FACTSET RESEARCH SYSTEMS INC
For the period ended Feb 29, 2024. Filed Apr 3, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Feb 29, 2024 · Filed Apr 3, 2024
FDS$327.89-3.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2023-11-30; filed 2024-01-05.
0001013237-24-000009
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-02-29; filed 2024-04-03.
0001013237-24-000049
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 187 previous paragraphs and 212 current paragraphs.
103 unchanged; 67 reworded; 40 added; 14 removed; 3 previous and 2 current paragraphs rearranged.
Tables are not compared: 13 previous and 13 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (40)
Current report
Fiscal 2024 Second Quarter in Review
Current report
Revenues for the three months ended February 29, 2024 were $545.9 million, an increase of 6.0%. This growth in revenues was reflective of organic revenues growth of 6.0%, with organic revenues increasing to $546.1 million for the three months ended February 29, 2024. Revenues increased in all our segments, primarily in the Americas and, to a lesser extent, EMEA and Asia Pacific.
Current report
Revenues for the six months ended February 29, 2024 were $1,088.2 million, an increase of 6.7%. This growth in revenues of 6.7% was reflective of a 6.6% increase in organic revenues and a 0.1% benefit due to the effects of foreign currency exchange rate fluctuations. Organic revenues increased to $1,087.5 million for the six months ended February 29, 2024. Revenues increased in all our geographic segments, primarily in the Americas and, to a lesser extent, EMEA and Asia Pacific.
Current report
The increase in revenues was mainly due to increased sales to existing clients and, to a lesser extent, price increases to existing clients and new client sales, partially offset by existing client cancellations. Revenues increased due to higher demand for our workstations, data solutions, middle office solutions and CGS subscriptions.
Current report
Americas revenues increased 6.5% to $352.6 million during the three months ended February 29, 2024, compared with $331.1 million from the same period a year ago. This growth in revenues was reflective of organic revenues growth of 6.5%. The increase in revenues was primarily driven by higher demand for our workstations and, to a lesser extent, sales of our CGS subscriptions, data solutions and middle office solutions, as well as our annual price increase.
Current report
EMEA revenues increased 5.0% to $139.2 million during the three months ended February 29, 2024, compared with $132.5 million from the same period a year ago. This growth in revenues of 5.0% was reflective of a 4.8% increase in organic revenues and a 0.2% benefit due to the effects of foreign currency exchange rate fluctuations. The increase in revenues was primarily driven by an increase in sales of our data solutions and middle office solutions.
Current report
Asia Pacific revenues increased 5.2% to $54.1 million during the three months ended February 29, 2024, compared with $51.5 million from the same period a year ago. This growth in revenues of 5.2% was reflective of a 6.4% increase in organic revenues, partially offset by a decrease of 1.2% due to the effects of foreign currency exchange rate fluctuations. The increase in revenues was primarily driven by higher demand for our data solutions and workstations.
Current report
Revenues from the Americas increased 7.1% to $701.0 million during the six months ended February 29, 2024, compared with $654.5 million from the same period a year ago. This growth in revenues was reflective of organic revenues growth of 7.1%. The increase in revenues was driven by higher demand for our workstations and, to a lesser extent, sales of our middle office solutions, data solutions and CGS subscriptions, as well as our annual price increase.
Current report
Revenues from EMEA increased 5.9% to $278.7 million during the six months ended February 29, 2024, compared with $263.2 million from the same period a year ago. This growth in revenues of 5.9% was reflective of a 5.4% increase in organic revenues and a 0.5% benefit due to the effects of foreign currency exchange rate fluctuations. The increase in revenues was primarily driven by higher demand for our data solutions and middle office solutions.
Current report
Revenues from Asia Pacific increased 6.1% to $108.4 million during the six months ended February 29, 2024, compared with $102.2 million from the same period a year ago. This growth in revenues of 6.1% was reflective of a 7.0% increase in organic revenues, partially offset by a 0.9% decrease due to the effects of foreign currency exchange rate fluctuations. The increase in revenues was driven by higher demand for our workstations and data solutions.
Current report
Cost of services, when expressed as a percentage of revenues, was 46.7% for the three months ended February 29, 2024, relatively consistent with 46.8% for the three months ended February 28, 2023. This change was primarily due to revenues outpacing the increase in Cost of services and, when expressed as a percentage of revenues, lower computer-related expenses, partially offset by an increase in amortization of intangible assets and higher employee compensation costs.
Current report
•Amortization of intangible assets increased 70 basis points mainly from higher capitalized costs related to the development of our internal-use software.
Current report
Cost of services increased 8.3% to $506.8 million for the six months ended February 29, 2024, compared with $467.8 million in the same period a year ago, primarily due to an increase in employee compensation costs and, to a lesser extent, amortization of intangible assets, computer-related expenses and royalty fees.
Current report
•Employee compensation costs increased 40 basis points primarily due to higher annual base salaries, net of capitalization of compensation costs related to the development of our internal-use software, a restructuring charge and an increase in payroll taxes. The increase in annual base salaries was primarily driven by annual merit increases and a net headcount increase in Cost of services of 459, primarily located in our COEs.
Current report
•Contractor fees decreased 30 basis points primarily due to a reduction in data and technology consulting services.
Current report
SG&A increased 4.0% to $108.8 million for the three months ended February 29, 2024, compared with $104.6 million from the same period a year ago, primarily driven by higher bad debt expense and employee compensation costs.
Current report
•Employee compensation costs decreased by 30 basis points primarily due to growth of our revenues outpacing the increase in employee compensation costs and lower variable compensation. This decrease was partially offset by higher payroll taxes, a restructuring charge and an increase in benefit-related expenses.
Current report
•Bad debt expense increased by 50 basis points primarily due to the aging of accounts receivable.
Current report
SG&A expenses, when expressed as a percentage of revenues, were 19.3% for the six months ended February 29, 2024, a decrease of 140 basis points compared with the same period a year ago. This decrease was primarily due to lower employee compensation costs, a benefit from the net settlement of our foreign currency forward contracts and a decrease in professional fees, partially offset by an increase in bad debt expense.
Current report
•The net settlement of foreign currency forward contracts decreased SG&A by 50 basis points.
Current report
•Bad debt expense increased by 40 basis points primarily due to the aging of accounts receivable.
Current report
Operating margin increased to 33.3% during the three months ended February 29, 2024, compared with 32.9% in the prior year period. This increase was mainly due to growth in revenues and, when expressed as a percentage of revenues, a decrease in computer-related expenses, partially offset by an increase in amortization of intangible assets and bad debt expense.
Current report
Operating income increased 8.7% to $371.0 million for the six months ended February 29, 2024, compared with $341.1 million in the prior year period. This increase was primarily due to growth in revenues, partially offset by higher employee compensation costs and amortization of intangible assets. Foreign currency exchange rate fluctuations, net of hedge activity, decreased operating income by $0.4 million for the six months ended February 29, 2024 compared with the six months ended February 28, 2023.
Current report
Operating margin increased to 34.1% for the six months ended February 29, 2024, compared with 33.4% in the prior year period. This increase was primarily due to growth in revenues and, when expressed as a percentage of revenue, a benefit from the net settlement of our foreign currency forward contracts, a decrease in contractor related fees and professional fees, partially offset by higher bad debt expense and royalty fees.
Current report
Americas operating income increased 33.6% to $81.7 million during the three months ended February 29, 2024, compared with $61.2 million in the same period a year ago. This increase was primarily due to growth in revenues of 6.5%, partially offset by higher amortization of intangible assets and, to a lesser extent, an increase in bad debt expense.
Current report
•Amortization of intangible assets increased mainly from higher capitalized costs related to the development of our internal-use software.
Current report
•Bad debt expense increased primarily due to the aging of accounts receivable.
Current report
EMEA
Current report
EMEA operating income decreased 8.9% to $62.8 million during the three months ended February 29, 2024, compared with $68.9 million in the same period a year ago. This decrease was primarily due to higher employee compensation costs, partially offset by growth in revenues of 5.0%. Employee compensation costs increased mainly due to an increase in payroll taxes, a restructuring charge, higher annual base salaries and increased variable compensation. The increase in annual base salaries was mainly driven by annual merit increases, partially offset by a net headcount decrease of 67 employees.
Current report
Americas operating income increased 26.3% to $162.6 million during the six months ended February 29, 2024, compared with $128.7 million in the same period a year ago. This increase was primarily due to growth in revenues of 7.1%, partially offset by higher amortization of intangible assets, computer-related expenses, bad debt expense, royalty fees and employee compensation costs.
Current report
•Amortization of intangible assets increased mainly from higher capitalized costs related to the development of our internal-use software.
Current report
•Bad debt expense increased primarily due to the aging of accounts receivable.
Current report
•Employee compensation costs increased primarily due to a restructuring charge and an increase in stock-based compensation, partially offset by a decrease in variable compensation.
Current report
EMEA
Current report
EMEA operating income decreased 3.3% to $131.7 million during the six months ended February 29, 2024, compared with $136.3 million in the same period a year ago. This decrease was primarily due to higher employee compensation costs and, to a lesser extent, an increase in data costs, partially offset by growth in revenues of 5.9%.
Current report
•Employee compensation costs increased primarily due to higher annual base salaries and payroll taxes. The increase in annual base salaries was mainly driven by annual merit increases, partially offset by a net headcount decrease of 67 employees.
Current report
Asia Pacific operating income increased 0.7% to $76.7 million during the six months ended February 29, 2024, compared with $76.2 million in the same period a year ago. This increase was mainly due to growth in revenues of 6.1%, partially offset by higher employee compensation costs. Employee compensation costs increased primarily due to higher annual base salaries, driven mainly by annual merit increases and a net headcount increase of 628 employees, and, to a lesser extent, an increase in benefit expense, variable compensation and post-employment benefits.
Current report
(4)Related to the accelerated vesting of stock awards for certain employees.
Current report
2022 Credit Agreement
Current report
The following table provides a summary of our net cash flow activity for the periods presented:
Removed paragraphs (14)
Previous report
Fiscal 2024 First Quarter in Review
Previous report
The growth in revenues of 7.4% was reflective of a 7.2% increase in organic revenues and a 0.2% increase due to the effects of foreign currency exchange rate fluctuations.
Previous report
Americas
Previous report
Americas revenues increased 7.7% to $348.3 million during the three months ended November 30, 2023, compared with $323.4 million from the same period a year ago. The increased revenues were primarily driven by higher demand for our workstations and, to a lesser extent, our middle office solutions, data feeds and our CGS subscriptions. The growth in revenues of 7.7% was reflective of organic growth.
Previous report
EMEA revenues increased 6.7% to $139.6 million during the three months ended November 30, 2023, compared with $130.7 million from the same period a year ago. The increased revenues were primarily driven by higher sales in our middle office solutions and data feeds. The growth in revenues of 6.7% was reflective of a 6.1% increase in organic revenues and a 0.6% increase due to the effects of foreign currency exchange rate fluctuations.
Previous report
Asia Pacific
Previous report
Asia Pacific revenues increased 7.1% to $54.3 million during the three months ended November 30, 2023, compared with $50.7 million from the same period a year ago. The increased revenues were primarily driven by higher demand for our workstations. The growth in revenues of 7.1% was reflective of a 7.5% increase in organic revenues, partially offset by a decrease of 0.4% due to the effects of foreign currency exchange rate fluctuations.
Previous report
•The net settlement of derivative instruments for the three months ended November 30, 2023 compared with the three months ended November 30, 2022 resulted in a decrease in SG&A of 110 basis points.
Previous report
Operating margin increased to 34.9% during the three months ended November 30, 2023, compared with 34.1% in the prior year period. This increase was mainly due to growth in revenues and, when expressed as a percentage of revenues, a benefit from the net settlement of our derivative instrumentsand a decrease in professional fees, partially offset by higher computer-related expenses and royalty fees.
Previous report
Americas
Previous report
Americas operating income increased 19.7% to $80.8 million during the three months ended November 30, 2023, compared with $67.5 million in the same period a year ago. This increase was primarily due to growth in revenues of 7.7%, partially offset by higher computer-related expenses and, to a lesser extent, an increase in royalty fees.
Previous report
Asia Pacific
Previous report
2022 Swap Agreement
Previous report
The table below provides selected cash flow information:
Reworded paragraphs (67)
Previous wording
Our platform delivers expansive data, sophisticated analytics, and flexible technology used by global financial professionals to power their critical investment workflows. As of November 30, 2023, we had nearly 8,000 clients comprised ofmore than 207,000 investment professionals, including institutional asset managers, bankers, wealth managers, asset owners, partners, hedge funds, corporate users, and private equity and venture capital professionals. Our revenues are primarily derived from subscriptions to our multi-asset class data and solutions powered by our connected content, referred to as our "content refinery." Our products and services include workstations, portfolio analytics and enterprise solutions.
Current wording
Our platform delivers expansive data, sophisticated analytics, and flexible technology used by global financial professionals to power their critical investment workflows. As of February 29, 2024, we had more than 8,000 clients comprised of over 206,000 investment professionals, including institutional asset managers, bankers, wealth managers, asset owners, partners, hedge funds, corporate users, and private equity and venture capital professionals. Our revenues are primarily derived from subscriptions to our multi-asset class data and solutions powered by our connected content, referred to as our "content refinery." Our products and services include workstations, portfolio analytics and enterprise solutions.
Previous wording
As our chief operating decision maker ("CODM") continues to review our business and operating results based on our three segments, the Americas, EMEA and Asia Pacific, the realignment of our internal organization by firm types will not impact our segments for fiscal 2024. Refer to Note 15, Segment Information, in the Notes to the Consolidated Financial Statements included in Part I, Item 1. of this Quarterly Report on Form 10-Q for more information on our segments and CODM.
Current wording
As our chief operating decision maker ("CODM") continues to review our business and operating results based on our three segments, the Americas, EMEA and Asia Pacific, the realignment of our internal organization by firm type will not impact our segments for fiscal 2024. Refer to Note 15, Segment Information, in the Notes to the Consolidated Financial Statements included in Part I, Item 1. of this Quarterly Report on Form 10-Q for more information on our segments and CODM.
Previous wording
Revenues in the first quarter of fiscal 2024 were $542.2 million, an increase of 7.4% from the comparable prior year period. Revenues increased in all our segments, primarily in the Americas and, to a lesser extent, EMEA and Asia Pacific. The increased revenues were driven by higher demand for our workstations, middle office solutions, data feeds and our CGS subscriptions. The increased revenues reflected 7.2% growth in organic revenues during the first quarter of fiscal 2024 compared with the prior year period. Refer to Part I, Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, Non-GAAP Financial Measures, of this Quarterly Report on Form 10-Q for a definition of organic revenues and a reconciliation between revenues and organic revenues.
Current wording
Revenues in the second quarter of fiscal 2024 were $545.9 million, an increase of 6.0% from the comparable prior year period, reflective of organic revenues growth of 6.0%. Revenues increased in all our segments, primarily in the Americas and, to a lesser extent, EMEA and Asia Pacific. Revenues increased due to higher demand for our workstations, data solutions, CGS subscriptions and middle office solutions. Refer to Part I, Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, Non-GAAP Financial Measures, of this Quarterly Report on Form 10-Q for a definition of organic revenues and a reconciliation between revenues and organic revenues.
Previous wording
As of November 30, 2023, organic annual subscription value ("Organic ASV") plus Professional Services totaled $2,185.0 million, an increase of 7.1% over the prior year. Organic ASV increased in all our segments, with the majority of the increase related to the Americas and, to a lesser extent, EMEA and Asia Pacific. This increase was primarily driven by higher demand for our workstations and, to a lesser extent, our middle office solutions and data feeds. Refer to Part I, Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, Annual Subscription Value, of this Quarterly Report on Form 10-Q for the definitions of Organic ASV and Organic ASV plus Professional Services.
Current wording
As of February 29, 2024, organic annual subscription value ("Organic ASV") plus Professional Services totaled $2,209.5 million, an increase of 5.4% over the prior year. Organic ASV increased in all our segments, with the majority of the increase in the Americas and, to a lesser extent, EMEA and Asia Pacific. The Organic ASV increase was primarily driven by higher demand for our workstations, data solutions and middle office solutions. Refer to Part I, Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, Annual Subscription Value, of this Quarterly Report on Form 10-Q for the definitions of Organic ASV and Organic ASV plus Professional Services.
Previous wording
Operating margin increased to 34.9% during the three months ended November 30, 2023, compared with 34.1% in the prior year period. This increase was mainly due to growth in revenues and, when expressed as a percentage of revenues, a benefit from the net settlement of our derivative instrumentsand a decrease in professional fees, partially offset by higher computer-related expenses and royalty fees. Diluted earnings per common share ("Diluted EPS") for the three months ended November 30, 2023 was $3.84, an increase of 9.1%, compared with the prior year period.
Current wording
Operating margin increased to 33.3% during the three months ended February 29, 2024, compared with 32.9% in the prior year period. This increase was mainly due to growth in revenues and, when expressed as a percentage of revenues, a decrease in computer-related expenses, partially offset by an increase in amortization of intangible assets and bad debt expense. Diluted earnings per common share ("Diluted EPS") for the three months ended February 29, 2024 was $3.65, an increase of 8.0% compared with the prior year period.
Previous wording
We believe ASV reflects our ability to grow recurring revenues and generate positive cash flows and serves as a key indicator of the successful execution of our business strategy.
Current wording
We believe ASV reflects our ability to grow recurring revenues, generate positive cash flows and serves as a key indicator of the successful execution of our business strategy.
Previous wording
(1)Includes $22.2 million in Professional Services as of November 30, 2023.
Current wording
(1)Includes $20.3 million in Professional Services as of February 29, 2024.
Previous wording
As of November 30, 2023, Organic ASV plus Professional Services was $2,185.0 million, an increase of 7.1% compared with November 30, 2022. This increase in Organic ASV was primarily driven by higher sales to existing clients and, to a lesser extent, price increases to existing clients and sales to new clients, partially offset by existing client cancellations.
Current wording
As of February 29, 2024, Organic ASV plus Professional Services was $2,209.5 million, an increase of 5.4% compared with February 28, 2023. Organic ASV increased in all our segments, with the majority of the increase related to the Americas, and, to a lesser extent, EMEA and Asia Pacific. This increase in Organic ASV was primarily driven by higher sales to existing clients and, to a lesser extent, price increases to existing clients and sales to new clients, partially offset by existing client cancellations. These higher sales mainly related to increased demand for our workstations, data solutions and middle office solutions.
Previous wording
As of November 30, 2023, ASV from the Americas represented 64% of total ASV and was $1,395.0 million, an increase from $1,293.1 million as of November 30, 2022. Americas Organic ASV was $1,395.1 million as of November 30, 2023, a 7.9% increase from the prior year period. The Organic ASV increase in the Americas was primarily driven by higher demand for our workstations and, to a lesser extent, our middle office solutions, data feeds and CGS subscriptions.
Current wording
As of February 29, 2024, ASV from the Americas represented 65% of total ASV and was $1,415.4 million, an increase from $1,336.6 million as of February 28, 2023. Americas Organic ASV was $1,415.4 million as of February 29, 2024, a 5.9% increase from the prior year period. The Organic ASV increase in the Americas was primarily driven by higher demand for our workstations and, to a lesser extent, CGS subscriptions.
Previous wording
As of November 30, 2023, ASV from EMEA represented 26% of total ASV and was $552.4 million, an increase from $522.0 million as of November 30, 2022. EMEA Organic ASV was $552.2 million as of November 30, 2023, a 5.4% increase from the prior year period. The EMEA Organic ASV increase was primarily driven by an increase in our data feeds, middle office solutions and, to a lesser extent, higher demand for our workstations.
Current wording
As of February 29, 2024, ASV from EMEA represented 25% of total ASV and was $557.2 million, an increase from $529.3 million as of February 28, 2023. EMEA Organic ASV was $557.5 million as of February 29, 2024, a 5.0% increase from the prior year period. The EMEA Organic ASV increase was primarily driven by higher demand for our data solutions, middle office solutions and workstations.
Previous wording
As of November 30, 2023, ASV from Asia Pacific represented 10% of total ASV and was $215.0 million, an increase from $201.0 million as of November 30, 2022. Asia Pacific Organic ASV was $215.5 million as of November 30, 2023, an 8.0% increase from the prior year period. The Asia Pacific Organic ASV increase was primarily driven by higher demand for our workstations, data feeds and middle office solutions.
Current wording
As of February 29, 2024, ASV from Asia Pacific represented 10% of total ASV and was $215.9 million, an increase from $207.1 million as of February 28, 2023. Asia Pacific Organic ASV was $216.3 million as of February 29, 2024, a 5.6% increase from the prior year period. The Asia Pacific Organic ASV increase was primarily driven by higher demand for our data solutions, middle office solutions and workstations.
Previous wording
The buy-side and sell-side Organic ASV annual growth rates as of November 30, 2023 were 7.2% and 7.6%, respectively. Buy-side clients account for approximately 82% of our Organic ASV, compared to 83% in the prior year, and primarily include institutional asset managers, wealth managers, asset owners, partners, hedge funds and corporate firms. The remainder of our Organic ASV is derived from sell-side firms and primarily include broker-dealers, banking and advisory, and private equity and venture capital firms.
Current wording
The buy-side and sell-side Organic ASV annual growth rates as of February 29, 2024 were 5.6% and 5.5%, respectively. Buy-side clients account for approximately 82% of our Organic ASV, compared to 83% in the prior year, and primarily include institutional asset managers, wealth managers, asset owners, partners, hedge funds and corporate firms. The remainder of our Organic ASV is derived from sell-side firms and primarily include broker-dealers, banking and advisory, and private equity and venture capital firms.
Previous wording
Our total client count was 7,945 as of November 30, 2023, a net increase of 4.1% or 314 clients in the last 12 months, mainly due to an increase in corporate clients and, to a lesser extent, wealth management clients and partners.
Current wording
Our total client count was 8,020 as of February 29, 2024, a net increase of 3.8% or 290 clients in the last 12 months, mainly due to an increase in corporate clients and, to a lesser extent, wealth management clients and partners.
Previous wording
As of November 30, 2023, there were 207,083 professionals using FactSet, representing a net increase of 14.4% or 26,124 users in the last 12 months, primarily driven by an increase in wealth users, and, to a lesser extent, sell-side users from our banking clients.
Current wording
As of February 29, 2024, there were 206,478 professionals using FactSet, representing a net increase of 10.7% or 20,015 users in the last 12 months, primarily driven by an increase in wealth users and, to a lesser extent, banking clients.
Previous wording
Annual ASV retention was greater than 95% of ASV for the three months ended November 30, 2023 and November 30, 2022. When expressed as a percentage of clients, annual retention was approximately 90% for the three months ended November 30, 2023, compared with approximately 92% for the three months ended November 30, 2022.
Current wording
Annual ASV retention was greater than 95% of ASV for the period ended February 29, 2024 and February 28, 2023. When expressed as a percentage of clients, annual retention was approximately 90% for the period ended February 29, 2024, compared with approximately 92% for the period ended February 28, 2023.
Previous wording
As of November 30, 2023, our employee headcount was 12,515, an increase of 7.6% compared with 11,627 employees as of November 30, 2022. This growth in headcount was primarily due to our continued investment in our centers of excellence ("COEs"), particularly through expanding our talent pool in our India and Philippines locations. Our COEs account for approximately 68% of our employees.
Current wording
As of February 29, 2024, our employee headcount increased by 3.2% to 12,279, compared with 11,896 employees as of February 28, 2023. This headcount growth was primarily due to our continued investment in our centers of excellence ("COEs"), particularly through expanding our talent pool in our India and Philippines locations. Our COEs account for approximately 68% of our employees.
Previous wording
Our net headcount growth by segment as of November 30, 2023 compared to November 30, 2022 was 11.7% in Asia Pacific and 0.2% in the Americas, partially offset by a decrease of 1.0% in EMEA. As of November 30, 2023, we had 8,595 employees located in Asia Pacific, 2,500 in the Americas and 1,420 in EMEA.
Current wording
As of February 29, 2024 compared to February 28, 2023, our net headcount growth in Asia Pacific was 8.0%, while the Americas and EMEA experienced a net headcount decrease of 7.0% and 4.6%, respectively. As of February 29, 2024, we had 8,519 employees located in Asia Pacific, 2,362 in the Americas and 1,398 in EMEA.
Previous wording
For an understanding of the significant factors that influenced our performance for the three months ended November 30, 2023 and November 30, 2022, the following discussion should be read in conjunction with the Consolidated Financial Statements and related Notes presented in Part I, Item 1. in this Quarterly Report on Form 10-Q.
Current wording
For an understanding of the significant factors that influenced our performance for the three and six months ended February 29, 2024 and February 28, 2023, the following discussion should be read in conjunction with the Consolidated Financial Statements and related Notes presented in Part I, Item 1. in this Quarterly Report on Form 10-Q.
Previous wording
Revenues for the three months ended November 30, 2023 were $542.2 million, an increase of 7.4%. The increase in revenues was primarily driven by increased sales to existing clients and, to a lesser extent, price increases to existing clients and sales to new clients, partially offset by existing client cancellations. Revenues increased in all our segments, primarily from the Americas and, to a lesser extent, EMEA and Asia Pacific. The increased revenues was driven by higher demand for our workstations, middle office solutions, data feeds and our CGS subscriptions. Organic revenues increased to $541.4 million for the three months ended November 30, 2023, a 7.2% increase over the prior year period.
Current wording
The increase in revenues was driven by increased sales to existing clients and, to a lesser extent, price increases to existing clients and sales to new clients, partially offset by existing client cancellations. Revenues increased due to higher demand for our workstations, data solutions, CGS subscriptions and middle office solutions.
Previous wording
Cost of services is mainly comprised of employee compensation costs and also includes expenses related to data costs, computer-related expenses, amortization of identifiable intangible assets, royalty fees, client-related communication costs and computer depreciation.
Current wording
Cost of services is mainly comprised of employee compensation costs and also includes expenses related to data costs, computer-related expenses, amortization of intangible assets, royalty fees, client-related communication costs and computer depreciation.
Previous wording
Cost of services increased 10.8% to $251.6 million for the three months ended November 30, 2023, compared with $227.0 million for the same period a year ago, primarily due to an increase in employee compensation costs and computer-related expenses.
Current wording
Cost of services increased 6.0% to $255.1 million for the three months ended February 29, 2024, compared with $240.8 million for the same period a year ago, primarily due to an increase in employee compensation costs and, to a lesser extent, amortization of intangible assets, partially offset by a decrease in computer-related expenses.
Previous wording
•Computer-related expenses increased 80 basis points primarily due to higher spending related to cloud-based hosting services and licensed software arrangements.
Current wording
•Computer-related expenses decreased 80 basis points primarily due to lower spending related to cloud-based hosting services and a reduction in third-party vendor costs as projects are leveraging internal resources, partially offset by an increase in costs related to licensed software arrangements.
Previous wording
•Employee compensation costs increased by 50 basis points primarily due to higher annual base salaries, net of capitalization of compensation costs related to the development of our internal-use software, and variable compensation. The increase in annual base salaries was primarily driven by annual merit increases and a net headcount increase in Cost of services of 869 employees, primarily located in our COEs.
Current wording
•Employee compensation costs increased by 30 basis points primarily due to a restructuring charge and higher annual base salaries, net of capitalization of compensation costs related to the development of our internal-use software, partially offset by a decrease in variable compensation costs. The increase in annual base salaries was primarily driven by annual merit increases and a net headcount increase in Cost of services of 459 employees, primarily located in our COEs.
Previous wording
Cost of services, when expressed as a percentage of revenues, was 46.4% for the three months ended November 30, 2023, an increase of 140 basis points over the prior year. This increase was primarily due to higher computer-related expenses, employee compensation costs and royalty fees. When expressed as a percentage of revenues:
Current wording
Cost of services, when expressed as a percentage of revenues, was 46.6% for the six months ended February 29, 2024, an increase of 70 basis points compared with the same period a year ago. This increase was primarily due to higher employee compensation costs and royalty fees, partially offset by lower contractor fees.
Previous wording
•Royalty fees increased by 30 basis points primarily driven by an increase in both CGS sales and the applicable royalty rate.
Current wording
•Royalty fees increased 30 basis points due to an increase in both CGS sales and the applicable royalty rate.
Previous wording
SG&A expenses, when expressed as a percentage of revenues, were 18.6% for the three months ended November 30, 2023, a decrease of 230 basis points over the prior year period. This decrease was primarily driven by the net settlement of our derivative instruments, lower employee compensation costs and professional fees. When expressed as a percentage of revenues:
Current wording
SG&A, when expressed as a percentage of revenues, was 19.9% for the three months ended February 29, 2024, a decrease of 40 basis points compared with the same period a year ago. This decrease was primarily driven by revenues outpacing the increase in SG&A and, when expressed as a percentage of revenues, lower employee compensation costs, partially offset by higher bad debt expense.
Previous wording
SG&A expenses decreased 4.6% to $100.7 million for the three months ended November 30, 2023, compared with $105.6 million from the same period a year ago, primarily driven by the net settlement of our derivative instruments and a decrease in professional fees.
Current wording
SG&A expenses decreased 0.3% to $209.5 million for the six months ended February 29, 2024, compared with $210.2 million for the same period a year ago, primarily driven by a benefit from the net settlement of our foreign currency forward contracts, partially offset by higher bad debt expense and employee compensation costs.
Previous wording
•Employee compensation costs decreased by 70 basis points primarily due to growth of our revenues outpacing the increase in employee compensation costs. This decrease was also driven by the release of certain restructuring and related payroll tax accruals, partially offset by higher variable compensation and annual base salaries. The increase in annual base salaries was primarily driven by annual merit increases, partially offset by a shift of employees to lower cost locations.
Current wording
•Employee compensation costs decreased by 50 basis points, primarily due to growth of our revenues outpacing the increase in employee compensation costs, partially offset by higher annual base salaries and stock-based compensation expense. The increase in annual base salaries was primarily driven by annual merit increases, partially offset by a net headcount decrease in SG&A of 76 employees.
Previous wording
•Professional fees decreased by 40 basis points primarily due to transition costs related to the CGS acquisition incurred during the prior year period.
Current wording
•Professional fees decreased by 30 basis points primarily due to transition costs related to the CGS acquisition incurred during the prior year period.
Previous wording
Operating income increased 10.0% to $189.0 million for the three months ended November 30, 2023, compared with $171.9 million in the prior period. This increase was primarily driven by growth in revenues, partially offset by higher employee compensation costs and computer-related expenses. Foreign currency exchange rate fluctuations, net of hedge activity, increased operating income by $1.9 million for the three months ended November 30, 2023 compared with the three months ended November 30, 2022.
Current wording
Operating income increased 7.5% to $181.9 million for the three months ended February 29, 2024, compared with $169.3 million in the prior year period. This increase was primarily driven by growth in revenues and a decrease in computer-related expenses, partially offset by higher employee compensation costs, amortization of intangible assets and bad debt expense. Foreign currency exchange rate fluctuations, net of hedge activity, decreased operating income by $2.3 million for the three months ended February 29, 2024 compared with the three months ended February 28, 2023.
Previous wording
Asia Pacific operating income increased 6.2% to $39.3 million during the three months ended November 30, 2023, compared with $37.0 million from the prior year. This increase was mainly due to growth in revenues of 7.1%, partially offset by higher employee compensation costs. Employee compensation costs increased primarily due to higher annual base salaries, variable compensation and post-employment benefits. The increase in annual base salaries was mainly driven by annual merit increases and a net headcount increase of 897 employees.
Current wording
Asia Pacific operating income decreased 4.4% to $37.4 million during the three months ended February 29, 2024, compared with $39.1 million in the same period a year ago. This decrease was mainly due to higher employee compensation costs, partially offset by growth in revenues of 5.2%. Employee compensation costs increased primarily due to higher annual base salaries. The increase in annual base salaries was mainly driven by annual merit increases and a net headcount increase of 628 employees.
Previous wording
•Computer-related expenses increased primarily due to higher spending related to cloud-based hosting services and licensed software arrangements.
Current wording
•Computer-related expenses increased primarily due to higher spending related to licensed software arrangements and our cloud-based hosting services.
Previous wording
EMEA operating income increased 2.3% to $68.9 million during the three months ended November 30, 2023, compared with $67.3 million in the same period a year ago. This increase was primarily due to growth in revenues of 6.7%, partially offset by an increase in employee compensation costs and data costs. Employee compensation costs increased primarily due to higher annual base salaries from annual merit increases, partially offset by a net headcount decrease of 14 employees. Data costs increased compared to the three months ended November 30, 2022 as the prior year period included the release of certain accruals related to the successful resolution of exchange audits that reduced data costs.
Current wording
•Data costs increased as the prior year period included the release of certain accruals related to the successful resolution of exchange audits.
Previous wording
Our effective tax rate for the three months ended November 30, 2023 was lower than the applicable U.S. corporate income tax rate mainly due to a net tax benefit from the employee exercise of stock options, research and development ("R&D") tax credits and utilization of foreign tax credits, partially offset by our net state taxes. For the three months ended November 30, 2022, our effective tax rate was lower than the applicable U.S. corporate income tax rate mainly due to R&D tax credits, a foreign derived intangible income ("FDII") deduction and a net tax benefit from the employee exercise of stock options.
Current wording
Our effective tax rate for the three and six months ended February 29, 2024 was lower than the applicable U.S. corporate income tax rate mainly due to a net tax benefit from the employee exercise of stock options, research and development ("R&D") tax credits and utilization of foreign tax credits, partially offset by our state taxes. For the three and six months ended February 28, 2023, our effective tax rate was lower than the applicable U.S. corporate income tax rate mainly due to R&D tax credits, a foreign derived intangible income ("FDII") deduction and a net tax benefit from the employee exercise of stock options.
Previous wording
Our effective tax rate for the three months ended November 30, 2023 was higher than for the three months ended November 30, 2022 due mainly to a reduction in the benefit from employee exercise of stock options, as well as a higher overall foreign tax rate, partially offset by increased utilization of foreign tax credits.
Current wording
Our effective tax rate for the three months ended February 29, 2024 was higher than for the three months ended February 28, 2023, mainly driven by higher pretax income at applicable statutory tax rates and a higher overall foreign tax rate, partially offset by an increase in the exercise of stock options and increased utilization of foreign tax credits.
Previous wording
Net income increased 8.6% to $148.6 million and Diluted EPS increased 9.1% to $3.84 for the three months ended November 30, 2023 compared with the same period a year ago. The increase in Net income and Diluted EPS, when compared to the prior year period, was primarily due to higher operating income, partially offset by an increase in the provision for income taxes.
Current wording
The increase in Net income and Diluted EPS for the three and six months ended February 29, 2024, compared to the respective prior year period, was primarily driven by higher operating income, partially offset by an increase in the provision for income taxes.
Previous wording
To supplement the financial measures prepared in accordance with generally accepted accounting principles in the United States ("GAAP"), we use non-GAAP financial measures including organic revenues, adjusted operating income, adjusted operating margin, adjusted net income, EBITDA and adjusted Diluted EPS. The reconciliations from our financial measures calculated and presented in accordance with GAAP to these non-GAAP financial measures are shown in the tables below. These non-GAAP financial measures should not be considered in isolation from, as a substitute for, or superior to, financial measures reported in accordance with GAAP. Moreover, these non-GAAP financial measures have limitations in that they do not reflect all the items associated with the operations of our business as determined in accordance with GAAP. Other companies may calculate similarly titled non-GAAP financial measures differently than we do, limiting the usefulness of those measures for comparative purposes.
Current wording
To supplement the financial measures prepared in accordance with generally accepted accounting principles in the United States ("GAAP"), we use non-GAAP financial measures including organic revenues, adjusted operating income, adjusted operating margin, adjusted net income, EBITDA, adjusted EBITDA and adjusted Diluted EPS. The reconciliations from our financial measures calculated and presented in accordance with GAAP to these non-GAAP financial measures are shown in the tables below. These non-GAAP financial measures should not be considered in isolation from, as a substitute for, or superior to, financial measures reported in accordance with GAAP. Moreover, these non-GAAP financial measures have limitations in that they do not reflect all the items associated with the operations of our business as determined in accordance with GAAP. Other companies may calculate similarly titled non-GAAP financial measures differently than we do, limiting the usefulness of those measures for comparative purposes.
Previous wording
The table below provides an unaudited reconciliation of operating income, operating margin, net income and Diluted EPS to adjusted operating income, adjusted operating margin, adjusted net income, EBITDA and adjusted Diluted EPS. Adjusted operating income and margin, adjusted net income, and adjusted Diluted EPS exclude the impact of acquisition-related intangible asset amortization and non-recurring items. EBITDA excludes interest expense, provision for income taxes and depreciation and amortization.
Current wording
The table below provides an unaudited reconciliation of Operating income, operating margin, Net income and Diluted EPS to adjusted operating income, adjusted operating margin, adjusted net income, EBITDA, adjusted EBITDA and adjusted Diluted EPS. Adjusted operating income and margin, adjusted net income, and adjusted Diluted EPS exclude the impact of acquisition-related intangible asset amortization and non-recurring items. EBITDA and adjusted EBITDA represent earnings before interest expense, provision for income taxes and depreciation and amortization, while adjusted EBITDA further excludes non-recurring non-cash expenses.
Previous wording
(1)Related to acquisition and integration costs of the CGS acquisition.
Current wording
(1)Related to integration costs of the CGS acquisition.
Previous wording
(3)For purposes of calculating Adjusted net income and Adjusted Diluted EPS, the three months ended November 30, 2023 and November 30, 2022 were taxed at an adjusted tax rate of 28.7% and 13.5%, respectively.
Current wording
(3)For purposes of calculating adjusted net income and adjusted Diluted EPS, the three months ended February 29, 2024 and February 28, 2023 were taxed at an adjusted tax rate of 24.6% and 16.9%, respectively, and the six months ended February 29, 2024 and February 28, 2023 were taxed at an adjusted tax rate of 26.0% and 15.0%, respectively.
Showing the first 40 of 67 pairs. Open the source sections for the rest.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
Our effective tax rate for the six months ended February 29, 2024 was higher than for the six months ended February 28, 2023, mainly driven by higher pretax income at applicable statutory tax rates and a higher overall foreign tax rate, partially offset by increased utilization of foreign tax credits.
Current report — wording carried from elsewhere
On March 1, 2024, we entered into an interest rate swap agreement ("2024 Swap Agreement") to hedge a portion of our outstanding floating SOFR debt with a fixed interest rate of 5.145%. Refer to Note 5, Derivative Instruments, in the Notes to the Consolidated Financial Statements included in Part I, Item 1. of this Quarterly Report on Form 10-Q, for more information on the 2024 Swap Agreement.
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
Organic ASV increased in all our segments, with the majority of the increase related to the Americas, and, to a lesser extent, EMEA and Asia Pacific. This increase was primarily driven by higher demand for our workstations and, to a lesser extent, our middle office solutions and data feeds.
Previous report — wording carried elsewhere
On March 1, 2022 we completed a public offering of $500.0 million aggregate principal amount of 2.900% Senior Notes due March 1, 2027 (the "2027 Notes") and $500.0 million aggregate principal amount of 3.450% Senior Notes due March 1, 2032
Previous report — wording carried elsewhere
For the three months ended November 30, 2023, there were no material changes to our contractual obligations.