FactSet Research Systems Inc. reported financial results for its third quarter fiscal 2026 ended May 31, 2026, with GAAP revenues growing 6.4% year over year to $622.9 million, topping analyst consensus estimates of $618.3 million. Adjusted diluted EPS rose 6.1% to $4.53, exceeding expectations of $4.46, supported by revenue growth and a lower share count. Following the announcement, FactSet Research shares rose 1.7% to trade at $249.67 on Thursday as analysts adjusted their price targets.

Operational Highlights

Organic revenue increased 7.0% to $622.9 million, driven by institutional buy-side and wealth management clients. Annual Subscription Value (ASV) reached $2.48 billion, up from $2.34 billion a year earlier, with organic ASV growing by $35.4 million during the quarter. Organic ASV reached $2,485.6 million, up 7.1% year over year, with Q3 renewals extending in length by 30% on average and annual ASV retention remaining above 95%. The company strengthened its leadership by appointing Joshua B. Warren as Chief Financial Officer, effective April 13, 2026. Additionally, more than 90% of FactSet's Top 50 clients now utilize four or more AI products, supported by new partnerships with Google Cloud, Finster AI, and TIFIN.AI.

Financial Performance

The company's profitability metrics reflected the impact of strategic investments and non-recurring items. GAAP operating margin was 26.7% compared to 33.2% in the prior year, primarily due to higher employee compensation costs, including one-time charges and CEO compensation costs. Adjusted operating margin declined to 34.0% from 36.8% year over year, mainly attributed to higher compensation and technology-related expenses. Net cash provided by operating activities increased 12.1% to $284.5 million, and free cash flow rose 11.1% to $254.0 million. FactSet ended the quarter with $288.1 million in cash and cash equivalents and $890.5 million in long-term debt.

Shareholder Returns

FactSet returned $243.4 million to shareholders in Q3, including $203.1 million in share repurchases and $40.3 million in dividends. The company raised its quarterly dividend by 6 cents to $1.16 per share, marking its twenty-seventh consecutive year of dividend increases on a stock split-adjusted basis.

Segment Performance

Revenue growth was consistent across key regions, with the Americas leading organic revenue growth at 7.0%. Asia-Pacific (APAC) showed strong momentum with organic revenue growth of 10.5%, while Europe, the Middle East, and Africa (EMEA) posted organic revenue growth of 5.3%.

Analyst Reactions

Several analysts revised their price targets following the earnings announcement. Wells Fargo maintained an Underweight rating and raised the target to $210. Morgan Stanley kept an Equal-Weight rating with a target of $230. BMO Capital maintained Market Perform and raised the target to $275. Evercore ISI Group kept an In-Line rating with a target of $275. Wolfe Research maintained Underperform with a target of $240. UBS maintained Buy but lowered the target to $340. Deutsche Bank kept Hold with a target of $280. B of A Securities maintained Underperform with a target of $210.

Outlook

FactSet reaffirmed its fiscal 2026 outlook provided on March 31, 2026. The company expects GAAP revenues between $2.45 billion and $2.47 billion, versus the Street estimate of $2.463 billion. GAAP diluted EPS is expected between $14.85 and $15.35, and adjusted diluted EPS between $17.25 and $17.75, compared with the analyst consensus estimate of $17.71. The guidance for adjusted operating margin remains between 34.0% and 35.5%, and the company reiterated its forecast for organic ASV growth of $130 million to $160 million.

Deutsche Bank analyst Faiza Alwy maintained a Hold rating on FactSet Research Systems and raised the price target to $280 from $275. The adjustment reflects a revised valuation outlook for the company, which operates on the NYSE under the ticker FDS.

Rating and Price Action

The brokerage firm kept its recommendation at Hold, indicating a neutral stance on the stock's near-term performance. The price target increase suggests a modest upward revision in the expected fair value of the shares.

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