Loading blog posts...
January 7, 2026 • 4 min read
For financial professionals and investors tracking the flow of market intelligence, FactSet Research Systems Inc. (FDS) is a household name. Competing in a high-stakes arena against giants like Bloomberg and LSEG (Refinitiv), FactSet provides the data and software workstations that power investment decisions globally.
We are diving into the numbers from their latest 10-Q filing for the first quarter of fiscal year 2026 (ended November 30, 2025). The goal is to peel back the layers of their income statement to understand not just how much money they made, but how efficiently they are converting subscription fees into profit amidst a competitive tech landscape.
To visualize how revenue flows through to the bottom line, take a look at the diagram below:
Please log in to view diagrams.
FactSet delivered a solid quarter in terms of sales, reporting $607.6 million in revenue, a 6.9% increase compared to the same period last year. This growth is a positive signal that demand for financial data and analytics remains robust despite broader economic uncertainties.
However, the story gets more complex further down the income statement. While revenue grew nearly 7%, Operating Income remained almost flat, inching up only 0.4% to $192.1 million. Consequently, the Operating Margin compressed from 33.6% last year to 31.6% this quarter.
Why the squeeze? The filing points to a specific culprit: technology transformation. Cost of Services jumped by 11.3%. FactSet is heavily investing in cloud-based hosting services and amortizing costs related to internal-use software development. Essentially, the company is spending significantly to modernize its infrastructure, which acts as a short-term drag on margins even as it potentially positions them for better scalability in the future.
For a subscription-based business like FactSet, the "Holy Grail" metric is Annual Subscription Value (ASV). This represents the forward-looking value of subscription contracts over the next 12 months.
Perhaps even more encouraging than the dollar figures is the operational expansion. FactSet isn't just squeezing more money out of existing clients; they are widening their net. The company reported a 9.1% increase in client count (reaching 9,003 clients) and a nearly 10% increase in user count. This growth was notably driven by their Wealth Management and Corporate sectors, suggesting their tools are finding traction beyond traditional institutional asset managers.
Geographically, the Americas remains the powerhouse of FactSet’s portfolio:
While the Americas segment drives the bulk of the revenue, it also saw a slight dip in operating income (down 4.0%), reinforcing the narrative that the costs of doing business—specifically personnel and technology investments—are rising in their primary market.
An interesting, albeit technical, disclosure in the filing relates to "Internal Controls." FactSet noted a continuing material weakness regarding IT general controls, specifically around user access and change management. While this hasn't resulted in misstated financials, it highlights the operational growing pains of a company that manages vast amounts of sensitive financial data. Management is actively remediating this through new hires and software solutions, but it is a reminder that even data giants struggle with IT governance.
FactSet’s Q1 2026 results paint a picture of a company in transition. The top-line health is undeniable, supported by strong user acquisition and steady subscription growth. However, the costs associated with cloud migration and software development are currently outpacing revenue growth, putting temporary pressure on operating margins. For investors, the key watch item will be whether these technological investments eventually yield the operational leverage and efficiency promised in the cloud era.
Last updated: January 7, 2026