FactSet (FDS) Q4 2026 earnings: record ASV gain, margin below guidance

FactSet (FDS) reported fiscal fourth-quarter 2026 earnings on September 30, 2026, through an 8-K results release and an earnings call, covering the quarter and fiscal year ended August 31, 2026. Subscription growth came in ahead of the company's own guidance, while operating margins kept falling [1][2]. Coming into the quarter, three questions mattered: whether subscription growth could hold near 7% against last year's record fourth quarter, whether AI-driven labor savings could outweigh restructuring and technology spending, and whether cash flow could fund buybacks and set up the refinancing of notes due in 2027 [3].

The answers split. Subscription growth delivered a clearly positive result, and margins were a negative one. On cash, the earlier view holds: fourth-quarter free cash flow was $177.3 million, flat with last year, and buybacks slowed to $138 million with no new net borrowing, but the company disclosed neither how it will refinance the notes nor a new repurchase authorization [1]. Overall, the acceleration in growth is confirmed, profit conversion still lags, and earnings-per-share growth came mainly from a lower share count [1].

FactSet sells financial data and analytics tools to asset managers, wealth managers, investment banks and corporations, and most of its revenue comes from subscriptions [4]. It serves more than 9,200 clients and 260,000 users [1]. The company measures growth with annual subscription value (ASV), the revenue that current subscriptions represent over the next 12 months.

FactSet Q4 2026 ASV growth beat a record base

Subscription growth did not slow against the high comparison. Organic ASV, which excludes currency and acquisition effects, was $2,568.2 million at August 31, 2026, up 7.0%, an increase of $168.2 million for the year [1]. That beat the top of the company's earlier full-year guidance of $130 million to $160 million [5]. Measured from $2,485.6 million at May 31, organic ASV rose by roughly $82.6 million in the fourth quarter [6], slightly above last year's record fourth-quarter increase of $81.8 million [3], and the company also called it a record [1].

The quality of growth held up. Annual ASV retention stayed above 95%, and average renewal contract length increased by about 30% [1]. Management said renewal pricing was preserved and that more than 10% of fourth-quarter ASV added came from new AI offerings [2]. Organic ASV grew 9% at both wealth management and dealmaker clients, and 5% at institutional buy-side clients [2].

The result raises the starting point for fiscal 2027 revenue, but its durability is not yet confirmed. The company guided fiscal 2027 organic ASV growth to 5.0% to 6.5%, and management said no contracts were pulled forward into fiscal 2026 [1][2]. The fourth-quarter increase is an approximate figure, and client-count retention was not disclosed this quarter.

Operating margin fell below the guidance floor as buybacks lifted EPS

Fourth-quarter margins declined again, and full-year GAAP operating margin missed guidance. Adjusted operating margin was 33.0% in the fourth quarter, compared with 33.8% a year earlier, and GAAP operating margin was 24.7%, compared with 29.7% [1]. For the full year, GAAP operating margin was 28.3%, below the low end of the 29.5% to 31.0% guidance range, and adjusted operating margin was 34.5%, inside its guidance range but below the midpoint [1].

Restructuring charges were the main reason GAAP margin fell. Restructuring and severance costs were $26.9 million in the fourth quarter and $46.2 million for the year [1], far above the $10 million to $12 million budget for discrete items in the company's March guidance [7]. Management attributed the lower adjusted margin to ASV-linked incentive compensation and technology expenses, explaining that incentives are expensed upfront while new subscriptions turn into revenue over time [1][2]. Management said headcount declined on a net basis but gave neither a headcount figure nor a savings amount [2].

Earnings per share beat expectations mainly because of the smaller share count. Adjusted diluted EPS was $4.52 in the fourth quarter, up 11.6%, and $18.01 for the year, above the $17.75 top of guidance [1]. Over the same quarter, adjusted net income grew only 4.1%, diluted weighted shares fell from 38.158 million to 35.572 million, and the effective tax rate declined from 18.7% to 16.1% [1]. The company views fiscal 2026 margins as a floor and guided fiscal 2027 adjusted operating margin to 34.75% to 35.25% [1][2].

Conclusion

The report confirms that FactSet's subscription growth has accelerated, but profit conversion has not kept pace. The growth side has been delivered, with AI offerings and longer enterprise agreements providing a source of incremental ASV that can be tracked [1][2]. Margin improvement still exists only in company guidance: revenue grew 6.7% for the year while adjusted operating income grew only 1.4% [1], and the end of restructuring and the realization of headcount savings cannot be verified until fiscal 2027. Cash generation remained steady, with full-year free cash flow of $707.5 million, up 14.6% [1]. The next tests are whether organic ASV growth holds above 6.5% in the first quarter of fiscal 2027, whether restructuring charges decline, and how FactSet refinances the $500 million of notes due in March 2027.

Sources

[1] FDS 8-K filed 2026-09-30 · Exhibit 99.1 Q4 and fiscal 2026 results release (September 30, 2026, FactSet, Form 8-K Exhibit 99.1 results release, https://www.sec.gov/Archives/edgar/data/1013237/000162828026063888/fdsq42026earningsrelease.htm) [2] FDS 4Q26 earnings call 2026-09-30 · Drillr structured summary (September 30, 2026, FactSet fiscal fourth-quarter 2026 earnings call, Drillr structured summary) [3] FDS fiscal 2025 results release 2025-09-18 · Q4 FY2025 highlights (September 18, 2025, FactSet, fiscal 2025 results release, https://www.sec.gov/Archives/edgar/data/1013237/000101323725000084/fdsq42025earningsrelease.htm) [4] FDS 10-K filed 2025-10-22 · business overview and client base (October 22, 2025, FactSet, Form 10-K annual report, https://www.sec.gov/Archives/edgar/data/1013237/000162828025045769/) [5] FDS 8-K filed 2026-07-01 · reaffirmed fiscal 2026 guidance (July 1, 2026, FactSet, Form 8-K results release, https://www.sec.gov/Archives/edgar/data/1013237/000162828026046338/fdsq32026earningsrelease.htm) [6] FDS 8-K filed 2026-07-01 · Q3 FY2026 highlights (July 1, 2026, FactSet, Form 8-K results release, https://www.sec.gov/Archives/edgar/data/1013237/000162828026046338/fdsq32026earningsrelease.htm) [7] FDS 8-K filed 2026-03-31 · updated fiscal 2026 guidance table (March 31, 2026, FactSet, Form 8-K results release, https://www.sec.gov/Archives/edgar/data/1013237/000162828026022203/)