0001628280-26-046549
SEC filingRevenue grew 6.4% to $622.9M driven by 7.0% organic growth, but operating margin fell 650 bps to 26.7% due to restructuring and CEO compensation costs.
In the third quarter of fiscal 2026, FactSet reported revenues of $622.9 million, up 6.4% year-over-year, driven by 7.0% organic growth partially offset by a 0.6% headwind from a business disposition. Growth was broad-based, led by workstations and data solutions. Despite top-line momentum, operating income declined 14.3% to $166.3 million, and operating margin contracted sharply from 33.2% to 26.7%. The compression was attributed to higher employee compensation costs, including $19.6 million in restructuring charges and $4.3 million in CEO one-time awards, as well as increased technology expenses and amortization. Net income fell 14.7% to $126.7 million, and diluted EPS decreased 9.6% to $3.50, partly cushioned by a 5.6% reduction in diluted share count from buybacks.
All three segments posted revenue growth. The Americas (65.4% of revenue) grew 7.0% to $407.2 million, but operating income dropped 22.0% to $63.6 million as compensation costs rose sharply due to restructuring and CEO awards. EMEA revenue increased 4.3% to $151.9 million, though operating income fell 15.7% to $58.2 million on higher salaries and restructuring. Asia Pacific revenue grew 7.5% to $63.7 million, and operating income rose 2.2% to $44.5 million, helped by stronger revenue growth outpacing compensation increases. Segment margins varied widely, with Asia Pacific showing high margin (69.9%) due to cost allocation differences.
Management did not provide explicit quantitative guidance. However, the company highlighted continued investment in data offerings, workflow integration, and AI innovation as strategic priorities. Organic ASV growth of 7.1% to $2.49 billion signals sustained recurring revenue momentum. The 5% dividend increase and $494 million remaining share repurchase authority reflect confidence in cash generation. Liquidity remains strong with $288 million cash and $1.0 billion revolving facility. Key risks include elevated cost pressures from restructuring and one-time compensation, which may normalize in coming quarters.
As of May 31, 2026, FactSet holds $288.1M in cash and cash equivalents and $16.1M in investments, providing ample liquidity. Total debt stands at $1.39B, consisting of $499.2M current debt (2027 Notes reclassified) and $890.5M long-term debt. The debt structure includes $500M 2027 Notes, $500M 2032 Notes, $375M Term Facility, and $20M drawn on the Revolving Facility. Shareholders' equity is $2.03B, reflecting cumulative retained earnings and stock repurchases.
FactSet has purchase commitments with suppliers and vendors, with a base of approximately $352M as of August 31, 2025. During Q2 FY2026, a multi-year contract renewal added $62.5M. Subsequent to May 31, 2026, another multi-year contract for $50M was entered. Operating lease liabilities total $180.9M (present value), with future minimum lease payments of $209.2M. No material legal contingencies are noted.
In Q3 FY2026, FactSet repurchased 926,370 shares for $203.1M. For the nine-month period, total buybacks were 2.056M shares for $506.0M. As of May 31, 2026, $494.0M remains under the share repurchase program, with an additional $600M authorized on December 16, 2025. Dividends declared total $122.8M for the nine months, with a quarterly dividend of $1.16 per share, representing a 5% increase from $1.10. Debt activity includes $95.0M in proceeds and $75.0M in repayments during the nine months, primarily related to revolving facility usage. Capital expenditures (including capitalized software) were $87.3M, supporting infrastructure and product development.
FactSet reports three segments: Americas, EMEA, and Asia Pacific. For the three months ended May 31, 2026, segment revenues were: Americas $407.2M, EMEA $151.9M, Asia Pacific $63.7M. Segment operating incomes were: Americas $63.6M, EMEA $58.2M, Asia Pacific $44.5M. Total operating income was $166.3M. The Americas segment bears the majority of corporate costs, including data centers and data costs. COE costs are allocated based on revenue percentage. This geographic segmentation aligns with management's internal performance assessment.
Operating cash flow (CFO) of $617.5M exceeded net income of $412.4M, yielding a CFO-to-net-income ratio of 1.5x, indicating strong cash conversion. The primary driver was $133.7M depreciation and amortization, $61.5M stock-based compensation, and a modest net working capital inflow of $39.0M. Accounts receivable decreased by $24.4M, while accounts payable and accrued expenses increased by $22.8M, both supporting cash flow. However, a $36.3M tax payment was a headwind. Capital expenditures of $87.3M represent 14.1% of CFO, a moderate intensity. Free cash flow (implicitly calculated as CFO minus capex) was $530.2M, covering share repurchases ($506.0M) and dividends ($122.7M) by 1.18x. Financing activities used net cash of $603.7M, primarily due to $506.0M in buybacks and $122.7M in dividends, partially offset by $95.0M debt proceeds. Overall, cash generation remains robust, with disciplined capex and strong shareholder returns.