FactSet posts Q2 net income rise

Source: FactSet Research Systems

FactSet Research Systems (NYSE: FDS) (NASDAQ: FDS), a leading provider of integrated financial information and analytical applications to the global investment community, today announced its results for the second quarter of fiscal 2010.

For the quarter ended February 28, 2010, revenues were $157.3 million, up 0.5% compared to the prior year. Operating income for the second quarter increased to $54.5 million, an advance of 5% from $52.0 million in the same period of fiscal 2009. Net income rose to $36.1 million as compared to $34.6 million a year ago. Diluted earnings per share increased to $0.75, up 6% from $0.71 in the same period of fiscal 2009.

"Although the market is still stabilizing, we believe we are beginning to see some benefits from our efforts and investments during the downturn, with acceptance of our new workstation and the highest quarterly user growth in two years," said Phil Hadley, Chairman and CE0. "We are excited about the opportunities as our clients begin to regain strength."

Annual Subscription Value ("ASV")

ASV increased $14 million during the second quarter. Excluding the impact of foreign currency, ASV advanced $15 million organically during the quarter. ASV was $635 million at February 28, 2010. Of this total, 82% is derived from buy-side clients and the remainder is from the sell-side firms who perform M&A advisory work and equity research. ASV at any given point in time represents the forward-looking revenues for the next 12 months from all annual subscription services currently being supplied to clients in addition to the trailing 12 months of non-subscription revenues derived from workstations sold to summer interns, introducing brokerage services, M&A related publications and the Partner software product.

Financial Highlights

* ASV from FactSet's U.S. operations was $430.3 million and $204.3 million related to international operations.
* U.S. revenues were $106.8 million, up $0.1 million from the year ago quarter.
* Non-U.S. revenues rose 1.3% to $50.5 million.
* Operating margins expanded 140 basis points to 34.6%.
* Quarterly free cash flow rose 46% to $42.6 million.
* Free cash flow ggenerated over the last 12 months was $185 million, up 37%.
* The effective tax rate for the quarter was 33.9%.
* Cash and investments in marketable securities were $205 million at February 28, 2010.
* Accounts receivable decreased $13.4 million or 16% over the last 12 months.

Operational Highlights

* Professionals using FactSet increased to 38,800, up 1,400 users.
* Client count was 2,052 at February 28, a net increase of 8 clients during the quarter.
* Annual client retention rate was greater than 95% of ASV and 88% of clients.
* Portfolio Analytics ("PA") 2.0 was deployed by 655 clients representing 5,794 users. During the past three months the number of PA users increased by 124, while the number of PA clients rose by 8.
* Employee count at February 28, 2010 was 3,422, up 150 employees during the quarter, driven by the expansion of FactSet's offshore proprietary content operations.
* Capital expenditures were $2.0 million, net of landlord contributions for construction of $0.3 million.
* The Company repurchased 844,057 shares for $55 million during the second quarter. At February 28, 2010, $95 million remains authorized for future repurchases and common shares outstanding were 46.6 million.
* FactSet was named one of Fortune's "100 Best Companies to Work For."

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