FactSet Research Systems Inc. (NYSE: FDS) stock crashes on disappointing outlook

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FactSet Research Systems Inc. (NYSE: FDS) stock fell over 11.4% on September 26th, 2019 (as of 12:52 pm GMT-4; Source: Google finance). FactSet guided to fiscal 2020 adjusted earnings per share to be in a range of $9.85-$10.15, missing the $10.52 Street estimate. The company guided to GAAP sales to be in the range of $1.49-$1.5 billion. For fiscal 2020, Organic ASV plus professional services is expected to increase in the range of $65 million and $85 million over FY 19, adjusted operating margin is expected to be in the range of 31.5% and 32.5% and FactSet’s annual effective tax rate is expected to be in the range of 17.0% and 17.5%.


For the fourth quarter of FY 19, Net cash provided by operating activities rose to $121.8 million compared with $106.3 million for the fourth quarter of 2018. Quarterly free cash flow was $95.3 million compared with $91.2 million a year ago, which is a rise of 4.6% primarily due to higher net income partially offset by higher capital expenditures. Capital expenditures rose to $26.5 million, compared with $15.1 million a year ago mainly due to new office space build out and technology upgrades.

Moreover, during the quarter, client count as of August 31, 2019 was 5,574, which is a net increase of 119 clients in the past three months, mainly due to an increase in corporate clients, wealth management and institutional asset managers. The count includes clients with ASV of $10,000 and above. User count grew by 3,871 to 126,822 in the past three months primarily due to an increase in banking and wealth management users. Annual client retention was 89% during the quarter.

FDS in the fourth quarter of FY 19 has reported the adjusted earnings per share of $2.61, while adjusted revenue growth of 5.3 percent to $364.28 million in the fourth quarter of FY 19. The revenue increase is mainly due to higher sales of analytics, content and technology solutions (CTS) and wealth management solutions. Organic revenues increased by 5.3% to $365.6 million during the fourth quarter of fiscal 2019 from the prior year period.

Additionally, FDS has repurchased 221,292 shares for $62.1 million during the fourth quarter under the Company’s existing share repurchase program. On June 2019, the company had approved an increase of $210 million to the existing share repurchase program. As of August 31, 2019, $239 million is currently available for share repurchases.

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