FactSet’s third quarter was met with a negative market reaction, reflecting investor disappointment in light of strong revenue growth but lower-than-expected non-GAAP earnings. Management pointed to broad-based demand for analytics and data solutions, especially in wealth and asset management, as key drivers of growth. CEO Sanoke Viswanathan described FactSet’s client relationships as “deeply embedded,” emphasizing the company’s expanding role in supporting complex workflows for both buy-side and wealth clients. The company credited recent wins and product enhancements, particularly those related to AI integration, for improving client retention and driving new business.

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While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions From FactSet’s Q3 Earnings Call

• Alex Kramm (UBS Securities) asked about drivers of margin decline and whether investment levels are a new normal. CFO Helen Shan explained that most incremental expenses are for AI, data, and productivity, and expects future operating leverage from these investments.
• Faiza Alwy (Deutsche Bank) questioned FactSet’s strategy to become a leading AI-powered platform and the risks posed by new competitors. CEO Sanoke Viswanathan described a focus on client engagement and adapting the product roadmap to changing market dynamics.
• Ashish Sabadra (RBC Capital Markets) sought clarity on the sustainability of large wealth management deals. CRO Goran Skoko emphasized the effectiveness of the land-and-expand approach and ongoing opportunities for AI-driven expansion.
• Kelsey Zhu (Autonomous Research) asked about the realized impact of AI products versus guidance. Shan confirmed that AI-related growth landed at the midpoint of prior expectations and highlighted broader benefits beyond stand-alone products.
• Toni Kaplan (Morgan Stanley) inquired about the trajectory for operating margins versus prior medium-term targets. Shan stated that no changes to medium-term guidance were being made, and that margin improvement would depend on leveraging current productivity investments.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will closely monitor (1) the pace of adoption for FactSet’s new AI-powered features and workflow solutions, (2) the company’s ability to maintain margin discipline amid elevated technology and hiring costs, and (3) client retention and expansion in wealth management and asset management, especially as longer sales cycles persist. Execution on cross-segment integration and new product launches will also be key markers of progress.

FactSet currently trades at $287, down from $335.80 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free).

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