FDS · Q2 2026 Earnings

Bullish

FactSet

Reported March 31, 2026

30-second summary

FactSet raised FY2026 revenue, adjusted EPS, GAAP EPS, and organic ASV growth guidance — the first in-year raise of this fiscal cycle — while holding both margin bands unchanged. Organic ASV growth accelerated to 6.7% (vs 5.9% in Q1 and 5.7% in Q4), hitting the top end of the new FY band in a single quarter, with management crediting "early AI contributions" in both client engagement and operational benefits. The margin guide stayed put despite Q2 adjusted operating margin of 35.0% landing inside the band, signaling the investment ramp is real but the growth thesis is working.

Headline numbers

EPS

Q2 FY2026

$4.46

Revenue

Q2 FY2026

$0.61B

+7.1% YoY

Free cash flow

Q2 FY2026

$0.19B

Operating margin

Q2 FY2026

30.3%

Key financials

Q2 FY2026

Metric	Q2 FY2026	YoY	Q1 FY2026	QoQ
Revenue	$0.61B	+7.1%	$0.61B	+0.6%
EPS	$4.46	—	$4.51	-1.1%
Operating margin	30.3%	—	31.6%	-130bps
Free cash flow	$0.19B	—	$0.09B	+105.8%

Guidance

FactSet raised full-year FY2026 revenue, adjusted EPS, and organic ASV growth guidance while holding margins steady, citing early AI contributions and strong execution.

Guidance is issued for the full year only, refreshed each quarter. Prior and new below are the same FY updated this quarter.

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
Revenue	FY 2026	$2,423 million to $2,448 million	$2,450 million to $2,470 million	+$27M to +$22M at low/high end (midpoint +$24.5M)	Raised
Adjusted diluted EPS	FY 2026	$16.90 to $17.60	$17.25 to $17.75	+$0.35 to +$0.15 (midpoint +$0.25)	Raised
GAAP diluted EPS	FY 2026	$14.55 to $15.25	$14.85 to $15.35	+$0.30 to +$0.10 (midpoint +$0.20)	Raised
Organic ASV Growth	FY 2026	$100 million to $150 million (approximately 4.1% to 6.1%)	$130 million to $160 million (approximately 5.4% to 6.7%)	+$30M to +$10M (5.4-6.7% vs 4.1-6.1% prior)	Raised
effective tax rate	FY 2026	18.0% to 19.0%	Withdrawn — no replacement	—	Withdrawn

Reaffirmed unchanged this quarter: GAAP Operating Margin (29.5% to 31.0%), Adjusted Operating Margin (34.0% to 35.5%)

Other KPIs

Q2 FY2026

Segment	Q2 FY2026	YoY
Americas	$0.4B	+7.4%
EMEA	$0.149B	+4.0%
Asia Pacific	$0.062B	+9.7%
Annual Subscription Value (ASV)	$2,449.1 million	—
Organic ASV Growth	6.7%	—
Client Count (ASV >= $10k)	9,101	—
User Count	241,352	—
Annual ASV Retention Rate	>95%	—
Annual Client Retention Rate	91%	—
Adjusted Operating Margin	35.0%	—
Organic Revenue Growth	6.8%	—

Management tone

AI investment year (Q4 FY2025) → Prudent execution (Q1 FY2026) → Early AI contributions land (Q2 FY2026).

The framing shift from Q1 to Q2 is decisive. Last quarter management held the FY guide flat with the cautious line that it was "really early in the year." This quarter, with the same disclosure cadence, management raised four of six FY metrics and stated in the press release: "we are raising our growth outlook for the year" citing "early AI contributions—both in new client engagement and operational benefits." The pivot from "embedded everywhere" (a posture that removed AI as a measurable line) to "early AI contributions" (a posture that credits AI for the upside) reintroduces AI as an attributable driver — but only on the growth side, not yet on the margin side.

The competitive language sharpened further. Q1's framing was that clients were turning to FactSet as a "consolidator" of fragmented AI tools they had been trialing; this quarter's Q&A made the substantiation concrete. Management cited 48 of the top 50 clients using at least three AI solutions, enterprise contracts extending duration 30%+ on average, and the MCP server product (launched December) being characterized as the "fastest-growing solution" in the market with API call volume tripling from February to March. The narrative has moved from "we will be the integration layer" to "we are being chosen as the integration layer," with named-client validation.

Margin discipline remained the deliberate counterweight to growth optimism. The adjusted operating margin guide held at 34.0–35.5% despite Q2 printing 35.0% — management is preserving room for continued AI investment rather than flowing the growth raise straight through to profitability. This is consistent with the multi-quarter framing established in Q4 FY2025 that FY2026 is an investment year; what's new is that the growth side of that bet is now visibly working.

Q&A highlights

Shlomo Rosenbaum · Stifel

What has changed in the last couple of quarters to drive the acceleration in organic growth? What specific changes in incentives or investments are clicking now that weren't before?

Management attributed acceleration to targeted investments in data (real-time data, private capital data, pricing/reference data), AI solutions (MCP servers, agentic platforms, AI-ready data across the stack), and commercial excellence improvements (sales/customer success team energy, pricing/packaging changes, enterprise contract restructuring). These investments, made over prior years but now gaining traction, combined with the open platform model being a tailwind in AI environment, are driving double-digit data growth across all firm types and improved retention and expansion.

Real-time data now competitive with larger competitors after years of investment48 of top 50 clients use at least 3 AI solutionsDouble-digit growth in data solutions across all firm typesEnterprise contracts extended by over 30% on average

Manav Patnaik · Barclays Capital

Can you provide more detail on middle office and trading solutions growth? How large are these solutions and what key sub-solutions are driving the strong performance?

Management described middle office and trading as crown jewels with deep entrenchment in large buy-side clients. Core offerings include performance analytics, attribution, and risk management. Key growth drivers: multi-asset class portfolios with mixed private/public positions, total portfolio risk views, and managed services helping clients operate large platforms with integrated data. Analytics book of record serves millions of funds managing trillions in assets. Recent market events around private credit increase relevance and stickiness.

Mission-critical processes for large buy-side clientsAnalytics book of record distributes data to millions of funds managing trillions in assetsGrowing demand for multi-asset class portfolio views combining private and public positionsManaged services helping clients transform and integrate data into compliance, reporting, and investment committee workflows

Ashish Sabadra · RBC Capital Markets

What is the demand environment and sales cycle status given evolving geopolitical concerns?

Management reported broad-based demand and strong pipeline through rest of year. Macro conditions not affecting them. Growth driven by: asset managers consuming data solutions (real-time, pricing/reference, private capital), middle office solutions with managed services overlay and agentic workflows, and trading solutions. AI solutions showing considerably faster sales cycles with eager client enthusiasm. MCP solution launched December is fastest-growing solution in market.

Sales cycle has not changed despite geopolitical concernsBroad-based demand across all client groupsAI solutions have considerably faster sales cyclesMCP solution is fastest-growing solution since launch in December

Kelsey Zhu · Autonomous Research

If FactSet transitioned all workstation ASV to data solutions ASV with usage-based pricing, what would that look like? How important is owning the UI product in a post-AI world as data consumption increases?

Management characterized question as speculative about future business model convergence. Emphasized currently seeing strong growth across all channels (workstation, data feeds, APIs, MCP servers). User personas expanding beyond traditional workstation users to tech teams and data science teams. Developing strategy with customers on flexible pricing and packaging with enterprise contracts. Enterprise contracts now offer flexibility on how clients consume data across multiple channels. Multi-channel business model expected to benefit from consumption-based pricing on top of enterprise agreements.

User personas shifting to include technology teams and data science teams beyond traditional workstation usersEnterprise contracts extended 30%+ with long-term durationDirect seed-based exposure reduced to less than 20% of ASVFlexible enterprise agreements allowing consumption across workstation, feeds, APIs, and MCP

Jason Haas · Wells Fargo

Question cut off in transcript - unable to assess

Exchange incomplete - no answer provided

Answers to last quarter's watch list

Q2 adjusted operating margin trajectory — Q2 printed 35.0%, down 120bps from Q1's 36.2% but still upper-middle of the 34.0–35.5% FY band. The compression toward the FY midpoint is happening as flagged, and the unchanged margin guide despite the revenue/EPS raise confirms the investment ramp is being delivered on plan rather than pushed to H2.

Resolved positively

Organic ASV growth sustaining ≥5.9% in Q2 — Yes, and decisively: organic ASV growth printed 6.7%, a third consecutive sequential acceleration (5.7% → 5.9% → 6.7%). The new FY guide ceiling of 6.7% has already been touched in a single quarter, validating the top-end raise.

Resolved positively

Whether AI's contribution is reintroduced as a quantified disclosure — Partially. Management did NOT reinstate the prior 30–50bps of ASV growth quantification, but did credit "early AI contributions" as a stated driver of the guide raise and provided usage-based AI proof points (48 of top 50 clients on 3+ AI solutions; MCP API calls 3x from February to March; 120+ MCP clients). The attribution is qualitative but more specific than Q1's "embedded everywhere" framing.

Continue monitoring

EMEA revenue growth holding ≥4% — Held at exactly 4.0% YoY, matching Q1 but not extending the sequential improvement. The asset-owner pressure has cleared but the region is not accelerating with the rest of the business.

Continue monitoring

Client count momentum — Recovered materially: +98 sequential client adds vs only +7 in Q1, consistent with the management framing that Q1 was seasonality rather than a net-new-logo slowdown.

Resolved positively

Client headcount-reduction signal pressuring user counts — User growth slowed to +1,489 in Q2 vs +2,539 in Q1 and +16,828 in Q4. No management commentary on whether this reflects client AI-driven seat compression or seasonality; the trend is now two consecutive quarters of decelerating user growth alongside accelerating ASV.

Continue monitoring

What to watch into next quarter

Whether organic ASV growth holds at or above 6.7% in Q3 — the new FY ceiling has been touched in Q2, so a Q3 print above 6.7% would force a second guide raise, while any deceleration would suggest the AI-driven acceleration has a near-term ceiling

Q3 adjusted operating margin trajectory — at 34.0–35.5% FY guide and 35.0% Q2 actual, H2 must average roughly 33.5% to land at midpoint; a Q3 print below 34.0% would signal the investment ramp is fully landing as planned, while a print still above 35.0% may trigger a margin guide raise

Whether the effective tax rate disclosure is reinstated — its silent removal this quarter is the lone red flag in an otherwise clean print

User count growth — two consecutive quarters of decelerating user adds (Q4 +16,828 → Q1 +2,539 → Q2 +1,489) against accelerating ASV deserves explicit management commentary; if seat compression is starting, the user/ASV gap will widen further

EMEA revenue growth — stalled at 4.0% for two consecutive quarters while the rest of the business accelerated; whether this breaks higher or marks a structural ceiling matters for the FY landing

Pricing/packaging evolution — management telegraphed flexible enterprise agreements that allow consumption across workstation, feeds, APIs, and MCP, with direct seat exposure now under 20% of ASV; any disclosed change in mix shift between these channels will signal whether the transition to consumption-based pricing is accelerating

Sources

FactSet Q2 FY2026 earnings press release (SEC filing): https://www.sec.gov/Archives/edgar/data/1013237/000162828026022203/fdsq22026earningsrelease.htm
FactSet Q2 FY2026 earnings call Q&A (transcript Q&A section)
FactSet Q1 FY2026 Tapebrief (prior quarter context)
FactSet Q4 FY2025 Tapebrief (multi-quarter trend context)

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