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FactSet rides on cost cuts to lift annual profit forecast

By Thomson Reuters Jun 21, 2024 | 8:29 AM

(Reuters) – FactSet Research Systems raised its forecast for annual adjusted profit on Friday, as the financial data and analytics company bets on cost cuts to counter sluggish revenue growth.

Shares of the company rose 4.2% to $425.45 before the bell.

The Norwalk, Connecticut-based company now expects its annual adjusted per-share earnings to be between $16 and $16.40, higher than its prior forecast of $15.60 to $16.

Higher interest rates and a lack of clarity about the Federal Reserve’s monetary easing path have prompted FactSet’s clients to cut back on spending on business data and analytics, forcing the company to look for avenues to trim expenses.

The company has reduced its real estate footprint by about a third, cut jobs and kept third-party data costs nearly flat.

FactSet’s total operating expenses fell 2.1% to $350.2 million in the third quarter ended May 31, compared with analysts’ average estimate of $366.5 million, according to LSEG data.

Meanwhile, FactSet now expects organic annual subscription value (ASV) plus professional services to grow between $85 million and $120 million during fiscal 2024, lower than its prior forecast of $110 million and $150 million.

ASV is a forward-looking indicator for sales in the next 12 months from subscription services currently being supplied to FactSet clients.

FactSet also cut its annual revenue forecast to be between $2.18 billion and $2.19 billion, down from its prior outlook of $2.20 billion and $2.21 billion.

On an adjusted basis, the company earned $4.37 per share, beating estimates of $3.90. Revenue rose 4.3% to $552.7 million.

Shares of the company have fallen 14.4% so far this year, compared with a 14.8% gain for the benchmark S&P 500 index.

(Reporting by Arasu Kannagi Basil in Bengaluru; Editing by Mohammed Safi Shamsi)