FactSet 2025 Q3 Earnings Mixed Results as Net Income Declines by 6.1%

FactSet (FDS) reported its fiscal 2025 Q3 earnings on Jul 03rd, 2025. FactSet revealed its Q3 2025 financial results with a 5.9% increase in GAAP revenue compared to the previous year, reaching $585.5 million. However, its earnings per share (EPS) fell short of expectations, reporting a GAAP diluted EPS of $3.87, which marks a 5.4% decline from last year. The company also reaffirmed its full-year 2025 guidance, with expectations for organic ASV growth between $100 million and $130 million and GAAP revenues in the range of $2.305 billion to $2.325 billion. The leadership transition will see Sanoke Viswanathan taking over as CEO in September 2025, a strategic move aimed at sustaining growth.

Revenue
FactSet's total revenue for the third quarter rose by 5.9% year-over-year, amounting to $585.52 million, compared to $552.71 million in the same period last year. This growth was driven by strong demand from wealth and institutional buy-side clients.

Earnings/Net Income
FactSet's EPS declined 5.5% to $3.92 in 2025 Q3 from $4.15 in 2024 Q3, reflecting increased operating expenses. The company's net income also decreased by 6.1% to $148.54 million in 2025 Q3, signaling challenges in maintaining profitability.

Post-Earnings Price Action Review
The strategy of buying FactSet shares when earnings exceed expectations and holding them for 30 days resulted in moderate returns but underperformed the market significantly. The strategy achieved a Compound Annual Growth Rate (CAGR) of 7.73%, trailing the benchmark by a substantial 82.40 percentage points. Additionally, it faced a maximum drawdown of -26.54%, indicating a challenging risk-return profile. The strategy's Sharpe ratio of 0.32 highlights the importance of risk management in such a volatile scenario, emphasizing the need for investors to carefully assess their investment strategies in light of market conditions.

CEO Commentary
F. Philip Snow, CEO of FactSet, expressed satisfaction with the company's third-quarter performance, highlighting that organic ASV growth of 4.5% year over year was driven by strong execution and product traction, particularly in data solutions and GenAI offerings. He acknowledged headwinds from clients optimizing costs and streamlining vendor relationships but remained optimistic about a promising pipeline for Q4. Snow emphasized the importance of the company's strategic investments in enterprise solutions and noted the solid foundation built on innovation and client trust, which positions FactSet well for continued success as it approaches a leadership transition.

Guidance
FactSet reaffirms its fiscal 2025 guidance, projecting GAAP revenues between $2.305 billion and $2.325 billion, with adjusted diluted EPS expected in the range of $16.80 to $17.40. The company anticipates organic ASV growth of $100 million to $130 million during the fiscal year, with GAAP operating margins forecasted between 32.0% and 33.0%.

Additional News
FactSet announced a significant leadership change, with Sanoke Viswanathan set to succeed Phil Snow as CEO in September 2025. This transition is part of the company's strategic efforts to strengthen its market position. FactSet has also approved a new share repurchase authorization of up to $400 million, available starting September 1, 2025, reflecting confidence in its future performance. Additionally, FactSet increased its quarterly dividend by 6% to $1.10 per share, marking the 26th consecutive year of dividend growth, underscoring its commitment to returning value to shareholders.