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FACTSET RESEARCH SYSTEMS INC

CIK: 1013237 Filed: October 22, 2025 10-K

Key Highlights

  • 237,000 investment professionals served with financial data and AI tools
  • $2.37 billion subscription pipeline indicating strong future demand
  • 32.2% operating margin reflecting efficient profit conversion

Financial Analysis

FACTSET RESEARCH SYSTEMS INC Annual Report - Plain English Summary for Investors

1. What Does FactSet Do?

FactSet is the "Google for finance professionals." They provide a digital platform packed with financial data, analytics, and AI tools used by 237,000 investment professionals at banks, hedge funds, and wealth management firms. Their tools help clients research stocks, manage portfolios, and automate tasks.

Key Stats (as of 2025):

  • 9,000+ clients globally
  • Core products: Workstations, portfolio analytics, enterprise data feeds
  • Heavy focus on AI tools to speed up financial analysis (think ChatGPT for stock research)

2. Financial Performance: The Big Numbers

Fiscal 2025 Highlights:

  • Revenue: $2.32 billion (up 5.4% from last year)
    • Growth drivers: 4.4% from existing clients, 0.9% from acquisitions
  • Operating Income: $748 million (up 6.7%)
  • Profit (Net Income): $13.91 per share (up 11.8%)
    • Boosted by a one-time gain from selling a non-core business unit
  • Subscription Pipeline: $2.37 billion (up 5.7%) – shows strong future demand

Margins & Efficiency:

  • Operating margin: 32.2% (up from 31.8% last year)
  • Cut administrative costs by 2.9% ($475.7M vs. $489.8M) due to resolved tax disputes

3. Wins vs. Challenges

What Went Well:

  • Core products (Workstations & CGS) drove growth – clients still rely on their bread-and-butter tools.
  • Americas region (their largest market) outperformed Europe and Asia.
  • Sold a non-core business unit for a cash boost (like decluttering your garage and making money).

Challenges:

  • Data/tech costs jumped 8.5% ($1.1B vs. $1.01B) due to:
    • Writing off millions in outdated software (like paying for unused subscriptions)
    • Higher employee pay and pricier tech infrastructure
  • Relied heavily on 2 suppliers for 22% of total costs – risky if prices rise or relationships sour.
  • AI investments continue to eat into cash reserves (like renovating your house while still paying the mortgage).

4. Financial Health Check

The Good:

  • Steady 32%+ operating margins – they’re efficient at turning revenue into profit.
  • $460 million returned to shareholders via dividends and stock buybacks.
  • $500 million in long-term debt (due 2027 and 2032) is manageable with current cash flow.

Watch Outs:

  • Auditors flagged concerns about financial controls (not a crisis, but worth monitoring).
  • Exact cash reserves weren’t disclosed, but they hold "significant" safe, liquid assets.

5. Risks to Keep You Up at Night

  • Supplier Dependency: 22% of costs tied to just two vendors – a price hike could hurt margins.
  • Tech Arms Race: Falling behind on AI tools might push clients to competitors like Bloomberg.
  • Economic Slowdown: Fewer IPOs and mergers = less demand for financial data.
  • Tax Disputes: Old sales tax issues (dating to 2019) could resurface. The company didn’t share new details.

The Bottom Line for Investors

Reasons to Like FactSet:

  • Steady growth: 5%+ revenue growth in a shaky economy is impressive.
  • Profit machine: 32% margins and 11.8% EPS growth show disciplined spending.
  • Dividend reliability: 26-year dividend streak – a sign of financial maturity.

Reasons to Be Cautious:

  • Margin pressure: Rising data/tech costs could squeeze profits if growth slows.
  • Debt timing: $500M debt isn’t scary now, but refinancing in a high-rate environment could bite.
  • Transparency gaps: Limited details on cash reserves and tax disputes.

Final Take:
FactSet is a "slow and steady" pick. It’s not a hyper-growth stock, but its reliable margins, sticky client base, and AI investments make it a solid hold for conservative investors. Watch for:

  1. AI adoption rates – are clients actually using their new tools?
  2. Q1 2026 margins – can they keep costs under control?
  3. Debt management – any moves to refinance early?

Fun fact: Serving 9,000+ clients is like providing coffee to every hotel in Las Vegas… 3 times over.

Investment Grade:
🟢 Moderate Buy (for investors comfortable with steady returns and moderate risk)

Need more details? FactSet’s annual report had gaps in transparency – something to consider if you value clear disclosure. ☕

Risk Factors

  • 22% of costs tied to two suppliers, risking margin pressure from price hikes
  • AI tech race risks client attrition to competitors like Bloomberg
  • Economic slowdown could reduce demand for financial data services

Why This Matters

FactSet's latest annual report is crucial for investors seeking insight into a stable, profitable financial data provider. The company's consistent revenue growth to $2.32 billion, coupled with an impressive 32.2% operating margin, demonstrates a robust business model and efficient operations in a competitive market. This financial strength, alongside a $2.37 billion subscription pipeline, signals continued demand and a reliable earnings stream, making it a key indicator for long-term portfolio stability.

However, the report also highlights strategic shifts and potential headwinds. FactSet's heavy investment in AI tools, while positioning it for future relevance, has led to an 8.5% jump in data/tech costs. Investors must weigh this necessary expenditure against potential margin pressures. Furthermore, the reliance on just two key suppliers for 22% of total costs and flagged auditor concerns regarding financial controls present areas for careful monitoring, impacting the company's risk profile and operational resilience.

For conservative investors, the 26-year dividend streak and steady growth make FactSet a 'slow and steady' pick. This report is essential for understanding the balance between its reliable profitability and the strategic investments and risks that will shape its future performance in the evolving financial technology landscape.

What Usually Happens Next

Following this annual report, investors should closely monitor FactSet's upcoming quarterly earnings calls, particularly the Q1 2026 results. These will provide the first concrete indications of whether the company can sustain its revenue growth while effectively managing the rising data and technology costs, which were a significant concern in the 2025 report. Any shifts in operating margins will be a critical metric to watch.

Key areas for observation also include the actual client adoption rates of FactSet's new AI tools. The success of these investments is paramount for future competitiveness, and investor updates on their integration and impact will be vital. Furthermore, any proactive steps taken by FactSet to mitigate its dependency on the two major suppliers, or to address the auditor-flagged concerns about financial controls and outstanding tax disputes, will be important indicators of management's responsiveness.

In the longer term, given the $500 million in debt maturing in 2027 and 2032, investors should watch for any strategic moves to refinance or manage this debt, especially in a potentially high-interest-rate environment. Increased transparency around cash reserves, which was noted as a gap in this report, will also be a recurring theme for investors seeking clearer financial disclosure in future filings.

Financial Metrics

Revenue $2.32 billion
Net Income $13.91 per share
Growth Rate 5.4%

Learn More

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Understanding SEC Filings & CIK

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Document Information

Analysis Processed

October 23, 2025 at 08:55 AM

Important Disclaimer

This AI-generated analysis is for informational purposes only and does not constitute financial or investment advice. Always consult with qualified professionals and conduct your own research before making investment decisions.