FactSet Research Systems Inc. FDS used its third-quarter fiscal 2026 earnings call to underscore a sharper growth story built around AI adoption, broader enterprise contracts and rising client engagement. Management’s message was less about the quarterly beat and more about how AI is changing contract structure, product demand and internal productivity.
The call also mattered because executives paired that growth narrative with a reaffirmed full-year outlook, even as they acknowledged heavier investment spending and some near-term margin pressure.
FDS Sees AI Lift Across the Client Base
Chief executive officer Sanoke Viswanathan said organic ASV rose 7.1% to $2.49 billion, marking the fifth straight quarter of acceleration. He pointed to growth across regions and client types, with existing customers expanding their use of FactSet’s data, analytics and workflow tools.
Viswanathan said more than 90% of the top 50 clients now use at least four FactSet AI products. He tied that adoption to stronger retention and expansion, noting that clients using AI solutions posted ASV growth 50% higher than the rest of the book.
The company also cited direct AI monetization. In response to a Deutsche Bank question, Viswanathan said that more than 10% of quarterly ASV growth came directly from AI stock-keeping units, while paid MCP usage expanded to more than 20% of the top 100 clients.
FactSet Pushes Toward Flexible Enterprise Deals
A major theme on the call was a shift away from narrower seat-based contracts toward broader enterprise agreements. Viswanathan said that most ASVs renewed in the quarter came through enterprise agreements or contracts lasting at least three years.
He added that the average contract duration extended by roughly 30% while pricing discipline was maintained. Pressed by a Stifel analyst, Viswanathan said FactSet was not trading price concessions for longer contract terms. Instead, it was structuring agreements around the value clients place on flexibility, new data sets and AI-enabled workflows.
Chief financial officer Joshua Warren reinforced that message, saying minimum commitments remain central even as clients show greater interest in consumption-oriented pricing. He said those structures preserve visibility while giving FactSet room to benefit as AI usage expands.
FDS Builds an AI Stack Around Data & Workflows
Viswanathan framed the company’s strategy through what he called FactSet Intelligence, built around trusted data, agentic infrastructure and intelligent workflows. He said the MCP server now has more than 450 clients engaged through contracts and trials, with API call volume in the fiscal third quarter reaching 13 times the fiscal second-quarter levels.
Management also highlighted product and partnership activity designed to deepen that position. FactSet expanded ties with Google Cloud and said clients can access its data through major AI platforms, including Anthropic, OpenAI, Google and Microsoft.
FactSet's CEO also described early traction in workflow-specific offerings. He said Capital Markets Intelligence agents are active or in pipeline trials at more than 30 of the top 100 banking clients, while buy-side and wealth-focused agent suites are expected to follow.
FactSet Balances Margin Pressure With Cost Actions
FactSet reported adjusted earnings of $4.53, beating the Zacks Consensus Estimate of $4.44, delivering a surprise of 2%. Revenues of $622.9 million also topped the Zacks Consensus Estimate of $617.2 million, resulting in a surprise of 0.9%.
FactSet Research Systems Inc. Price, Consensus and EPS Surprise
FactSet Research Systems Inc. price-consensus-eps-surprise-chart | FactSet Research Systems Inc. Quote
Still, the tone on margins was measured. Warren said adjusted operating margin fell to 34% from 36.8% a year ago as compensation expense rose with ASV outperformance and as the company increased spending on technology, tokens, marketing and professional services.
Management argued that those pressures should ease over time. Viswanathan said the company now has a clearer line of sight to margin improvement, while Warren pointed to engineering workforce reductions, product portfolio reviews and efficiency initiatives across data operations and client service.
FDS Reaffirms Outlook but Leaves Room for Timing Risk
FactSet reaffirmed fiscal 2026 guidance for revenues of $2.45 billion to $2.47 billion and adjusted EPS of $17.25-$17.75. Adjusted operating margin guidance remained at 34-35.5%.
On the call, Warren said revenues and EPS are tracking toward the high end of those ranges. Even so, management did not raise guidance, arguing that execution risk remains tied to several large deals and a busy close to the fiscal year.
In response to a question from RBC Capital Markets about implied fiscal fourth-quarter moderation, Viswanathan said momentum had continued into June and early July. He described the pipeline as broad-based but said the timing of multiple seven-figure deals could still affect the quarter.
FactSet Stresses Discipline Alongside Growth
Warren used his first earnings call as CFO to emphasize capital allocation and balance-sheet flexibility. He said the company generated $254 million in fiscal third-quarter free cash flow and returned $243.4 million to shareholders through buybacks and dividends.
Management also stressed discipline in portfolio decisions. Warren said FactSet discontinued the Signals attribution service and will continue reviewing products against hurdle rates while remaining selective on acquisitions.
The broader tone from both executives was confident but operationally focused. Management presented FactSet as an established financial-data platform using AI to expand wallet share, lengthen contracts and improve internal efficiency rather than chase growth at any cost.
What Zacks Signals Show for FDS
FDS carries a Zacks Rank #3 (Hold), along with a Value Score of B, Growth Score of C, Momentum Score of D and VGM Score of B. Under the Zacks framework, a Rank #3 signals a more neutral near-term earnings revision profile than a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Style Scores add nuance. The Value Score of B and VGM Score of B indicate relatively favorable value and blended style characteristics, while the Growth Score of C and Momentum Score of D imply a less compelling setup on those factors. The Zacks framework also notes that estimate revisions drive the Rank most heavily, so FDS’ standing can still change as analysts update forecasts after the quarter.
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