FactSet Research Systems Stock

FactSet Research Systems Inc. and its wholly-owned subsidiaries (FactSet) is a global financial digital platform and enterprise solutions provider with open and flexible products that drive the investment community to see more, think bigger and do its best work.

The company's platform delivers expansive data, sophisticated analytics, and flexible technology used by global financial professionals to power their critical investment workflows. As of August 31, 2023, the company had nearly 8,000 clients consisted of almost 190,000 investment professionals, including asset managers, bankers, wealth managers, asset owners, partners, hedge funds, corporate users and private equity and venture capital professionals. The company's revenues are primarily derived from subscriptions to its multi-asset class data and solutions powered by its connected content, referred to as its content refinery. The company's products and services include workstations, portfolio analytics and enterprise solutions.

The company drives its business based on its detailed understanding of its clients' workflows, which helps it to solve their most complex challenges. The company provides financial data and market intelligence on securities, companies, industries and people to enable its clients to research investment ideas, as well as to analyze, monitor and manage their portfolios. The company's on- and off-platform solutions span the investment life cycle of investment research, portfolio construction and analysis, trade execution, performance measurement, risk management and reporting. The company provides open and flexible technology offerings, including a configurable desktop and mobile platform, comprehensive data feeds, cloud-based digital solutions and application programming interfaces (APIs). The company's CUSIP Global Services (CGS) business supports security master files relied on by the investment industry for critical front, middle and back-office functions. The company's platform and solutions are supported by its dedicated client service team.

Segments

The company operates through three segments: the Americas, EMEA and Asia Pacific.

The Americas segment serves the company's clients throughout North, Central, and South America. In the Americas, the company has offices in 12 states in the United States (U.S.), including its corporate headquarters in Norwalk, Connecticut. The company also has offices in both Brazil and Canada.

The EMEA segment serves clients in Europe, the Middle East and Africa via offices in Bulgaria, England, France, Germany, Italy, Ireland, Latvia, Luxembourg, the Netherlands, Sweden and the United Arab Emirates.

The Asia Pacific segment serves clients in Asia and Australasia via office locations in Australia, China, Hong Kong Special Administrative Region (SAR) of China, India, Japan, the Philippines and Singapore.

For each of the company's segments, it executes its strategy through three workflow solutions: Research & Advisory; Analytics & Trading; and Content & Technology Solutions (CTS). CGS operates as part of CTS.

Business Strategy

The company's strategy is to build the leading open content and analytics platform and powerful enterprise solutions that deliver a differentiated advantage for its clients' success. By offering personalized digital products, the company strives to be a trusted partner and service provider, delivering relevant insights and research ideas tailored to its clients' specific business models.

To execute its strategy, the company has outlined the following key initiatives, such as expanding its digital platform; ensuring execution excellence; and fostering a growth mindset.

The company focuses on growing its global business through three strategically aligned geographic segments: the Americas, EMEA and the Asia Pacific. This approach allows the company to better manage resources, target solutions and interact with clients effectively. The company executed on its growth strategy during fiscal 2023 (year ended August 31, 2023) by offering data, products and analytical applications for three workflow solutions: Research & Advisory; Analytics & Trading; and CTS.

Research & Advisory

Research & Advisory delivers essential content and workflow solutions in one flexible platform for investment bankers, wealth advisors, buy and sell-side analysts, corporate users, portfolio managers and investment relationship professionals. The company's workstation, advisor dashboard, research management solutions (RMS), and FactSet for client relationship management (CRM) enable its clients to personalize and automate their workflows. These tools provide insight and efficiency for idea generation, company and market analysis, fundamental research, presentation building and distribution, and research management. The company's Research & Advisory solutions also offer global coverage, deep history, and transparency through proprietary and third-party sourced databases. These solutions provide deep company and sector-specific analyses, spanning the public and private markets. The company's solutions easily integrate with its clients' technology, offering additional flexibility through mobile, API, data feeds and web-based components. The company's RMS and advisory solutions also enable its wealth clients to provide market-leading support for their businesses, including home office, advisory, and client engagement work.

Analytics & Trading

Analytics & Trading offers comprehensive solutions to institutional asset managers and asset owners across the investment portfolio life cycle. The company's front office tools connect fundamental and quantitative research, portfolio construction, order management and trade execution. These outputs seamlessly integrate with advanced middle office workflows, including portfolio attribution, performance measurement, risk management, and reporting. The company's flexible and open framework supports both proprietary and third-party models, connected data, analytics and reporting. Whether deployed as a multi-asset class enterprise system or individual workflow components, its platform and APIs meet the diverse needs of multi-asset class investing. Additionally, the company's tools can integrate client holdings data with global market data to power its investment portfolio life cycle workflows.

CTS

CTS focuses on delivering data directly to the company's clients by leveraging its core content and technology. Clients can seamlessly discover, explore, and access organized and connected content via multiple delivery channels. Whether a client needs market data, company data, alternative data, customized client facing digital solutions or data elements uniquely identifying financial instruments, the company provides structured data through a variety of technologies, including APIs and cloud infrastructures. Through the company's data management solutions (DMS), it provides entity mapping and integration of client data. The company's symbology links and aggregates a diverse set of content sources to ensure consistency, transparency, and data integrity. The company empowers its clients to centralize, integrate, and analyze disparate data sources for faster and more cost-effective decision making. Given this integration capability, the company's clients can then choose their preferred cloud infrastructure, industry standard databases, programming languages and data visualization tools. Through CGS, the company is also the exclusive issuer of the Committee on Uniform Security Identification Procedures (CUSIP) and CUSIP International Number System (CINS) identifiers globally, acting as the official numbering agency for International Securities Identification Number (ISIN) identifiers in the United States and as a substitute number agency for more than 30 other countries.

Revised Organizational Approach

The company has a long-term view of its business and are committed to investing for growth and efficiency. Starting September 1, 2023, the beginning of the company's fiscal 2024 year, it revised its internal organization by firm type to better align with its clients, as follows:

Analytics & Trading will become 'Institutional Buyside', focusing on asset managers, asset owners, and hedge fund companies.

Research & Advisory will become two groups: (Dealmakers, focusing on banking and sell-side research, corporate, and private equity and venture capital workflows; and Wealth, focusing on wealth management workflows).

The company will discuss the results of its Partnerships and CGS groups in combination. Partnerships delivers solutions primarily to content providers, financial exchanges, and rating agencies, while CGS is the exclusive issuer of CUSIP and CINS identifiers globally.

The activities of CTS will be reassigned to Institutional Buyside, Dealmakers, Wealth, and Partnerships and CGS.

Institutional Buyside

Institutional Buyside offers multi-asset class solutions to global asset managers, asset owners and hedge fund professionals across the investment portfolio life cycle. It includes workflows for research analysts, portfolio managers, and traders in the front office, as well as performance analysts, risk managers, and client service and marketing professionals in the middle office. The company's front office on-platform solutions are designed for portfolio construction, research management, order management, and trade execution capabilities. The company's middle office on-platform solutions are designed for performance measurement, attribution, risk management, and reporting capabilities. In addition to its platform offerings, the company offers comprehensive off-platform content and technology solutions, including data feeds, APIs, and programmatic access for clients to engage with the company in the environment best suited to them.

Dealmakers

Dealmakers delivers content and workflow solutions in a flexible platform for investment bankers, sell-side research analysts, corporate users, private equity and venture capital professionals and investment relationship managers. The company provides comprehensive solutions to its clients, including workstations, data feeds, APIs, proprietary and third-party content, and productivity tools for Microsoft Office. The company also delivers firm-type tailored solutions for CRM and RMS for research authoring and publishing. These open and flexible products enable the company's clients to personalize and automate their workflows and to easily integrate them with their own technology. These tools are used to monitor investments, generate ideas, analyze companies and markets, perform fundamental research, and build and distribute presentations. The company's Dealmakers solutions also offer global coverage of public and private markets, deep history, and transparency through proprietary and third-party sourced databases.

Wealth

Wealth delivers comprehensive solutions to wealth management clients, including the company's web-based workstation, advisor dashboards, data feeds, APIs, proprietary and third-party content, and productivity tools for Microsoft Office. It also provides RMS for research authoring and publishing. The company's Wealth solution enables its clients to easily integrate its products into their CRM software and internally developed applications. Wealth clients use the company's advisory tools to provide market-leading support for their businesses, including home office, advisory, and client engagement work. The company continues to focus on expanding its content and increasing workflow efficiency for wealth-management firms.

Partnerships and CGS

Partnerships delivers solutions including off-platforms (feeds, APIs), workstations, and digital or analytics solutions to other firms in the financial services ecosystem including content providers, financial exchanges and rating agencies. CGS is the exclusive issuer of CUSIP and CINS identifiers globally. CGS also acts as the official numbering agency for ISIN identifiers in the United States and as a substitute ISIN agency for more than 30 other countries. The results of Partnerships and CGS will be discussed together.

FactSet Clients

Buy-side

Buy-side clients continue to shift toward multi-asset class investment strategies, where the company is well-positioned to be a partner of choice. Buy-side clients primarily include asset managers, wealth managers, asset owners, partners, hedge funds and corporate firms. These clients access the company's multi-asset class tools through its workstations, analytics & trading tools, proprietary and third-party content, data feeds, APIs and portfolio services. Buy-side clients accounted for 82% of the company's organic ASV as of August 31, 2023.

Sell-side

The company delivers comprehensive solutions to sell-side clients, including workstation, data feeds, APIs, proprietary and third-party content, productivity tools for Microsoft Office, web and mobile, and RMS for research authoring and publishing. The company's focus remains on expanding the depth of content offered and increasing workflow efficiency for sell-side firms. These firms primarily include broker-dealers, banking & advisory and private equity & venture capital firms. Sell-side clients accounted for 18% of the company's organic ASV as of August 31, 2023.

Client and User Additions

The company's total client count as of August 31, 2023 was 7,921, representing a net increase of 5.1%, or 383 clients compared to the prior year, mainly due to an increase in corporate clients, wealth management clients and partners.

As of August 31, 2023, there were 189,972 professionals using FactSet, representing a net increase of 5.6%, or 9,990 users compared to the prior year, mainly driven by an increase from the company's wealth management firms and sell-side users from its banking clients.

Competition

The company's largest competitors are Bloomberg L.P., Market Intelligence (an S&P Global business) and Refinitiv (a London Stock Exchange Group business). Other competitors and competitive products include online database suppliers and integrators and their applications, such as BlackRock Solutions, MSCI Inc. and Morningstar Inc.

Research and Product Development Costs

For the year ended August 31, 2023, the company incurred research and development (R&D) costs of $267.4 million.

Government Regulation

The company is subject to reporting requirements, disclosure obligations and other recordkeeping requirements of the Securities and Exchange Commission (SEC) and the various local authorities that regulate each location in which it operates. The company's P.A.N. Securities, LP subsidiary is a member of the Financial Industry Regulatory Authority, Inc. and is a registered broker-dealer under Section 15 of the Securities Exchange Act of 1934. P.A.N. Securities, LP, as a registered broker-dealer, is subject to Rule 15c3-1 under the Securities Exchange Act of 1934. The company claims exemption under Rule 15c3-3(k)(2)(i).

History

FactSet Research Systems Inc. was founded in 1978. The company was incorporated in 1984.