FactSet Research Systems, a provider of integrated financial information and analytical applications to the global investment community, today announced its results for the third quarter of fiscal 2010.
For the quarter ended May 31, 2010, revenues were $160.3 million, up 4% compared to the prior year. Operating income for the third quarter increased to $55.7 million, a rise of 4% from $53.3 million in the same period of fiscal 2009. Net income advanced to $38.7 million as compared to $38.5 million a year ago. Diluted earnings per share increased to $0.81, up 3% from $0.79 in the same period of fiscal 2009. Included in this quarter’s EPS were income tax benefits of $0.03 per share related to finalising prior years’ tax returns. In the third quarter last year, diluted earnings per share included income tax benefits of $0.06 per share primarily from repatriating foreign earnings to the US and finalising prior years’ tax returns.
“We are pleased with our progress this quarter as we’ve delivered solid growth across all our key metrics,” explains Philip Hadley, chairman and chief executive officer. “Our hard work and the investments we’ve made during the downturn are beginning to show results, just as the health of our clients has begun to improve.”
ASV advanced $12.3 million organically during the quarter. Including the impact from foreign currency, the increase was $11.8 million. ASV was $646 million at May 31, 2010, up 5% over the last year. Of this total, 82% is derived from buy-side clients and the remainder is from the sell-side firms who perform M&A advisory work and equity research. ASV at any given point in time represents the forward-looking revenues for the next 12 months from all services currently being supplied to clients.
Financial Highlights
ASV from FactSet’s US operations was $436.6 million and $209.8 million related to international operations.
US revenues were $108.6 million, up 3% from the year ago quarter.
Non-US revenues rose 5% to $51.7 million.
Operating margins expanded 20 basis points to 34.7%.
Quarterly free cash flow rose 4% to $66.1 million.
Free cash flow generated over the last 12 months was $187 million, up 22%.
Cash and investments in marketable securities were $225 million at May 31, 2010.
Accounts receivable decreased $12.1 million or 17% over the last 12 months.
The effective tax rate for the quarter was 30.7%. The components of the effective tax rate are 33.5% for the full fiscal 2010 year partially offset by income tax benefits of 2.8%.
Professionals using FactSet increased to 40,400, up 1,600 users.
Client count was 2,075 at May 31, a net increase of 23 clients during the quarter.
Annual client retention rate was greater than 95% of ASV and 89% of clients.
Portfolio Analytics (“PA”) 2.0 was deployed by 671 clients representing 5,979 users. During the past three months the number of PA users increased by 185, while the number of PA clients rose by 16.
Employee count at May 31, 2010 was 3,631, up 209 employees during the quarter, driven by the expansion of FactSet’s proprietary content operations.
Capital expenditures were $4.6 million, including $3.8 million for computer equipment and the remainder for office space expansion.
The quarterly dividend increased 15% from $0.20 to $0.23 per share.
For the second consecutive year, the Wall Street Journal partnered with FactSet to calculate its 2010 ranking of the best equity analysts.
On June 14, 2010, the Board of Directors approved a $150 million expansion to the existing share repurchase program. The Company repurchased 621,147 shares for $46.4 million during the third quarter. Including the expansion, $198 million remains authorised for future repurchases. Common shares outstanding at May 31, 2010 were 46.3 million. Repurchases will be made from time to time in the open market and privately negotiated transactions, subject to market conditions. No minimum number of shares to be repurchased has been fixed. There is no timeframe to complete the repurchase program and it is expected that share repurchases will be paid using existing and future cash generated by operations.
On June 1, 2010, FactSet acquired Market Metrics. Formed in 1996 and headquartered in Quincy, Massachusetts, Market Metrics is the leading market research firm in the US focused on advisor-sold investments and insurance products. Each year Market Metrics conducts more than 20,000 in-depth surveys of financial advisors, brokers, research analysts and gatekeepers. Leveraging this unique body of data, Market Metrics helps senior managers to understand better their competitive strengths and weaknesses, and how they can improve their relationships with customers and increase market share. Market Metrics currently has annual subscriptions of $16 million and is supported by 25 employees. The acquisition of Market Metrics is not expected to have a material impact on FactSet’s fiscal 2010 fourth quarter or fiscal 2011 diluted earnings per share.
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