Financial data provider FactSet (NYSE: FDS) announced better-than-expected revenue in Q4 CY2025, with sales up 6.9% year on year to $607.6 million. The company expects the full year’s revenue to be around $2.44 billion, close to analysts’ estimates. Its non-GAAP profit of $4.51 per share was 3.5% above analysts’ consensus estimates.

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StockStory’s Take

FactSet’s fourth quarter drew a negative market reaction despite the company beating Wall Street’s revenue and non-GAAP profit expectations. Management highlighted that revenue gains were driven by strong adoption of AI-enabled products, expansion with key institutional clients, and traction in wealth management and banking segments. CEO Sanoke Viswanathan pointed to several large client wins, such as a mandate with a major investment manager for FactSet Vault and increased usage of AI-powered analytics, as evidence of the firm’s ability to gain share across core markets. However, operating margins declined compared to last year, a result management attributed to higher personnel and technology expenses as the company invests in product development and sales infrastructure.

Looking ahead, FactSet’s guidance reflects a focus on balancing continued investment in technology, data enrichment, and sales capabilities with operational discipline. Management emphasized that priorities include streamlining sales processes, accelerating development of AI-ready data solutions, and driving productivity through automation. CFO Helen Shan noted that increased technology investments will affect operating margins in the near term, but management expects these foundational initiatives to support sustainable growth and operating leverage over time. Viswanathan stated, “We are sharpening sales execution and ramping investments in infrastructure to position FactSet for long-term growth.”

Key Insights from Management’s Remarks

Management attributed the quarter’s revenue growth to accelerated adoption of AI-ready products, deeper client integration, and commercial execution improvements.

• AI-enabled product adoption: Management reported broad-based adoption of newly launched AI products, with quarterly user growth exceeding 45%. These solutions are now deeply embedded in client workflows across asset management, banking, and wealth, driving increased usage and customer retention.

• Sales and incentive restructuring: Leadership implemented new sales incentives and realigned compensation structures to emphasize new business development, cross-selling, and upselling. Early results include faster sales cycles and a stronger pipeline, especially among top global banks and consolidators.

• Client integration and workflow embedding: FactSet’s platform is increasingly integrated into clients’ core decision-making processes, evidenced by high-volume usage of FactSet query language and portfolio analytics. Management highlighted the platform’s role in powering valuation, performance, and risk reporting for leading global institutions.

• Segment diversification and geographic gains: The quarter saw growth across firm types, with notable strength in wealth (10% organic growth) and banking, as well as improved expansion in Asia Pacific and EMEA regions. Client count increased, led by corporate and wealth additions, and retention rates remained strong.

• Ongoing investment in infrastructure and content: FactSet continued to invest in upgrading its technology stack, cloud infrastructure, and proprietary data sets. This includes efforts to automate support functions—such as deploying a text-to-formula agent—and to accelerate third-party data ingestion, enabling broader content coverage without headcount increases.

Drivers of Future Performance

FactSet’s outlook is shaped by ongoing investment in AI, technology infrastructure, and sales enablement amid a focus on expanding data capabilities and workflow integration.

• Sustained technology and AI investment: Management plans to maintain elevated spending on technology modernization, cybersecurity, and AI-powered tools to support new product development and operational efficiency. These investments are intended to deepen FactSet’s competitive moat but will weigh on operating margins in the near term.

• Commercial excellence and sales productivity: Ongoing efforts to sharpen sales execution and streamline packaging are expected to boost new client acquisition and expansion within existing accounts. Management believes improved sales incentives and analytics-driven pipeline management will enhance top-line growth over time.

• Content differentiation and market expansion: FactSet is prioritizing development of proprietary data sets—including real-time, private market, and deep sector data—to meet evolving client needs. Management views growing demand for AI-ready data and workflow integration as opportunities to further entrench FactSet’s solutions with financial institutions globally.

Catalysts in Upcoming Quarters

In upcoming quarters, the StockStory team will monitor (1) the pace of adoption for FactSet’s AI-enabled analytics and workflow solutions, (2) progress in sales productivity and client expansion initiatives, and (3) the effects of technology and infrastructure investments on operating margins. Execution against these priorities, along with expansion of proprietary data offerings, will be key indicators of future performance.

FactSet currently trades at $275.28, down from $296.13 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free for active Edge members).

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