FactSet's 2Q EPS Lags, Revs Up - Analyst Blog
20 Março 2013 - 10:21AM
Zacks
FactSet Research Systems Inc. (FDS) reported
second-quarter 2013 earnings per share of 89 cents, below the Zacks
Consensus Estimate of $1.13.
Revenue
FactSet reported total revenue of $213.1 million in the second
quarter of 2013, up 6.9% from $199.4 million in the year-ago
quarter. This includes $2.7 million contribution from StreetAccount
(Acquired on July 2012).
The company witnessed an increase in its client count, which
increased by 35 to reach a level of 2,436.
On the other hand, the number of users for FactSet declined by
150 sequentially, to a level of 49,455 professionals. Total clients
witnessed additions from the buy-side clients, which was offset to
a considerable extent by declines on the sell-side.
The U.S. revenues for the company were $2.7 billion, which
included a $146.0 million contribution from StreetAccount, up 7.0%
from the year-ago quarter. Moreover, the Non-U.S. revenues were
$67.1 million, up 7.0% compared with the year-ago quarter.
Annual Subscription Value
The company’s Annual Subscription Value (ASV) grew $17.3 million
in the reported quarter to $863.2 million. Of this total amount,
82% was derived from buy-side clients while the remainder was from
the sell-side firms, mostly conducting the M&A advisory work
and equity research.
Operating Results
FactSet’s revenue growth rate was slower than that of operating
expenses. This led to a 30 basis points decline in operating
margin. Operating margin was 26.3% in the quarter versus 33.6% in
the year-ago quarter. Operating expenses, excluding the non-cash
charge, were $157 million, up 7.0% year over year.
The increase resulted from higher compensation expense due to an
increase in headcount in the software engineering, consultant and
content collection, as well as new employees from StreetAccount,
which was offset to a considerable extent by lower computer
maintenance costs and a dip in the depreciation from computer
hardware.
Net income during the quarter came in at $44.5 million, down
4.9% from $46.7 million in the year-ago period. Quarterly earnings
per share were $1.00 versus $1.02 in the year-ago quarter. Adjusted
net income (excluding amortization of intangible assets from
acquisitions, but including stock-based compensation) of 89 cents
per share was below the year-ago quarter’s $1.02 per share.
Balance Sheet, Cash Flow
FactSet exited the quarter with $166.1 million in cash and cash
equivalents, compared with $210.7 million in the previous quarter.
The company has no long-term debt. The company generated cash flow
from operations of $46.4 million, down from $47.5 million in the
previous quarter.
Guidance
For the third quarter of fiscal 2013, revenues are expected
between $213 million and $216 million, while operating margin is
expected to hover around 33% and 34%. GAAP EPS should range between
$1.14 and $1.16.
Our Take
FactSet reported modest second-quarter 2013 results since
revenue grew on a year-over-year basis, but earnings per share
remained below the Zacks Consensus Estimate due to some unexpected
increase in operating expense. Although revenue grew on the back of
an increase in clients, number of users declined. The company
witnessed revenue growth in most of its business segments.
FactSet continues to launch new products and applications across
its segments with special emphasis on financial services to gain
more customers.
The company is offering new products and services on a regular
basis. However, adding new customers is still a challenge due to
the sluggish European market, which led to a slowdown in business.
Moreover, FactSet faces stiff competition from MSCI
Inc. (MSCI), which is also coming up with new solutions to
increase its market share.
FactSet carries a Zacks Rank #2 (Buy).
Investors can also consider other stocks in the technology space
such as:
- Lifelock Inc. (LOCK) Zacks Rank #2 (Buy)
- Nielsel Holdings (NLSN) Zacks Rank #2
(Buy)
FACTSET RESH (FDS): Free Stock Analysis Report
LIFELOCK INC (LOCK): Free Stock Analysis Report
MSCI INC-A (MSCI): Free Stock Analysis Report
NIELSEN HOLDNGS (NLSN): Free Stock Analysis Report
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