FactSet Beats Quarterly Estimates but Softer 2027 Outlook Pressures Shares

FactSet Research Systems delivered stronger-than-expected fiscal fourth-quarter results on Wednesday, but the financial data provider's outlook for the coming year tempered the market's response to the earnings beat.

The company reported adjusted earnings of $4.52 per share, exceeding the analyst consensus estimate of $4.35. Revenue reached $635.5 million, also topping Wall Street expectations of approximately $629.7 million.

Quarterly revenue increased 7.1% from $593.5 million in the comparable period a year earlier, reflecting continued growth in the company's subscription-based financial information and analytics businesses.

Despite the better-than-anticipated quarterly performance, shares of FDS moved lower in premarket trading as investors focused on management's projections for fiscal 2027.

FactSet expects adjusted earnings of $19.25 to $19.65 per share for the new fiscal year. The midpoint of that range, $19.45, falls below the roughly $19.72 analysts had been expecting.

The company projected fiscal 2027 revenue between $2.60 billion and $2.63 billion. The midpoint of approximately $2.615 billion is slightly below the Wall Street consensus estimate of about $2.62 billion, leaving investors with a more restrained growth outlook despite the fourth-quarter beat.

Subscription growth remained a bright spot. Organic annual subscription value reached approximately $2.57 billion at the end of August, representing year-over-year growth of 7%. FactSet also reported that annual subscription value added from its artificial-intelligence offerings more than doubled during fiscal 2026.

Customer retention remained strong, with annual subscription value retention staying above 95%. The results indicate that demand for the company's financial data, analytics and technology remains durable even as FactSet continues investing in artificial intelligence and other new capabilities.

Profitability, however, showed some pressure. Adjusted operating margin declined to 33% in the fourth quarter from 33.8% a year earlier. Higher compensation expenses associated with subscription-growth incentives and increased technology spending contributed to the decline.

For fiscal 2027, management expects adjusted operating margin between 34.75% and 35.25%, suggesting the company anticipates some improvement as it balances continued investment with profitability.

FactSet also continued returning capital to shareholders. During the fourth quarter, the company distributed approximately $179 million through dividends and stock repurchases, including $138 million devoted to buying back shares and $41 million paid as dividends. The company has now increased its dividend for 27 consecutive years.

For investors in FDS, Wednesday's report presents a mixed picture: current operating results surpassed expectations and subscription growth remained healthy, but the fiscal 2027 forecast indicates that earnings growth may be somewhat more restrained than Wall Street had anticipated.