FactSet Reports Mixed First Quarter, but Operating Trajectory Mostly Intact

FactSet reported a mixed fiscal 2023 first quarter, with revenue of $505 million coming in below the FactSet consensus of $511 million while adjusted EPS of $3.99 topped the consensus estimate of $3.62. We attribute the earnings beat to elevated operating margins, which we expect will normalize in the coming quarters. Overall, we are not concerned about the revenue miss, as the first quarter is seasonally soft from a new sales perspective and we expect higher pricing to take effect next quarter. Organic annual subscription value grew 8.8%, a downtick from 9.3% in the prior quarter but still a healthy result. FactSet maintained its fiscal 2023 outlook for GAAP revenue of $2.100 billion-$2.115 billion, adjusted EPS of $14.50-$14.90, and adjusted operating margins of 34%-35%. On balance, there was little in the first-quarter earnings release that would alter our long-term view of the firm, and we will maintain our narrow moat rating and $365 fair value estimate.