efficiency, enhancing market positioning, and supporting long-term growth by delivering mission-critical solutions that clients increasingly demand.

Strategic Expansion and Deepening Client Workflows

FactSet's strategic initiatives extend beyond organic innovation to targeted acquisitions that deepen its integration into client workflows. The acquisition of Irwin in November 2024, a leading investor relations and capital markets platform, has expanded FactSet's offerings for IR professionals, driving seat count growth and accelerating cross-sell momentum into the office of the CFO. Similarly, the acquisition of Liquid Holdings, LLC (LiquidityBook) in February 2025, a cloud-native trading solutions provider, has bolstered FactSet's integrated workflow capabilities across the portfolio lifecycle by adding order management (OMS) and investment book of record (IBOR) functionalities. This acquisition is particularly beneficial for hedge funds and mid-sized buy-side clients, creating bidirectional cross-sell opportunities. The smaller acquisition of LogoIntern in early March 2025 further enhances banker automation tools.

The company's Managed Services offering has emerged as a significant growth channel, acting as a natural hedge against client cost-cutting pressures. These services operate as an extension of clients' internal teams, supporting data, performance, risk, and reporting workflows. FactSet has successfully displaced incumbent vendors at major asset managers by offering managed services, underscoring its ability to deliver workflow efficiencies and improved operating models.

FactSet is also aggressively expanding its Data Solutions, which saw double-digit ASV growth in fiscal 2025. This includes widening real-time and pricing reference data capabilities and extending proprietary data coverage across deep sectors like TMT and power and utilities. The company has made substantial investments in private company data, growing its coverage from approximately 3-4 million to over 9 million high-quality private companies, reducing reliance on third-party sources. Furthermore, its Data Management Services help clients concord FactSet's data with their own, representing a profitable service line with strong growth potential. This strategic focus on data quality, breadth, and integration, coupled with an organizational shift to a unified data factory, ensures consistency and enhances delivery to clients, partners, and internal engineers.

Competitive Arena: FactSet's Differentiated Stance

FactSet operates in a highly competitive financial information services industry, facing off against large, well-capitalized players like Bloomberg L.P., S&P Global's Market Intelligence division , and London Stock Exchange Group's (LSEG) Data & Analytics division (formerly Refinitiv). Other notable competitors include BlackRock (BLK) Aladdin, MSCI Inc. , and Morningstar Inc. .

FactSet differentiates itself through its customizable workflow solutions, integrated analytics for research and trading, and a client-centric approach. While competitors like S&P Global (SPGI) leverage their vast scale and benchmark dominance, FactSet's strength lies in tailored content delivery and a user-friendly interface that offers greater efficiency in data aggregation for portfolio managers. Against Morningstar (MORN), which excels in retail investor tools, FactSet provides significantly greater depth in professional-grade data integration for institutional clients. Compared to LSEG (LSEG), which emphasizes real-time trading data and market infrastructure, FactSet's offerings focus on streamlined platforms and in-depth analysis for research workflows, potentially offering materially lower operating costs for users. MSCI (MSCI) specializes in indices and ESG analytics, whereas FactSet provides broader, multi-asset class data suites and integrated workflows.

FactSet's competitive wins underscore its differentiated positioning. In Q4 2025, it achieved two competitive displacements in wealth management and one at a large asset manager in EMEA. The Irwin acquisition has led to nearly half of new corporate ASV coming from competitor displacements. FactSet's banking product, considered best-in-class, is further strengthened by its Pitch Creator, which receives "exceptional feedback" compared to competitors' offerings. The Portware EMS, integrated with IntelligentCross JumpStart, provides institutional traders with "more efficient ways to locate high-quality liquidity without compromising on signaling risks," a significant advantage in trade execution. These successes demonstrate FactSet's ability to leverage its technology and client service to capture market share and secure multi-year enterprise contracts, reinforcing its position as a trusted partner.

Fiscal 2025 Performance: Momentum and Strategic Execution

FactSet concluded fiscal year 2025 with robust financial performance, demonstrating the effectiveness of its strategic initiatives. Revenues for fiscal 2025 reached $2,321.70 million, marking a 5.4% increase year-over-year. This growth was primarily organic, contributing 4.4%, supplemented by 0.9% from acquisitions and 0.1% from foreign currency fluctuations. Organic Annual Subscription Value (ASV) grew 5.7% to $2,370.90 million, with a record-setting Q4 2025 organic ASV increase of $81.8 million, representing a sequential acceleration to 5.7% growth. This was driven by strong performance in workstations, data solutions, and CGS.

Profitability also saw an uptick, with the operating margin expanding to 32.2% in fiscal 2025 from 31.8% in the prior year. Net income increased 11.2% to $597 million, and diluted EPS rose 11.8% to $15.55. This was primarily due to higher operating income and a gain from the divestiture of RMS Partners, a noncore asset. While cost of services increased 8.5% due to amortization of intangible assets, employee compensation, and computer-related expenses, Selling, General and Administrative (SGA) expenses decreased 2.9%, benefiting from lower charges related to a sales tax dispute in the prior year. The effective tax rate for fiscal 2025 was 17.2%, down from 17.6%.

Segment performance was strong across the board. The Americas segment, representing 64.9% of revenues, grew 6.1% in revenue and 6% in organic ASV. EMEA (25% of revenues) saw 3% revenue growth and 4.2% organic ASV growth, while Asia Pacific (10.1% of revenues) achieved 7% revenue growth and 7.2% organic ASV growth. From a firm-type perspective, Wealth management was a standout, delivering over 10% organic growth in Q4 2025, with off-platform ASV growing more than 50% year-over-year. Data solutions also achieved double-digit ASV growth for the fiscal year. FactSet maintained strong client engagement, with ASV retention exceeding 95% and client retention at 91%, serving approximately 9,000 clients and over 237,000 users.

FactSet's commitment to shareholder returns remained steadfast. The company returned $460.40 million to stockholders in fiscal 2025 through share repurchases and dividends, marking its 26th consecutive year of dividend increases. A new $400 million share repurchase authorization was approved in June 2025. The balance sheet remains robust, with a gross debt leverage ratio of 1.5x, providing ample financial flexibility for future investments. Capital expenditures increased 27% to $108.80 million, primarily driven by capitalized internal-use software development, reflecting ongoing investments in technology.

Outlook and Investment for Fiscal 2026

FactSet's fiscal 2026 guidance reflects a balanced approach to continued growth and strategic investment in a dynamic market. The company anticipates organic ASV growth of $100 million to $150 million, representing approximately 5% growth at the midpoint. This outlook is supported by a first-half sales pipeline comparable to the previous year, with expected momentum in wealth, in-line activity in banking and partnerships, and stability in the buy side. FactSet projects GAAP revenues between $2.42 billion and $2.45 billion.

The adjusted operating margin is guided to be between 34% and 35.5%, with adjusted diluted EPS expected in the range of $16.90 to $17.60. This guidance incorporates anticipated increases in technology and content costs, which will be partially offset by productivity gains and cost discipline. FactSet plans to invest significantly in data expansion (real-time, pricing reference, deep sector data), embedding deeper into client workflows through its portfolio life cycle solution, and developing a comprehensive suite of AI-ready data and an agentic platform as part of its multiyear AI roadmap. These investments are crucial for driving future growth and maintaining market leadership. Capital expenditures are projected to be $110 million to $120 million, and the effective tax rate is expected to be between 18% and 19%.

Management characterizes its guidance as conservative, attributing it to longer sales cycles and more rigorous client approval processes in the current environment, rather than a lack of confidence in its competitive positioning or market demand. The company emphasizes that it is "methodically building capabilities that address genuine client needs while positioning FactSet to capitalize on secular trends."

Risks and Challenges

Despite its strong positioning, FactSet faces several pertinent risks. The company identified a material weakness in its internal control over financial reporting related to IT general controls as of August 31, 2025, a continuation from the prior year, with remediation efforts ongoing. This could impact the accuracy and timeliness of financial reporting. Cybersecurity and AI technology risks are also significant, given the handling of sensitive data and the potential for inaccurate or biased AI-generated content, intellectual property claims, and increased cyber threats.

The highly competitive industry, coupled with a secular shift from active to passive investing, could pressure demand for FactSet's services. Economic downturns, client cost-cutting pressures, and consolidation in the financial services industry may lead to reduced spending or cancellations. Furthermore, FactSet's reliance on third-party data suppliers and a single primary cloud computing provider exposes it to potential disruptions or increased costs. Operational risks associated with its extensive non-U.S. operations, including diverse regulatory environments and rising labor costs, also warrant attention.

Conclusion

FactSet Research Systems Inc. stands at a pivotal moment, poised to capitalize on the transformative power of AI and the increasing demand for sophisticated financial intelligence. Its robust fiscal 2025 performance, marked by accelerating organic ASV growth and strong profitability, underscores the effectiveness of its strategic investments in technology, data, and targeted acquisitions. The company's open architecture, client-centric approach, and innovative AI-powered solutions, such as Pitch Creator and the Conversational API, provide a significant competitive edge in a dynamic market.

While the fiscal 2026 guidance reflects a conservative stance in light of market uncertainties, FactSet's underlying momentum, strategic pipeline, and commitment to disciplined investment in its AI roadmap and data expansion initiatives position it for sustained long-term growth. The company's ability to consistently deliver shareholder value through dividends and share repurchases, coupled with a strong balance sheet, further reinforces its investment appeal. Investors should monitor the ongoing remediation of internal control weaknesses and the evolving competitive landscape, particularly in AI, but FactSet's foundational strengths and proactive strategic responses suggest a compelling narrative for continued success.