FactSet (FDS) reported fiscal Q4 2026 revenue of $634.7 million, up 6.3% year over year, while GAAP diluted EPS fell 15.4% to $3.41 from $4.03. Organic revenue rose 7.1% and adjusted diluted EPS increased 11.6% to $4.52, but higher compensation, restructuring, and technology costs compressed operating margins. Quarterly free cash flow was $177.3 million, down 0.5%.
Core Earnings Results
The quarter ended August 31, 2026, showed a clear divergence between revenue and GAAP profitability. GAAP operating income and net income declined despite higher revenue, while adjusted operating income increased modestly after excluding acquisition-related amortization and non-recurring items.
| Metric | Q4 FY2026 | Q4 FY2025 | Year-Over-Year Change |
|---|---|---|---|
| Revenue | $634.7 million | $596.9 million | +6.3% |
| Organic revenue | $635.5 million | $593.5 million | +7.1% |
| GAAP operating income / margin | $156.6 million / 24.7% | $177.3 million / 29.7% | -11.7% / -5.0 pp |
| Adjusted operating income / margin | $209.4 million / 33.0% | $201.7 million / 33.8% | +3.8% / -0.8 pp |
| Net income | $121.1 million | $153.6 million | -21.1% |
| GAAP diluted EPS | $3.41 | $4.03 | -15.4% |
| Adjusted diluted EPS | $4.52 | $4.05 | +11.6% |
| Free cash flow | $177.3 million | $178.1 million | -0.5% |
GAAP operating margin contracted primarily because of higher employee compensation, including one-time restructuring charges and incentives linked to annual subscription value, or ASV. The adjusted margin also declined as ASV-linked compensation and technology expenses outpaced the benefit from revenue growth.
Business and Regional Performance
Organic ASV reached $2.568 billion at August 31, increasing $168.2 million, or 7.0%, from the prior year. Annual ASV retention remained above 95%, while the average renewal contract length increased by approximately 30% during the quarter. FactSet also said the amount of AI solutions ASV added during fiscal 2026 more than doubled year over year.
APAC remained the fastest-growing region, while the Americas continued to account for most of FactSet’s revenue and the largest absolute revenue increase.
| Region | Q4 FY2026 Revenue | Organic Revenue Growth | Organic ASV Growth |
|---|---|---|---|
| Americas | $414.3 million | 6.7% | 7.1% |
| EMEA | $154.8 million | 6.6% | 5.2% |
| APAC | $65.6 million | 11.0% | 10.6% |
The regional figures indicate broad-based organic growth, although APAC expanded at a notably faster rate than the Americas and EMEA from a smaller revenue base.
Profitability, Cash Flow, and Balance Sheet
Higher expenses were the main constraint on quarterly profitability. In addition to compensation and restructuring costs, GAAP EPS faced a difficult comparison because the prior-year quarter included a gain on a business divestiture. A lower effective tax rate of 16.1%, compared with 18.7% a year earlier, provided a partial offset.
Quarterly operating cash flow declined 3.5% to $204.7 million, and free cash flow slipped 0.5% to $177.3 million. The full-year trend was stronger: fiscal 2026 operating cash flow increased 13.2% to $822.2 million, while free cash flow rose 14.6% to $707.5 million.
FactSet returned approximately $808 million to shareholders during fiscal 2026 through $644.0 million of share repurchases and $164.2 million of dividends. Those returns exceeded full-year free cash flow by approximately $100.5 million, while cash and cash equivalents declined to $233.3 million from $337.7 million. Total debt remained approximately $1.37 billion, although $499.4 million was classified as current debt at year-end. The company had $356.0 million remaining under its repurchase authorization.
Lower Share Count Lifted Adjusted EPS Despite Margin Compression
Adjusted net income increased only 4.1% to $160.9 million, but adjusted diluted EPS rose 11.6% to $4.52. The difference reflects a roughly 6.8% decline in diluted weighted-average shares to 35.6 million, alongside FactSet’s substantial repurchase activity.
This means the quarter’s adjusted EPS growth was driven by revenue gains and fewer shares rather than operating-margin expansion. Adjusted operating margin declined 80 basis points, so continued per-share earnings growth will depend in part on whether FactSet can better absorb compensation and technology spending.
Fiscal 2027 Guidance
FactSet introduced fiscal 2027 guidance that points to continued revenue growth and a recovery in both GAAP and adjusted operating margins. However, the organic ASV growth range of 5.0% to 6.5% is below fiscal 2026’s 7.0% result, indicating a slower subscription-growth assumption.
| Metric | FY2027 Guidance | FY2026 Actual | Implied Change |
|---|---|---|---|
| Organic ASV growth | 5.0%-6.5% | 7.0% | Slower growth range |
| Revenue | $2.600-$2.625 billion | $2.476 billion | Approximately +5.0% to +6.0% |
| GAAP operating margin | 31.0%-32.0% | 28.3% | +2.7 to +3.7 pp |
| Adjusted operating margin | 34.75%-35.25% | 34.5% | +0.25 to +0.75 pp |
| GAAP diluted EPS | $17.00-$17.50 | $14.57 | Approximately +16.7% to +20.1% |
| Adjusted diluted EPS | $19.25-$19.65 | $18.01 | Approximately +6.9% to +9.1% |
The outlook makes margin execution a central issue for fiscal 2027. FactSet is projecting higher profitability even as organic ASV growth moderates from its fiscal 2026 rate.
Risks Investors Should Monitor
- Cost and margin execution: Compensation tied to ASV, restructuring charges, and technology spending reduced both GAAP and adjusted margins in Q4. Fiscal 2027 guidance requires these pressures to ease relative to revenue.
- Slower subscription growth: The fiscal 2027 organic ASV growth range is below the 7.0% achieved in fiscal 2026, potentially limiting revenue momentum if growth approaches the bottom of the range.
- Cash use and capital returns: Fiscal 2026 shareholder returns exceeded free cash flow, contributing to a lower cash balance. Continued repurchases and dividends above internally generated cash could further reduce liquidity.
- Quarterly cash conversion: Q4 operating cash flow and free cash flow declined slightly despite revenue growth, making future cash conversion an important measure of earnings quality.
Summary
FactSet closed fiscal 2026 with broad organic revenue and ASV growth, led by APAC and supported by high retention and longer renewal contracts. Higher compensation, restructuring, and technology costs weakened GAAP profitability, while adjusted EPS benefited materially from a lower share count. For fiscal 2027, the main question is whether FactSet can deliver its projected margin recovery while organic ASV growth moderates and capital returns continue to draw on cash.
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