FactSet Research Systems Inc. - 10-Q Summary (Q1 Fiscal 2026)
Business Context and Reporting Period
This report covers the quarterly period ended November 30, 2025 (First Quarter of Fiscal 2026). FactSet Research Systems Inc. is a global financial digital platform provider delivering data, analytics, and AI-powered solutions to investment professionals. As of the period end, the company served over 9,000 clients and 239,000 users across three geographic segments: Americas, EMEA, and Asia Pacific.
Key Financial Metrics
| Metric | Q1 2026 (Nov 30, 2025) | Q1 2025 (Nov 30, 2024) |
|---|---|---|
| Revenues | $607.6 million | $568.7 million |
| Operating Income | $192.1 million | $191.3 million |
| Operating Margin | 31.6% | 33.6% |
| Net Income | $152.6 million | $150.0 million |
| Diluted EPS | $4.06 | $3.89 |
| Free Cash Flow | $90.4 million | $60.5 million |
| Cash & Equivalents | $275.4 million | $337.7 million (Aug 31, 2025) |
| Long-Term Debt | $1.37 billion | $1.37 billion (Aug 31, 2025) |
Material Changes vs. Prior Period
- Revenue Growth: Revenues increased 6.9% year-over-year, driven by a 6.0% increase in organic revenue and 0.7% from acquisitions. Growth was observed across all segments, led by the Americas (7.9% growth).
- Margin Compression: Operating margin decreased 200 basis points to 31.6%. This was primarily due to higher amortization of intangible assets (from capitalized software), increased technology-related expenses (cloud hosting), and higher employee compensation costs.
- Expense Increases: Cost of services rose 11.3% and SG&A rose 7.7%. SG&A increases were driven by CEO compensation awards and annual merit increases.
- Acquisitions: The quarter included the impact of the LiquidityBook acquisition (completed Feb 2025) and the Irwin acquisition (completed Nov 2024).
- Shareholder Returns: The company returned $181.3 million to shareholders via $139.9 million in share repurchases and $41.4 million in dividends.
Guidance, Outlook, and Risks
- Organic ASV: Organic Annual Subscription Value (ASV) totaled $2,389.6 million, a 5.9% increase year-over-year, indicating strong recurring revenue growth.
- Capital Allocation: On December 16, 2025, the Board approved an additional $600 million in share repurchase authority with no expiration date. $260.1 million remained available under the prior authorization as of Nov 30, 2025.
- Material Weakness in Internal Controls: Management concluded that disclosure controls and procedures were not effective as of November 30, 2025, due to a continuing material weakness in IT general controls (specifically program change management and user access segregation). Remediation efforts are ongoing.
- Debt Structure: The company entered a new 2025 Credit Agreement in April 2025, replacing the 2022 facility. It includes a $375 million term loan and a $1.0 billion revolving facility. The company is in compliance with all covenants.
- Tax Rate: The effective tax rate increased to 19.7% from 16.5%, primarily due to a stock-based compensation tax shortfall compared to an excess benefit in the prior year.
Investor Verification Checklist
- Remediation Timeline: Verify the specific timeline and progress reports regarding the remediation of the material weakness in IT general controls.
- Organic Growth Sustainability: Assess the sustainability of the 6.0% organic revenue growth amidst rising technology and compensation costs.
- Amortization Impact: Monitor the trajectory of intangible asset amortization expenses, which significantly impacted operating margins this quarter.
- Share Repurchase Execution: Track the utilization of the new $600 million repurchase authorization and its impact on diluted share count.
- Cloud Cost Management: Review future quarters for the impact of increasing cloud-based hosting expenses on Cost of Services.