Analysts, portfolio managers, and investment bankers know FactSet Research Systems has the facts down pat. The company offers global financial and economic information for investment analysis. FactSet also offers software for use in downloading and manipulating the data. (Its products can be fully integrated with Microsoft applications such as Excel and PowerPoint.) Among the company's applications are tools for presentations, data warehousing, portfolio analysis, and report writing. Revenues are derived from month-to-month subscriptions to services, databases, and financial applications. More than 80% of revenue comes from investment managers; investment banking clients account for the rest.
About 30% of the company's revenues come from outside the US. Recent geographic growth efforts include the build out of new space in Paris and New York, as well as the continued expansion of offices in India and the Philippines. It opened its 24th office, located in Dubai, in 2011. In addition to those locations, FactSet has international offices in Australia, Germany, Italy, Japan, Hong Kong, and the Netherlands.
FactSet has managed to achieve several years of consecutive growth in profits and revenues, including in 2011, despite a weak economy. In 2011 the company reported a 13% growth in revenues due to a number of factors: broad-based growth across geographical segments; clients continued use of advanced applications such as Portfolio Analysis; growth in the number of clients and users; new functionality within FactSet that improves clients' workflows by consolidating multiple services into one platform; the expanded deployment of proprietary data; $17 million of incremental revenues from the acquisition of Market Metrics in 2010; an increase in the client retention rate; and annual price increases.
Net income grew by 14% in 2011 thanks to higher revenues offset by a 14% increase in selling, general and administrative costs due to higher travel and entertainment expenses, increased stock-based compensation from performance-based stock options, and a full year of expenses from the acquisition of Market Metrics.
The company's success is in part due to its focus on growing its proprietary content collection efforts, as well as investing in products and applications. Such efforts in 2011 include the launch of new reports and analytical tools, including Interactive Charting, FactSet Market Aggregates, Debt Capital Structure Analysis, and Idea Screening. In 2012 it added StreetAccount, a provider of news managment services for investment professionals, to its holdings.
FactSet has also benefitted from the launch of wireless applications to allow for mobile access to its offerings, as well as from its 2010 acquisition of Market Metrics, a US-based market research firm.
Concurrent with the growth of its products and services, the company has gained new clients and users both in the US and internationally. By 2011 more than 48,000 financial professionals from some 2,200 corporate clients used the company's services (compared with some 42,000 financial professionals from approximately 2,100 corporate clients the previous year). As a result of its growth, in 2011 FactSet made capital expenditures that included investing in computer equipment and other technology, and hiring more more consultants and software engineers.
In 2012 Brown Capital Group and T. Rowe Price Associates owned 10% and 9% of FactSet, respectively. – less