Organic Annual Subscription Value (ASV) increased by 4.5% to $2,296.9 million as of May 31, 2025. Concurrently, total client count grew by 9.7% to 8,811 and user count increased by 5.9% to 220,496, indicating successful organic growth initiatives and market penetration.

FactSet completed two significant acquisitions: LiquidityBook for $243.2 million (Feb 2025) and Irwin for $120.2 million (Nov 2024). These acquisitions enhance FactSet's cloud-native trading solutions, order management capabilities, and investor relations platforms, aligning with the strategy to deepen client workflow integration.

Management highlighted strategic pillars including expanding data offerings to serve as raw material for large language models and innovating with AI, exemplified by new AI-powered solutions for portfolio commentary and earnings call analysis. This focus aims to differentiate FactSet and drive growth.

Operating margin decreased to 33.2% in Q3 FY25 from 36.6% in Q3 FY24, primarily due to a 150 basis point increase in employee compensation costs (driven by higher variable compensation and base salaries) and a 100 basis point increase in intangible asset amortization, indicating challenges in cost management relative to revenue growth.

Management identified a material weakness in IT general controls (ITGCs) supporting revenues, accounts receivable, and deferred revenues processes. A remediation plan is being implemented, including increasing timely reviews of IT system changes and rationalizing access privileges, with expected completion in fiscal 2025.

FactSet announced the appointment of Sanoke Viswanathan as Chief Executive Officer, effective September 1, 2025, succeeding F. Philip Snow. This planned transition aims to ensure smooth leadership continuity and support the company's long-term business strategy.

Management concluded that disclosure controls and procedures were not effective as of May 31, 2025, due to material weaknesses in IT general controls. While a remediation plan is in place, the persistence of this weakness poses a risk to the accuracy and timeliness of financial reporting.

The company's outstanding floating rate debt under the 2025 Credit Facilities exposes it to interest rate risk. Although FactSet uses interest rate swap agreements to hedge a portion of this exposure, a hypothetical 25 basis point change in SOFR could still result in an approximate $1 million change to annual interest expense, highlighting residual risk.

As a global operator, FactSet is exposed to foreign currency exchange rate risk, which can impact financial condition and results of operations. While forward contracts are maintained to hedge projected operating expenses, a hypothetical 10% devaluation of the U.S. dollar could decrease operating income by an estimated $34 million for the nine months ended May 31, 2025.

FactSet's total client count grew by 9.7% to 8,811 and user count increased by 5.9% to 220,496 as of May 31, 2025, year-over-year. This expansion, particularly driven by acquisitions and growth in workstations and CGS, suggests a strengthening competitive position in the financial intelligence market.

Annual ASV retention remained strong at greater than 95%, and client retention improved to 91% as of May 31, 2025, compared to 90% in the prior year. These high retention rates indicate strong client satisfaction and the embedded nature of FactSet's solutions within client workflows, providing a competitive advantage.

FactSet's focus on 'Innovating with AI' through its AI Blueprint and 'Embedding deeper in client workflows' with new solutions for portfolio analytics and digital reporting aims to differentiate its offerings. This strategic direction is crucial for maintaining a competitive edge in the evolving financial technology landscape.

Cost of services increased by 13.7% to $280.7 million for the three months ended May 31, 2025, while revenues grew by 5.9%. As a percentage of revenues, cost of services increased by 330 basis points to 47.9%, primarily due to higher employee compensation costs and amortization of intangible assets, indicating a decline in operational efficiency.

Selling, general and administrative (SG&A) expenses increased by 7.1% to $110.6 million for the three months ended May 31, 2025. This rise was mainly driven by higher employee compensation costs (due to variable compensation and payroll taxes) and professional fees related to acquisition activities, contributing to overall expense growth.

Net employee headcount increased by 2.6% to 12,579, with approximately 67% of employees located in lower-cost centers of excellence (COEs) in the Philippines and India. While overall costs increased, this strategic allocation of headcount to COEs suggests an ongoing effort to manage operational costs and leverage global talent pools.

Capital expenditures increased by 25.3% to $74.8 million for the nine months ended May 31, 2025, primarily driven by higher capitalized costs related to the development of internal-use software. This indicates substantial ongoing investment in enhancing FactSet's core technology platform and product capabilities.

FactSet is actively leveraging its 'AI Blueprint' to introduce new AI-powered solutions, such as those for generating portfolio performance commentary and analyzing earnings call transcripts. This strategic focus on AI aims to enhance client workflows and differentiate FactSet's offerings in the market.

The acquisitions of LiquidityBook and Irwin bring advanced cloud-native trading solutions, a proprietary FIX network, and an integrated investor relations platform. These additions significantly bolster FactSet's technological capabilities and its ability to serve integrated workflow needs across the investment lifecycle.

FactSet repurchased $193.8 million of common stock during the nine months ended May 31, 2025, an increase from $171.9 million in the prior year period. The Board authorized an additional $400 million for share repurchases on June 17, 2025, signaling management's confidence in the company's intrinsic value and commitment to returning capital to shareholders.

The Board approved a 6% increase in the regular quarterly dividend from $1.04 to $1.10 per share in Q3 fiscal 2025, marking the 26th consecutive fiscal year of dividend increases. This consistent growth highlights FactSet's strong cash flow generation and commitment to shareholder returns.

FactSet entered into a new 2025 Credit Agreement, borrowing $500.0 million under a term loan facility and establishing a $1.0 billion revolving credit facility, primarily to repay existing debt. The company also voluntarily prepaid $62.5 million under the new term facility, demonstrating proactive debt management and capital structure optimization.

The 10-Q filing primarily focuses on financial performance, operations, and risks, with no specific sections or detailed disclosures dedicated to FactSet's environmental, social, or governance (ESG) initiatives, commitments, or progress beyond general operational descriptions.

FactSet acknowledges the SEC's new rules on climate-related disclosures (effective for future periods but currently stayed). The company is monitoring legal challenges and assessing the potential impact on its disclosures, indicating awareness of evolving regulatory expectations in the ESG space.

FactSet has determined that the OECD's Base Erosion and Profit Shifting Pillar Two rules, introducing a global minimum corporate tax, have had no material impact on its provision for income taxes for the three and nine months ended May 31, 2025. This suggests a neutral current financial impact from this governance-related tax development.

FactSet serves over 8,800 clients and 220,000 investment professionals globally, including institutional asset managers, hedge funds, and wealth managers across Americas, EMEA, and Asia Pacific segments. This broad client base indicates diversified exposure to various sub-sectors of the financial market.

FactSet is actively monitoring the SEC's new climate-related disclosure rules, which, despite being stayed, represent a significant industry trend towards increased transparency on ESG matters. This proactive stance indicates the company's awareness and preparation for potential future regulatory changes impacting the market environment.

Changes in foreign currency exchange rates resulted in a 0.1% net increase in revenues for the three months ended May 31, 2025, but a hypothetical 10% devaluation of the U.S. dollar could decrease operating income by an estimated $34 million for the nine months ended May 31, 2025. This highlights the ongoing sensitivity to global macroeconomic currency shifts.