FactSet FY2026: GAAP EPS Missed at $14.57, Adjusted Beat at $18.01

FactSet closed fiscal 2026 with two earnings numbers that landed on opposite sides of its own guidance. Revenue for the year ended August 31, 2026 rose 6.7% to $2,476.3 million, above the top of the $2,450 to $2,470 million range the company had last given. GAAP diluted EPS fell 6.3% to $14.57, below the bottom of its $14.85 to $15.35 range. Adjusted diluted EPS rose 6.1% to $18.01, above the top of its $17.25 to $17.75 range. Same company, same year, same release: a miss and a beat. Net income fell 10.6% to $533.5 million while adjusted net income rose 1.2% to $659.5 million. The $126.0 million between those two figures is the subject of this post, because every dollar of it is itemized, and not every item is the kind that goes away.

The Headline Numbers​

The release these figures come from is unaudited; the Form 10-K for the year had not been filed when we wrote this.

The arithmetic of the year is short. Revenue grew by $154.5 million. Operating expenses grew by $202.9 million. Operating income therefore fell by $48.3 million, and the operating margin gave back 3.9 points in a single year, returning to a level between fiscal 2022 and fiscal 2023. Cost of services grew 11.4% and selling, general and administrative expense grew 16.3%, both well ahead of 6.7% revenue growth.

Two details soften and sharpen that picture. Fiscal 2025's other income included a gain on the divestiture of a business ($23.2 million in that year's cash flow statement), so the prior-year net income had a one-time lift of its own and the comparison is harder than it looks. And EPS fell less than net income, 6.3% against 10.6%, because the diluted share count dropped 4.6%, from 38.4 million to 36.6 million. The company spent $644.0 million on repurchases in the year, more than double the $300.5 million of fiscal 2025.

Revenue Deep Dive​

FactSet sells subscriptions to financial data and analytics, and reports three geographic segments. The release gives full-year revenue only in total; by region it gives the fourth quarter and the metric management steers by, Annual Subscription Value, which it defines as "the forward-looking revenues for the next 12 months from all subscription services currently supplied to clients."

Americas is 65% of ASV and grew organically at 7.1%, in line with the company. EMEA, 24% of ASV, is the slow region at 5.2%. APAC, 10% of ASV, is the fast one at 10.6%. The mix has not changed the thesis: this is a business that grows in the mid-to-high single digits in every region, with no segment shrinking and none carrying the others.

The release's own language about demand is confident. It headlines the quarter "Robust growth," says FactSet achieved "a record increase in organic ASV for both the fourth quarter and fiscal year," and states that "demand for trusted financial intelligence continues to grow." On commercial terms it says "Annual ASV retention remained above 95%" and "During Q4, average renewal contract length increased by ~30%." On product it says "AI solutions ASV added in fiscal 2026 more than doubled year over year." Note what that last sentence measures: the ASV added by AI products, not their share of the $2,565.2 million total, which the release does not give.

The ledger offers one line that bears on these claims, Liabilities:Current:DeferredRevenue. Deferred revenues rose 9.8%, from $167.9 million to $184.3 million, faster than revenue and faster than ASV. That is consistent with clients committing and paying ahead. It is also a small number. Deferred revenue is 7.4% of the year's revenue, so it captures only the slice of subscriptions billed in advance of service; the $2,565.2 million of ASV is a forward-looking metric and appears nowhere on the balance sheet. Accounts receivable rose 11.4% to $301.4 million, also ahead of revenue, which is the less comfortable side of the same growth.

The Margin Story​

Three years of margin expansion reversed in one. The operating margin climbed 6.4 points from fiscal 2022 to fiscal 2025 and gave back 3.9 of them. The net margin is back where it was in fiscal 2022, 21.5%, a year that carried $64.3 million of asset impairments.

The release explains the decline in one sentence: the margin fell "primarily due to higher employee compensation costs, mainly driven by one-time restructuring charges, ASV-linked incentive plans and one-time CEO compensation costs, partially offset by growth in revenues." That sentence contains two different kinds of cost. Restructuring charges and make-whole awards are, by the company's description, one-time. Incentive plans linked to ASV are not: they pay out because ASV grew, and they will pay out again if it grows again. The balance sheet shows the size of the accrual. Accrued compensation rose 47.3%, from $130.6 million to $192.4 million, and stock-based compensation in the cash flow statement rose 37.4%, from $61.2 million to $84.1 million.

The adjusted margin makes the same point from the other direction. Adjusted operating margin strips out the amortization of acquired intangibles and the items the company labels non-recurring, and it still fell, from 36.3% to 34.5%. The release attributes that to "higher compensation expense from ASV-linked incentive plans and technology expenses." So 1.8 points of the 3.9-point decline survive the adjustments. That part is the cost of running the business this year, not the cost of reorganizing it.

There is no pricing language in the release at all. It does not mention price increases, selling prices or pricing momentum, in a year when the story is about costs outrunning revenue. For a subscription business with retention above 95%, the absence is worth noting: whatever pricing power exists was not presented as a lever.

The One Big Question: Which Number Is the Real One?​

The company's own reconciliation answers this better than any opinion can. Here is the full walk from GAAP net income to adjusted net income, with each item after tax, as the release presents it:

The adjustments total $126.0 million, or $3.44 per diluted share. They fall into two groups that deserve different treatment.

The first group is intangible asset amortization, $58.8 million after tax and $76.2 million before, or $1.60 of the $3.44. It is non-cash, which is the argument for excluding it. It is also not one-time. The same line was $73.0 million before tax in fiscal 2025 and $67.4 million in fiscal 2024, and it exists largely because FactSet paid $1.932 billion in cash for CUSIP Global Services in March 2022 and bought more businesses in fiscal 2025. A company that grows partly by acquisition and then excludes the amortization of what it acquired is reporting the revenue of those purchases without their cost. The fiscal 2027 guidance budgets for the item again.

The second group is everything else, a net $67.3 million after tax. Restructuring and severance is the largest piece at $35.6 million, against $0.2 million a year earlier. The company describes the CEO onboarding costs as "one-time make-whole cash and equity awards" recognized "over their respective service periods," which is why the same line already appears in fiscal 2025, at $1.2 million after tax. These items are plausibly temporary, and fiscal 2025 supports that reading: the same categories added up to far less.

Now the test. Fiscal 2025's adjusted operating income was $843.4 million and fiscal 2026's was $855.3 million, growth of 1.4% on 6.7% more revenue. Even on the company's preferred measure, with every reorganization cost removed, operating profit barely moved. Adjusted EPS grew 6.1% only because there were 4.6% fewer shares. Among the companies in this series, Accenture closes its books on the same August 31 and reported $307.5 million of business optimization costs for the year as a GAAP operating expense; the question a reader should ask of both is the same one. How much of the "one-time" line recurs?

The fiscal 2027 outlook is the company's own answer:

Management is guiding the GAAP operating margin up by roughly three points and the adjusted margin up by less than one. That is a statement that the restructuring-type costs are expected to fall away while the underlying cost base stays close to where it is. The guidance reconciliation still budgets $85 to $97 million for "Amortization of intangible assets and other discrete items," so the gap between the two EPS figures narrows to between $2.15 and $2.25 but does not close. And organic ASV growth is guided to slow, from 7.0% to a range whose top is 6.5%.

Of the seven signals we scan every release for, this one contains two: robust demand, in the words quoted above, and a product ramp, in the AI sentence. It makes no claim that demand exceeds supply, none of tight supply, none of an industry upcycle, none of rising prices and none of expansion ahead of plan. The guidance is consistent with that restraint. A company that expected demand to accelerate would not guide ASV growth lower.

Tracking a $2.5B Data Business in Plain Text​

Adjusted earnings are a list of exclusions, and the only way to judge a list of exclusions is to see the full statement they were taken out of. Double-entry does that by construction: every line has to reconcile to one bottom number. Our ledger records GAAP only, on the conventions we use for every company in this series: how we model every company. Income postings are credits (negative), expenses are debits (positive), and Equity:Adjustments absorbs net income so the transaction sums to zero. Here is fiscal 2026 exactly as it sits in the ledger:

; Check: −2,476.256 + 1,223.146 + 553.153 + 54.684 + −4.064 + −0.379 + 116.235 + 533.481 = 0 ✓
2026-08-31 * "FactSet Research Systems Inc." "FY2026 Income Statement"
  Income:Revenue                              -2476.256 MUSD  ; revenues
  Expenses:CostOfRevenue                       1223.146 MUSD  ; cost of services
  Expenses:SellingGeneralAdministrative         553.153 MUSD  ; selling, general and administrative
  Expenses:OtherNet                              54.684 MUSD  ; interest expense
  Expenses:OtherNet                              -4.064 MUSD  ; interest income (a credit)
  Expenses:OtherNet                              -0.379 MUSD  ; other income (expense), net (a credit)
  Expenses:IncomeTax                            116.235 MUSD  ; provision for income taxes
  Equity:Adjustments                            533.481 MUSD  ; net income offset (equity set by balance assertion)

There is no posting for adjusted net income, and there cannot be. The $76.2 million of amortization and the $46.2 million of restructuring are inside Expenses:CostOfRevenue and Expenses:SellingGeneralAdministrative, where the filing puts them. A non-GAAP figure is a second reading of the same transaction, not a second transaction.

The balance sheet carries the story the income statement only hints at:

2025-08-31 balance Liabilities:Current:ShortTermDebt                 0.000 MUSD  ; current debt: none reported
2026-08-31 balance Liabilities:Current:ShortTermDebt              -499.436 MUSD  ; current debt
2025-08-31 balance Liabilities:NonCurrent:LongTermDebt           -1368.260 MUSD  ; long-term debt
2026-08-31 balance Liabilities:NonCurrent:LongTermDebt            -870.586 MUSD  ; long-term debt
2025-08-31 balance Assets:Current:Cash                             337.651 MUSD  ; cash and cash equivalents
2026-08-31 balance Assets:Current:Cash                             233.339 MUSD  ; cash and cash equivalents

Total debt is essentially unchanged, $1,368.3 million a year ago and $1,370.0 million now. What changed is where it sits. $499.4 million moved into current debt, a caption that was empty a year earlier. The release does not itemize it; the fiscal 2025 Form 10-K shows $500.0 million of 2.900% Senior Notes due March 1, 2027. Against that, cash fell by $104.3 million to $233.3 million, and current liabilities of $1,092.3 million now exceed current assets of $654.7 million. A year ago the relationship ran the other way, $729.8 million of current assets against $521.3 million of current liabilities.

This is a refinancing question, not a solvency one: the business generated $822.2 million of operating cash flow in the year. But the same year it returned $808.1 million to shareholders through $644.0 million of repurchases and $164.2 million of dividends, more than its $707.5 million of free cash flow. Total stockholders' equity fell by $184.5 million, to $2,001.9 million, in a year with $533.5 million of net income.

One modeling note. The release presents stockholders' equity as a single total with no split between paid-in capital, treasury stock and retained earnings. We do not estimate one. For fiscal 2026 the ledger holds that total in one account, Equity:UndisaggregatedParent, and the component accounts return when the Form 10-K is filed.

The Multi-Year Arc​

Our ledger starts in fiscal 2022 because that is the year the balance sheet was remade. The CUSIP Global Services purchase closed in March 2022, and by August 31 of that year goodwill and intangibles stood at $2,861.8 million against $889.2 million a year before, with long-term debt of $1,982.4 million against $574.5 million. Everything since is the digestion of that deal.

The table shows three phases. In fiscal 2023 and fiscal 2024 the company paid down $616.5 million of debt and operating income rose 47%. In fiscal 2025 it stopped deleveraging and started buying again: goodwill and intangibles jumped $345.5 million, mainly with the Irwin and LiquidityBook acquisitions, and debt held flat. In fiscal 2026 the cash went to shareholders instead, with repurchases more than doubling.

Revenue compounded at 7.7% a year across the four years and rose in every one; the release notes 47 consecutive years of revenue growth. Operating cash flow grew faster, 53% in total. Goodwill and intangibles are 76% of total assets, which is what an acquisitive data business looks like and why the amortization line in the bridge keeps recurring. Net income, the only line in the table that fell, is where the year's choices show up.

The Verdict: Bull vs. Bear​

Bull Case

• Revenue of $2,476.3 million beat the top of the last guidance range, organic ASV grew 7.0% and the release reports a record organic ASV increase for both the quarter and the year.
• Annual ASV retention stayed above 95%, and average renewal contract length rose by roughly 30% in the fourth quarter.
• Operating cash flow rose 13.2% to $822.2 million and free cash flow 14.6% to $707.5 million, both well above net income.
• Guidance puts the fiscal 2027 GAAP operating margin at 31.0% to 32.0%, which would recover most of this year's 3.9-point decline, and GAAP diluted EPS at $17.00 to $17.50.
• The share count fell 4.6%, and $356.0 million remained available under the repurchase program at year-end.

Bear Case

• Operating expenses grew 12.9% against 6.7% revenue growth, and adjusted operating income grew only 1.4%. The adjustments do not explain the margin away.
• Of the $3.44 gap between GAAP and adjusted EPS, $1.60 is intangible amortization, a line that was $1.27 in fiscal 2024 and $1.41 in fiscal 2025 and is budgeted again for fiscal 2027.
• Organic ASV growth is guided down, from 7.0% to between 5.0% and 6.5%. The demand language in the release is not yet supported by the outlook.
• $499.4 million of debt is now current, cash is down to $233.3 million, and current liabilities exceed current assets by $437.6 million.
• Capital returns of $808.1 million exceeded free cash flow, and equity shrank by $184.5 million in a profitable year.

Our Take

The adjusted number is not wrong, but it is the less informative of the two. Strip out every item the company calls non-recurring and operating profit still grew 1.4% on 6.7% more revenue, because compensation tied to ASV and technology costs rose with the business. That is the finding, and it holds on either basis. The GAAP figure overstates the damage, since $35.6 million of after-tax restructuring should not repeat at that size; the adjusted figure understates the cost of the acquisitions that built the revenue line. The honest midpoint is the one the company guides to: a GAAP margin of 31% to 32%, below the 32.2% of fiscal 2025, on slower ASV growth. FactSet remains a durable subscription franchise with 47 years of rising revenue. In fiscal 2026 it grew its top line and not its operating profit, and it funded its largest buyback of the five years while $499.4 million of debt moved into current liabilities. The number to watch in fiscal 2027 is not EPS on either basis. It is whether adjusted operating income grows as fast as revenue.