FactSet Research Systems: A Long-term Holding Opportunity

FactSet Research Systems (FDS) has consistently demonstrated strong financial performance and growth, making it an attractive long-term holding for investors. With a market capitalization of $18.336 billion and a PE ratio of 33.05, the company has shown resilience and adaptability in the face of market uncertainties. This article explores the key factors that contribute to FactSet's long-term investment appeal and its strategies for navigating future market challenges.



FactSet's revenue growth trajectory over the past decade has been impressive, with a compound annual growth rate (CAGR) of approximately 10%. This growth can be attributed to several key drivers, including strategic acquisitions, organic growth, expansion into new markets, and investment in technology and AI. These factors have contributed to the company's consistent revenue growth and strong financial performance.

Strategic acquisitions have played a significant role in FactSet's growth. The company has expanded its capabilities and client base through strategic acquisitions such as Portware, BISAM, and CUSIP Global Services. These acquisitions have allowed FactSet to offer a broader range of services and attract new clients, contributing to its revenue growth. For instance, the acquisition of CUSIP Global Services in 2022 drove growth in the partners business line, which grew at 6% (Phil Snow, CEO).

FactSet has also experienced organic growth in its revenue, driven by an increase in client count and user growth. In the first quarter of fiscal 2025, the company reported a 4.9% increase in GAAP revenues to $568.7 million, surpassing the analyst estimate of $565.13 million. This growth was driven by strong performance in wealth, asset owners, and institutional asset managers segments.

Expansion into new markets, such as the wealth management sector, has also contributed to FactSet's revenue growth. In fiscal 2024, the company added over 23,000 adviser desktops, representing over 30% growth in seat count, bringing its total wealth users to over 100,000. This expansion has helped the company maintain consistent growth despite the cyclical nature of the asset management sector.

Investment in technology and AI has positioned FactSet well for future growth. The company has made strategic investments in generative AI, which has started to drive incremental ASV and improve retention. FactSet expects generative AI to contribute 30-50 basis points to ASV growth and about 50 basis points to expenses in 2025 (Helen Shan, CFO). By embracing AI and technology, FactSet can enhance its service offerings, attract new clients, and retain existing ones.



FactSet's strategic initiatives, such as the launch of its Intelligent Platform and the acquisition of Irwin, are expected to enhance its service offerings and client engagement. The company's focus on integrating AI and expanding its Managed Services portfolio positions it well for future growth. FactSet's collaboration with J.P. Morgan Securities Services further strengthens its market presence by offering comprehensive performance, reporting, and portfolio analytics solutions.

In conclusion, FactSet Research Systems' long-term investment appeal is driven by its consistent revenue growth, strategic acquisitions, organic growth, expansion into new markets, and investment in technology and AI. The company's ability to navigate market uncertainties and maintain strong financial performance makes it an attractive long-term holding for investors. By staying adaptable and innovative, FactSet can continue to maintain its competitive edge in the capital markets industry and deliver value to its shareholders.