0001628280-26-022873
SEC filingRevenue up 7.1%, driven by workstations and data solutions, but operating margin fell 220 bps to 30.3% due to higher compensation costs.
In Q2 FY2026, FactSet reported revenue of $611.0 million, up 7.1% year-over-year, driven by a 6.8% increase in organic revenue. Growth was led by workstations, data solutions, and portfolio management and trading solutions. Operating income declined marginally by 0.3% to $185.0 million, and operating margin contracted 220 basis points to 30.3% as cost of services and SG&A rose faster than revenue. Cost of services grew 10.1% due to higher employee compensation (annual merit increases, India labor reform) and increased technology expenses. SG&A rose 11.9% driven by variable compensation, stock-based compensation, and CEO one-time awards, partially offset by lower professional fees. Net income fell 8.1% to $133.1 million, and diluted EPS decreased 4.5% to $3.59, also aided by share repurchases.
All three segments contributed to revenue growth. The Americas, FactSet's largest segment (65.4% of revenue), grew 8.1% to $399.7 million, driven by workstations and data solutions; operating income grew 1.5% to $74.2 million. EMEA revenue increased 4.0% to $149.1 million from data solutions and workstations, but operating income fell 6.1% to $66.2 million due to higher compensation. Asia Pacific revenue grew 8.0% to $62.2 million, led by data solutions and middle office, with operating income up 6.5% to $44.5 million. Segment operating margins were 18.6% (Americas), 44.4% (EMEA), and 71.6% (Asia Pacific), reflecting different cost structures and support allocations.
Management did not provide explicit quantitative guidance for future periods. However, strategic priorities include expanding data offerings, embedding deeper into client workflows, and innovating with AI. Organic ASV growth of 6.7% and client/user additions signal sustained demand. The company faces headwinds from rising compensation costs, including the India labor reform and CEO awards. Liquidity remains strong with $268.3 million cash and $697.1 million in share repurchase authorization. Capital allocation will continue to prioritize dividends, buybacks, and strategic acquisitions.
As of February 28, 2026, FactSet held $268.3 million in cash and cash equivalents plus $16.9 million in investments (mutual funds), providing $285.2 million in liquid assets. Total assets stood at $4.22 billion. Goodwill totaled $1.287 billion, with intangible assets net at $1.885 billion. Total debt was $1.369 billion (net of unamortized discounts and issuance costs), comprising $500 million 2027 Notes, $500 million 2032 Notes, and $375 million drawn on the 2025 Term Facility. The company had no borrowings under its $1.0 billion revolving credit facility. Stockholders' equity was $2.129 billion. Deferred revenue was $188.7 million, up from $167.9 million at fiscal year-end.
As of August 31, 2025, FactSet had total purchase obligations with suppliers and vendors of approximately $352 million, primarily for hosting services, data acquisition, and third-party software. During the second quarter of fiscal 2026, the company entered into a multi-year contract renewal with a supplier adding $62.5 million in commitments. Total purchase commitments therefore approximated $414.5 million as of February 28, 2026 (combining the pre-existing $352 million and the $62.5 million new commitment). Operating lease obligations totaled $213.5 million in future minimum payments, with $184.4 million recognized as lease liabilities. Debt maturities were $500 million in fiscal 2027, $375 million in fiscal 2028, and $500 million thereafter.
FactSet repurchased 1,129,850 shares of common stock for $302.9 million during the six months ended February 28, 2026. An additional 22,355 shares were repurchased to satisfy tax withholding requirements. On December 16, 2025, the board authorized an additional $600 million in share repurchase authority (removing expiration on prior authorization). Remaining authorization was $697.1 million as of February 28, 2026. Dividends paid totaled $82.4 million ($1.10 per share quarterly, up 5.8% from $1.04). Capital expenditures were $56.8 million (4.7% of sales). Debt net change was minimal (+$0.96 million) due to amortization of issuance costs; no new debt was issued or repaid.
FactSet reports three segments: Americas, EMEA, and Asia Pacific. For the six months ended February 28, 2026, Americas revenue was $795.9 million (+8.0% YoY) with operating income of $152.7 million (19.2% margin). EMEA revenue was $298.6 million (+4.0% YoY) with operating income of $134.4 million (45.0% margin). Asia Pacific revenue was $124.1 million (+7.7% YoY) with operating income of $89.9 million (72.4% margin). The Americas segment bears all data center, third-party data, and corporate overhead costs, which explains the lower margin. Goodwill by segment: Americas $926.3 million, EMEA $346.5 million, Asia Pacific $14.4 million.
Net income of $285.64 million was well covered by operating cash flow of $332.97 million, a 1.17x ratio. Depreciation and amortization ($87.84M) and stock-based compensation ($39.32M) were the primary non-cash add-backs. Working capital consumed $107.98 million, driven by an accounts receivable increase of $51.02M, a $42.24M decrease in accrued compensation, and a $20.60M reduction in lease liabilities, partially offset by a $20.22M increase in deferred revenues.
Capital expenditures of $56.84 million represented 17.1% of CFO, indicating moderate reinvestment. The company returned $385.31 million to shareholders via repurchases ($302.93M) and dividends ($82.38M), which exceeded CFO by $52.34 million, funded by existing cash and debt capacity. Investing activities also included $36.05M in proceeds from investment sales.
Overall, cash generation was robust with strong CFO growth, but capital returns outpaced internal cash generation, necessitating reliance on balance sheet resources.