FactSet grew revenue 6.4% to $622.9M and organic ASV 7.1% in fiscal Q3 2026, but restructuring, CEO awards and higher pay and AI computing costs cut GAAP operating margin to 26.7% and diluted EPS 9.6% to $3.50.
Revenue
$623M
+6.4% YoY
Net income
$127M
-14.7% YoY
Diluted EPS
$3.50
-9.6% YoY
Operating margin
26.7%
Overview
FactSet sells financial data and analytics software to investment firms on subscription. In its fiscal third quarter (three months ended May 31, 2026), subscription sales grew faster than they had a year earlier, but profit fell. Revenue rose 6.4% to $622.9 million. Organic ASV, FactSet's main forward-looking number, rose 7.1% to $2,485.6 million. It is the value of all subscriptions currently running over the next 12 months, with acquisitions, disposals and currency moves stripped out. Profit went the other way: GAAP net income fell 14.7% to $126.7 million and diluted EPS fell 9.6% to $3.50. GAAP means profit under standard accounting rules, with nothing excluded.
A large part of the profit decline came from one-off costs: $19.6 million of restructuring (reorganisation) charges and $4.3 million of one-time pay awards to the new CEO. But these don't explain all of it. Even on FactSet's own adjusted basis, which removes those items and the amortization of acquired intangibles, operating income fell 1.7%. The underlying cost base is growing faster than revenue.
Note on timing: FactSet's fiscal year ended August 31, 2026, but its fourth-quarter and full-year results are not out yet. The company has scheduled them for September 30, 2026. This analysis covers the most recent filed period, the Q3 fiscal 2026 10-Q, together with the Q3 earnings release (Exhibit 99.1 to the July 1, 2026 8-K).
Key metrics
Metric
Q3 FY2026
Q3 FY2025
YoY Change
Revenue
$622.9M
$585.5M
+6.4%
Organic revenue growth
7.0%
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Operating margin is the share of revenue left after the costs of running the business, before interest and tax. Free cash flow is operating cash flow minus spending on equipment and capitalised software.
Subscriptions: growth picked up, mostly from existing clients
Organic ASV rose $165.0 million over the 12 months to May 31, and $35.4 million in the quarter alone. The 10-Q says the growth came "from higher net sales to existing clients and, to a lesser extent, sales to new clients," mainly in data solutions and workstations (FactSet's desktop terminal product).
Client count rose 3.6% to 9,130, "mainly due to corporate clients." FactSet only counts clients paying at least $10,000 a year.
User count rose 12.4% to 247,766, "primarily due to wealth management users." Users are growing much faster than clients, so FactSet is putting more seats into firms it already serves, especially wealth advisers. Advisers are typically a lower-priced seat than a buy-side portfolio manager.
Retention: more than 95% of ASV renewed on an annual basis, the same as last year. Measured by number of clients, retention slipped to 90% from 91%. So the clients leaving are mostly small ones. That is a small change, but worth watching.
The release says enterprise renewals signed in Q3 were 30% longer on average, which locks in revenue for longer.
By region
Region
ASV (May 31, 2026)
Organic ASV growth
Q3 revenue
Q3 FY25 revenue
Organic revenue growth
Americas
$1,621.0M
7.2%
$407.2M
$380.5M
7.0%
EMEA
$608.1M
5.6%
$152.0M
$145.7M
5.3%
Asia Pacific
$255.2M
10.0%
$63.7M
$59.3M
10.5%
The Americas make up 65% of ASV and produced most of the dollar growth. Asia Pacific grew fastest, led by middle-office solutions (back-end tools for portfolio accounting and reporting). EMEA is the laggard. Its reported revenue grew 4.3%, below its 5.3% organic rate, because of a business FactSet sold at the end of fiscal 2025. That disposal reduced total company revenue growth by 0.6 points in the quarter.
Why margins fell: pay, restructuring, and AI computing costs
Total operating expenses rose 16.7%, far faster than revenue (+6.4%). The 10-Q gives the reasons as changes in cost relative to revenue (basis points; 100 bps = 1 percentage point):
Selling, general and administrative (SG&A) costs rose 430 bps to 23.2% of revenue. Employee compensation accounted for 290 bps of that: higher bonuses "due to financial achievement against targets," restructuring charges, and higher stock-based pay, including the CEO's one-time cash and equity awards. A loss on currency hedging contracts added another 50 bps.
Cost of services rose 220 bps to 50.1% of revenue. Compensation added 90 bps, "primarily driven by restructuring charges." Technology costs added 40 bps from "cloud-based hosting services, licensed software arrangements and AI token consumption," which is the cost of running AI models behind FactSet's products. Amortization added 40 bps as capitalised software development is now being expensed.
Currency moves, net of hedging, cut operating income by $3.4 million.
The gap between GAAP and adjusted results is unusually large this quarter. Adjusted operating income excludes $19.0M of intangible amortization, $19.6M of restructuring/severance, $4.3M of CEO make-whole compensation, $1.8M of deal costs and a $0.75M client bankruptcy charge. Adjusted EPS also excludes a $2.3M after-tax write-down of an equity investment. That is how adjusted EPS rose 6.1% while GAAP EPS fell 9.6%. Adjusted EPS growth also depends heavily on the smaller share count: diluted shares fell about 6% to 36.2 million, while adjusted net income was flat ($163.8M vs. $163.9M).
For the nine months, revenue rose 6.8% to $1,841.6M, while GAAP operating margin fell to 29.5% from 33.1% and diluted EPS fell to $11.16 from $11.53. Adjusted operating margin fell to 35.1% from 37.2%.
AI: wider use, higher costs, pricing effect not yet shown
FactSet's pitch is that trusted financial data becomes more valuable when clients plug it into AI tools. The quarter's evidence:
More than 90% of its Top 50 clients use four or more FactSet AI products.
New partnerships with Google Cloud, Finster AI and TIFIN.AI, plus an MCP server. MCP is a standard interface that lets outside AI agents query FactSet data directly.
The costs appear in the income statement as AI token consumption. The benefit does not yet appear as a separately reported revenue line. The filing doesn't discuss pricing pressure or AI-driven cancellations directly. The measures that would show them are the slip in client-count retention to 90% and the faster growth of lower-priced wealth seats. Neither shows heavy pressure yet, since dollar retention stayed above 95% and ASV growth sped up.
Cash returns and balance sheet
Q3 returned $243.4M to shareholders: $203.1M of buybacks (926,370 shares at an average $219.21) and $40.3M of dividends. The fiscal year-to-date total is $628.7M. Nine-month buybacks were $506.0M, against $193.8M a year earlier.
The quarterly dividend was raised by $0.06 to $1.16, the 27th consecutive year of increases. $494.0M of buyback authorisation remained.
Operating cash flow rose 12.1% in the quarter to $284.5M and 20.1% over nine months to $617.5M. Cash generation is growing even though reported profit fell.
Debt was $1,395M. The $500M of notes due March 1, 2027 are now a current liability. After the quarter, an August 28, 2026 amendment extended the $375M term loan to 2029, and extended the revolving credit line to 2031 while enlarging it to $1.5B. That leaves room to refinance the 2027 notes.
Outlook
FactSet reaffirmed the fiscal 2026 guidance it gave on March 31, 2026:
Guidance item
FY2026 range
Organic ASV growth
$130M – $160M
GAAP revenue
$2,450M – $2,470M
GAAP operating margin
29.5% – 31.0%
Adjusted operating margin
34.0% – 35.5%
GAAP diluted EPS
$14.85 – $15.35
Adjusted diluted EPS
$17.25 – $17.75
Subtracting the nine-month revenue of $1,841.6M, the guidance implies Q4 revenue of about $608M–$628M. The full-year GAAP operating income guidance of $729M–$760M implies $186M–$217M in Q4, up from $166M in Q3. So management expects the restructuring and other one-off charges to fall away and margins to recover in Q4.
The organic ASV guidance may be the more important number. The trailing 12-month gain was already $165.0M at May 31, above the top of the fiscal-year range. The fiscal year runs September to August, so the two aren't directly comparable. Even so, the full-year print on September 30 will show whether the second-half momentum held through FactSet's heaviest renewal season.
Takeaway: FactSet's revenue base is strengthening, with organic ASV growth up to 7.1% and dollar retention above 95%. But its cost base is growing faster: adjusted operating margin fell 2.8 points even after stripping out restructuring and CEO pay. Adjusted EPS grew only because of buybacks. The Q4 report needs to show both ASV growth holding up and margins returning to the guided 34–35.5% adjusted range. Otherwise the AI build-out is costing margin rather than adding to it.