Intro
This post is based on the company’s official 10-K filing and investor relations (IR) materials. It summarizes only objective facts and the logical implications that directly follow from them. Personal opinions and forecasts have been minimized. The goal is to help readers understand and interpret the materials more easily.
Table of Contents
👉 1. Business Overview
👉 2. Financial Highlights
👉 3. Valuation
👉 4. Risk
👉 5. MD&A (Management’s Discussion and Analysis)
👉 6. Summary
1. Business Overview 🌐
🔍 What FactSet Does
FactSet Research Systems is a global financial data and analytics company that helps investment professionals make better decisions. Its platform combines financial data, analytics, research tools, and workflow software into a single subscription-based service.
FactSet is mainly used by asset managers, hedge funds, investment banks, and wealth advisors who need fast, accurate, and reliable information to analyze companies, markets, and portfolios.
In simple terms: FactSet sells the “brains and dashboards” that professionals use to decide what to buy, sell, or hold in financial markets.
🧠 Core Products & Services
FactSet’s value comes from integrating many complex tools into one system:
- Financial Data – Company financials, estimates, economic indicators, and market prices.
- Analytics – Tools that calculate ratios, growth, risk, and performance.
- Research & Content – Consensus estimates, transcripts, and third-party research.
- Workflow Solutions – Software that helps teams collaborate and automate daily tasks.
These services are delivered through a subscription model, meaning customers pay recurring fees rather than one-time purchases. This creates predictable, repeat revenue.
🏢 Who Uses FactSet?
FactSet serves a wide range of financial professionals, but its strongest presence is in institutional investing.
- Asset Managers – Firms managing mutual funds, ETFs, and pensions.
- Hedge Funds – Active investors who rely on fast data and advanced analytics.
- Investment Banks – For research, valuation, and client advisory work.
- Wealth Managers – Advisors managing high-net-worth client portfolios.
Because switching platforms is costly and disruptive, FactSet benefits from high customer retention and long-term client relationships.
🌍 Global Reach & Business Model
FactSet operates globally, serving clients across North America, Europe, and Asia. Revenue is primarily generated from long-term contracts that renew annually.
- Recurring Revenue – Most sales come from subscriptions.
- Sticky Platform – Deep integration into client workflows reduces churn.
- Scalable Model – Software-driven delivery keeps incremental costs relatively low.
This model is attractive to long-term investors because it emphasizes stability, visibility, and operating leverage.
💡 Competitive Position
FactSet competes with other financial data providers, but differentiates itself through:
- Integrated Platform – Data, analytics, and workflow in one system.
- Customization – Clients can tailor tools to their specific investment process.
- Client Support – High-touch service and training.
Rather than targeting casual investors, FactSet focuses on professional-grade users willing to pay for quality and reliability.
🧾 Plain English Summary
FactSet is a tools-and-data company for professional investors.
It does not take investment risk itself. Instead, it sells the information and software that others use to invest.
Because customers rely on FactSet every day, they rarely leave. This creates steady revenue and strong long-term business stability, which is why the company is often viewed as a high-quality, durable business.
“FactSet makes money by helping investors think faster, smarter, and with better data.”
2. Financial Highlights 📊
Income Statement Summary
| (Unit: $m, EPS in $) | FY 2023 | FY 2024 | FY 2025 |
|---|---|---|---|
| Revenue | 2,085.5 | 2,203.1 | 2,321.7 |
| Cost of Goods Sold | 973.2 | 1,011.9 | 1,097.8 |
| Gross Profit | 1,112.3 | 1,191.1 | 1,224.0 |
| SG&A | 483.1 | 489.8 | 475.7 |
| Operating Income | 629.2 | 701.3 | 748.3 |
| Non-Operating Income/Expense | (45.3) | (49.8) | (27.3) |
| Interest Income/Expense | (53.5) | (51.3) | (49.8) |
| Income Before Tax | 584.0 | 651.5 | 721.0 |
| Income Tax | 115.8 | 114.4 | 123.9 |
| Net Income | 468.2 | 537.1 | 597.0 |
| EPS | 12.0 | 13.9 | 15.6 |
Plain English: FactSet grew revenue steadily from FY2023 to FY2025, and operating income rose as well. Net income and EPS increased each year, helped by the company’s recurring subscription-style revenue model. Non-operating items were a drag overall (mainly interest expense), but the drag eased in FY2025.
Key Financial Ratios
| Ratio | FY 2023 | FY 2024 | FY 2025 |
|---|---|---|---|
| ROE (%) | 31.7 | 30.4 | 29.1 |
| ROA (%) | 11.7 | 13.4 | 14.3 |
| ROTC (%) | 19.5 | 21.4 | 21.1 |
| ROIC (%) | 18.0 | 20.2 | 19.3 |
| Gross Margin (%) | 53.3 | 54.1 | 52.7 |
| Operating Margin (%) | 30.2 | 31.8 | 32.2 |
| Pretax Margin (%) | 28.0 | 29.6 | 31.1 |
| Net Margin (%) | 22.4 | 24.4 | 25.7 |
| Debt-to-Equity Ratio (D/E) (%) | 144.6 | 112.0 | 96.9 |
| Net Debt / EBITDA (x) | 1.6 | 1.1 | 1.1 |
| Interest Coverage Ratio (x) | 9.5 | 10.7 | 13.3 |
| Current Ratio (%) | 1.6 | 1.3 | 1.4 |
| Quick Ratio (%) | 1.4 | 1.1 | 1.2 |
| Fixed Asset to Long-term Capital Ratio (%) | 2.7 | 2.6 | 2.4 |
Plain English: Profitability improved over time: operating and net margins moved higher, and returns on capital (ROTC and ROIC) stayed strong. Leverage metrics also improved, with Debt-to-Equity declining and interest coverage rising in FY2025. Net Debt / EBITDA around ~1.1x in FY2024–FY2025 suggests the debt load looked manageable relative to earnings power.
Balance Sheet Summary Template
| (Unit: $m) | FY 2023 | FY 2024 | FY 2025 |
|---|---|---|---|
| Assets | |||
| Cash & Equivalents | 425.4 | 423.0 | 337.7 |
| Accounts Receivable | 237.7 | 228.1 | 270.7 |
| Inventory | — | — | — |
| Current Assets | 770.1 | 835.8 | 729.8 |
| Property, Plant & Equipment | 86.1 | 82.5 | 85.2 |
| Intangible Assets | 1,859.2 | 1,844.1 | 1,916.1 |
| Non-current Assets | 3,192.8 | 3,219.2 | 3,574.5 |
| Total Assets | 3,962.9 | 4,055.0 | 4,304.3 |
| Liabilities | |||
| Short-term Debt | 0.0 | 124.8 | 0.0 |
| Accounts Payable | 121.8 | 178.3 | 135.3 |
| Current Liabilities | 484.3 | 667.1 | 521.3 |
| Long-term Debt | 1,612.7 | 1,241.1 | 1,368.3 |
| Non-current Liabilities | 1,858.7 | 1,475.5 | 1,596.6 |
| Total Liabilities | 2,343.0 | 2,142.6 | 2,117.9 |
| Equity | |||
| Common Equity | 1,619.9 | 1,912.5 | 2,186.4 |
| Total Liabilities + Equity | 3,962.9 | 4,055.0 | 4,304.3 |
Plain English: FactSet’s balance sheet expanded in FY2025, with total assets rising. Intangible assets are a major part of the asset base (common for data/software businesses, especially after acquisitions). Total liabilities declined slightly in FY2025, while equity increased—this combination helped reduce leverage versus FY2023.
Cash Flow Statement Summary Template
| (Unit: $m) | FY 2023 | FY 2024 | FY 2025 |
|---|---|---|---|
| Cash Flow from Operating Activities | 645.6 | 700.3 | 726.3 |
| Cash Flow from Investing Activities | (95.4) | (144.3) | (392.8) |
| Cash Flow from Financing Activities | (632.0) | (560.9) | (407.8) |
| Net Change in Cash | (77.8) | (2.5) | (71.3) |
| Beginning Cash Balance | 503.3 | 425.4 | 423.0 |
| Ending Cash Balance | 425.4 | 423.0 | 351.7 |
Plain English: Operating cash flow increased each year, which is a healthy sign for a subscription business. Investing cash flow was much more negative in FY2025 due to acquisitions and investment activity. Financing cash flow stayed negative because FactSet returned cash to shareholders through buybacks and dividends and also managed debt repayments and issuance.
Beginner Takeaways ✅
- Steady growth: Revenue, operating income, net income, and EPS rose each year from FY2023 to FY2025.
- Healthy profitability: Margins improved overall, and returns on capital (ROTC and ROIC) remained strong.
- Leverage looks manageable: Debt-to-Equity declined by FY2025, interest coverage improved, and Net Debt / EBITDA stayed near ~1.1x in FY2024–FY2025.
- Cash generation is a core strength: Operating cash flow grew, supporting dividends, buybacks, and strategic investments.
- FY2025 was investment-heavy: Cash outflows for investing jumped in FY2025, consistent with acquisition activity.
3. Valuation 🧮
Here are the valuation ratios. These numbers don’t tell you by themselves if the stock is cheap or expensive. Investors typically compare them with peers, the broader market, or with their own view of intrinsic value (DCF). It’s up to each investor to judge whether these multiples signal undervaluation or overvaluation.
Current Market Data 📍
Share Price : 291.77 $
Market Cap : 11.02B
Valuation Multiples Snapshot 📌
| Metric | Company |
|---|---|
| P/E | 18.8 |
| Forward P/E | 17.0 |
| P/B | 5.0 |
| EV/EBITDA | 13.3 |
| P/S | 4.7 |
| Dividend Yield (%) | 1.4 |
| Free Cash Flow Yield (%) | 5.6 |
💡 Plain English Recap
- P/E (18.8) and Forward P/E (17.0) suggest investors are paying for a business with steady earnings and high recurring revenue, but the “right” multiple depends on growth expectations and peer comparisons.
- P/S (4.7) reflects that the market values FactSet as a subscription-style business (investors often pay more for predictable revenue than for cyclical sales).
- EV/EBITDA (13.3) is a leverage-aware view of valuation because it includes debt (and subtracts cash), which helps when comparing companies with different capital structures.
- P/B (5.0) is often less central for data/software businesses because acquisitions can create large intangible assets, making book value less comparable across peers.
- Dividend Yield (1.4%) indicates the dividend is present but not the main shareholder-return lever; buybacks and reinvestment can still matter a lot.
- Free Cash Flow Yield (5.6%) is a quick “cash return” check: higher yields can look more attractive, but it’s worth checking whether cash flow is influenced by one-time items.
1) Forward P/E is shown as a consensus estimate (average from major financial data providers) for reference.
2) 2026-01-13
4. Risks
Editorial Note:
In order to enhance readability, we have omitted broad, market-wide risks that generally affect all companies. The following discussion is focused solely on the risks that are specific to this company and the industry in which it operates.
🔒 Cybersecurity, data security, and trust risk
- Cyberattacks could disrupt operations or expose sensitive data. FactSet delivers time-sensitive data and analytics and is entrusted with significant client information (including, in some cases, proprietary data such as portfolio holdings). A security incident could harm service reliability, client trust, and the company’s reputation.
- Security requirements keep rising. The threat landscape changes quickly, and maintaining strong security controls requires ongoing investment and execution.
🧩 Dependence on third-party data/content providers
- FactSet relies on third-party content to power many datasets and workflows. If key suppliers terminate agreements, restrict usage rights, or raise prices significantly, FactSet could face higher costs, reduced product breadth, or both.
- Contract renewal and termination terms can create uncertainty. Some agreements can be terminated on relatively short notice, and some providers may also be competitors (or could be acquired by competitors), which can make renewals more difficult or expensive.
- Limited suppliers for certain datasets can increase concentration risk. Even with efforts to diversify sources, some content categories may have only a few viable providers.
☁️ Technology infrastructure and cloud concentration risk
- Service delivery depends on large-scale systems that must run reliably. FactSet’s business requires rapid processing and delivery of substantial data volumes. Outages or performance degradation could impact client workflows and satisfaction.
- Concentration with a major cloud provider can be a vulnerability. FactSet uses multiple cloud providers, but one supplier provides the majority of its cloud computing support. Operational issues, pricing changes, or contract constraints at a major provider could create disruption or cost pressure.
🏁 Intense competition in financial information and analytics
- The market is highly competitive and well-capitalized. FactSet competes with large platforms and specialized niche firms across data, analytics, and workflow tools.
- Major competitors include Bloomberg, S&P Market Intelligence, and LSEG’s Data & Analytics (formerly Refinitiv). Competitive pressure can affect pricing, sales cycles, client retention, and the pace of required product innovation.
🌍 Global operating footprint and cross-border compliance complexity
- A meaningful portion of revenue and workforce is outside the U.S. Operating internationally introduces additional legal, regulatory, and compliance burdens (including privacy and data protection rules), as well as staffing and management complexity.
- Geopolitical or regional instability can create operational friction. Political, economic, social, or regulatory changes in key markets can disrupt staffing, service delivery, or cost structures.
📜 Intellectual property and legal rights protection
- Protecting proprietary technology and content is not guaranteed. FactSet relies on a combination of IP rights and other measures (like confidentiality agreements). However, legal protections may be limited, and disputes or infringement could lead to costs or operational constraints.
💡 Plain English Recap
FactSet is a subscription-based financial data and workflow company, so the biggest company-specific risks tend to cluster around trust and dependability. If FactSet’s systems go down, if data/content access becomes more expensive or restricted, or if a cybersecurity incident damages client confidence, the impact can show up quickly in renewals and new sales. Because the competitive set includes very large players, FactSet also has to keep investing to stay differentiated—especially in the tools and data that clients depend on every day.
5. MD&A (Management’s Discussion and Analysis)
📈 Overall performance and revenue growth
Management explains that revenue growth in fiscal 2025 was driven primarily by continued demand for FactSet’s subscription-based data, analytics, and workflow solutions. The company emphasizes that its business model is largely recurring, meaning most revenue comes from ongoing client subscriptions rather than one-time sales.
Organic growth (growth from existing products and clients, excluding acquisitions) remained a key focus, supported by client retention and expanded product usage across investment professionals.
💼 Operating expenses and margin discipline
Management highlights that operating expenses increased in fiscal 2025, mainly due to:
- Higher personnel-related costs, reflecting continued investment in employees to support product development, sales, and client service.
- Technology and infrastructure spending, including cloud-related costs to support scalable data delivery.
Despite these increases, management notes that operating income grew, indicating that revenue growth outpaced expense growth. Operating margin (operating income divided by revenue, a measure of profitability from core operations) remained a central internal performance metric.
🌍 Geographic mix and client demand
Management states that FactSet continues to generate revenue across multiple regions, including the Americas, EMEA (Europe, Middle East, and Africa), and Asia-Pacific. This geographic diversity helps broaden the client base but also introduces operational complexity.
Client demand was described as steady across asset managers, asset owners, and wealth management clients, with ongoing interest in integrated data and workflow solutions.
🧠 Investment in products, data, and innovation
Management emphasizes ongoing investment in:
- Data content expansion, including new datasets and enhancements to existing ones.
- Technology and analytics, particularly tools that help clients manage large volumes of financial information more efficiently.
- Workflow solutions, designed to embed FactSet more deeply into clients’ daily decision-making processes.
These investments are described as essential to maintaining competitiveness in the financial information and analytics industry.
🏦 Cash flow, capital allocation, and balance sheet focus
Management notes that FactSet continued to generate strong cash flows from operating activities, reflecting the recurring nature of its subscription revenue model. Operating cash flow is described as a key indicator of the company’s financial health.
Capital allocation priorities discussed by management include:
- Reinvestment in the business to support growth and innovation.
- Share repurchases, used as a way to return capital to shareholders.
- Dividend payments, reflecting a commitment to regular shareholder returns.
🔮 Management outlook and strategic focus
Looking ahead, management reiterates a focus on:
- Expanding the value delivered to clients through integrated data and analytics.
- Maintaining disciplined cost management while continuing to invest for long-term growth.
- Leveraging FactSet’s global platform to deepen client relationships.
Management does not provide specific forecasts in this section but frames fiscal 2025 results as evidence of the resilience of FactSet’s business model.
💡 Plain English Recap
In simple terms, management says that FactSet is growing steadily because clients keep renewing and using more of its tools. The company is spending more on people and technology, but it believes these investments are necessary to stay competitive. Strong cash generation allows FactSet to both reinvest in the business and return money to shareholders through dividends and share buybacks.
6. Summary
FactSet is a subscription-based financial data and analytics company that serves professional investors who rely on its tools every day. Its revenue base is largely recurring, which provides stability and visibility compared with one-time sales models. In fiscal 2025, the company continued to grow revenue and operating income, supported by steady client demand and high retention.
Management emphasized ongoing investment in people, technology, and data to keep the platform competitive, while still maintaining solid profitability. Strong operating cash flow allowed FactSet to reinvest in the business and return capital to shareholders through dividends and share repurchases.
Overall, the company’s results reflect a durable business model built on long-term client relationships, predictable revenue, and consistent cash generation.
📝 Disclaimer
This article is intended for educational purposes only. It does not constitute financial, investment, or legal advice. All investment decisions involve risks, and readers should conduct their own research or consult with a licensed financial advisor.
👉 FactSet Research Systems (FDS) FY 2025 10-K Key Highlights (Filed 2025) | Explained for Beginners