FactSet Research Systems (FDS) Financials

FactSet Research Systems (NYSE:FDS) continued to grow revenue through fiscal 2026, but profitability weakened as expenses and financing costs increased. Q4 2026 revenue reached $634.7 million, up 6.3% from $596.9 million in Q4 2025 and the highest quarterly level in the provided data. Revenue also rose sequentially from $607.6 million in Q1 to $634.7 million in Q4.

Despite the top-line growth, Q4 net income fell to $121.1 million from $153.6 million a year earlier. Operating income declined 11.7% year over year to $156.6 million, while diluted EPS fell from $4.03 to $3.42. FactSet’s gross margin declined to approximately 48.6% from 51.6%, and its operating margin fell to approximately 24.7% from 29.7%.

• Revenue momentum remains intact: Q4 2026 revenue increased 6.3% year over year, and quarterly revenue rose steadily throughout fiscal 2026.
• Operating cash flow remains strong: FactSet generated $204.7 million of operating cash flow in Q4 2026. Fiscal 2026 operating cash flow totaled approximately $822.2 million, up from roughly $726.3 million across the four reported quarters of fiscal 2025.
• Share repurchases reduced the share count: Q4 diluted weighted-average shares declined to 36.6 million from 38.4 million a year earlier, a reduction of roughly 4.5%. This provides ongoing per-share support when earnings stabilize.
• Dividend payments have increased: Quarterly dividends per share rose from $1.04 in fiscal 2025 to $1.10 in Q2 2026 and $1.16 in Q3 2026, indicating continued shareholder-return capacity.
• Debt declined modestly from the prior-year comparison: At May 31, 2026, total debt was approximately $1.39 billion, compared with about $1.43 billion at May 31, 2025, despite continued capital returns.
• Cash generation is being directed toward capital returns: In Q4 2026, FactSet repurchased $138.0 million of stock and paid $41.5 million in dividends. These actions may benefit shareholders but also contributed to a $54.8 million quarterly decline in cash and equivalents.
• Liquidity is influenced by deferred revenue: Current assets totaled $727.5 million at May 31, 2026, compared with current liabilities of $1.06 billion. The apparent current-liability deficit is partly associated with deferred revenue and other operating liabilities, which are not equivalent to conventional debt.
• Acquisition-related assets remain significant: Goodwill and intangible assets totaled approximately $3.15 billion at May 31, 2026, representing most of FactSet’s noncurrent assets. This supports the company’s acquired platform but increases exposure to future impairment charges.
• Profitability has deteriorated despite revenue growth: Fiscal 2026 quarterly net income fell from $152.6 million in Q1 to $121.1 million in Q4, while operating income declined from $192.1 million to $156.6 million over the same period.
• Higher costs and interest expense are pressuring earnings: Q4 operating costs and expenses increased to $478.1 million from $465.6 million a year earlier, while interest expense rose to $14.4 million from $12.9 million. Continued cost growth could limit the benefit of FactSet’s revenue expansion.

Overall, FactSet’s financial profile shows a durable recurring-revenue business with strong operating cash generation and aggressive shareholder returns. However, the recent pattern of rising revenue alongside falling margins and net income is a concern. Investors should watch whether the company can control operating costs, improve cash conversion and stabilize earnings before assuming that revenue growth will translate into stronger stock performance.