Dear FactSet Shareholders,
Throughout fiscal 2023, FactSet continued to solidify our position as a trusted enterprise partner for our clients. Our
team remained committed to innovation and to delivering purpose-built solutions and mission-critical data that
empower investment professionals to work more efficiently. Our unwavering dedication to driving the investment
community to achieve more and do its best work made this progress possible.
Enterprise packages drove growth with strategic wins across various workflows. We successfully expanded our
presence with existing clients, attracting new logos and users, both on- and off-platform.
Our industry-leading analytics and middle office solutions played a crucial role in FactSet winning a major
performance deal on the buy-side. Asset managers and asset owners increasingly rely on FactSet to handle more
aspects of their portfolio lifecycle. Demand also increased for our cloud-native real-time market data services.
On the sell-side, our Deep Sector solution was pivotal in securing banking client renewals. We believe that the Deep
Sector solution positions us well to gain a larger market share in the banking sector in fiscal 2024.
In addition to producing solid financial results, we achieved several significant milestones during the 2023 fiscal year.
A notable accomplishment was the successful integration of CUSIP Global Services, the largest acquisition in our
history, into the FactSet family. Additionally, we reduced our debt leverage to below 2.5x, allowing us to resume our
share repurchase program in May 2023. As a result, we returned over $315 million to our shareholders through
dividends and share repurchases during the 2023 fiscal year.
Our business has undergone a positive transformation as we have expanded our client base, diversified our product
mix, and achieved sustainable growth through targeted investments fueled by our exceptional execution strategy. This
year, we expanded our client base to over 7,900 and increased our user base by 6%, surpassing 189,000 users.
A Winning Strategy
Our commitment to delivering the leading open data and analytics platform resonated with our clients and drove
growth. As the pace of technological change continues to accelerate, we remain committed to innovation, constantly
adapting to stay ahead. We have been incorporating machine learning and artificial intelligence (AI) into our offerings
since 2018, and the recent advancements in Generative AI have allowed us to further enhance our development. In
the latter half of 2023, we began devoting additional resources to Generative AI projects, and we intend to invest
further in this area in fiscal 2024, making it one of our top priorities.
One of our key competitive advantages is FactSet's data refinery, which provides us with an extensive suite of highly
connected proprietary and third-party data. We are continually investing in new categories of data to enhance our
workflow solutions. The breadth and depth of our data will enable us to ground our AI-powered products in facts and
allow for auditability and verification. Clients can, and will be able to, rely on FactSet for trustworthy answers in our
current and future products.
We look to reimagine our user experience through the incorporation of Generative AI to support “mile-wide
discoverability” across FactSet, allowing clients to ask questions, source information, and initiate tasks. Leveraging
our 45-year heritage of client-centricity and workflow understanding, we are also building AI-augmented workflows
specific to client types and personas to automate time-consuming parts of client workflows and enable “mile-deep”
personalization. We foresee clients being able to lean on FactSet to generate a proposal, create a pitchbook, summarize
portfolio performance, and more through a conversational experience. Finally, we aim to provide API access to AI-
ready data solutions that can be leveraged in any client workflow in any cloud or in conjunction with other copilots or
models.
In addition to driving growth and innovation, we see significant cost savings opportunities through Generative AI
projects that can enhance our operational efficiency. In fiscal 2023, we piloted AI coding initiatives to improve
technologist productivity and used our agent assist bot to help respond to client queries. Furthermore, our recent
acquisition of idaciti has bolstered our expertise in collecting unstructured data. As we enter fiscal 2024, we plan to
build upon our strategic investments in content, Generative AI, and technology to foster deeper client relationships
and drive continued growth.
A Passion for Making an Impact
Our commitment to sustainable growth extends to our clients, employees, shareholders, and communities. We
recognize that our success hinges on our people, our most valuable asset. Therefore, we have continued to invest in
initiatives to support FactSetters throughout the year. These efforts have included supporting a hybrid work model to
maximize productivity, providing technology for efficient remote collaboration, and offering global wellness days to
allow our teams to rejuvenate. By prioritizing the well-being of our workforce, we aim to attract and empower a
talented team that creates value for all our stakeholders.
FactSet’s social impact is driven by our dedicated employee volunteers sharing their time and talent to strengthen our
local communities. We contribute to our communities through our four pillars of service, which include inspiring
tomorrow’s engineers, educating to elevate, alleviating food insecurity, and protecting the environment. In 2023,
FactSetters contributed nearly 15,000 hours of volunteer service to benefit our community partners.
The FactSet Charitable Foundation is dedicated to building a future with diverse finance and technology leaders who
will make the sector more innovative, sustainable, and equitable. The Foundation’s primary focus is providing
financial support and expertise to non-profit organizations implementing innovative programs that empower
underserved students to experience greater educational support and enrichment. The goal is to support programs that
create pathways to and through college and on to technology careers. We hope that many students will be positively
impacted by transformative educational experiences supported by the Foundation’s grants.
Building on FactSet’s History of Delivering Strong Returns
Although the macroeconomic landscape for fiscal 2024 is still evolving, I am optimistic about our ability to execute
our strategy and deliver value to our stakeholders. There is remarkable work taking place across FactSet that will
position us well for the future, and I am excited about the journey ahead.
Phil Snow
Chief Executive Officer, FactSet
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
☒ Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended August 31, 2023
☐ Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from to
Commission File Number: 1-11869
FACTSET RESEARCH SYSTEMS INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
13-3362547
(I.R.S. Employer Identification No.)
45 Glover Avenue, Norwalk, Connecticut 06850
(Address of principal executive offices, including zip code)
Registrant’s telephone number, including area code: (203) 810-1000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbols(s)
Common Stock, $0.01 Par Value
FDS
Name of each exchange on which registered
New York Stock Exchange LLC
The Nasdaq Stock Market
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes x No o
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes o No x
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller
reporting company, or emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller
reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒
Non-accelerated filer ☐
Accelerated filer
Smaller reporting company
☐
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.o
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report.
x
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the
registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicated by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based
compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x
The aggregate market value of the registrant’s common stock held by non-affiliates of the registrant based upon the closing price of a
share of the registrant’s common stock on February 28, 2023, the last business day of the registrant’s most recently completed second
fiscal quarter, as reported by the New York Stock Exchange on that date, was $15,868,442,481.
As of October 20, 2023, there were 37,988,456 shares of the registrant's common stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Certain information required by Part III of this Annual Report on Form 10-K is incorporated by reference to our definitive Proxy
Statement for our 2023 Annual Meeting of Stockholders, which will be filed with the Securities and Exchange Commission not later
than 120 days after August 31, 2023.
FACTSET RESEARCH SYSTEMS INC.
FORM 10-K
For The Fiscal Year Ended August 31, 2023
PART I
PART II
PART III
PART IV
SIGNATURES
ITEM 1.
ITEM 1A.
ITEM 1B.
ITEM 1C.
ITEM 2.
ITEM 3.
ITEM 4.
ITEM 5.
ITEM 6.
ITEM 7.
ITEM 7A.
ITEM 8.
ITEM 9.
ITEM 9A.
ITEM 9B.
ITEM 10.
ITEM 11.
ITEM 12.
ITEM 13.
ITEM 14.
ITEM 15.
ITEM 16.
Business
Risk Factors
Unresolved Staff Comments
Cybersecurity
Properties
Legal Proceedings
Mine Safety Disclosures
Market for Registrant’s Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities
Reserved
Management’s Discussion and Analysis of Financial Condition and Results of
Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure
Controls and Procedures
Other Information
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accounting Fees and Services
Exhibits, Financial Statement Schedules
Form 10-K Summary
Page
5
16
25
25
25
26
27
28
29
30
49
51
95
96
96
97
97
97
97
98
99
101
102
3 Special Note Regarding Forward-Looking Statements
FactSet Research Systems Inc. has made statements under the captions Item 1. Business, Item 1A. Risk Factors, Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations and in other sections of this Annual
Report on Form 10-K that are forward-looking statements. In some cases, you can identify these statements by words such as
"may," "might," "will," "should," "expects," "plans," "anticipates," "believes," "estimates," "intends," "projects," "indicates,"
"predicts," "potential," or "continue," and similar expressions.
These forward-looking statements, which are subject to risks, uncertainties and assumptions about us, may include projections
of our future financial performance and anticipated trends in our business. These statements are only predictions based on our
current expectations, estimates, forecasts and projections about future events. These statements are not guarantees of future
performance and involve a number of risks, uncertainties and assumptions. There are many important factors that could cause
our actual results, level of activity, performance or achievements to differ materially from the results, level of activity,
performance or achievements expressed or implied by the forward-looking statements, including the numerous factors
discussed under Item 1A. Risk Factors in this Annual Report on Form 10-K, that should be specifically considered.
Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future
results, level of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for
the accuracy and completeness of any of these forward-looking statements. Forward-looking statements speak only as of the
date they are made, and actual results could differ materially from those anticipated in forward-looking statements. We do not
intend, and are under no duty, to update any of these forward-looking statements after the date of this Annual Report on Form
10-K to reflect actual results, future events or circumstances, or revised expectations.
We intend that all forward-looking statements we make will be subject to safe harbor protection of the federal securities laws as
found in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
4 ITEM 1. BUSINESS
Business Overview
Part I
FactSet Research Systems Inc. and its wholly-owned subsidiaries (collectively, "we," "our," "us," the "Company" or "FactSet")
is a global financial digital platform and enterprise solutions provider with open and flexible products that drive the investment
community to see more, think bigger and do its best work.
Our platform delivers expansive data, sophisticated analytics, and flexible technology used by global financial professionals to
power their critical investment workflows. As of August 31, 2023, we had nearly 8,000 clients comprised of almost 190,000
investment professionals, including asset managers, bankers, wealth managers, asset owners, partners, hedge funds, corporate
users and private equity & 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.
We drive our business based on our detailed understanding of our clients’ workflows, which helps us to solve their most
complex challenges. We provide financial data and market intelligence on securities, companies, industries and people to enable
our clients to research investment ideas, as well as to analyze, monitor and manage their portfolios. Our on- and off-platform
solutions span the investment life cycle of investment research, portfolio construction and analysis, trade execution,
performance measurement, risk management and reporting. We provide open and flexible technology offerings, including a
configurable desktop and mobile platform, comprehensive data feeds, cloud-based digital solutions and application
programming interfaces ("APIs"). Our CUSIP Global Services ("CGS") business supports security master files relied on by the
investment industry for critical front, middle and back-office functions. Our platform and solutions are supported by our
dedicated client service team.
We operate our business through three reportable segments ("segments"): the Americas, EMEA and Asia Pacific. Refer to Note
18, Segment Information, in the Notes to the Consolidated Financial Statements included in Part II, Item 8. of this Annual
Report on Form 10-K for further discussion. For each of our segments, we execute our strategy through three workflow
solutions: Research & Advisory; Analytics & Trading; and Content & Technology Solutions ("CTS"). CGS operates as part of
CTS.
Corporate History
FactSet was founded in 1978 and has been publicly traded since June 1996. We are dual-listed on the New York Stock
Exchange ("NYSE") and the NASDAQ Stock Market ("NASDAQ") under the symbol "FDS". FactSet has been a member of
the S&P 500 since December 2021.
Business Strategy
Our strategy is to build the leading open content and analytics platform and powerful enterprise solutions that deliver a
differentiated advantage for our clients’ success. By offering personalized digital products, we strive to be a trusted partner and
service provider, delivering relevant insights and research ideas tailored to our clients' specific business models.
To execute our strategy, we have outlined the following key initiatives:
•
•
Expanding our Digital Platform: We are scaling up our content refinery to provide a comprehensive inventory of
industry, proprietary and third-party data. This includes granular data for key industry verticals, real-time data, fund
data and sustainable finance. Through an open ecosystem of cloud-based data and analytics, we aim to offer flexible
solutions and content accessible through various delivery methods. In addition, we are working to expand our use of
artificial intelligence to drive efficiencies for our clients, with anticipated initiatives including automation of tasks and
integration of natural language queries. We believe that our breadth of high-quality, connected content will be a critical
raw material for large language models.
Ensuring Execution Excellence: Innovation and collaboration are at the core of our approach. We employ technology
to accelerate content collection, data connectivity and the development of summaries and themes. Our sales force is
committed to enhancing price realization, productivity, efficiency and improved client outcomes. We are also
optimizing operations and managing expenses to improve returns on our investments.
5 •
Fostering a Growth Mindset: We prioritize recruiting, training and empowering a diverse and efficient workforce.
We are driving sustainable growth by investing in talent that can create leading technological solutions and efficiently
execute our strategy. Additionally, strategic partnerships and acquisitions help to accelerate our expansion in key
areas.
We are focused on growing our global business through three strategically aligned geographic segments: the Americas, EMEA
and Asia Pacific. This approach allows us to better manage resources, target solutions and interact with clients effectively. We
executed on our growth strategy during fiscal 2023 by offering data, products and analytical applications for three workflow
solutions: Research & Advisory; Analytics & Trading; and CTS.
Research & Advisory
Research & Advisory delivers essential content and workflow solutions in one flexible platform for investment bankers, wealth
advisors, buy and sell-side analysts, corporate users, portfolio managers and investment relationship professionals. Our
workstation, advisor dashboard, research management solutions ("RMS"), and FactSet for client relationship management
("CRM") enable our clients to personalize and automate their workflows. These tools provide insight and efficiency for idea
generation, company and market analysis, fundamental research, presentation building and distribution, and research
management. Our Research & Advisory solutions also offer global coverage, deep history, and transparency through
proprietary and third-party sourced databases. These solutions provide deep company and sector-specific analyses, spanning the
public and private markets. Our solutions easily integrate with our clients’ technology, offering additional flexibility through
mobile, API, data feeds and web-based components. Our RMS and advisory solutions also enable our wealth clients to provide
market-leading support for their businesses, including home office, advisory, and client engagement work.
Analytics & Trading
Analytics & Trading offers comprehensive solutions to institutional asset managers and asset owners across the investment
portfolio life cycle. Our front office tools connect fundamental and quantitative research, portfolio construction, order
management and trade execution. These outputs seamlessly integrate with advanced middle office workflows, including
portfolio attribution, performance measurement, risk management, and reporting. Our flexible and open framework supports
both proprietary and third-party models, connected data, analytics and reporting. Whether deployed as a multi-asset class
enterprise system or individual workflow components, our platform and APIs meet the diverse needs of multi-asset class
investing. Additionally, our tools can integrate client holdings data with global market data to power our investment portfolio
life cycle workflows.
CTS
CTS focuses on delivering data directly to our clients by leveraging our core content and technology. Clients can seamlessly
discover, explore, and access organized and connected content via multiple delivery channels. Whether a client needs market
data, company data, alternative data, customized client facing digital solutions or data elements uniquely identifying financial
instruments, we provide structured data through a variety of technologies, including APIs and cloud infrastructures. Through
our data management solutions ("DMS"), we provide entity mapping and integration of client data. Our symbology links and
aggregates a diverse set of content sources to ensure consistency, transparency, and data integrity. We empower our clients to
centralize, integrate, and analyze disparate data sources for faster and more cost-effective decision making. Given this
integration capability, our clients can then choose their preferred cloud infrastructure, industry standard databases,
programming languages and data visualization tools. Through CGS, we are also the exclusive issuer of the Committee on
Uniform Security Identification Procedures ("CUSIP") and CUSIP International Number System ("CINS") identifiers globally,
acting as the official numbering agency for International Securities Identification Number ("ISIN") identifiers in the United
States and as a substitute number agency for more than 30 other countries.
Revised Organizational Approach
We have a long-term view of our business and are committed to investing for growth and efficiency. Starting September 1,
2023, the beginning of our fiscal 2024 year, we revised our internal organization by firm type to better align with our clients, as
follows:
• Analytics & Trading will become "Institutional Buyside," focusing on asset managers, asset owners, and hedge fund
companies.
•
Research & Advisory will become two groups:
◦
"Dealmakers," focusing on banking and sell-side research, corporate, and private equity and venture capital
workflows; and
6 ◦
"Wealth," focusing on wealth management workflows.
• We will discuss the results of our Partnerships and CGS groups in combination. Partnerships delivers solutions
primarily to content providers, financial exchanges, and rating agencies, while CGS is the exclusive issuer of CUSIP
and CINS identifiers globally.
•
The activities of CTS will be reassigned to Institutional Buyside, Dealmakers, Wealth, and Partnerships and CGS.
This realignment of firm types is not expected to impact our segment reporting for fiscal 2024.
Institutional Buyside
Institutional Buyside offers multi-asset class solutions to global asset managers, asset owners and hedge fund professionals
across the investment portfolio life cycle. It includes workflows for research analysts, portfolio managers, and traders in the
front office, as well as performance analysts, risk managers, and client service and marketing professionals in the middle office.
Our front office on-platform solutions are designed for portfolio construction, research management, order management, and
trade execution capabilities. Our middle office on-platform solutions are designed for performance measurement, attribution,
risk management, and reporting capabilities. In addition to our platform offerings, we offer comprehensive off-platform content
and technology solutions including data feeds, APIs, and programmatic access for clients to engage with us in the environment
best suited to them.
Dealmakers
Dealmakers delivers content and workflow solutions in a flexible platform for investment bankers, sell-side research analysts,
corporate users, private equity and venture capital professionals and investment relationship managers. We provide
comprehensive solutions to our clients including workstations, data feeds, APIs, proprietary and third-party content, and
productivity tools for Microsoft® Office. We also deliver firm-type tailored solutions for CRM and RMS for research authoring
and publishing. These open and flexible products enable our clients to personalize and automate their workflows and to easily
integrate them with their own technology. These tools are used to monitor investments, generate ideas, analyze companies and
markets, perform fundamental research, and build and distribute presentations. Our Dealmakers solutions also offer global
coverage of public and private markets, deep history, and transparency through proprietary and third-party sourced databases.
Wealth
Wealth delivers comprehensive solutions to wealth management clients including our web-based workstation, advisor
dashboards, data feeds, APIs, proprietary and third-party content, and productivity tools for Microsoft® Office. It also provides
RMS for research authoring and publishing. Our Wealth solution enables our clients to easily integrate our products into their
CRM software and internally developed applications. Wealth clients use our advisory tools to provide market-leading support
for their businesses, including home office, advisory, and client engagement work. We continue to focus on expanding our
content and increasing workflow efficiency for wealth-management firms.
Partnerships and CGS
Partnerships delivers solutions including off-platforms (feeds, APIs), workstations, and digital or analytics solutions to other
firms in the financial services ecosystem including content providers, financial exchanges and rating agencies. CGS is the
exclusive issuer of CUSIP and CINS identifiers globally. CGS also acts as the official numbering agency for ISIN identifiers in
the United States and as a substitute ISIN agency for more than 30 other countries. The results of Partnerships and CGS will be
discussed together.
FactSet Clients
Buy-side
Buy-side clients continue to shift toward multi-asset class investment strategies, where we are well-positioned to be a partner of
choice. We are able to compete for greater market share given our ability to provide enterprise-wide solutions to our clients by
leveraging their portfolio data for multiple asset classes. Buy-side clients primarily include asset managers, wealth managers,
asset owners, partners, hedge funds and corporate firms. These clients access our multi-asset class tools through our
workstations, analytics & trading tools, proprietary and third-party content, data feeds, APIs and portfolio services.
7 The buy-side organic annual subscription value ("Organic ASV") annual growth rate as of August 31, 2023 was 6.9%. Buy-side
clients accounted for 82% of our organic ASV as of August 31, 2023. Refer to Part II, Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations, Annual Subscription Value ("ASV"), of this Annual Report on Form
10-K for the definition of Organic ASV.
Sell-side
We deliver comprehensive solutions to sell-side clients including workstation, data feeds, APIs, proprietary and third-party
content, productivity tools for Microsoft® Office, web and mobile, and RMS for research authoring and publishing. Our focus
remains on expanding the depth of content offered and increasing workflow efficiency for sell-side firms. These firms primarily
include broker-dealers, banking & advisory and private equity & venture capital firms.
The sell-side Organic ASV annual growth rate as of August 31, 2023 was 9.3%. Sell-side clients accounted for 18% of our
organic ASV as of August 31, 2023.
Client and User Additions
Our total client count as of August 31, 2023 was 7,921, representing a net increase of 5.1%, or 383 clients compared to the prior
year, mainly due to an increase in corporate clients, wealth management clients and partners. Our client count includes clients
with ASV of $10,000 and above.
As of August 31, 2023, there were 189,972 professionals using FactSet, representing a net increase of 5.6%, or 9,990 users
compared to the prior year, mainly driven by an increase from our wealth management firms and sell-side users from our
banking clients.
Annual ASV retention was greater than 95% for the year ended August 31, 2023 and August 31, 2022. When expressed as a
percentage of clients, annual retention was approximately 91% for the year ended August 31, 2023, compared with
approximately 92% for the year ended August 31, 2022.
Financial Information on Geographic Areas
Operating segments are defined as components of an enterprise that have the following characteristics: (i) they engage in
business activities from which they may recognize revenues and incur expenses, (ii) their operating results are regularly
reviewed by the chief operating decision maker ("CODM") for resource allocation decisions and performance assessment, and
(iii) their discrete financial information is available. Our Chief Executive Officer functions as our CODM.
We have three operating segments: Americas, EMEA and Asia Pacific. This is how we and our CODM manage our business
and the geographic markets in which we operate. These operating segments are consistent with our reportable segments.
The Americas segment serves clients in North, Central and South America. In the Americas, we have offices in 12 states in the
United States ("U.S."), including our corporate headquarters in Norwalk, Connecticut. We also have offices in both Brazil and
Canada. The EMEA segment serves clients in Europe, the Middle East and Africa via offices in Bulgaria, England, France,
Germany, Italy, Ireland, Latvia, Luxembourg, the Netherlands, Sweden and the United Arab Emirates. The Asia Pacific
segment serves clients in Asia and Australasia via office locations in Australia, China, Hong Kong Special Administrative
Region ("SAR") of China, India, Japan, the Philippines and Singapore. These offices exclude any leases that we have fully
vacated in advance of their originally scheduled lease term.
Segment revenues reflect client sales based on geographic location. Each segment records expenses related to its individual
operations with the exception of data center expenditures, third-party data costs and corporate headquarters charges. These
expenses are recorded in the Americas and are not allocated to the other segments. The expenses incurred at our content
collection centers, located in India, the Philippines and Latvia, are allocated to each segment based on their respective
percentage of revenues.
8 The following table reflects the Revenues and Operating income of our segments:
Revenues
Operating Income
(in thousands)
Americas
EMEA
Asia Pacific
Total
Years ended August 31,
2022
2023
1,335,484 $ 1,173,946 $
$
2021
1,008,046 $
539,843
210,181
484,279
185,667
427,700
155,699
Years ended August 31,
2022
2021
2023
239,438 $
159,140 $
243,028
146,741
196,231
120,111
$
2,085,508 $ 1,843,892 $
1,591,445 $
629,207 $
475,482 $
218,180
159,704
96,157
474,041
Refer to Note 18, Segment Information in the Notes to the Consolidated Financial Statements included in Part II, Item 8. of this
Annual Report on Form 10-K for additional segment information.
Organic ASV plus Professional Services Growth
As of August 31, 2023, our Organic ASV plus Professional Services totaled $2.2 billion, up 7.1% compared with August 31,
2022. The increase in Organic ASV plus Professional Services was primarily driven by higher Organic ASV in all our
segments, with the majority of the increase related to the Americas, followed by EMEA and Asia Pacific. This increase was
driven by additional sales in our workflow solutions, primarily in Analytics & Trading, followed by CTS and Research &
Advisory. Refer to Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations,
Annual Subscription Value ("ASV"), of this Annual Report on Form 10-K for the definitions of Organic ASV and Organic ASV
plus Professional Services.
The following chart provides a snapshot of our historic Organic ASV plus Professional Services growth:
Total Organic ASV + Professional Services Growth
$1,481
$1,560
$1,678
$1,837
$2,175
(in millions)
$2,500
$2,000
$1,500
$1,000
$500
$-
'19
'20
'21
'22
'23
Americas
EMEA
Asia Pacific
Professional Services
Human Capital Management
Our employees are key to our success and enable us to execute at a high level. We have built a collaborative culture that
recognizes and rewards innovation and offers employees a variety of opportunities and experiences. We believe that our
continued focus on our employees helps us to provide high quality insights and service to our clients.
9
Who We Are
As of August 31, 2023, we had 34 offices in 19 countries with 12,237 employees, representing an increase of 9.2% compared
with August 31, 2022. Of our total employees, 8,322 (68%) were located in Asia Pacific, 2,487 (20%) in the Americas and
1,428 (12%) in EMEA. We continue to invest in our centers of excellence ("COEs"), which accounted for approximately 67%
of our employees, by expanding our talent pool primarily in India and the Philippines. Functionally, as of August 31, 2023,
47% of our employees were in Content Operations, 28% were in Technology & Product Development, 21% were in Sales and
Client Solutions and 4% were in Corporate Support. As of August 31, 2023, 447 of our employees were represented by
mandatory works councils in our French and German subsidiaries and 24 of our employees were represented by collective
bargaining agreements in the United States.
Employee Engagement
We conduct an annual, anonymous and confidential global employee engagement survey administered by a third-party to
capture our employees’ feedback on a range of topics. The survey's scores and comments provide insight on appropriate actions
to improve our employees’ experience and overall effectiveness. Aggregated survey results are reviewed by senior leadership
and direct managers to identify areas of focus and to create improvement plans. We share survey results with employees to
highlight strengths as well as opportunities for positive change. In our fiscal 2023 employee engagement survey, we achieved a
90% response rate. The majority of our employees indicated that they feel they are treated fairly regardless of diversity
characteristics, are comfortable being their authentic selves at work, believe that FactSet has a great culture and understand how
their work contributes to the Company’s success. In all areas, our scores either remained the same or increased from the
previous year's survey and our overall survey engagement score was the highest since the survey began.
Diversity, Equity & Inclusion
As part of our core values and our efforts to attract and retain top talent, we are committed to building a globally diverse,
equitable and inclusive workplace. Diversity, Equity, and Inclusion (“DE&I”) at FactSet is supported by our DE&I Council,
comprised of executive leaders and chaired by our CEO, Phil Snow. An important component of our DE&I strategy is our
Business Resource Groups (“BRGs”), which help create an inclusive culture for all our employees. Our BRGs are supported by
senior leaders who serve as executive sponsors to our eight BRGs - the Asian BRG, Black BRG, Families BRG, Pride BRG,
Multicultural BRG, Latinx BRG, Women’s BRG, and Veterans BRG. Our BRGs host a variety of educational and networking
events globally and many also co-sponsor external community events.
During fiscal 2023, we continued to publish our workforce demographics and annual EEO-1 Federal data in our Sustainability
Report, launched DE&I annual performance goals for all employees and initiated an internal sponsorship program designed to
create equitable opportunities for those seeking career advancement. Our DE&I annual performance goals included adhering to
inclusive hiring best practices and completing unconscious bias training. Our sponsorship program aimed to increase visibility
for underrepresented talent and connect participating leaders with employees who identify differently from them across lines of
gender and/or race.
How We Work
Based on our success working in a remote environment during the COVID-19 pandemic, in fiscal 2022 we rolled out our “How
We Work” guide to flexible working arrangements. Employees in many of our locations, where permitted by local laws and
regulations, and where the role and department permits, can choose between working full-time in the office, remotely or in a
hybrid arrangement. Some employees may also elect to work a flexible schedule. These arrangements help to retain talent,
increase employee satisfaction, and support our commitment to creating a diverse, equitable and inclusive workplace.
Learning & Development
We offer a range of learning opportunities to empower employees through experiences that support their personal and
professional growth. We identify learning needs to ensure that our employees have the skills and knowledge to excel in their
roles, grow their careers, and contribute to the success of our organization. During fiscal 2023, our employees increasingly
made use of non-mandatory learning, particularly expanded technical learning and upskilling courses. During fiscal 2023, the
FactSet Leadership Advantage Academy helped employees refine their leadership skills and style, expand their enterprise
perspective and create a stronger cross-departmental network.
10 Compensation, Benefits and Wellbeing
We offer our employees a broad range of competitive compensation, benefits and well-being programs reflective of our values
and culture which are designed to meet the diverse needs of our global employee population and are essential to our
recruitment, development, and retention strategies. Our employee compensation may include one or more of the following
elements: base salaries, annual incentive awards, sales incentive awards and equity awards. We differentiate individual salary,
bonus and equity awards based on performance against key objectives and how effectively our employees demonstrate
behaviors consistent with our values and culture. We are committed to offering high-quality, affordable, and locally competitive
benefits options, designed to support the physical, emotional, financial and social well-being of our employees and their
families.
Third-Party Content
We aggregate content from third-party data suppliers, news sources, exchanges, brokers and contributors into our dedicated
managed databases, which our clients access through our flexible delivery platforms. We seek to maintain contractual
relationships with a minimum of two content providers for each major type of financial data, though certain data sets on which
we rely have a limited number of suppliers. We make every effort to assure that, where reasonable, alternative sources are
available. We have entered into third-party content agreements of varying lengths, which in some cases can be terminated with
one year’s notice, at predefined dates, and in other cases on shorter notice. We are not dependent on any one third-party data
supplier to meet the needs of our clients, with only two data suppliers each representing more than 10% of our total data costs
during fiscal 2023.
Data Centers and Cloud Computing
Our business is dependent on our ability to process substantial volumes of data and transactions rapidly and efficiently on our
networks and systems. Our global technology infrastructure supports our operations and is designed to facilitate reliable and
efficient processing and delivery of data and analytics to our clients. As part of our hybrid cloud strategy, we operate two fully
redundant, physically separated data centers in the U.S. that provide client services, while also using market-leading cloud
providers to run products and services to best benefit from the cloud's elasticity, resiliency, security, and regionalization. We
currently use several cloud providers; however, one supplier provided the majority of our cloud computing support for fiscal
2023. Our physical data centers provide layers of redundancy to enhance system performance, including maintaining,
processing and storing data at multiple locations. In the event of a single site failure or localized disaster, client workloads will
automatically move to unaffected sites. We continue to focus on maintaining a global technological infrastructure that allows us
to support our growing business.
The Competitive Landscape
We are a part of the financial information services industry focused on delivering expansive data, sophisticated analytics, and
flexible technology through our platform to the global investment community. This competitive market is comprised of both
large, well-capitalized companies and smaller, niche firms including market data suppliers, news and information providers, and
many third-party content providers that supply us with financial information included in our products. Our largest competitors
are Bloomberg L.P., Market Intelligence (an S&P Global business) and Refinitiv (a London Stock Exchange Group business).
Other competitors and competitive products include online database suppliers and integrators and their applications, such as
BlackRock Solutions, MSCI Inc. and Morningstar Inc. Many of these firms provide products or services similar to our
offerings.
We believe there are high barriers to entry to our business, and we expect it would be difficult for another vendor to quickly
replicate the extensive data we currently offer. We offer clients comprehensive solutions with a broad set of products delivered
through a desktop or mobile user interface, cloud-based platforms, or through standardized or bespoke data feeds, as well as
APIs. In addition, our applications and client support and service offerings are entrenched in the workflow of many financial
professionals given the data management and portfolio analysis/screening capabilities offered. We are entrusted with significant
amounts of our clients' own proprietary data, including portfolio holdings. As a result, we believe our products are central to our
clients’ investment analysis and decision-making.
11 Intellectual Property
We have registered trademarks and copyrights for many of our products and services and will continue to evaluate the
registration of additional trademarks and copyrights as appropriate. We enter into confidentiality agreements with our
employees, clients, data suppliers and vendors. We seek to protect our workflow solutions, documentation and other written
materials under trade secret, copyright and patent laws. While we do not believe we are dependent on any one of our intellectual
property rights, we do rely on the combination of intellectual property rights and other measures to protect our proprietary
rights. Despite these efforts, existing intellectual property laws may afford only limited protection.
Research & Product Development Costs
A key aspect of our growth strategy is to offer new solutions and enhance our existing products and applications by making
them faster and with more reliable and deeper data. We strive to rapidly adopt new technology that can improve our products
and services.
Government Regulation
We are subject to reporting requirements, disclosure obligations and other recordkeeping requirements of the Securities and
Exchange Commission ("SEC") and the various local authorities that regulate each location in which we operate. Our P.A.N.
Securities, LP subsidiary is a member of the Financial Industry Regulatory Authority, Inc. and is a registered broker-dealer
under Section 15 of the Securities Exchange Act of 1934. P.A.N. Securities, LP, as a registered broker-dealer, is subject to Rule
15c3-1 under the Securities Exchange Act of 1934, which requires that we maintain minimum net capital requirements. We
claim exemption under Rule 15c3-3(k)(2)(i).
Corporate Contact Information
FactSet was founded as a Delaware corporation in 1978, and our principal executive office is in Norwalk, Connecticut.
Mailing address of FactSet's headquarters: 45 Glover Avenue, Norwalk, CT 06850
Telephone number: +1 (203) 810-1000
Website address: www.factset.com
Available Information
Through the Investor Relations section of our website (https://investor.factset.com), we make available free of charge the
following filings as soon as practicable after they are electronically filed with, or furnished to, the SEC: our Annual Report on
Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Proxy Statements for the annual stockholder
meetings, Reports on Forms 3, 4 and 5, and any amendments to those reports filed or furnished pursuant to Section 13(a) or
15(d) of the Securities Exchange Act of 1934, as amended. The SEC maintains a website that contains reports, proxy and
information statements and other information that we file with the SEC at www.sec.gov.
Additionally, we broadcast our quarterly earnings calls live via the investor relations section of our website. We also provide
notifications of news or announcements regarding our financial performance, including investor events and press and earnings
releases on our investor relations website. The contents of this website section are not intended to be incorporated by reference
into this Annual Report on Form 10-K or in any other report or document we file with the SEC and any reference to this section
of our website is intended to be inactive textual references only.
12 Executive Officers of the Registrant
The following table shows our current executive officers:
Name of Officer
Age Office Held with FactSet
F. Philip Snow
59 Chief Executive Officer
Linda S. Huber
65 Executive Vice President, Chief Financial Officer
Rachel R. Stern
Executive Vice President, Chief Legal Officer, Global Head of Strategic
Resources and Secretary
58
Robert J. Robie
45 Executive Vice President, Head of Institutional Buyside
Helen L. Shan
56 Executive Vice President, Chief Revenue Officer
Goran Skoko
Executive Vice President, Managing Director EMEA and Asia Pacific, Head
of Dealmakers and Wealth
62
Kristina W. Karnovsky
44 Executive Vice President, Chief Product Officer
John Costigan
54 Executive Vice President, Chief Data Officer
Katherine M. Stepp
38 Executive Vice President, Chief Technology Officer
Catrina Harding
51 Executive Vice President, Chief People Officer
Officer Since
2014
2021
2009
2018
2018
2019
2021
2022
2022
2023
F. Philip Snow – Chief Executive Officer. Mr. Snow was named Chief Executive Officer effective July 1, 2015. Prior to that,
Mr. Snow held the title of President. He began his career at FactSet in 1996 as a Consultant, before moving to Asia to hold
positions in the Tokyo and Sydney offices. Following his move back to the U.S. in 2000, Mr. Snow held various sales
leadership roles prior to assuming the role of Senior Vice President, Director of U.S. Investment Management Sales in 2013.
Mr. Snow received a Bachelor of Arts in Chemistry from the University of California at Berkeley and a Master of International
Management from the Thunderbird School of Global Management. He has earned the right to use the Chartered Financial
Analyst designation.
Linda S. Huber – Executive Vice President, Chief Financial Officer. Ms. Huber was appointed Executive Vice President,
Chief Financial Officer of FactSet in October 2021. As Chief Financial Officer, she is responsible for FactSet’s global finance
organization and oversees all financial functions, including accounting, corporate development, financial planning and analysis,
treasury, tax and investor relations. Prior to joining FactSet, Ms. Huber served as Chief Financial Officer and Treasurer at
MSCI Inc. Prior to joining MSCI, she served as Executive Vice President and Chief Financial Officer of Moody’s Corporation
from May 2005 to June 2018. Earlier in her career, Ms. Huber served in several increasingly senior roles in financial services,
including Executive Vice President and Chief Financial Officer at U.S. Trust Company, a subsidiary of Charles Schwab &
Company, Inc.; Managing Director at Freeman & Co.; Vice President of Corporate Strategy and Development and Vice
President and Assistant Treasurer at PepsiCo.; Vice President of Energy Investment Banking Group at Bankers Trust Co.; and
Associate in the Natural Resources Group at The First Boston Corp. Ms. Huber also held the rank of Captain in the U.S. Army.
Ms. Huber earned an MBA from the Stanford Graduate School of Business and a B.S. degree in business and economics from
Lehigh University. Ms. Huber also serves on the Board of Directors of the Bank of Montreal.
Rachel R. Stern – Executive Vice President, Chief Legal Officer, Global Head of Strategic Resources and Secretary. Ms.
Stern was appointed Executive Vice President, Chief Legal Officer and Global Head of Strategic Resources and Secretary in
October 2018. In addition to her role in the Legal Department, Ms. Stern is also responsible for Compliance, Facilities
Management and Real Estate Planning, and the administration of our offices in Hyderabad, Manila and Riga. Ms. Stern joined
FactSet in January 2001 as General Counsel. Ms. Stern is admitted to practice in New York, Washington D.C., and as House
Counsel in Connecticut. Ms. Stern received a Bachelor of Arts from Yale University, a Master of Arts from the University of
London and a Juris Doctor from the University of Pennsylvania Law School. She sits on the Board of Directors of Baron
Capital Group, Inc. and Morrow Sodali, a TPG Growth Company.
13 Robert J. Robie – Executive Vice President, Head of Institutional Buyside. Mr. Robie was appointed Executive Vice
President, Head of Institutional Buyside, effective September 1, 2023. In his current role, he oversees strategy, research,
development and engineering for Institutional Buyside solutions. Prior to that, he served as Executive Vice President, Head of
Analytics & Tradition Solutions starting in September 2018. Mr. Robie joined FactSet in July 2000 as a Product Sales
Specialist. During his tenure at FactSet, Mr. Robie has held several positions of increased responsibility, including Senior
Director of Analytics and Director of Global Fixed Income. Although Mr. Robie joined FactSet in 2000, he did work at BTN
Partners from 2004 through 2005 in their quantitative portfolio management and performance division, before returning to
continue his career with FactSet. Mr. Robie holds a Bachelor of Arts in Economics and Fine Arts from Beloit College.
Helen L. Shan – Executive Vice President, Chief Revenue Officer. Ms. Shan was appointed Executive Vice President, Chief
Revenue Officer effective May 3, 2021. As the Chief Revenue Officer, she is responsible for driving revenue growth by
managing global sales, client solutions, marketing and media relations. Ms. Shan joined FactSet as Chief Financial Officer in
September 2018 where she oversaw all financial functions at FactSet. Prior to that, she was at Marsh McLennan Companies,
where she served in a variety of roles, including as the company's Corporate Treasurer and as Chief Financial Officer for
Mercer, a professional services firm where she was responsible for global financial reporting and performance, operational
finance, investments, and corporate strategy. Preceding that, Ms. Shan also served as the Vice President and Treasurer for
Pitney Bowes Inc. and served as a Managing Director at J.P. Morgan. In September 2018, Ms. Shan joined the Board of
Directors of EPAM Systems Inc., a global provider of digital platform engineering and software development services. Ms.
Shan holds dual degrees with a Bachelor of Science and a Bachelor of Applied Science from the University of Pennsylvania’s
Wharton School of Business and School of Applied Science and Engineering. Ms. Shan also has a Master of Business
Administration from Cornell University’s SC Johnson College of Business.
Goran Skoko – Executive Vice President, Managing Director EMEA and Asia Pacific, Head of Dealmakers and Wealth.
Mr. Skoko was appointed Executive Vice President, Managing Director EMEA and Asia Pacific, Head of Dealmakers &
Wealth, effective September 1, 2023. In his current role, Mr. Skoko is responsible for providing direction to address the product
and content needs for EMEA and Asia Pacific clients while also focusing on increased deployment and building community
within our Dealmakers & Wealth space. Prior to that, he served as Executive Vice President, Managing Director EMEA and
Asia Pacific and Head of Research & Advisory Solutions starting in July 2021, after having served as Executive Vice President,
Managing Director EMEA and Asia Pacific and Head of Wealth Solutions. He joined FactSet in 2004 as a Senior Product
developer and has held a number of positions of increased responsibility. Prior to FactSet, he spent 16 years in various
engineering and product management roles at Thomson Financial. Mr. Skoko earned his B.S. in Physics and Computer Science
from Fordham University.
Kristina W. Karnovsky – Executive Vice President, Chief Product Officer. Ms. Karnovsky was appointed Executive Vice
President, Chief Product Officer in July 2021. In this current role she works across the entire product portfolio to deliver a
differentiated advantage for clients and support their success. Prior to this role, Ms. Karnovsky was Head of Research
Solutions. Ms. Karnovsky joined FactSet in 2001 as a Consultant and spent over a decade building FactSet's sell-side business
in Sales leadership roles. Ms. Karnovsky earned a bachelor's degree from the University of Scranton.
John Costigan – Executive Vice President, Chief Data Officer. Mr. Costigan was appointed Chief Data Officer of FactSet
effective June 1, 2023. Prior to that, he served as Chief Content Officer of FactSet starting in April 2022. As Chief Data
Officer, he is responsible for FactSet's enterprise-wide data strategy and leads data development from planning through
production. This includes data digital transformation using modern techniques and technology to drive timeliness, accuracy,
coverage, consistency and usability across all FactSet data assets. Mr. Costigan has been at FactSet since September 2007 in a
variety of roles. Prior to joining FactSet, Mr. Costigan served as Vice President, Product Management at Thomson Financial,
and spent 11 years in a variety of Product Management roles at First Call, Autex, ILX, and Tradeweb. Mr. Costigan earned a
bachelor's degree in Economics from St. Michael's College.
Katherine M. Stepp – Executive Vice President, Chief Technology Officer. Ms. Stepp was appointed Chief Technology
Officer, effective September 1, 2022. As Chief Technology Officer, she is responsible for leading FactSet's technology
organization and overseeing its digital transformation strategy. Ms. Stepp joined FactSet in 2008 and previously served as
Senior Director of Product Management within FactSet's Research and Advisory workflow solutions business. Prior to that role,
she was Senior Director of Engineering within FactSet's Research workflow solutions business. Ms. Stepp holds a B.S. in
Computer Science from Carnegie Mellon University.
Catrina Harding - Executive Vice President, Chief People Officer. Ms. Harding was appointed Executive Vice President,
Chief People Officer in July 2023. Prior to that, Ms. Harding served as Chief Human Resources Officer at Gerson Lehrman
Group, a financial and global information services company, and Senior Vice President of Human Resources at Synchrony
Financial, a consumer financial services company and former division of GE Capital. She has more than 20 years of experience
in senior human resources roles at major companies, including U.S. Steel Corporation, General Electric Company, and Ford
14 Motor Company. Ms. Harding holds a Bachelor of Science from Western Michigan University and a Masters in Industrial and
Organizational Psychology from the University of Detroit Mercy.
Additional Information
Additional information with respect to our business is included in the following pages and is incorporated herein by reference:
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures about Market Risk
Notes to the Consolidated Financial Statements
Page(s)
30
49
61
15 ITEM 1A. RISK FACTORS
The following risks could materially and adversely affect our business, financial condition, results of operations, and cash flows
and, as a result, the trading price of our common stock could decline. These risk factors do not identify all risks that we face;
our operations could also be affected by factors that are not presently known to us or that we currently consider to be immaterial
to our operations. Due to risks and uncertainties, known and unknown, our past financial results may not be a reliable indicator
of future performance, and historical trends should not be used to anticipate results or trends in future periods. Investors should
also refer to the other information set forth in this Annual Report on Form 10-K, including Item 7. Management’s Discussion
and Analysis of Financial Condition and Results of Operations and our Consolidated Financial Statements including the related
Notes. Investors should carefully consider all risks, including those disclosed here, before making an investment decision.
Technology & Data Security Risks
Loss, corruption and misappropriation of data and information relating to clients and others
Many of our products, as well as our internal systems and processes, involve the collection, retrieval, processing, storage and
transmission through a variety of media channels of our own, as well as supplier and customer, proprietary information and
sensitive or confidential data. We rely on, and continuously invest in, a complex system of internal processes and controls,
along with policies, procedures and training, designed to protect data that we receive in the ordinary course of business,
including information from client portfolios and strategies. However, these measures do not guarantee security, and improper
access to or release of confidential information may still occur through, for example, employee error or malfeasance, system
error, other inadvertent release, failure to properly purge and protect data, or cybersecurity threats or attacks. Additionally, the
maintenance and enhancement of our systems may not be completely effective in preventing loss, unauthorized access or
misappropriation. Data misappropriation, unauthorized access or data loss could instill a lack of confidence in our products and
systems and damage our brand, reputation and business. Breaches of security measures could expose us, our clients or the
individuals affected to a risk of loss or misuse of this information, potentially resulting in litigation and liability for us, as well
as the loss of existing or potential clients and suppliers. Many jurisdictions in which we operate have laws and regulations
relating to data privacy and protection of personal information, including, for example, the European Union's General Data
Protection Regulation, an increasing number of U.S. state laws, such as California's Consumer Privacy Act and Connecticut's
Personal Data Privacy and Online Monitoring Act, China's Personal Information Protection Law, and India's Digital Personal
Data Protection Act. These laws contain requirements regarding the handling of personal and sensitive data, including our use,
protection and the ability of persons whose data is stored to correct or delete such data about themselves. The law in this area
continues to develop and the changing nature of these laws could impact our processing and cross-border transfer of personal
and sensitive information related to our content, operations, employees, clients, suppliers and others, and may expose us to
claims of violations.
Successful access to prohibited data and other cyber-attacks and the failure of cyber-security systems and procedures
In providing our digital-enabled services to clients, we rely on information technology infrastructure that is managed internally
along with placing reliance on third-party service providers for critical functions. We and these third-party service providers are
subject to the risks of system failures and security breaches, including cyber-attacks (such as those sponsored by nation-states,
terrorist organizations, or global corporations seeking to illicitly obtain technology or other intellectual property and those
accomplished by phishing scams, hacking, viruses, denials of service attacks, tampering, intrusions, physical break-ins,
ransomware and malware), as well as employee errors or malfeasance. In some cases, these risks might be heightened when
employees are working remotely. Our and our vendors' use of mobile and cloud technologies may increase our risk for such
threats. Our protective systems and procedures and those of third parties to which we are connected, such as cloud computing
providers, may not be effective against these threats. Our information technology systems must be constantly updated and
patched to protect against known vulnerabilities and to optimize performance.
While we have dedicated resources responsible for maintaining appropriate levels of cybersecurity and implemented systems
and processes intended to help identify cyberattacks and protect and remediate our network infrastructure, we are aware that
these attacks have become increasingly frequent, sophisticated, and difficult to detect and, as a result, we may not be able to
anticipate, prevent or detect all such attacks. We also may be impacted by a cyberattack targeting one of our vendors or within
our technology supply chain or infrastructure. Our contracts with service providers typically require them to implement and
maintain adequate security controls, but we may not have the ability to effectively monitor these security measures. As a result,
inadequacies of the third-party security technologies and practices may not be detected until after a security breach has
occurred. These risks may be heightened in connection with employees working from remote work environments, as our
dependency on certain service providers, such as video conferencing and web conferencing services, has significantly
increased. In addition, to access our network, products and services, customers and other third parties may use personal mobile
devices or computing devices that are outside of our network environment and are subject to their own security risk.
16 We could suffer significant damage to our brand and reputation: if a cyber-attack or other security incident were to allow
unauthorized access to, or modification of, clients’ or suppliers’ data, other external data, internal data or information
technology systems; if the services provided to clients were disrupted; or if products or services were perceived as having
security vulnerabilities. The costs we would incur to address and resolve these security incidents would increase our expenses.
These types of security incidents could also lead to lawsuits, regulatory investigations and claims, loss of business and
increased legal liability. Cyberattacks, security breaches or third-party reports of perceived security vulnerability to our
systems, even if no breach has occurred, also could damage our brand and reputation, result in litigation, regulatory actions, loss
of client confidence and increased legal liability. We also make acquisitions periodically. While significant effort is placed on
addressing information technology security issues with respect to the acquired companies, we may inherit such risks when these
acquisitions are integrated into our infrastructure. While we maintain insurance coverage that is intended to address certain
aspects of cybersecurity and data protection risks, such coverage may not include, or may not be sufficient to cover, all or the
majority of the costs, losses or types of claims.
A prolonged or recurring outage at our data centers and other business continuity disruptions at facilities could result in
reduced service and the loss of clients
Our clients rely on us for the delivery of time-sensitive, up-to-date data and applications. Our business is dependent on our
ability to process substantial volumes of data and transactions rapidly and efficiently on our computer-based networks, database
storage facilities, and other network infrastructure, which are located across multiple facilities globally. If we experience
significant growth of our customer base or increases in the number of products or services or in the speed at which we are
required to provide products and services, it may strain our systems. Additionally, our systems and networks may become
strained due to aging or end-of-life technology that we have not yet updated or replaced.
Our computer operations, as well as our other business centers, and those of our suppliers and clients, may be vulnerable to
interruption by fire, natural disaster, extreme weather or climate conditions, power loss, telecommunications failures, terrorist
attacks, acts of war or civil unrest, internet failures, computer viruses or security breaches, employee or systems errors, and
other events beyond our reasonable control. In addition, in the remote work environments, the daily activities and productivity
of our workforce is now more closely tied to key vendors, such as video conferencing services, consistently delivering their
services without material disruption. Our ability to deliver information using the internet and to operate in a remote working
environment may be impaired because of infrastructure failures, service outages at third-party internet providers, malicious
attacks, or other factors.
We also currently use multiple providers of cloud services; however, one supplier provided the majority of our cloud computing
support for fiscal 2023. While we believe this provider to be reliable, we have limited control over its performance, and a
disruption or loss of service from this provider could impair our system's operation and our ability to operate for a period of
time. We maintain back-up facilities and certain other redundancies for each of our major data centers to minimize the risk that
any such event will disrupt those operations. However, a loss of our services involving our significant facilities may materially
disrupt our business and may induce our clients to seek alternative data suppliers. Any such losses or damages we incur could
have a material adverse effect on our business. Although we seek to minimize these risks through security measures, controls,
back-up data centers and emergency planning, there can be no assurance that such efforts will be successful or effective.
Additionally, we may also face significant increases in our use of power and data storage and may experience a shortage of
capacity and increased costs associated with such usage.
Transition to new technologies, applications and processes could expose us to unanticipated disruptions
The technology landscape is constantly evolving. To remain competitive, we must adapt and migrate to new technologies,
applications and processes. Use of more advanced technologies and infrastructure is critical to the development of our products
and services, the scaling of our business for future growth, and the accurate maintenance of our data and operations. The
implementation of new technologies and infrastructure, such as migration to new cloud-based systems, is complex and can
involve substantial expenditures as well as risks inherent in the conversion to any new system, including potential loss of
information and disruption to operations. We may experience unanticipated interruption and delay in the performance and
delivery of certain of our products and services. Certain of our technologies are also dependent upon third-party providers to
maintain adequate systems to protect the security of our confidential information and data. Failure by our providers to maintain
appropriate security could result in unauthorized access to our systems or a network disruption that could further lead to
improper disclosure of confidential information or data, regulatory penalties and remedial costs. Any disruption to either the
provider’s systems or the communication links between us and the provider could negatively affect our ability to operate our
data systems and could impair our ability to provide services to our clients. If the services to our clients are disrupted, or if there
is unauthorized access to the confidential information of our clients or our vendors, we could suffer significant damage to our
brand and reputation and lose clients. We also may incur increased operating expenses to recover data, repair or remediate
systems, equipment or facilities, and to protect ourselves from such disruptions. As we increase our reliance on third-party
17 systems, our exposure to damages from services disruptions may increase, and we may incur additional costs to remedy
damages caused by these disruptions.
Use of open source software could introduce security vulnerabilities, impose unanticipated restrictions on our ability to
commercialize our products and services, and subject us to increased costs
We use open source code in our software development and incorporate it into our products and internal systems. The use of
open source code may entail greater risks than the use of third-party commercial software. Open source licensors generally do
not provide warranties or other contractual protections regarding infringement claims or the quality or security of the code.
Some open source licenses provide that if we combine our proprietary applications with the open source software in a certain
manner, we could be required to release the source code of our proprietary applications to the public. This would allow our
competitors to create similar products with less development effort and time and ultimately put us at a competitive
disadvantage. We have implemented procedures to control the use of open source code so as to mitigate this risk; however, the
terms of many open source licenses are also ambiguous and have not been interpreted by U.S. or other courts. Therefore, there
is a risk that our internal procedures controlling the use of open source code could fail, or that the licenses could be construed in
a manner that imposes unanticipated conditions or restrictions on us. If any of this were to occur, we could be required to seek
alternative third-party licenses at increased costs or reduced scope, to re-engineer products or systems, or potentially to
discontinue the licensing of certain products. Any remedial actions could divert resources away from our development efforts,
be time intensive and have a significant cost.
Our use of artificial intelligence technologies may not be successful and may present business, compliance, and reputational
risks
We use, and will expand our use of, machine learning and artificial intelligence ("AI") technologies in some of our products and
processes. If we fail to keep pace with rapidly evolving AI technological developments, our competitive position and business
results may be negatively impacted. Our use of AI technologies will require resources to develop, test and maintain such
products, which could be costly. Third parties may be able to use AI to create technology that could reduce demand for our
products. In addition, the introduction of AI technologies, particularly generative AI, into new or existing offerings may result
in new or expanded risks and liabilities, due to enhanced governmental or regulatory scrutiny, litigation, compliance issues,
ethical concerns, confidentiality, data privacy or security risks, as well as other factors that could adversely affect our business,
reputation, and financial results. For example, use of AI technologies could lead to unintended consequences, such as accuracy
issues, cybersecurity risks, unintended biases, and discriminatory outputs, could impact our ability to protect our data,
intellectual property, and client information, or could expose us to intellectual property claims by third parties.
Strategy & Market Demand Risks
Competition in our industry may cause price reductions or loss of market share
We continue to experience intense competition across all markets for our products, with competitors ranging in size from
smaller, highly specialized, single-product businesses to multi-billion-dollar companies. While we believe the breadth and depth
of our suite of products and applications offer benefits to our clients that are a competitive advantage, our competitors may offer
price incentives to attract new business. Future competitive pricing pressures may result in decreased sales volumes and price
reductions, resulting in lower revenues and ASV. Weak economic conditions may also result in clients seeking to utilize lower-
cost information that is available from alternative sources. The impact of cost-cutting pressures across the industries we serve
could lower demand for our products. Clients within the financial services industry that strive to reduce their operating costs
may seek to reduce their spending on financial market data and related services, such as ours. If our clients consolidate their
spending with fewer suppliers, by selecting suppliers with lower-cost offerings or by self-sourcing their needs for financial
market data, our business could be negatively affected.
The continued shift from active to passive investing could negatively impact user count growth and revenues
The predominant investment strategy today is still active investing, which attempts to outperform the market. The main
advantage of active management is the expectation that the investment managers will be able to outperform market indices.
They make informed investment decisions based on their experiences, insights, knowledge and ability to identify opportunities
that can translate into superior performance. The main advantage of passive investing is that it closely matches the performance
of market indices. Passive investing requires little decision-making by investment managers and low operating costs which
result in lower fees for the investor. A continued shift to passive investing, resulting in an increased outflow to passively
managed index funds, could reduce demand for the services of active investment managers and consequently, the demand of
our clients for our services.
18 A decline in equity and/or fixed income returns may impact the buying power of investment management clients
The majority of our ASV is derived from our investment management clients, and the profitability and management fees of
many of these clients are tied to assets under management. An equity market decline not only depresses the value of assets
under management but also could cause a significant increase in redemption requests from our clients’ customers, further
reducing their assets under management. Reduced client profits and management fees may cause our clients to cut costs.
Moreover, extended declines in the equity and fixed income markets may reduce new fund or client creation. Each of these
developments may result in lower demand from investment managers for our services and workstations, which could negatively
affect our business.
Uncertainty or downturns in the global economy and consolidation in the financial services industry may cause us to lose
clients and users
Many of our clients are asset and wealth managers, investment and commercial bankers, hedge funds, private equity and
venture capital professionals, and other financial services entities. Uncertainty or downturns in the global economy or a lack of
confidence in the global financial system could negatively impact our clients, which could cause a corresponding negative
impact on our business results. Mergers, consolidation or contraction of our clients in the financial services industry also could
directly impact the number of clients, prospective clients and users of our products and services. If our clients merge with or are
acquired by other entities that are not our clients, or that use fewer of our products and services, they may discontinue or reduce
their use of our products and services. Thus, economic uncertainty, economic downturns, lack of confidence in the global
financial system, and consolidation in this sector could adversely affect our business, financial results and future growth.
Volatility or downturns in the financial markets may delay the spending pattern of clients and reduce future ASV growth
The decision on the part of large institutional clients to purchase our services often requires management-level sponsorship and
typically depends upon the size of the client, with larger clients having more complex and time-consuming purchasing
processes. The process is also influenced by market volatility and market downturns. These characteristics often lead us to
engage in relatively lengthy sales efforts. Purchases (and incremental ASV) may therefore be delayed as uncertainties or
downturns in the financial markets may cause clients to remain cautious about capital and data content expenditures,
particularly in uncertain economic environments. Market volatility or market downturns may curtail our client's spending and
lead them to delay or defer purchasing decisions or product service implementations, or cause them to cancel or reduce their
spending with us, which could negatively impact our revenues and future growth.
Failure to develop and market new products and enhancements that maintain our technological and competitive position
and failure to anticipate and respond to changes in the marketplace for our products and customer demands
The market for our products is characterized by rapid technological change, including methods and speed of delivery, changes
in client demands, development of new investment instruments and evolving industry standards. The direction of these trends
can render our existing products less competitive, obsolete or unmarketable. As a result, our future success will continue to
depend upon our ability to identify and develop new products and enhancements that address the future needs of our target
markets and to respond to their changing standards and practices. We may not be successful in developing, introducing,
marketing, licensing and implementing new products and enhancements on a timely and cost-effective basis or without
impacting the stability and efficiency of existing products and customer systems. Further, any new products and enhancements
may not adequately meet the requirements of the marketplace or achieve market acceptance. We must make long-term
investments and commit significant resources before knowing whether these investments will eventually result in products and
services that satisfy our clients' needs and generate revenues required to provide the desired results. Our failure or inability to
anticipate and respond to changes in the marketplace, including competitor and supplier developments, may also adversely
affect our business, operations and growth.
Errors or defects can exist at any point in a product's life cycle, but are more frequently found after the introduction of new
products or enhancements to existing products. Despite internal testing and testing by clients, our products may contain errors.
We may also experience delays while developing and introducing new products for various reasons, such as difficulties in
licensing data inputs. Defects, errors, or delays in our products that are significant, or are perceived to be significant, could
result in rejection or delay in market acceptance, damage to our reputation, loss of revenues, lower rate of license renewals or
upgrades, diversion of development resources, product liability claims or regulatory actions, or increases in service and support
costs.
19 We have provisions in our client contracts to limit our exposure to potential liability claims brought by clients based on the use
of our products or services or our delay or failure to provide services. Contracts with customers also increasingly include
service level requirements and audit rights to review our security. Many of our customers in the financial services sector are
also subject to regulations and requirements to adopt risk management processes commensurate with the level of risk and
complexity of their third-party relationships, and provide rigorous oversight of relationships that involve certain "critical
activities," some of which may be deemed to be provided by us. Any failure on our part to comply with the specific provisions
in customer contracts could result in the imposition of various penalties, which may include termination of contracts, service
credits, suspension of payments, contractual penalties, adverse monetary judgments, and, in the case of government contracts,
suspension from future government contracting. Even if the outcome of any claims brought against us were ultimately
favorable, such a claim would require the time and attention of our management, personnel, as well as financial and other
resources and potentially pose a significant disruption to our normal business operations.
Failure to identify, integrate, or realize anticipated benefits of acquisitions and strains on resources as a result of growth
There can be no assurance that we will be able to identify suitable candidates for successful acquisition at acceptable prices.
Additionally, there may be integration risks or other risks resulting from acquired businesses, including our acquisition of CGS
during fiscal 2022. Our ability to achieve the expected returns and synergies from past and future acquisitions and alliances
depends in part upon our ability to integrate the offerings, technology, sales, administrative functions and personnel of these
businesses effectively into our core business. We cannot guarantee that our acquired businesses will perform at the levels
anticipated. In addition, past and future acquisitions may subject us to unanticipated risks or liabilities or disrupt operations.
Growth, such as the addition of new clients and acquisitions, puts demands on our resources, including our internal systems and
infrastructure. These may require improvements or replacement to meet the additional demands of a larger organization.
Further, the addition of new clients and the implementation of such improvements would require additional management time
and resources. These needs may result in increased costs that could negatively impact results of operations. Failure to
implement needed improvements, such as improved scalability, could result in a deterioration in the performance of our internal
systems and negatively impact the performance of our business.
Failure to maintain reputation
We enjoy a positive reputation in the marketplace. Our ability to attract and retain clients and employees is affected by external
perceptions of our brand and reputation. Reputational damage from negative perceptions or publicity, including without
limitation market perception of our sustainability and corporate responsibility policies and practices, could affect our ability to
attract and retain clients and employees and our ability to maintain our pricing for our products. Although we monitor
developments for areas of potential risk to our reputation and brand, negative perceptions or publicity could have a material
adverse effect on our business and financial results.
Operational Risks
Operations outside the United States involve additional requirements and burdens that we may not be able to control or
manage successfully
In fiscal 2023, approximately 39% of our revenues related to operations located outside the U.S. In addition, approximately
80% of our employees are located in offices outside the U.S. We expect our growth to continue outside the U.S. Our non-U.S.
operations involve risks that differ from or are in addition to those faced by our U.S. operations. These risks include difficulties
in developing products, services and technology tailored to the needs of non-U.S. clients, including in emerging markets;
different employment laws and rules; rising labor costs in lower-wage countries; difficulties in staffing and managing personnel
that are located outside the U.S.; different regulatory, legal and compliance requirements, including in the areas of privacy and
data protection, anti-bribery and anti-corruption, trade sanctions and restraints and currency controls, marketing and sales and
other barriers to conducting business; social and cultural differences, such as language; diverse or less stable political, operating
and economic environments and market fluctuations; civil disturbances or other catastrophic events that reduce business
activity, including the risk that the current conflicts between Ukraine and Russia and in the Middle East expand in a way that
impacts our business and operations; limited recognition of our brand and intellectual property protection; differing accounting
principles and standards; restrictions on or adverse tax consequences from entity management efforts; and changes in U.S. or
foreign tax laws. If we are not able to adapt efficiently or manage the business effectively in markets outside the U.S., our
business prospects and operating results could be materially and adversely affected.
20 Failure to enter into, renew or comply with contracts supplying new and existing data sets or products on competitive terms
We collect and aggregate third-party content from data suppliers, news sources, exchanges, brokers and contributors into our
own dedicated managed databases, which clients access to perform their analyses. We combine the data from these sources into
our own dedicated databases. Clients have access to the data and content found within our databases. These databases are
important to our operations as they provide clients with key information. We have entered into third-party content agreements
of varying lengths, which in some cases can be terminated on one year’s notice at predefined dates, and in other cases on
shorter notice. Some of our content provider agreements are with competitors, who may attempt to make renewals difficult or
expensive. We seek to maintain favorable contractual relationships with our data suppliers, including those that are also
competitors. However, we cannot control the actions and policies of our data suppliers and we may have data suppliers who
provide us with notice of termination, or exclude or restrict us from use of their content, or only license such content at
prohibitive cost. Additionally, despite our efforts to comply with our third-party data supplier agreements, there can be no
assurances that third parties may not challenge our use of their content, which could result in increased licensing costs, loss of
rights, and costly legal actions. Certain data sets that we rely on have a limited number of suppliers, although we make every
effort to assure that, where reasonable, alternative sources are available. We are not dependent on any one third-party data
supplier to meet the needs of our clients, with only two data suppliers each representing more than 10% of our total data costs
for fiscal 2023. Our failure to be able to maintain our supplier relationships, or the failure of our suppliers to deliver accurate
data or in a timely manner, or the occurrence of a dispute with a vendor over use of their content, could increase our costs and
reduce the type of content and products available to our clients, which could harm our reputation in the marketplace and
adversely affect our business.
Increased accessibility to free or relatively inexpensive information sources may reduce demand for our products
Each year, an increasing amount of free or relatively inexpensive information becomes available, particularly through the
internet, and this trend may continue. The availability of free or relatively inexpensive information may reduce demand for our
products. While we believe our service offering is distinguished by such factors as customization, timeliness, accuracy, ease-of-
use, completeness and other value-added factors, if users choose to obtain the information they need from public or other
sources, our business, results of operations, and cash flows could be adversely affected.
Inability to hire and retain key qualified personnel
Our business is based on successfully attracting, motivating and retaining talented and diverse employees. Creating a diverse
and inclusive environment that promotes empowerment and engagement is key to our ability to attract, retain, and develop
talent. Competition for talent, especially engineering personnel, is strong. We need technical resources such as engineers to help
develop new products and enhance existing services. We rely upon sales personnel to sell our products and services and
maintain healthy business relationships. Our future success also is dependent on the continued service and performance of the
members of our senior leadership team. All of these personnel possess business and technical capabilities that are difficult to
replace. If we are unsuccessful in our recruiting efforts, or if we are unable to retain key employees, our ability to develop and
deliver successful products and services may be negatively affected and could have a material, adverse effect on our business.
Pandemics and other global public health epidemics may adversely impact our business, our future results of operations and
our overall financial performance
Our business could be materially and adversely affected by the risk, or the public perception of risk, related to a pandemic or
widespread health crisis, such as the COVID-19 pandemic. A significant outbreak, epidemic or pandemic of contagious
diseases in the human population could result in a widespread health crisis adversely affecting the broader economies, financial
markets and overall demand for our products. In addition, any preventative or protective actions that governments implement or
that we take in respect of a global health crisis, such as travel restrictions, quarantines or site closures, may interfere with the
ability of our employees, vendors, and data suppliers to perform their respective responsibilities and obligations relative to the
conduct of our business, including our ability to gather content. Such results could have a material adverse effect on our
operations, business, financial condition, results of operations, or cash flows.
Legal & Regulatory Risks
Legislative and regulatory changes in the environments in which we and our clients operate
As a business, we are subject to numerous laws and regulations in the U.S. and in the other countries in which we operate.
These laws, rules, and regulations, and their interpretations, may conflict or change in the future, and compliance with these
changes may increase our costs or cause us to make changes in or otherwise limit our business practices. In addition, the global
nature and scope of our business operations make it more difficult to monitor areas that may be subject to regulatory and
21 compliance risk. If we fail to comply with any applicable law, rule, or regulation, we could be subject to claims and fines and
suffer reputational damage. Uncertainty caused by political change globally, and complex relationships across countries,
including the U.S. and nations in Europe and Asia, heightens the risk of regulatory uncertainty.
Many of our clients operate within a highly regulated environment and must comply with governmental legislation and
regulations. The U.S. regulators have increased their focus on the regulation of the financial services industry. Increased
regulation of our clients may increase their expenses, causing them to seek to limit or reduce their costs from outside services
such as ours. Additionally, if our clients are subjected to investigations or legal proceedings they may be adversely impacted,
possibly leading to their liquidation, bankruptcy, receivership, reduction in assets under management, or diminished operations,
which would adversely affect our revenues.
Some recent legislative and regulatory changes that we believe might materially impact us and our clients include: (a) in the
European Union ("EU") and the United Kingdom ("UK"), the Markets in Financial Instruments Directive (recast) ("MiFID II"),
which became effective in January 2018, may adversely affect demand for our services; (b) in the UK, the uncertainty
surrounding the UK and EU regulatory frameworks following the UK's departure from the EU in January 2020 ("Brexit"),
including the Financial Services and Markets Bill, may negatively impact our revenues or growth; and (c) evolving laws, rules
and regulations in a variety of jurisdictions around such areas as climate, data privacy, cybersecurity, and data protection.
Adverse resolution of litigation or governmental investigations
We are party to lawsuits in the normal course of our business. Litigation and governmental investigations can be expensive,
lengthy and disruptive to normal business operations. Moreover, the results of complex legal proceedings are difficult to
predict. Unfavorable resolution of lawsuits could have a material adverse effect on our business, operating results or financial
condition. For additional information regarding legal matters, see Item 3. Legal Proceedings, of this Annual Report on Form
10-K.
Third parties may claim we infringe upon their intellectual property rights or they may infringe upon our intellectual
property rights
We may receive notice from others claiming that we have infringed upon their intellectual property rights. Responding to these
claims may require us to enter into royalty and licensing agreements on unfavorable terms, incur litigation costs, enter into
settlements, stop selling or redesign affected products, or pay damages and satisfy indemnification commitments with our
clients or suppliers under contractual provisions of various license arrangements. Additionally, third parties may copy, infringe
or otherwise profit from the unauthorized use of our intellectual property rights, requiring us to litigate to protect our rights.
Certain countries may not offer adequate protection of proprietary rights. If we are required to defend ourselves or assert our
rights or take such actions mentioned, our operating margins may decline as a result. We have incurred, and expect to continue
to incur, expenditures to acquire the use of technology and intellectual property rights as part of our strategy to manage this
risk.
Additional cost due to tax assessments resulting from ongoing and future audits by tax authorities as well as changes in tax
laws
In the ordinary course of business, we are subject to changes in tax laws as well as tax examinations by various governmental
tax authorities. The global and diverse nature of our business means that there could be additional examinations by
governmental tax authorities and the resolution of ongoing and other probable audits which could impose a future risk to the
results of our business. In August 2019, July 2021 and December 2022, we received Notices of Intent to Assess (the "Notices")
additional sales/use taxes, interest and underpayment penalties from the Commonwealth of Massachusetts Department of
Revenue relating to prior tax periods. We requested pre-assessment conferences with the Department of Revenue's Office of
Appeals to appeal the Notices and in May 2023 we received a Letter of Determination from the Commonwealth upholding the
Notices, along with a Notice of Assessment for all the periods covered by the Notices. On June 22, 2023, we filed an
Application for Abatement with the Commonwealth disputing all amounts assessed, which was subsequently denied. We are
filing petitions with the Appellate Tax Board to appeal all amounts assessed by the Commonwealth and believe that we will
ultimately prevail; however, if we do not prevail the amount of these assessments could have a material impact on our
consolidated financial position, results of operations and cash flows.
As of August 31, 2023, we have concluded that some payment to the Commonwealth is probable. We have recorded an accrual
which is not material to our consolidated financial statements. While we believe that the assumptions and estimates used to
determine the accrual are reasonable, future developments could result in adjustments being made to this accrual.
22 Changes in tax laws or the terms of tax treaties in a jurisdiction where we are subject to tax could have an impact on our taxes
payable. In addition, as a global taxpayer, we face challenges due to increasing complexities in accounting for taxes in a variety
of jurisdictions, which could impact our tax obligations and effective tax rate.
Financial Market Risks
Exposure to fluctuations in currency exchange rates and the failure of hedging arrangements
Due to the global nature of our operations, we conduct business outside the U.S. in several currencies. Our primary currency
exposures include the Indian Rupee, Euro, British Pound Sterling and Philippine Peso. To the extent our international activities
increase in the future, our exposure to fluctuations in currency exchange rates may increase as well. To manage this exposure,
we utilize derivative instruments, namely foreign currency forward contracts. By their nature, all derivative instruments involve
elements of market and credit risk. The market risk associated with these instruments resulting from currency exchange
movements is expected to offset the market risk of the underlying transactions, assets and liabilities being hedged. Credit risk is
managed through the continuous monitoring of exposure to the counterparties associated with these instruments. Our primary
objective in holding derivatives is to reduce the volatility of earnings with changes in foreign currency. Although we believe
that our foreign exchange hedging policies are reasonable and prudent under the circumstances, our attempt to hedge against
these risks may not be successful, which could cause an adverse impact on both our results of operations and cash flows.
Business performance may not be sufficient to meet financial guidance or publicly disclosed long-term targets
We provide public, full-year financial guidance based upon assumptions regarding our expected financial performance,
including our ability to grow revenues and organic ASV plus professional services, to meet our planned expenses and maintain
a certain tax rate, and our ability to achieve our profitability targets. We can provide no assurances that we will be able to
maintain the levels of growth and profitability that we have experienced in the past, or that our growth strategies will be
successful. If we are unable to successfully execute on our strategies to achieve our growth objectives and retain our existing
clients, or if we experience higher than expected operating costs or taxes, we risk not meeting our full-year financial guidance
or may find it necessary to revise such guidance during the year.
Economic, political and market forces beyond our control could adversely affect our business.
Our costs and the demand for our products may be impacted by domestic and international factors that are beyond our control.
Negative conditions in the general economy in either the United States or abroad, including conditions resulting from financial
and credit market fluctuations, changes in economic policy, inflation rate fluctuations and trade uncertainty, including changes
in tariffs, sanctions, international treaties and other trade restrictions, or other geopolitical events, such as the ongoing military
conflicts between Russia and Ukraine and in the Middle East, could result in an increase in our costs and/or a reduction in
demand for our products, which could have an adverse effect on our results of operations and financial condition.
Risks Relating to Our Debt
Our indebtedness may impair our financial condition and prevent us from fulfilling our obligations under the Senior Notes
and our other debt instruments
As of August 31, 2023, our total outstanding principal amount of debt was $1.6 billion, none of which is secured. This includes
our obligations under the Senior Notes and the 2022 Credit Facilities. Under the 2022 Revolving Facility, we have $250.0
million of unused commitments and an option to increase the size of the facility by an additional $750.0 million. Refer to Note
12, Debt in the Notes to the Consolidated Financial Statements included in Part II, Item 8. of this Annual Report on Form 10-K
for definitions of these terms and more information on the Senior Notes, 2022 Credit Facilities and 2019 Revolving Credit
Facility.
Our indebtedness could have important consequences to investors, including:
a. making it more difficult for us to satisfy our obligations;
b.
c.
limiting our ability to borrow additional amounts to fund working capital, capital expenditures, acquisitions, debt
service requirements, execution of our growth strategy and other purposes;
requiring us to dedicate a substantial portion of our cash flows from operations to pay interest on our debt and
scheduled amortization on the 2022 Term Facility, which would reduce availability of our cash flow to fund working
capital, capital expenditures, acquisitions, execution of our strategy and other general corporate purposes;
d. making us more vulnerable to adverse changes in general economic, industry and government regulations and in our
business by limiting our flexibility in planning for, and making it more difficult for us to react quickly to, changing
conditions;
23 e.
f.
placing us at a competitive disadvantage compared with those of our competitors that have less debt; and
exposing us to risks inherent in interest rate fluctuations because some of our borrowings are at variable rates of
interest, which could result in higher interest expense in the event of increases in market interest rates.
In addition, we may not be able to generate sufficient cash flows from our operations to repay our indebtedness when it
becomes due and to meet our other cash needs. If we are not able to pay our debts as they become due, we will be required to
pursue one or more alternative strategies, such as selling assets, refinancing or restructuring our indebtedness or selling
additional debt or equity securities. We may not be able to refinance our debt or sell additional debt or equity securities or our
assets on favorable terms, if at all, and if we must sell our assets, it may negatively affect our ability to generate revenues.
Despite current indebtedness levels, we may still incur more debt. The incurrence of additional debt could further exacerbate
the risks associated with our indebtedness
Subject to certain limitations, the 2022 Credit Agreement and the indenture governing the Senior Notes permit us and our
subsidiaries to incur additional debt. If new debt is added to our or any such subsidiary’s current debt levels, the risks described
above in the previous risk factor could intensify.
The restrictive covenants in our debt may affect our ability to operate our business successfully
The 2022 Credit Agreement contains, and our future debt instruments may contain, various provisions that limit our ability to,
among other things: incur liens; incur additional indebtedness, guarantees or other contingent obligations; enter into sale and
leaseback transactions; engage in mergers and consolidations; make investments and acquisitions; change the nature of our
business; and make sales, transfers and other dispositions of property and assets. The indenture governing the Senior Notes also
contains various provisions that limit our ability to, among other things: incur liens; enter into sale and leaseback transactions;
engage in mergers and consolidations; and make sales, transfers and other dispositions of property and assets. These covenants
could adversely affect our ability to finance our future operations or capital needs and pursue available business opportunities.
In addition, the 2022 Credit Agreement requires us to maintain specified financial ratios and satisfy certain financial condition
tests. Events beyond our control, including changes in general economic and business conditions, may affect our ability to meet
those financial ratios and financial condition tests. There can be no assurance that we will meet those tests or that the lenders
will waive any failure to meet those tests. A breach of any of these covenants or any other restrictive covenants contained in the
definitive documentation governing our indebtedness would result in a default or an event of default. If an event of default in
respect of any of our indebtedness occurs, the holders of the affected indebtedness could declare all amounts outstanding,
together with accrued interest, to be immediately due and payable, which, in turn, could cause the default and acceleration of
the maturity of our other indebtedness. We expect we will be permitted to incur substantial amounts of secured debt under the
covenants in the indenture governing the Senior Notes and the 2022 Credit Facilities. If, upon an acceleration, we were unable
to pay amounts owed in respect of any such indebtedness secured by liens on our assets, then the lenders of such indebtedness
could proceed against the collateral pledged to them.
Certain of our borrowings and other obligations are based upon variable rates of interest, which could result in higher
expense in the event of increases in interest rates
The 2022 Credit Agreement provides that (i) loans denominated in U.S. dollars, at our option, will bear interest at either the
one-month Term Secured Overnight Financing Rate ("SOFR") (with a 0.1% credit spread adjustment and subject to a "zero"
floor), (ii) the Daily Simple SOFR (with a 0.1% credit spread adjustment and subject to a "zero" floor) or (iii) an alternate base
rate. Under the 2022 Credit Agreement, loans denominated in Pounds Sterling will bear interest at the Daily Simple Sterling
Overnight Index Average ("SONIA") (subject to a "zero" floor) and loans denominated in Euros will bear interest at the Euro
Interbank Offered Rate ("EURIBOR") (subject to a "zero" floor), in each case, plus an applicable interest rate margin. The
interest rate margin will fluctuate based upon our senior unsecured non-credit enhanced long-term debt rating and our total
leverage ratio. An increase in the alternate base rate, Term SOFR, Daily Simple SOFR, SONIA or EURIBOR would increase
our interest payment obligations under the 2022 Credit Facilities and could have a negative effect on our cash flow and
financial condition.
To mitigate this exposure, on March 1, 2022, we entered into an interest rate swap agreement to hedge the variable interest rate
obligation on a portion of our outstanding balance under the 2022 Credit Facilities. However, as the interest rate swap
agreement covers only a portion of our outstanding balance under the 2022 Credit Facilities, a substantial portion of our
outstanding balance under the 2022 Credit Facilities continues to be exposed to interest rate volatility. An increase in the
applicable rates would increase our interest payment obligations under the 2022 Credit Facilities and could have a negative
effect on our cash flow and financial condition.
24 ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 1C. CYBERSECURITY
FactSet’s information security program is managed by a dedicated Chief Information Security Officer (“CISO”), whose team is
responsible for leading enterprise-wide cybersecurity strategy, policy, standards, architecture, and processes. The CISO
provides periodic reports to our Board of Directors (the “Board”), as well as our Chief Executive Officer and other members of
our senior management as appropriate. These reports include updates on the Company’s cyber risks and threats, the status of
projects to strengthen our information security systems, assessments of the information security program, and the emerging
threat landscape. Our program is regularly evaluated by internal and external experts with the results of those reviews reported
to senior management and the Board. We also actively engage with key vendors, industry participants, and intelligence and law
enforcement communities as part of our continuing efforts to evaluate and enhance the effectiveness of our information security
policies and procedures.
ITEM 2. PROPERTIES
As of August 31, 2023, we leased 34 offices worldwide, including our corporate headquarters located at 45 Glover Avenue,
Norwalk, Connecticut, where we occupy 91,718 square feet of office space. Our leased office space also includes our data
content collection offices located in India, the Philippines and Latvia and our data centers that support our technological
infrastructure located in New Jersey and Virginia.
Refer to the table set forth below for the listing of our leased office space by geographic location. The listing excludes any
office locations that we have fully vacated during fiscal 2022 and 2023 in advance of their original lease expiration dates. We
vacated certain leased office space to resize our real estate footprint for our hybrid work environment. We believe the amount of
leased space as of August 31, 2023 is adequate for our current business needs. We regularly review our real estate footprint to
best support our operations and should our real estate needs increase, we believe additional space will be available.
25 Segment
Americas
EMEA
Asia Pacific
Leased Location
Austin, Texas
Boston, Massachusetts
Charlotte, North Carolina
Chicago, Illinois
Lakewood, Colorado
Los Angeles, California
New York, New York
Norwalk, Connecticut
Piscataway, New Jersey
Reston, Virginia
San Francisco, California
Sao Paulo, Brazil
Toronto, Canada
Youngstown, Ohio
Amsterdam, the Netherlands
Dubai, United Arab Emirates
Frankfurt, Germany
Gothenburg, Sweden
London, England
Milan, Italy
Paris, France
Riga, Latvia
Sofia, Bulgaria
Stockholm, Sweden
Hong Kong SAR, China
Hyderabad, India
Manila, the Philippines
Melbourne, Australia
Mumbai, India
Shanghai, China
Singapore
Sydney, Australia
Tokyo, Japan
ITEM 3. LEGAL PROCEEDINGS
From time to time, we are subject to legal proceedings, claims and litigation arising in the ordinary course of business. Based on
currently available information, our management does not believe that the ultimate outcome of these unresolved matters against
us, individually or in the aggregate, is likely to have a material adverse effect on our consolidated financial position, annual
results of operations and cash flows. However, these matters are subject to inherent uncertainties and management’s view of
these matters may change in the future. Refer to Note 13, Commitments and Contingencies in the Notes to the Consolidated
Financial Statements included in Part II, Item 8. of this Annual Report on Form 10-K, for more information on contingent
matters.
26 ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
27 Part II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
Our common stock is listed on the NYSE and NASDAQ under the symbol "FDS".
Holders of Record – As of October 20, 2023, we had approximately 2,093 holders of record of our common stock. However,
because many of our shares of common stock are held by brokers and other institutions on behalf of stockholders, we are unable
to estimate the total number of stockholders represented by these record holders.
Dividends - We paid four quarterly dividends during fiscal 2023. In the third quarter of fiscal 2023, we increased our quarterly
cash dividend from $0.89 cents per share to $0.98 cents per share. Future dividend payments will depend on our earnings,
capital requirements, financial condition and other factors we consider relevant, and is subject to final determination by our
Board of Directors. Refer to Note 14, Stockholders' Equity, in the Notes to the Consolidated Financial Statements included in
Part II, Item 8. of this Annual Report on Form 10-K for more information on our dividends.
Recent Sales of Unregistered Securities
There were no sales of unregistered equity securities during fiscal 2023.
Issuer Purchases of Equity Securities
The following table provides a month-to-month summary of the share repurchase activity during the three months ended
August 31, 2023:
(in thousands, except share and per share data)
Period
June 2023
July 2023
August 2023
Total number
of shares
purchased(1)
Average
price paid per
share
Total number of shares
purchased as part of
publicly announced
plans or programs(2)
Approximate dollar value
of shares that may yet be
purchased under the plans
or programs(2)
91,470 $
83,878 $
92,544 $
267,892
401.90
411.90
429.56
89,950 $
83,000 $
91,450 $
264,400
78,010
43,812
4,534
(1)
Includes 264,400 shares repurchased under the existing stock repurchase program, as well as 3,492 shares repurchased to satisfy
withholding tax obligations due upon the vesting of stock-based awards.
(2) As of August 31, 2023, we had $4.5 million authorized under our share repurchase program for future share repurchases, which was
not available for use after August 31, 2023. On June 20, 2023, our Board of Directors authorized up to $300 million for share
repurchases on or after September 1, 2023. Repurchases may be made from time-to-time in the open market and via privately
negotiated transactions, subject to market conditions. There is no defined number of shares to be repurchased over a specified
timeframe through the life of our share repurchase program. It is expected that share repurchases will be paid using existing and
future cash generated by operations. Refer to Part II, Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations, Liquidity and Capital Resources, of this Annual Report on Form 10-K for further discussion on our share
repurchase program.
Trading Arrangements
On August 11, 2023, we entered into an agreement to adopt a trading arrangement for the repurchase of shares of our common
stock in the open market consistent with the provisions of Rule 10b5-1 of the Securities Exchange Act of 1934. The
arrangement provides for the repurchase of up to $250 million of our common stock during the period from September 1, 2023
through August 31, 2024 pursuant to a written algorithm for determining the amount, price and date for purchase of shares of
our common stock.
Securities Authorized for Issuance under Equity Compensation Plans
Refer to Part III, Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters,
of this Annual Report on Form 10-K.
28 Stock Performance Graph
The annual changes for the five-year period shown in the graph below assume $100 had been invested in our common stock,
the Standard & Poor’s 500 Index, the Dow Jones U.S. Financial Services Index and the S&P 500 Financial Exchange and Data
Index on August 31, 2018.
The total cumulative dollar returns shown on the graph represent the value that such investments would have had on August 31,
2023. Stockholder returns over the indicated period are based on historical data and should not be considered indicative of
future stockholder returns.
FactSet Research Systems Inc.
S&P 500 Index
Dow Jones U.S. Financial Services Index
S&P 500 Financial Exchanges and Data
2018
2019
2020
2021
2022
2023
$
$
$
$
100 $
100 $
100 $
100 $
119 $
101 $
96 $
153 $
121 $
93 $
124 $
144 $
166 $
156 $
139 $
179 $
189 $
136 $
114 $
147 $
190
155
117
163
The information contained in the above graph shall not be deemed to be soliciting material or filed or incorporated by
reference in future filings with the SEC, or subject to the liabilities of Section 18 of the Securities Exchange Act of 1934, except
to the extent that we specifically incorporate it by reference into a document filed under the Securities Act of 1933 or the
Securities Exchange Act of 1934.
ITEM 6. RESERVED
29 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This Management’s Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") should be read in
conjunction with the Consolidated Financial Statements and related Notes included in Part II, Item 8. Financial Statements and
Supplementary Data, of this Annual Report on Form 10-K, our Current Reports on Form 8-K and our other filings with the
Securities and Exchange Commission. For a similar detailed discussion comparing fiscal 2022 and 2021, refer to Part II, Item 7.
Management's Discussion and Analysis of Financial Condition and Results of Operations within our Annual Report on Form
10-K for the year ended August 31, 2022. This discussion contains forward-looking statements that involve risks and
uncertainties. Our actual results could differ materially from those discussed below. Factors that could cause such differences
include, but are not limited to, those identified below and those discussed in Part I, Item 1A. Risk Factors of this Annual Report
on Form 10-K.
Our MD&A is designed to provide a reader of our financial statements with a narrative from the perspective of our management
on our financial condition, results of operations, liquidity and certain other factors that may affect our future results. Our
MD&A is presented in the following sections:
•
•
•
•
•
•
•
•
•
•
•
Executive Overview
Annual Subscription Value ("ASV")
Client and User Additions
Employee Headcount
Results of Operations
Non-GAAP Financial Measures
Liquidity and Capital Resources
Off-Balance Sheet Arrangements
Foreign Currency
Critical Accounting Estimates
New Accounting Pronouncements
Executive Overview
FactSet Research Systems Inc. and its wholly-owned subsidiaries (collectively, "we," "our," "us," the "Company" or "FactSet")
is a global financial digital platform and enterprise solutions provider with open and flexible products that drive the investment
community to see more, think bigger and do its best work.
Our platform delivers expansive data, sophisticated analytics and flexible technology used by global financial professionals to
power their critical investment workflows. As of August 31, 2023, we had nearly 8,000 clients comprised of almost 190,000
investment professionals, including asset managers, bankers, wealth managers, asset owners, partners, hedge funds, corporate
users and private equity & venture capital professionals. Our revenues are primarily derived from subscriptions to our multi-
asset class data and solutions powered by our content refinery. Our products and services include workstations, portfolio
analytics and enterprise solutions.
We drive our business based on our detailed understanding of our clients’ workflows, which helps us to solve their most
complex challenges. We provide financial data and market intelligence on securities, companies, industries and people to enable
our clients to research investment ideas, as well as to analyze, monitor and manage their portfolios. Our on- and off-platform
solutions span the investment life cycle of investment research, portfolio construction and analysis, trade execution,
performance measurement, risk management and reporting. We provide open and flexible technology offerings, including a
configurable desktop and mobile platform, comprehensive data feeds, cloud-based digital solutions and APIs. Our CGS
business supports security master files relied on by the investment industry for critical front, middle and back-office functions.
Our platform and solutions are supported by our dedicated client service teams.
We operate our business through three segments: the Americas, EMEA and Asia Pacific. Refer to Note 18, Segment
Information, in the Notes to the Consolidated Financial Statements included in Part II, Item 8. of this Annual Report on Form
10-K for further discussion. For each of our segments, we execute our strategy through three workflow solutions: Research &
Advisory; Analytics & Trading; and CTS. CGS operates as part of CTS.
Refer to Part I, Item 1. Business - Business Strategy, of this Annual Report on Form 10-K for further discussion on our business
strategy.
30 Fiscal 2023 in Review
Revenues for fiscal 2023 were $2.1 billion, an increase of 13.1% from the prior year. Revenues increased in all our segments,
primarily in the Americas, and, to a lesser extent, EMEA and Asia Pacific. This increase in revenues was supported by higher
sales in each of our workflow solutions, primarily in CTS (driven by inorganic revenues from CGS), followed by Analytics &
Trading and Research & Advisory. Organic revenues contributed to 8.2% of our growth during fiscal 2023, compared with the
prior year. Refer to Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations,
Non-GAAP Financial Measures, of this Annual Report on Form 10-K for a reconciliation between revenues and organic
revenues.
As of August 31, 2023, organic annual subscription value ("Organic ASV") plus Professional Services totaled $2.2 billion, 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 driven by additional sales in our workflow
solutions, primarily in Analytics & Trading, followed by CTS and Research & Advisory. Refer to Part II, Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations, Annual Subscription Value, of this Annual Report
on Form 10-K for the definitions of Organic ASV and Organic ASV plus Professional Services.
Operating income for fiscal 2023 was $629.2 million, an increase of 32.3% compared with the prior year. Operating margin
increased in fiscal 2023 to 30.2%, compared with 25.8% for fiscal 2022. Operating margin increased primarily due to growth in
revenues and, when expressed as a percentage of revenues, a decrease in asset impairment charges, employee compensation
costs, professional fees, data costs and occupancy costs, partially offset by higher royalty fees and amortization of intangible
assets.
Net income for fiscal 2023 was $468.2 million, an increase of 18.0% from the prior year. Diluted earnings per common share
("Diluted EPS") increased 17.5% compared with the prior year. This increase in net income and Diluted EPS was primarily due
to higher operating income, partially offset by an increase in the provision for income taxes and an increase in interest expense
as a result of higher outstanding debt compared to the prior year.
Our clients and users reached new highs of 7,921 and 189,972, respectively, in fiscal 2023. We returned $315.3 million to
stockholders in the form of share repurchases and dividends paid during fiscal 2023.
As of August 31, 2023, our employee count was 12,237, up 9.2% compared to the prior year, due to an increase in net new
employees of 12.4% in Asia Pacific, 3.6% in the Americas and 1.9% in EMEA.
We garnered multiple awards in fiscal 2023, with honors noted for research, risk, performance, trading and wealth management.
FactSet was honored by more than thirty industry awards and rankings reports, including winning “Trading Tech’s Best Cloud-
Based Market Data Delivery Solution.”
CUSIP Global Services Acquisition
On March 1, 2022, we completed our acquisition of CGS for a cash price of $1.932 billion, inclusive of working capital
adjustments. We acquired CGS to expand our critical role in the global capital markets. Revenues from CGS are recognized
based on geographic business activities in accordance with how our operating segments are currently aligned. During fiscal
2023, CGS functioned as part of the CTS workflow solution.
The purchase price for the CGS acquisition was financed from the net proceeds of the issuance of the Senior Notes and
borrowings under the 2022 Credit Facilities. Refer to Note 6, Acquisitions and Note 12, Debt in the Notes to the Consolidated
Financial Statements included in Part II, Item 8. of this Annual Report on Form 10-K for more information on these defined
terms as well as our acquisition of CGS, the Senior Notes and the 2022 Credit Facilities, respectively.
31 Annual Subscription Value ("ASV")
We believe ASV reflects our ability to grow recurring revenues and generate positive cash flow and serves as a key indicator of
the successful execution of our business strategy.
–
–
–
–
"ASV" at any point in time represents our forward-looking revenues for the next 12 months from all subscription
services currently being supplied to clients, excluding revenues from Professional Services.
"Organic ASV" at any point in time equals our ASV excluding ASV from acquisitions and dispositions completed
within the last 12 months and the effects of foreign currency movements.
"Professional Services" are revenues derived from project-based consulting and implementation, annualized over the
past 12 months.
"Organic ASV plus Professional Services" at any point in time equals the sum of Organic ASV and Professional
Services.
Prior year ASV now reflects additional CGS revenues not previously included.
Organic ASV plus Professional Services
The following table presents the calculation of Organic ASV plus Professional Services as of August 31, 2023. With proper
notice provided as contractually required, our clients can add to, delete portions of, or terminate service, subject to certain
limitations.
(dollar amounts in millions)
As reported ASV plus Professional Services(1)
Currency impact(2)
Organic ASV plus Professional Services
Organic ASV plus Professional Services annual growth rate
(1) Includes $22.7 million in Professional Services as of August 31, 2023.
(2) The impact from foreign currency movements.
$
$
As of August 31, 2023
2,174.6
0.5
2,175.1
7.1 %
As of August 31, 2023, Organic ASV plus Professional Services was $2.2 billion, an increase of 7.1% compared with
August 31, 2022. The 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.
Organic ASV increased in all our segments, with the majority of the increase related to the Americas, followed by EMEA and
Asia Pacific. This increase was driven by additional sales in our workflow solutions, primarily in Analytics & Trading,
followed by CTS and Research & Advisory. Sales increased in Analytics & Trading mainly from our performance & reporting
products, portfolio analytics solutions and portfolio & benchmark services. CTS sales increased mainly from CGS and, to a
lesser extent, data management solutions, company data and real time data. Sales increased in Research & Advisory mainly due
to higher demand for our workstations.
Segment ASV
As of August 31, 2023, ASV from the Americas represented 64% of total ASV and was $1,376.9 million, an increase from
$1,286.7 million as of August 31, 2022. Americas Organic ASV was $1,376.9 million as of August 31, 2023, a 7.0% increase
from the prior year. The Organic ASV increase in the Americas was primarily driven by increased sales from Analytics &
Trading, followed by CTS and Research & Advisory.
As of August 31, 2023, ASV from EMEA represented 26% of total ASV and was $559.6 million, an increase from $516.1
million as of August 31, 2022. EMEA Organic ASV was $558.8 million as of August 31, 2023, a 7.7% increase from the prior
year. The EMEA Organic ASV increase was mainly driven by higher sales from Analytics & Trading and CTS.
As of August 31, 2023, ASV from Asia Pacific represented 10% of total ASV and was $215.4 million, an increase from $200.5
million as of August 31, 2022. Asia Pacific Organic ASV was $216.7 million as of August 31, 2023, an 8.1% increase from the
prior year. The Asia Pacific Organic ASV increase was primarily due to higher sales from Research & Advisory and Analytics
& Trading.
32
Buy-side and Sell-side Organic ASV Growth
The buy-side and sell-side Organic ASV annual growth rates as of August 31, 2023 were 6.9% and 9.3%, respectively. Buy-
side clients account for approximately 82% of our Organic ASV, compared to 83% in the prior year, and primarily include 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 & advisory and private equity & venture capital
firms.
Client and User Additions
The table below presents our total clients and users:
Clients(1)
Users
As of August 31,
2023
2022
Change
7,921
7,538
189,972
179,982
5.1 %
5.6 %
(1) The client count includes clients with ASV of $10,000 and above.
Our total client count was 7,921 as of August 31, 2023, a net increase of 5.1%, or 383 clients compared to the prior year, mainly
due to an increase in corporate clients, wealth management clients and partners. We believe this increase is primarily due to our
on- and off- platform workflow solutions, connected content and client-focused services.
As of August 31, 2023, there were 189,972 professionals using FactSet, representing a net increase of 5.6%, or 9,990 users,
compared to the prior year, primarily driven by an increase from our wealth management firms and sell-side users from our
banking clients.
Annual ASV retention was greater than 95% for the year ended August 31, 2023 and August 31, 2022. When expressed as a
percentage of clients, annual retention was approximately 91% for the year ended August 31, 2023, compared with
approximately 92% for the year ended August 31, 2022.
Employee Headcount
As of August 31, 2023, our employee headcount was 12,237, an increase of 9.2% compared with 11,203 employees as of
August 31, 2022. This headcount increase was primarily due to our continued investment in our COEs by expanding our talent
pool primarily in India and the Philippines. Our COEs accounted for approximately 67% of our employees.
Our net headcount growth by segment as of August 31, 2023 compared with August 31, 2022 was 12.4% in Asia Pacific, 3.6%
in the Americas and 1.9% in EMEA. As of August 31, 2023, the number of employees located in Asia Pacific was 8,322, in the
Americas was 2,487 and in EMEA was 1,428.
33
Results of Operations
For an understanding of the significant factors that influenced our performance during fiscal 2023 and 2022, the following
discussion should be read in conjunction with the Consolidated Financial Statements and related Notes included in Part II, Item
8. of this Annual Report on Form 10-K.
The following table summarizes our results of operations:
(dollar amounts in thousands, except per share data)
Revenues
Cost of services
Selling, general and administrative
Asset impairments
Operating income
Net income
Diluted weighted average common shares
Diluted EPS
Revenues
Years ended August 31,
2022
2023
$ Change % Change
2,085,508 $
973,225
1,843,892 $ 241,616
102,119
871,106
457,130
25,946
433,032
64,272
24,098
(38,326)
629,207 $
475,482 $ 153,725
13.1 %
11.7 %
5.6 %
(59.6) %
32.3 %
468,173 $
396,917 $
71,256
18.0 %
38,898
12.04
$
38,736
10.25
$
1.79
17.5 %
$
$
$
$
Revenues in fiscal 2023 were $2.1 billion, an increase of 13.1% compared to the prior year. This increase 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. Revenues increased in all our segments, primarily from the Americas, followed by
EMEA and Asia Pacific. The increased revenues were supported by higher sales in all three of our workflow solutions,
primarily in CTS (driven by inorganic revenues from CGS), and, to a lesser extent, by Analytics & Trading and Research &
Advisory. Organic revenues increased to $1,995.0 million for fiscal 2023, an 8.2% increase over the prior year. Refer to Part II,
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations, Non-GAAP Financial
Measures, of this Annual Report on Form 10-K for further discussion on organic revenues.
The 13.1% growth in revenues was reflective of organic revenues growth of 8.2% and a 5.2% increase primarily related to
acquisition-related revenues, partially offset by a 0.3% decrease from foreign currency exchange rate fluctuations.
Revenues by Segment
The following table summarizes our revenues by segment:
(dollar amounts in thousands)
Americas
% of revenues
EMEA
% of revenues
Asia Pacific
% of revenues
Consolidated Revenues
Years ended August 31,
2023
$ 1,335,484
2022
$ 1,173,946
$ Change
% Change
$
161,538
13.8 %
64.0 %
63.7 %
$ 539,843
$ 484,279
25.9 %
26.3 %
$ 210,181
$ 185,667
$
$
10.1 %
10.0 %
55,564
11.5 %
24,514
13.2 %
$ 2,085,508
$ 1,843,892
$
241,616
13.1 %
Americas revenues increased 13.8% to $1,335.5 million in fiscal 2023, compared with $1,173.9 million in fiscal 2022. This
increase was mainly due to higher sales in all our workflow solutions, primarily in CTS (driven by inorganic revenue from
CGS). The 13.8% growth in revenues was reflective of a 7.7% increase in organic revenue and a 6.1% increase primarily due to
the impact of acquisition-related revenues.
34
EMEA revenues increased 11.5% to $539.8 million in fiscal 2023, compared with $484.3 million in fiscal 2022. This increase
was mainly due to higher sales in all our workflow solutions, primarily in CTS (driven by inorganic revenues from CGS). The
11.5% growth in revenues was reflective of an 8.0% increase in organic revenue and a 3.9% increase primarily due to the
impact of acquisition-related revenues, partially offset by a 0.4% decrease due to effects of foreign currency exchange rate
fluctuations.
Asia Pacific revenues increased 13.2% to $210.2 million in fiscal 2023, compared with $185.7 million in fiscal 2022. This
increase was mainly due to higher sales in all our workflow solutions, primarily in CTS (driven by inorganic revenues from
CGS), followed by Research & Advisory and Analytics & Trading. The 13.2% growth in revenues was reflective of an 11.8%
increase in organic revenue and a 3.3% increase primarily due to the impact of acquisition-related revenues, partially offset by a
1.9% decrease due to effects of foreign currency exchange rate fluctuations.
Revenues by Workflow Solution
The growth in revenues of 13.1% for fiscal 2023, compared with fiscal 2022, was due to higher revenues from each of our
segments supported by increased revenues from our workflow solutions, primarily from CTS and, to a lesser extent, Analytics
& Trading and Research & Advisory. The increased CTS revenues were driven mainly by CGS related data licensing and
issuance revenues. The increased revenues from Analytics & Trading were primarily due to higher demand for our performance
& reporting products, portfolio analytics solutions and portfolio & benchmark services. The increased Research & Advisory
revenues was driven mainly by higher demand for our workstations.
Operating Expenses
Principal Operating Expenses
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.
Selling, general and administrative ("SG&A") consists primarily of employee compensation costs and also includes expenses
related to occupancy costs, professional fees, depreciation of furniture and fixtures, amortization of leasehold improvements,
travel and entertainment expenses, marketing costs, other employee-related expenses, internal communication costs and bad
debt expense.
Employee compensation costs are a major component of both our Cost of services and SG&A. These expenses primarily
include costs related to salaries, incentive compensation and sales commissions, stock-based compensation, benefits,
employment taxes, and any applicable restructuring costs.
We assign employee compensation costs between Cost of services and SG&A based on the roles and activities associated with
each employee. We categorize employees within the content collection, consulting, product development, software and systems
engineering groups as Cost of services personnel. Employees included in our sales department and those that serve in various
other support departments, including marketing, finance, legal, human resources and administrative services, are classified as
SG&A.
Asset impairments consist primarily of expenses recognized when the carrying amount of an asset exceeds its fair value.
The following table summarizes the components of our total operating expenses and operating margin:
(dollar amounts in thousands)
Cost of services
SG&A
Asset impairments
Total operating expenses
Operating income
Operating margin
Years ended August 31,
2023
$ 973,225
457,130
2022
$ 871,106
433,032
25,946
64,272
$ 1,456,301
$ 1,368,410
$
$
$
102,119
24,098
(38,326)
87,891
$ Change
% Change
$ 629,207
$ 475,482
$
153,725
30.2 %
25.8 %
11.7 %
5.6 %
(59.6) %
6.4 %
32.3 %
17.0 %
35
Cost of Services
Cost of services increased 11.7% to $973.2 million in fiscal 2023, compared with $871.1 million in fiscal 2022, primarily due
to an increase in employee compensation costs, amortization of intangible assets, computer-related expenses and royalty fees
related to our CGS acquisition.
Cost of services, when expressed as a percentage of revenues, was 46.7% for fiscal 2023, a decrease of 60 basis points
compared with fiscal 2022. This decrease was primarily due to lower employee compensation costs and data costs, partially
offset by higher royalty fees, amortization of intangible assets and computer-related expenses. When expressed as a percentage
of revenues:
•
•
•
•
•
Employee compensation costs decreased 180 basis points primarily due to growth of our revenues outpacing the
increase in employee compensation costs. This decrease was also driven by higher capitalization of compensation
costs related to the development of internal-use software, partially offset by higher annual base salaries and
restructuring costs to drive organization realignment. The increase in annual base salaries was primarily driven by
annual merit increases and a net headcount increase in Cost of services of 959 employees, primarily located in our
COEs.
Data costs decreased 80 basis points mainly due to the release of certain accruals in the first quarter of fiscal 2023
related to the successful resolution of exchange audits that were recorded during the prior year and revenue growth
outpacing the increased cost of content.
Royalty fees increased Cost of services 80 basis points due to contracts acquired in connection with the acquisition of
CGS. Due to the timing of the CGS acquisition, fiscal 2023 included a full year of royalty fees, compared with a
partial year during fiscal 2022.
Amortization of intangible assets increased 80 basis points, mainly due to acquired intangible assets, primarily from
the CGS acquisition. Due to the timing of the CGS acquisition, fiscal 2023 included a full year of CGS intangible
amortization, compared with a partial year during fiscal 2022.
Computer-related expenses increased 50 basis points, primarily due to higher spend related to licensed software
arrangements and our cloud-based hosting services.
Selling, General and Administrative
SG&A expenses increased 5.6% to $457.1 million during fiscal 2023, compared with $433.0 million in fiscal 2022, primarily
due to higher employee compensation costs and, to a lesser extent, an increase in travel and entertainment expenses, partially
offset by a decrease in professional fees and occupancy costs.
SG&A expenses, when expressed as a percentage of revenues, were 21.9% for fiscal 2023, a decrease of 160 basis points over
fiscal 2022. This decrease was primarily due to lower professional fees and occupancy costs, partially offset by an increase in
travel and entertainment expenses. When expressed as a percentage of revenues:
•
•
•
Professional fees decreased 100 basis points primarily due to CGS acquisition costs incurred during the prior year.
Occupancy costs decreased by 60 basis points mainly driven by impairment charges recognized during fiscal 2022
related to vacating leased office space, which reduces occupancy costs recorded over their respective remaining lease
terms.
Travel and entertainment expenses increased by 30 basis points as we resumed essential business travel and incurred
other employee-related expenses associated with return to office activities during the current year.
Asset Impairments
Asset impairments were $25.9 million and $64.3 million during fiscal 2023 and 2022, respectively. The asset impairments were
mainly driven by an $18.0 million and $62.2 million charge during fiscal 2023 and 2022, respectively, related to our lease right-
of-use ("ROU") assets and property, equipment and leasehold improvements ("PPE") associated with vacating certain leased
office space to resize our real estate footprint for the hybrid work environment. As there were no expected future cash flows
associated with lease ROU assets for locations we will not sublease nor PPE associated with the related vacated leased office
space, we determined these assets had no remaining fair value and were fully impaired. For locations we intended to sublease,
we recognized an impairment when the estimated fair value of the lease ROU asset was less than its carrying value.
The remaining asset impairments for fiscal 2023 and 2022 were $7.9 million related to Developed technology and Trade names
and $2.1 million related to Developed technology, respectively.
36 Operating Income and Operating Margin
Operating income increased 32.3% to $629.2 million in fiscal 2023, compared with $475.5 million in the prior year. This
increase was primarily due to a 13.1% growth in revenues, and, to a lesser extent, a decrease in asset impairment charges and
professional fees, partially offset by higher employee compensation costs, amortization of intangible assets, computer-related
expenses and royalty fees. Foreign currency exchange rate fluctuations, net of hedge activity, increased operating income by
$25.7 million during fiscal 2023, compared with a decrease of $3.1 million in fiscal 2022.
Operating margin increased in fiscal 2023 to 30.2%, compared with 25.8% in the prior year. This increase was primarily due to
growth in revenues and, when expressed as a percentage of revenues, a decrease in asset impairment charges, employee
compensation costs, professional fees, data costs and occupancy costs, partially offset by higher royalty fees and amortization
of intangible assets.
Operating Income by Segment
We operate our business through three segments: the Americas, EMEA and Asia Pacific. Refer to Note 18, Segment
Information in the Notes to the Consolidated Financial Statements included in Part II, Item 8. of this Annual Report on Form
10-K for further discussion regarding our segments. The following table summarizes our operating income by segment:
(dollar amounts in thousands)
2023
2022
$ Change
% Change
Years ended August 31,
Americas
EMEA
Asia Pacific
Total Operating Income
Americas
$
239,438 $
159,140 $
243,028
146,741
196,231
120,111
80,298
46,797
26,630
$
629,207 $
475,482 $
153,725
50.5 %
23.8 %
22.2 %
32.3 %
Americas operating income increased 50.5% to $239.4 million during fiscal 2023, compared with $159.1 million from the prior
year. This increase was primarily due to a 13.8% growth in revenues and, to a lesser extent, a decrease in asset impairment
charges and professional fees, partially offset by higher employee compensation costs, amortization of intangible assets,
computer-related expenses and royalty fees.
•
•
•
•
•
•
Asset impairment charges decreased primarily due to lower lease ROU asset and PPE impairment charges associated
with vacating certain leased office space during fiscal 2023, compared with fiscal 2022.
Professional fees decreased primarily due to costs incurred during the prior year related to the acquisition of CGS.
Employee compensation costs increased primarily due to an increase in annual base salaries and, to a lesser extent,
higher stock-based compensation expense, payroll taxes and restructuring costs, partially offset by a decrease in
variable compensation. The increase in annual base salaries was primarily driven by annual merit increases and a net
headcount increase of 87 employees.
Amortization of intangible assets increased mainly due to acquired intangible assets, primarily from the CGS
acquisition. Due to the timing of the CGS acquisition, fiscal 2023 included a full year of CGS intangible asset
amortization, compared with a partial year during fiscal 2022.
Computer-related expenses increased primarily due to higher spend related to licensed software arrangements and our
cloud-based hosting services.
Royalty fees increased due to contracts acquired in connection with the acquisition of CGS. Due to the timing of the
CGS acquisition, fiscal 2023 included a full year of royalty fees, compared with a partial year during fiscal 2022.
EMEA
EMEA operating income increased 23.8% to $243.0 million during fiscal 2023, compared with $196.2 million from the prior
year. This increase was primarily due to an 11.5% growth in revenues and, to a lesser extent, a decrease in data costs and
amortization of intangible assets. These increases in operating income were partially offset by higher employee compensation
costs and, to a lesser extent, asset impairment charges.
•
Data costs decreased due to the release of certain accruals during the first quarter of fiscal 2023 which related to the
successful resolution of exchange audits that were recorded during the prior year.
37
•
•
•
Amortization of intangible assets decreased as certain acquired intangible assets were fully amortized during the third
quarter of fiscal 2022.
Employee compensation costs increased primarily due to higher annual base salaries, restructuring costs and, to a
lesser extent, higher variable compensation. The increase in annual base salaries was primarily driven by annual merit
increases and a net headcount increase of 26 employees.
Asset impairment charges increased primarily due to higher lease ROU asset impairment charges associated with
vacating certain leased office space during fiscal 2023, compared with fiscal 2022.
Asia Pacific
Asia Pacific operating income increased 22.2% to $146.8 million during fiscal 2023, compared with $120.1 million from the
prior year. The increase was mainly due to a 13.2% growth in revenues, partially offset by an increase in employee
compensation costs and, to a lesser extent, travel expenses. Employee compensation costs increased mainly due to an increase
in annual base salaries driven by annual merit increases and a net headcount increase of 921 employees primarily in our COEs.
Travel expenses increased due to other employee-related expenses associated with return to office activities in the current year.
Income Taxes
(dollar amounts in thousands)
Income before income taxes
Provision for income taxes
Effective tax rate
Years ended August 31,
2023
2022
$ Change
% Change
$ 583,954
$ 443,594
$ 115,781
$ 46,677
$
$
140,360
69,104
19.8 %
10.5 %
31.6 %
148.0 %
88.4 %
We are subject to taxation in the United States and various foreign jurisdictions in which we conduct our business.
Our effective tax rate is based on recurring factors and non-recurring events, including the taxation of foreign income. Our
effective tax rate will vary based on, among other things, changes in levels of foreign income, as well as other non-recurring
events. Our effective tax rate is lower than the applicable U.S. corporate income tax rate for fiscal 2023 driven mainly by
research and development ("R&D") tax credits, a tax benefit from the exercise of stock options and a foreign derived intangible
income ("FDII") deduction, partially offset by a one-time out-of-period adjustment related to a review and analysis of certain
tax positions, as well as our net state taxes.
Our effective tax rate for fiscal 2023 was 19.8% compared to 10.5% in fiscal 2022. The increase was primarily driven by an
out-of-period adjustment related to a review and analysis of certain tax positions, resulting in a one-time net charge of $22.1
million. The adjustment related to the accounting of tax balance sheet accounts. All local, federal and foreign taxes payable
have been paid in a timely manner, subject to normal audits of open years. The increase was also driven by a lower impact from
tax attributes on the effective tax rate as a result of an increase in income before income taxes, higher net state taxes, an increase
in the UK's enacted tax rates and a reduction in the exercise of stock options.
Net Income and Diluted EPS
(dollar amounts in thousands, except per share data)
Net income
Diluted weighted average common shares
Diluted EPS
Years ended August 31,
2023
468,173 $
38,898
2022
396,917 $
38,736
12.04 $
10.25 $
$
$
$ Change
% Change
71,256
162
1.79
18.0 %
0.4 %
17.5 %
Net income increased 18.0% and Diluted EPS increased 17.5% for fiscal 2023, compared with fiscal 2022. The increase in net
income and Diluted EPS was primarily due to higher operating income, partially offset by an increase in the provision for
income taxes and an increase in interest expense as a result of higher outstanding debt compared to the prior year.
Non-GAAP Financial Measures
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
38
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.
Despite the limitations of these non-GAAP financial measures, we believe these adjusted financial measures and the
information they provide are useful in viewing our performance using the same tools that management uses to gauge progress
in achieving our goals. Adjusted measures may also facilitate comparisons to our historical performance.
Adjusted revenues exclude the impact of the fair value of deferred revenues acquired in a business combination. Organic
revenues further excludes both acquisition-related revenues recognized in the current year in which the comparable prior year
period predated the acquisition(s) and foreign currency movements in all years presented.
The table below provides an unaudited reconciliation of revenues to adjusted revenues and organic revenues:
(dollar amounts in thousands)
Revenues
Deferred revenues fair value adjustment(1)
Adjusted revenues
Acquired revenues(2)
Currency impact(3)
Organic revenues
Years ended August 31,
2023
2022
$ Change
% Change
$ 2,085,508 $ 1,843,892 $
241,616
13.1 %
—
25
2,085,508
1,843,917
(95,953)
5,398
—
—
$ 1,994,953 $ 1,843,917 $
(25)
241,591
(95,953)
5,398
151,036
13.1 %
8.2 %
(1) Reflects the amortization effect of any purchase accounting adjustments related to the fair value of acquired deferred revenues for
acquisitions prior to fiscal 2022. Acquisitions thereafter do not include this adjustment in accordance with ASU No. 2021-08,
Business Combinations: Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (Topic 805).
(2) Removes acquisition-related revenues recognized during fiscal 2023 in which the comparable prior year period predated the
acquisition(s).
(3) The impact from foreign currency movements during the fiscal year.
39
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 the fair
value of deferred revenues acquired in a business combination, intangible asset amortization and non-recurring items. EBITDA
excludes interest expense, provision for income taxes and depreciation and amortization, while Adjusted EBITDA further
excludes non-recurring non-cash expenses.
(dollar amounts in thousands, except per share data)
2023
2022
% Change
Years ended August 31,
Operating income
Deferred revenues fair value adjustment
Intangible asset amortization
Asset impairments(1)
Restructuring / severance
Business acquisition / integration costs(2)
Contingent liability
Transformation costs (3)
Adjusted operating income
Operating margin
Adjusted operating margin(4)
Net income
Deferred revenues fair value adjustment
Intangible asset amortization
Asset impairments(1)
Restructuring / severance
Business acquisition / integration costs(2)
Contingent liability
Transformation costs(3)
Income tax items
Adjusted net income(5)
Net income
Interest expense
Income taxes
Depreciation and amortization expense
EBITDA
Non-recurring non-cash expenses
Adjusted EBITDA
Diluted EPS
Deferred revenues fair value adjustment
Intangible asset amortization
Asset impairments(1)
Restructuring / severance
Business acquisition / integration costs(2)
Contingent liability
Transformation costs(3)
Income tax items
Adjusted Diluted EPS(5)
32.3 %
$ 629,207
—
71,503
$ 475,482
25
49,122
20,327
19,879
7,033
6,239
62,205
9,975
20,608
3,610
—
$ 754,188
3,368
$ 624,395
20.8 %
30.2 %
36.2 %
25.8 %
33.9 %
$ 468,173
$ 396,917
18.0 %
—
59,422
16,893
16,520
5,845
5,185
—
22
43,266
54,789
8,786
18,151
3,180
2,967
(2,316)
(7,799)
$ 569,722
$ 520,279
9.5 %
$ 468,173
$ 396,917
33.5 %
23.6 %
17.5 %
66,319
115,781
105,384
$ 755,657
20,963
$ 776,620
12.04
$
—
1.53
0.43
0.43
0.15
0.13
35,697
46,677
86,683
$ 565,974
62,205
$ 628,179
10.25
$
0.00
1.11
1.41
0.23
0.47
0.08
—
(0.06)
0.08
(0.20)
$
14.65
$
13.43
9.1 %
Weighted average common shares (Diluted)
38,898
38,736
40
(1) We reclassified Real estate charges to Asset impairments in the Non-GAAP Financial Measures to conform to current year's
presentation. Asset impairments primarily related to impairment charges of lease ROU assets and PPE associated with vacating
certain leased office space.
(2) Related to acquisition and integration costs of the CGS acquisition.
(3) Primarily related to professional fees associated with our multi-year investment plan.
(4) Adjusted operating margin is calculated as Adjusted operating income divided by Adjusted revenues as shown in the revenues
reconciliation table above.
(5) For purposes of calculating Adjusted net income and Adjusted Diluted EPS, all adjustments for fiscal 2023 and 2022 were taxed at
an adjusted tax rate of 16.9% and 11.9%, respectively.
Liquidity and Capital Resources
Our cash flows provided by operating activities, existing cash and cash equivalents, supplemented with our long-term debt
borrowings, have been sufficient to fund our operations while allowing us to invest in activities that support the long-term
growth of our operations. Generally, some or all of our remaining available cash flows have been used to, among other things,
service our existing and future debt obligations, satisfy our working capital requirements and fund various activities, including
our capital expenditures, acquisitions, investments, dividend payments and repurchases of our common stock. Based on past
performance and current expectations, we believe our sources of liquidity, including the available capacity under our existing
revolving credit facility and other financing alternatives, will provide us the necessary capital to fund these transactions and
achieve our planned growth for the next 12 months and the foreseeable future. We are exposed to credit risk for cash and cash
equivalents held in financial institutions in the event of a default, to the extent that such amounts are in excess of applicable
insurance limits; however, we do not believe our concentration of cash and cash equivalents presents a significant credit risk as
the counterparties to the instruments consist of multiple high-quality, credit-worthy financial institutions.
Sources of Liquidity
Long-Term Debt & Swap Agreements
2022 Credit Agreement
On March 1, 2022, we entered into a credit agreement (the "2022 Credit Agreement") and borrowed an aggregate principal
amount of $1.0 billion under its senior unsecured term loan credit facility (the "2022 Term Facility") and $250.0 million of the
available $500.0 million under its senior unsecured revolving credit facility (the "2022 Revolving Facility" and, together with
the 2022 Term Facility, the “2022 Credit Facilities”). The 2022 Term Facility matures on March 1, 2025, and the 2022
Revolving Facility matures on March 1, 2027. The 2022 Revolving Facility allows for the availability of up to $100.0 million in
the form of letters of credit and up to $50.0 million in the form of swingline loans. We may seek additional commitments under
the 2022 Revolving Facility from lenders or other financial institutions up to an aggregate principal amount of $750.0 million.
We pay a commitment fee on the daily unused amount of the 2022 Revolving Facility using a pricing grid based on our senior
unsecured non-credit enhanced long-term debt rating and our total leverage ratio. The commitment fee remained consistent at
0.125% from the borrowing date through August 31, 2023. During fiscal 2022, we incurred approximately $9.5 million in debt
issuance costs related to the 2022 Credit Facilities.
We used these borrowings, along with the net proceeds from the issuance of the Senior Notes (as defined below) and cash on
hand, to finance the consideration for the CGS acquisition, to repay borrowings under the 2019 Credit Agreement (as defined
below) and to pay related transaction fees, costs and expenses.
We may voluntarily prepay loans under the 2022 Credit Facilities at any time without premium or penalty. During fiscal 2023,
we repaid $375.0 million under the 2022 Term Facility, inclusive of voluntary prepayments of $325.0 million. Since loan
inception on March 1, 2022, we have repaid $625.0 million under the 2022 Term Facility, inclusive of voluntary prepayments
of $562.5 million.
As of August 31, 2023, the outstanding borrowings under the 2022 Credit Facilities bore interest at a rate equal to the
applicable one-month Term Secured Overnight Financing Rate ("SOFR") rate plus a 1.1% spread (comprised of a 1.0% interest
rate margin based on a debt leverage pricing grid plus a 0.1% credit spread adjustment). The spread remained consistent from
the borrowing date through August 31, 2023. Interest on the 2022 Credit Facilities is currently payable on the last business day
of each month, in arrears.
The 2022 Credit Agreement contains usual and customary event of default provisions for facilities of this type, which are
subject to usual and customary grace periods and materiality thresholds. If an event of default occurs under the 2022 Credit
Agreement, the lenders may, among other things, terminate their commitments and declare all outstanding borrowings
immediately due and payable.
41 The 2022 Credit Agreement contains usual and customary affirmative and negative covenants for facilities of this type,
including a financial covenant requiring maintenance of a total leverage ratio of no greater than 3.75 to 1.00 as of August 31,
2023. We were in compliance with all covenants and requirements of the 2022 Credit Agreement as of August 31, 2023.
Refer to Note 12, Debt in the Notes to the Consolidated Financial Statements included in Part II, Item 8. of this Annual Report
on Form 10-K for further discussion of the 2022 Credit Agreement.
2022 Swap Agreement
On March 1, 2022, we entered into an interest rate swap agreement (the "2022 Swap Agreement") to hedge a portion of our
outstanding floating SOFR rate debt with a fixed interest rate of 1.162%. Effective December 30, 2022, we apportioned the
then-outstanding notional amount of the 2022 Swap Agreement between two counterparties. Refer to Note 5, Derivative
Instruments in the Notes to the Consolidated Financial Statements included in Part II, Item 8. of this Annual Report on Form
10-K, for defined terms and more information on the 2022 Swap Agreement.
Senior Notes
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
(the “2032 Notes” and, together with the 2027 Notes, the “Senior Notes”). The Senior Notes were issued pursuant to an
indenture, dated as of March 1, 2022, by and between us and U.S. Bank Trust Company, National Association, as trustee (the
"Trustee"), as supplemented by the supplemental indenture, dated as of March 1, 2022, between us and the Trustee (the
"Supplemental Indenture").
Interest on the Senior Notes is payable semiannually in arrears on March 1 and September 1 of each year, with the first payment
made on September 1, 2022. The Senior Notes were issued at an aggregate discount of $2.8 million and we incurred
approximately $9.1 million in debt issuance costs.
We may redeem the Senior Notes, in whole or in part, at any time at specified redemption prices, plus any accrued and unpaid
interest. Upon the occurrence of a change of control triggering event (as defined in the Supplemental Indenture), we must offer
to repurchase the Senior Notes at 101% of their principal amount, plus any accrued and unpaid interest.
2019 Credit Agreement
On March 29, 2019, we entered into a credit agreement with PNC Bank, National Association (the "2019 Credit Agreement")
and borrowed $575.0 million of the available $750.0 million provided by the revolving credit facility thereunder (the "2019
Revolving Credit Facility"). Borrowings under the 2019 Revolving Credit Facility bore interest on the outstanding principal
amount at a rate equal to the daily London Interbank Offer Rate ("LIBOR") plus a spread using a debt leverage pricing grid.
Interest on the amounts outstanding under the 2019 Revolving Credit Facility was payable quarterly, in arrears, and on the
maturity date.
As of March 1, 2022, we repaid in full and terminated the 2019 Credit Agreement. Refer to Note 12, Debt in the Notes to the
Consolidated Financial Statements included in Part II, Item 8. of this Annual Report on Form 10-K for more information on the
termination.
Uses of Liquidity
Returning Value to Stockholders
During fiscal 2023 and 2022, respectively, we returned $315.3 million and $144.6 million to our stockholders in the form of
share repurchases and dividends.
Dividends
During fiscal 2023 and 2022, we paid dividends of $138.6 million and $125.9 million, respectively. During fiscal 2023, our
dividends increased 10%, which marked the 24th consecutive year we have increased dividends, highlighting our continued
42 commitment to returning value to our stockholders. Future cash dividends will depend on our earnings, capital requirements,
financial condition and other factors considered relevant by us and are subject to final determination by our Board of Directors.
Share Repurchase Program
We may repurchase shares of our common stock under our share repurchase program from time-to-time in the open market and
via privately negotiated transactions, subject to market conditions. We suspended our share repurchase program beginning in
the second quarter of fiscal 2022, with the exception of potential minor repurchases to offset dilution from grants of equity
awards or repurchases to satisfy withholding tax obligations due upon the vesting of stock-based awards. We suspended our
share repurchase program to prioritize the repayment of debt under the 2022 Credit Facilities. We resumed our share repurchase
program in the third quarter of fiscal 2023. For fiscal 2023 and 2022, we repurchased 430,350 shares for $176.7 million and
46,200 shares for $18.6 million, respectively.
There is no defined number of shares to be repurchased over a specified timeframe through the life of our share repurchase
program. As of August 31, 2023, we had $4.5 million authorized under our share repurchase program for future share
repurchases, which was not available for use after August 31, 2023. On June 20, 2023, our Board of Directors authorized up to
$300 million for share repurchases on or after September 1, 2023.
Capital Expenditures
For the year ended August 31, 2023, capital expenditures increased by 18.8% to $60.8 million, compared with $51.2 million in
fiscal 2022. This increase was primarily due to higher expenditures related to the development of capitalized internal-use
software and investments in network-related equipment mainly at our data centers.
Acquisitions
We completed acquisitions of several businesses during fiscal 2021 through fiscal 2023, with the most significant cash flows
related to the acquisitions of CGS, Cobalt Software, Inc. ("Cobalt") and Truvalue Labs, Inc. ("TVL").
CUSIP Global Services
On March 1, 2022, we completed the acquisition of CGS for a cash purchase price of $1.932 billion, inclusive of working
capital adjustments. CGS manages a database of 60 different data elements uniquely identifying more than 50 million global
financial instruments. It is the foundation for security master files relied on by critical front, middle and back-office functions.
CGS, operating on behalf of the ABA, is the exclusive issuer of CUSIP and CINS identifiers globally and also acts as the
official numbering agency for ISIN identifiers in the United States and as a substitute number agency for more than 30 other
countries. We acquired CGS to expand our critical role in the global capital markets.
Cobalt Software, Inc.
On October 12, 2021, we acquired all of the outstanding shares of Cobalt for a purchase price of $50.0 million, net of cash
acquired and inclusive of working capital adjustments. Cobalt is a leading portfolio monitoring platform for the private capital
industry. We acquired Cobalt to scale our data and workflow solutions through targeted investments as part of our multi-year
investment plan and to expand our private markets offering.
Truvalue Labs, Inc.
On November 2, 2020, we acquired all of the outstanding shares of TVL for a purchase price of $41.9 million, net of cash
acquired. TVL is a leading provider of sustainability information. TVL applies artificial intelligence driven technology to over
100,000 unstructured text sources in multiple languages, including news, trade journals, and non-governmental organizations
and industry reports, to provide daily signals that identify positive and negative sustainability behavior. We acquired TVL to
further enhance our commitment to providing industry leading access to sustainability data across our platforms.
Refer to Note 6, Acquisitions, in the Notes to the Consolidated Financial Statements included in Part II, Item 8. of this Annual
Report on Form 10-K for further discussion of the CGS, Cobalt and TVL acquisitions.
Contractual Obligations
Purchase obligations represent our legally-binding agreements to purchase fixed or minimum quantities at determinable prices.
As of August 31, 2023 and 2022, we had total purchase obligations with suppliers of $362.2 million and $373.9 million,
respectively. Our total purchase obligations as of August 31, 2023 and 2022 primarily related to hosting services, acquisition of
43 data and, to a lesser extent, third-party software providers. Hosting services support our hybrid cloud strategy, the majority of
which rely on third-party hosting providers. Data is an integral component of the value we provide to our clients, and our
commitments to third-party software providers mainly include internal-use software licenses.
We also have contractual obligations related to our lease liabilities and outstanding debt. Refer to Note 11, Leases and Note 12,
Debt in the Notes to the Consolidated Financial Statements included in Part II, Item 8. of this Annual Report on Form 10-K for
information regarding lease commitments and outstanding debt obligations, respectively.
Summary of Cash Flows
As of August 31, 2023, Cash and cash equivalents were $425.4 million, compared with $503.3 million as of August 31, 2022.
Our cash and cash equivalents are held in numerous locations throughout the world, with $165.4 million in the Americas,
$148.4 million in EMEA (predominantly in the UK) and the remaining $111.6 million in Asia Pacific (predominantly in India
and the Philippines) as of August 31, 2023. As of August 31, 2023, we had approximately $204.0 million of undistributed
foreign earnings. We permanently reinvest all foreign undistributed earnings, except in jurisdictions where earnings can be
repatriated substantially free of tax. It is not practicable to determine the deferred tax liability that would be payable if these
earnings were repatriated to the U.S.
The table below provides selected cash flow information:
Years ended August 31,
(dollar amounts in thousands)
2023
2022
$ Change
% Change
Net cash provided by operating activities
$
645,573 $
538,277 $
107,296
Net cash provided by (used in) investing activities
(95,393)
(2,033,675)
1,938,282
Net cash provided by (used in) financing activities
(632,024)
1,339,234
(1,971,258)
Effect of exchange rate changes on cash and cash equivalents
4,015
(22,428)
26,443
Net increase (decrease) in cash and cash equivalents
$
(77,829) $
(178,592) $
100,763
19.9 %
(95.3) %
(147.2) %
(117.9) %
(56.4) %
Operating
For fiscal 2023, net cash provided by operating activities was $645.6 million, which included net income of $468.2 million,
non-cash charges of $194.6 million and a net cash outflow of $17.2 million to support working capital requirements. The non-
cash charges were primarily driven by $105.4 million of depreciation and amortization, $62.0 million of stock-based
compensation expense and $32.3 million from amortization of lease ROU assets, partially offset by $31.1 million in deferred
income taxes. The net cash outflow in working capital was primarily due to an increase in accounts receivable driven by sales
and the timing of client payments and cash outflows for lease payments, partially offset by an increase in net taxes payable due
to an out-of-period adjustment related to an ongoing review and analysis of certain tax positions and timing of tax payments in
certain jurisdictions.
For fiscal 2022, net cash provided by operating activities was $538.3 million, which included net income of $396.9 million,
non-cash charges of $241.3 million and net cash outflow of $99.9 million to support working capital requirements. The non-
cash charges were primarily driven by $86.7 million of depreciation and amortization, $64.3 million in asset impairment
charges, $56.0 million of stock-based compensation expense and $43.0 million from amortization of lease ROU assets. The net
cash outflow in working capital was primarily driven by cash outflows for lease payments and an increase in accounts
receivable driven by sales and the timing of client payments.
Investing
For fiscal 2023, net cash used in investing activities was $95.4 million, mainly driven by capital expenditures of $60.8 million,
primarily due to capitalization of compensation costs related to development of capitalized internal-use software and, to a lesser
extent, investments in network-related equipment mainly at our data centers and laptops. Cash used in investing activities was
also driven by the acquisition of a business for $23.6 million.
For fiscal 2022, net cash used in investing activities was $2,033.7 million, mainly driven by the cash purchase of CGS for
$1.932 billion, inclusive of working capital adjustments, and the cash purchase of Cobalt for $50.0 million, net of cash acquired
and inclusive of working capital adjustments.
44
Financing
For fiscal 2023, net cash used in financing activities was $632.0 million, consisting mainly of $375.0 million related to the
partial repayment of the 2022 Term Facility, $176.7 million of share repurchases and $138.6 million of dividend payments,
partially offset by $72.0 million in proceeds from employee stock plans.
For fiscal 2022, net cash provided by financing activities was $1,339.2 million, consisting mainly of $2,238.4 million proceeds
received from the 2022 Credit Facilities and Senior Notes and $86.0 million of proceeds from employee stock plans, partially
offset by $825.0 million related to the full repayment and termination of the 2019 Credit Agreement and, to a lesser extent, the
partial repayment of the 2022 Term Loan Facility, $125.9 million of dividend payments and $18.6 million of share repurchases.
Free Cash Flow
We define free cash flow, a non-GAAP financial measure, as cash provided by operating activities, less purchases of PPE and
capitalized internal use software. We believe free cash flow is a liquidity measure that provides useful information to
management and investors about the amount of cash generated by the business that, after capital expenditures, can be used for
strategic opportunities, including returning value to stockholders, investing in our business, making strategic acquisitions, and
strengthening the balance sheet. Free cash flow should be considered in addition to, rather than as a substitute for, consolidated
net income as a measure of our performance and net cash provided by operating activities as a measure of our liquidity.
The following table reconciles our net cash provided by operating activities to free cash flow:
(dollar amounts in thousands)
Net cash provided by operating activities
Less: purchases of property, equipment, leasehold improvements and
capitalized internal-use software
Free cash flow
Years ended August 31,
2023
2022
Change
$
645,573 $
538,277 $
107,296
(60,786)
(51,156)
$
584,787 $
487,121 $
(9,630)
97,666
During fiscal 2023, we generated free cash flow of $584.8 million, an increase of $97.7 million compared with fiscal 2022. This
change reflects a $107.3 million increase in cash provided by operating activities, mainly due to lower working capital
requirements and higher net income, partially offset by an increase in purchases of PPE and capitalized internal-use software,
primarily driven by higher capitalized costs related to internal-use software and investments in network-related equipment at
our data centers.
Off-Balance Sheet Arrangements
As of August 31, 2023 and August 31, 2022, we had no off-balance sheet financing other than letters of credit incurred in the
ordinary course of business. Refer to Note 12, Debt and Note 13, Commitments and Contingencies in the Notes to the
Consolidated Financial Statements included in Part II, Item 8. of this Annual Report on Form 10-K for more information on our
letters of credit.
As of August 31, 2023 and August 31, 2022, we also had no other arrangements with unconsolidated entities or financial
partnerships (such as entities often referred to as structured finance or special purpose entities) established for purposes of
facilitating off-balance sheet financing other debt arrangements, or other contractually limited purposes.
Foreign Currency Exposure
As we operate globally, we are exposed to the risk that our financial condition, results of operations and cash flows could be
impacted by changes in foreign currency exchange rates. As of August 31, 2023, we maintained a series of foreign currency
forward contracts to hedge a portion of our primary currency exposures of the Indian Rupee, Euro, British Pound Sterling and
Philippine Peso. To mitigate our currency exposure, we entered into these contracts to hedge between 25% to 75% of our
45
projected primary currency operating expenses over their respective hedge periods which range from the first quarter of fiscal
2024 through the fourth quarter of fiscal 2024.
The following table summarizes the gross notional value of our foreign currency forward contracts to purchase the respective
local currency with U.S. dollars:
(in thousands)
British Pound Sterling
Euro
Indian Rupee
Philippine Peso
Total
Critical Accounting Estimates
August 31, 2023
August 31, 2022
Local Currency
Amount
Notional Contract
Amount (USD)
Local Currency
Amount
Notional Contract
Amount (USD)
£
€
Rs
₱
45,000 $
39,000
3,363,150
1,888,541
$
56,098 £
42,646 €
40,300 Rs
33,600 ₱
172,644
44,200 $
37,500
2,667,928
1,462,060
$
55,567
40,679
33,600
27,000
156,846
We prepare the Consolidated Financial Statements in conformity with GAAP, which requires us to make certain estimates and
apply judgements that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures. We base
our estimates on historical experience and other assumptions that we believe to be reasonable at the time the Consolidated
Financial Statements are prepared and, as such, they may ultimately differ materially from actual results.
We describe our significant accounting policies in Note 2, Summary of Significant Accounting Policies in the Notes to the
Consolidated Financial Statements included in Part II, Item 8. of this Annual Report on Form 10-K.
We disclose the development and selection of our critical accounting estimates with the Audit Committee of our Board of
Directors. The critical accounting estimates and judgments that we believe to have the most significant impacts to our
Consolidated Financial Statements are described below.
Income Taxes
We are subject to income taxes in the U.S. and numerous foreign jurisdictions. Our tax provision is an estimate based on our
understanding of laws in federal, state and foreign tax jurisdictions. These laws can be complicated and are difficult to apply to
any business. The tax laws also require us to allocate our taxable income to many jurisdictions based on subjective allocation
methodologies and information collection processes. Our effective tax rate differs from the statutory rate primarily due to the
impact of state taxes, foreign operations, research and development ("R&D") and other tax credits, tax audit settlements, the tax
benefit from stock option exercises and the foreign derived intangible income ("FDII") tax deduction.
Our provision for income taxes is subject to volatility and could be adversely impacted by numerous factors such as changes in
earnings or tax laws, regulations, or accounting principles, including accounting for uncertain tax positions or interpretations of
them. Significant judgment is required in determining our provision for income taxes, deferred tax assets and liabilities and
unrecognized tax benefits.
Further, as a result of certain ongoing employment and capital investment actions and commitments, our income in certain
countries is subject to reduced tax rates. Our failure to meet these employment and capital investment actions and commitments
could adversely affect our provision for income taxes. In addition, we are subject to the continuous examination of our income
tax returns by the Internal Revenue Service and other tax authorities. We regularly assess the likelihood of adverse outcomes
resulting from these examinations to determine the adequacy of our provision for income taxes. There can be no assurance that
the outcomes from these continuous examinations will not have an adverse impact on our operating results and financial
condition.
Significant judgement is required in determining our uncertain tax positions. We follow a two-step approach in recognizing and
measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of
available evidence indicates that it is more likely than not (defined as a likelihood of more than 50%) that a tax position will be
sustained based on its technical merits as of the reporting date. The second step, for those positions that meet the recognition
criteria, is to measure and recognize the largest amount of benefit that is greater than 50% likely of being realized upon
effective settlement with a taxing authority. As the determination of liabilities related to uncertain tax positions and associated
interest and penalties requires significant estimates and assumptions, there can be no assurance that we will accurately predict
46 the outcomes of these audits. For this reason and due to ongoing audits by multiple tax authorities, we regularly engage in
discussions and negotiations with tax authorities regarding tax matters in various jurisdictions. We adjust these reserves in light
of changing facts and circumstances, such as the closing of a tax audit or the refinement of an estimate. To the extent that the
final outcome of these matters is different than the amounts recorded, such differences will affect the provision for income taxes
in the period in which such determination is made. We accrue interest on all tax exposures for which reserves have been
established consistent with jurisdictional tax laws. The Provision for income taxes on our Consolidated Statements of Income
includes the impact of changes to reserves and any related interest. We have no reason to believe that such audits will result in
the payment of additional taxes and/or penalties that would have a material adverse effect on our results of operations or
financial position, beyond current estimates.
Refer to Note 10, Income Taxes in the Notes to the Consolidated Financial Statements included in Part II, Item 8. of this Annual
Report on Form 10-K for further information.
Stock-based Compensation
We measure compensation expense for all stock-based awards using a lattice-binomial option-pricing model ("binomial
model") or the Black-Scholes model to estimate the grant-date fair value. Both models involve certain estimates and subjective
assumptions regarding our stock price volatility, the expected life of the award, the term selected for the risk-free rate and the
expected dividend yield. The binomial model also incorporates market conditions, vesting restrictions and exercise patterns.
Our performance share units ("PSUs") require management to make assumptions regarding the probability of achieving
specified performance levels established at the time of grant, which are reviewed on a quarterly basis. The ultimate number of
common shares that may be earned from a PSU is determined pursuant to a payout range based on the achievement of specified
performance levels.
We estimate expected forfeitures of equity awards at the date of grant and recognize compensation expense only for those
awards expected to vest. The forfeiture assumption is revised if actual forfeitures differ from those estimates.
The assumptions we use to calculate and account for stock-based compensation awards represent management's best estimates,
which involve inherent uncertainties. As a result, if we revise our assumptions and estimates, our stock-based compensation
expense could differ from amounts recorded. Refer to Note 16, Stock-Based Compensation in the Notes to the Consolidated
Financial Statements included in Part II, Item 8. of this Annual Report on Form 10-K for further information.
Goodwill and Intangible Assets
Goodwill
Goodwill is assigned to one or more reporting units on the date of acquisition. Our reporting units are the same as our
reportable segments. Goodwill is not amortized as it is estimated to have an indefinite life. We test our goodwill for impairment
annually during the fourth quarter of each fiscal year and between annual tests if an event occurs or circumstances change that
would more likely than not reduce the fair value of any one of our reporting units below its respective carrying amount.
We may elect to perform a qualitative analysis for the reporting units to determine whether it is more likely than not (a
likelihood of more than 50%) that the fair value of the reporting unit is less than its carrying value. In performing a qualitative
assessment, we consider such factors as macro-economic conditions, industry and market conditions in which we operate,
including the competitive environment and significant changes in demand for our services. We also consider the share price
both in absolute terms and in relation to peer companies. If the qualitative analysis indicates that it is more likely than not the
fair value of a reporting unit is less than its carrying amount or if we elect not to perform a qualitative analysis, a quantitative
analysis is performed to determine whether a goodwill impairment exists.
The quantitative goodwill impairment analysis is used to identify potential impairment by comparing the carrying amount of a
reporting unit with its fair value. To perform this analysis, we apply the income approach which utilizes discounted cash flows,
along with other relevant market information. Significant judgment is involved in determining the assumptions used in
estimating future cash flows. These assumptions include, but are not limited to, the following estimates: expected sales,
working capital needs to support each reporting unit, capital expenditures and related depreciation and amortization, operating
expenses, expected tax rates and the weighted average cost of capital for each reporting unit. Our cost of capital is based on
assumptions about interest rates, as well as a risk-adjusted rate of return required by our equity investors. Changes in these
estimates can impact the present value of expected cash flows used in determining fair value of a reporting unit. If the carrying
value of the reporting unit exceeds the fair value, then the goodwill is considered impaired and written down to the reporting
unit’s fair value. The impairment loss for the reporting unit cannot exceed the carrying amount of the goodwill allocated to that
reporting unit.
47 Intangible Assets
We amortize our identifiable intangible assets over their estimated useful lives, which are evaluated annually to determine
whether events and circumstances warrant a revision to the remaining period of amortization. If the estimate of the remaining
useful life is changed, the remaining carrying amount of the intangible asset is amortized prospectively over that revised
remaining useful life. Determining the useful life of intangible assets requires judgement and an understanding of our planned
use of the asset, among other factors.
Intangible assets are tested for impairment qualitatively on a quarterly basis or whenever events or changes in circumstances
indicate that the carrying amount of an asset group is not recoverable. If indicators of impairment are present, amortizable
intangible assets are tested for impairment by comparing the carrying value to undiscounted cash flows and, if impaired, written
down to fair value based on discounted cash flows. Significant judgment is involved in determining the assumptions used in
estimating future cash flows.
Refer to Note 8, Goodwill and Note 9, Intangible Assets in the Notes to the Consolidated Financial Statements included in Part
II, Item 8. of this Annual Report on Form 10-K for further details.
Business Combinations
We account for business combinations using the purchase method of accounting. The acquisition purchase price is allocated to
the underlying identified, tangible and intangible assets and liabilities assumed, based on their respective estimated fair values
on the acquisition date. The excess of the purchase consideration over the fair values of the identified assets and liabilities is
recorded as goodwill and assigned to one or more reporting units. The amounts and useful lives assigned to acquisition-related
tangible and intangible assets impact the amount and timing of future amortization expense. Determining the fair value of assets
acquired and liabilities assumed and the expected useful life requires management’s judgment and often involves the use of
significant estimates and assumptions, including assumptions with respect to future cash inflows and outflows, discount rates,
asset lives and market multiples, among other items. Acquisition-related expenses and restructuring costs, if any, are recognized
separately from the business combination and are expensed as incurred.
Long-lived Assets
We review our PPE to determine if any indicators of impairment are present on a quarterly basis or whenever events or changes
in circumstances indicate that the carrying amount of an asset group may not be recoverable. If indicators of impairment are
present, the asset group is tested for impairment by comparing the carrying value to undiscounted cash flows and, if impaired,
written down to fair value based on discounted cash flows.
A significant amount of judgment is involved in determining if an indicator of impairment has occurred and in calculating the
inputs to the impairment calculation. Indicators we consider include, but are not limited to, a significant decline in our expected
future cash flows, a change in an expected useful life, unanticipated competition, slower growth rates, ongoing maintenance and
improvements of the assets, or changes in the usage or operating performance. Inputs to an impairment calculation include
estimates related to future cash flows and asset fair values, forecasting asset useful lives and selecting the discount rate that
reflects the risk inherent in future cash flows. If actual results are not consistent with our estimates and assumptions included in
our impairment assessment, we may be exposed to losses that could be material.
Refer to Note 7, Property, Equipment and Leasehold Improvements in the Notes to the Consolidated Financial Statements
included in Part II, Item 8. of this Annual Report on Form 10-K for further information.
Contingencies
We are subject to various legal proceedings, claims and litigation that have arisen in the ordinary course of business, which
involve inherent uncertainties. Assessing the probability of loss for such contingencies and determining how to accrue the
appropriate liabilities requires judgment. If actual results differ from our assessments, our financial position, results of
operations, or cash flows would be affected. Refer to Note 13, Commitments and Contingencies in the Notes to the
Consolidated Financial Statements included in Part II, Item 8. of this Annual Report on Form 10-K, for more information on
contingent matters.
New Accounting Pronouncements
Refer to Note 2, Summary of Significant Accounting Policies in the Notes to the Consolidated Financial Statements included in
Part II, Item 8. of this Annual Report on Form 10-K for a full description of recent accounting pronouncements, including the
expected dates of adoption.
48 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
In the normal course of business, we are exposed to foreign currency exchange risk and interest rate risk that could impact our
financial position and results of operations. Current market events have not required us to materially modify our financial risk
management strategies with respect to our exposures to foreign currency exchange risk or interest rate risk.
Foreign Currency Transaction Risk
We operate on a global basis and are exposed to the risk that our financial condition, results of operations and cash flows could
be impacted by changes in foreign currency exchange rates. As of August 31, 2023, we maintained a series of foreign currency
forward contracts to hedge a portion of our primary currency exposures of the Indian Rupee, Euro, British Pound Sterling and
Philippine Peso. To mitigate our currency exposure, we entered into these contracts to hedge between 25% to 75% of our
projected primary currency operating expenses over their respective hedge periods, which range from the first quarter of fiscal
2024 through the fourth quarter of fiscal 2024. We do not enter into cash flow hedges for trading or speculative purposes.
The changes in fair value for these foreign currency forward contracts are initially reported as a component of Accumulated
other comprehensive loss ("AOCL") on the Consolidated Balance Sheets and subsequently reclassified into SG&A in the
Consolidated Statements of Income when the hedged exposure affects earnings.
The following table reflects the foreign currency forward contracts gain (loss) reclassified from AOCL into income and the
impact of foreign currency exchange rate fluctuations, net of hedge activity, to operating income:
(in thousands)
Foreign currency forward contracts gain (loss) reclassified from AOCL into SG&A
Foreign currency exchange rate fluctuations increase (decrease) to operating income(1)
(1) Impact to operating income is net of hedge activity.
Years ended August 31,
2023
2022
$
$
(3,176) $
(7,867)
25,719 $
(3,059)
We performed a sensitivity analysis to determine the effects on both the fair value of our outstanding foreign currency forward
contracts and our operating income, excluding these forward contracts, of a hypothetical devaluation of the U.S. dollar by 10%
as of August 31, 2023, relative to the other foreign currencies in which we transact. Based on the financial results for fiscal
2023, the fair value of our outstanding forward contracts would have increased by $17.0 million and our operating income,
excluding these forward contracts, would have decreased by $42.9 million. This sensitivity analysis has inherent limitations as
it disregards the possibility that rates of multiple foreign currencies will not always move in the same direction relative to the
value of the U.S. dollar over time and does not account for our forward contracts that we utilize to mitigate fluctuations in
exchange rates.
Refer to Note 5, Derivative Instruments in the Notes to the Consolidated Financial Statements included in Part II, Item 8. of this
Annual Report on Form 10-K for more information on our foreign currency exposures and our foreign currency forward
contracts.
Foreign Currency Translation Risk
We are exposed to foreign currency risk due to the translation of our results from certain international operations into U.S.
Dollars, as part of the consolidation process. Fluctuations in foreign currency exchange rates can create volatility in our results
of operations and our financial condition.
49 The following table reflects the foreign currency translation adjustment gains and losses recorded in Other comprehensive
income (loss):
(in thousands)
Foreign currency translation adjustment gains (losses)
Interest Rate Risk
Cash and Cash Equivalents and Investments
Years ended August 31,
2023
2022
$
21,511 $
(74,666)
As of August 31, 2023, we had Cash and cash equivalents of $425.4 million and Investments of $32.2 million. Our Cash and
cash equivalents consist of cash and highly liquid investments including demand deposits and money market funds. Our
Investments consist of mutual funds. We are exposed to interest rate risk due to fluctuations in interest rates, which may affect
our interest income and the fair market value of our investments. As we have a restrictive investment policy, our financial
exposure to fluctuations in interest rates is expected to remain low. Refer to Note 2, Summary of Significant Accounting
Policies in the Notes to the Consolidated Financial Statements included in Part II, Item 8. of this Annual Report on Form 10-K
for more information on our cash and cash equivalents.
Debt
2022 Credit Agreement
As of August 31, 2023, our outstanding variable interest rate debt included $375.0 million under the 2022 Term Facility and
$250.0 million under the 2022 Revolving Facility. During fiscal 2023, the outstanding borrowings under the 2022 Credit
Facilities bore interest at a rate equal to the applicable one-month Term SOFR rate plus a spread using a debt leverage pricing
grid, currently at 1.1% (comprised of a 1.0% interest rate margin based on a debt leverage pricing grid plus 0.1% credit spread
adjustment). The spread remained consistent from the date of borrowing through August 31, 2023.
To mitigate our exposure to interest rate volatility due to changes in SOFR, we entered into the 2022 Swap Agreement on
March 1, 2022, to hedge a portion of our outstanding floating SOFR rate debt with a fixed interest rate of 1.162%. The notional
amount of the 2022 Swap Agreement declines by $100.0 million on a quarterly basis beginning May 31, 2022. Effective
December 30, 2022, we apportioned the then-outstanding notional amount of the 2022 Swap Agreement between two
counterparties. As of August 31, 2023, the notional amount of the 2022 Swap Agreement was $200.0 million, maturing on
February 28, 2024.
As our Senior Notes have a fixed interest rate, they are not subject to interest rate changes. As a result of the 2022 Swap
Agreement, our exposure to fluctuations in SOFR is limited to our borrowings from the 2022 Credit Facilities in excess of
amounts that are hedged, which was $425.0 million of our outstanding principal balance as of August 31, 2023. Assuming all
terms of our outstanding long-term debt remained the same, a hypothetical 25 basis point change (up or down) in the one-month
SOFR would result in a $1.1 million change to our annual interest expense.
Refer to Note 12, Debt in the Notes to the Consolidated Financial Statements included in Part II, Item 8. of this Annual Report
on Form 10-K for more information on our outstanding borrowings as of August 31, 2023.
50 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index to Consolidated Financial Statements
Management’s Statement of Responsibility for Financial Statements
Management’s Report on Internal Control over Financial Reporting
Reports of Independent Registered Public Accounting Firm Reports of Independent Registered Public Accounting
Firm (PCAOB ID: 42)
Consolidated Financial Statements:
Consolidated Statements of Income for the years ended August 31, 2023, 2022 and 2021
Consolidated Statements of Comprehensive Income for the years ended August 31, 2023, 2022 and 2021
Consolidated Balance Sheets at August 31, 2023 and 2022
Consolidated Statements of Cash Flows for the years ended August 31, 2023, 2022 and 2021
Consolidated Statements of Changes in Stockholders’ Equity for the years ended August 31, 2023, 2022 and 2021
Notes to the Consolidated Financial Statements
Financial Statement Schedule:
Schedule II – Valuation and Qualifying Accounts
Page
52
52
53
56
57
58
59
60
61
99
51 Management’s Statement of Responsibility for Financial Statements
Our management prepares and is responsible for the fairness, integrity and objectivity of our Consolidated Financial
Statements. The accompanying Consolidated Financial Statements have been prepared in conformity with accounting principles
generally accepted in the United States of America and include amounts based on our management’s estimates and judgments.
All financial information in this Report on Form 10-K has been presented on a basis consistent with the information included in
the accompanying financial statements.
Our policies and practices reflect corporate governance initiatives that are compliant with the listing requirements of the New
York Stock Exchange, the NASDAQ Stock Market and the corporate governance requirements of the Sarbanes-Oxley Act of
2002. Our management, with oversight by our Board of Directors, has established and maintains a strong ethical climate so that
our affairs are conducted to the highest standards of personal and corporate conduct.
We maintain accounting systems, including internal accounting controls, designed to provide reasonable assurance of the
reliability of financial records and the protection of assets. The concept of reasonable assurance is based on recognition that the
cost of a system should not exceed the related benefits. The effectiveness of those systems depends primarily upon the careful
selection of financial and other managers, clear delegation of authority and assignment of accountability, inculcation of high
business ethics and conflict-of-interest standards, policies and procedures for coordinating the management of corporate
resources, and the leadership and commitment of top management. In compliance with the Sarbanes-Oxley Act of 2002, we
assessed our internal control over financial reporting as of August 31, 2023 and issued a report (see below).
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting for FactSet.
Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles. Internal control over financial reporting includes those policies and procedures that (i) pertain to the
maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;
(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles and that our receipts and expenditures are being made only in
accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial
statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.
Our management (with the participation of the Chief Executive Officer and Chief Financial Officer) conducted an evaluation of
the effectiveness of our internal control over financial reporting based on the framework in Internal Control—Integrated
Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Based on this evaluation, our management concluded that our internal control over financial reporting was effective as of
August 31, 2023. Ernst & Young LLP (PCAOBID: 42), an independent registered public accounting firm, has audited the
effectiveness of our internal control over financial reporting and has issued a report on our internal control over financial
reporting, which is included in their report on the subsequent page.
52 Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of FactSet Research Systems Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of FactSet Research Systems Inc. (the Company) as of
August 31, 2023 and 2022, and the related consolidated statements of income, comprehensive income, stockholders’ equity and
cash flows for each of the three years in the period ended August 31, 2023, and the related notes and financial statement
schedule listed in the Index at Item 8 (collectively referred to as the “Consolidated Financial Statements”). In our opinion, the
Consolidated Financial Statements present fairly, in all material respects, the financial position of the Company at August 31,
2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended August 31,
2023, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company’s internal control over financial reporting as of August 31, 2023, based on criteria established in
Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(2013 framework) and our report dated October 27, 2023 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on
the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to
error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that
was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that
are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The
communication of the critical audit matter does not alter in any way our opinion on the Consolidated Financial Statements,
taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical
audit matter or on the account or disclosure to which it relates.
53 Description of the
Matter
Measurement of income tax provision
As discussed in Note 2, Summary of Significant Accounting Policies, and Note 10, Income Taxes, of the
Consolidated Financial Statements, the Company serves international markets and is subject to income
taxes in the U.S. and numerous foreign jurisdictions, which affect the Company’s provision for income
taxes. The tax provision is an estimate based on management’s understanding of current enacted tax
laws and tax rates of each tax jurisdiction and the use of subjective allocation methodologies to allocate
taxable income to tax jurisdictions based upon the structure of the Company’s operations and customer
arrangements. For the year-ended August 31, 2023, the Company recognized a consolidated provision
for income taxes of $115.8 million with $54.3 million related to its U.S. operations and $61.5 million
related to its Non-U.S. operations.
Management’s calculation of the provision for income taxes was significant to our audit because the
provision for income taxes involved subjective estimation and complex audit judgement related to the
evaluation of tax laws, including the methods used to allocate taxable income, and the amounts and
disclosures are material to the financial statements.
How We Addressed
the Matter in Our
Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of internal
controls over management’s calculation of its provision for income taxes. For example, we tested
controls over management’s evaluation of the allocation methodologies and management’s review of
the assumptions and data utilized in determining the allocation of income to applicable tax
jurisdictions.
Among other audit procedures performed, we evaluated the reasonableness of management’s allocation
methodologies by analyzing the methodology based on the Company’s structure, operations and current
tax law. We recalculated income tax expense using management’s methodology and agreed the data
used in the calculations to the Company’s underlying books and records. We involved our tax
professionals to evaluate the application of tax law to management’s allocation methodologies and tax
position. This included evaluating third-party reports and advice obtained by the Company. We also
performed a sensitivity analysis to evaluate the effect from changes in management’s allocation
methodologies and assumptions. We have evaluated the Company’s income tax disclosures included in
Note 10, Income Taxes, of the Consolidated Financial Statements in relation to these matters.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2013.
Stamford, CT
October 27, 2023
54 Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of FactSet Research Systems Inc.
Opinion on Internal Control over Financial Reporting
We have audited FactSet Research System Inc.’s (the Company) internal control over financial reporting as of August 31, 2023,
based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations
of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, the Company maintained, in all material
respects, effective internal control over financial reporting as of August 31, 2023, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the 2023 Consolidated Financial Statements of the Company and our report dated October 27, 2023, expressed an
unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report
on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control
over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all
material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and
performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a
reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Stamford, CT
October 27, 2023
55 FactSet Research Systems Inc.
Consolidated Statements of Income
(in thousands, except per share data)
Revenues
Operating expenses
Cost of services
Selling, general and administrative
Asset impairments
Total operating expenses
For the years ended August 31,
2023
2022
$ 2,085,508 $ 1,843,892 $ 1,591,445
2021
973,225
457,130
25,946
871,106
433,032
64,272
786,400
331,004
—
1,456,301
1,368,410
1,117,404
Operating income
629,207
475,482
474,041
Other income (expense), net
Interest income
Interest expense
Other income (expense), net
Total other income (expense), net
12,809
(66,319)
8,257
6,175
(35,697)
(2,366)
1,806
(8,200)
(30)
(45,253)
(31,888)
(6,424)
Income before income taxes
583,954
443,594
467,617
Provision for income taxes
Net income
Basic earnings per common share
Diluted earnings per common share
Basic weighted average common shares
Diluted weighted average common shares
$
$
$
115,781
468,173 $
46,677
396,917 $
68,027
399,590
12.26 $
12.04 $
10.48 $
10.25 $
10.56
10.36
38,194
38,898
37,864
38,736
37,856
38,570
The accompanying notes are an integral part of these Consolidated Financial Statements.
56
FactSet Research Systems Inc.
Consolidated Statements of Comprehensive Income
(in thousands)
Net income
Other comprehensive income (loss), net of tax
Net unrealized gain (loss) on cash flow hedges(1)
Foreign currency translation adjustment gains (losses)
Other comprehensive income (loss)
Comprehensive income
For the years ended August 31,
2022
2021
2023
$
468,173 $
396,917 $
399,590
(269)
21,511
5,245
(74,666)
(504)
835
21,242
489,415 $
(69,421)
327,496 $
331
399,921
$
(1) Presented net of a tax benefit of $61 thousand, tax expense of $1,657 thousand, and a tax benefit of $162 thousand for the years ended
August 31, 2023, 2022 and 2021, respectively.
The accompanying notes are an integral part of these Consolidated Financial Statements.
57
FactSet Research Systems Inc.
Consolidated Balance Sheets
(in thousands, except share data)
ASSETS
Cash and cash equivalents
Investments
Accounts receivable, net of reserves of $7,769 at August 31, 2023 and $2,776 at August 31,
2022
Prepaid taxes
Prepaid expenses and other current assets
Total current assets
Property, equipment and leasehold improvements, net
Goodwill
Intangible assets, net
Deferred taxes
Lease right-of-use assets, net
Other assets
TOTAL ASSETS
LIABILITIES
August 31,
2023
2022
$
425,444 $
32,210
503,273
33,219
237,665
204,102
24,206
50,610
38,539
91,214
770,135
870,347
86,107
1,004,736
1,859,202
27,229
141,837
73,676
80,843
965,848
1,895,909
3,153
159,458
38,747
$ 3,962,922 $ 4,014,305
Accounts payable and accrued expenses
$
121,816 $
108,395
Current lease liabilities
Accrued compensation
Deferred revenues
Current taxes payable
Dividends payable
Total current liabilities
Long-term debt
Deferred taxes
Deferred revenues, non-current
Taxes payable
Long-term lease liabilities
Other liabilities
TOTAL LIABILITIES
28,839
112,892
152,430
31,009
37,265
484,251
29,185
114,808
152,039
—
33,860
438,287
1,612,700
1,982,424
6,737
3,734
30,344
198,382
6,844
8,800
7,212
34,211
208,622
3,341
$ 2,342,992 $ 2,682,897
Commitments and contingencies (see Note 13)
STOCKHOLDERS’ EQUITY
Preferred stock, $0.01 par value, 10,000,000 shares authorized, none issued
$
— $
—
Common stock, $0.01 par value, 150,000,000 shares authorized, 42,096,628 and 41,653,218
shares issued, 38,025,372 and 38,044,756 shares outstanding at August 31, 2023 and 2022,
respectively
Additional paid-in capital
Treasury stock, at cost: 4,071,256 and 3,608,462 shares at August 31, 2023 and 2022,
respectively
Retained earnings
Accumulated other comprehensive loss
TOTAL STOCKHOLDERS’ EQUITY
421
1,323,631
417
1,190,350
(1,122,077)
1,505,096
(930,715)
1,179,739
(87,141)
(108,383)
$ 1,619,930 $ 1,331,408
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
$ 3,962,922 $ 4,014,305
The accompanying notes are an integral part of these Consolidated Financial Statements.
58
FactSet Research Systems Inc.
Consolidated Statements of Cash Flows
(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Years ended August 31,
2023
2022
2021
Net income
$
468,173 $
396,917 $
399,590
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization
Amortization of lease right-of-use assets
Stock-based compensation expense
Deferred income taxes
Asset impairments
Changes in assets and liabilities, net of effects of acquisitions
Accounts receivable, net of reserves
Accounts payable and accrued expenses
Accrued compensation
Deferred revenues
Taxes payable, net of prepaid taxes
Lease liabilities, net
Other, net
Net cash provided by operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
105,384
32,344
62,038
86,683
43,032
56,003
(31,119)
25,946
(8,715)
64,272
(40,103)
(32,980)
8,393
(3,431)
(3,387)
41,396
(39,704)
19,643
12,815
14,524
(6,100)
(19,275)
(48,628)
(20,271)
64,476
42,846
45,065
(4,602)
—
3,646
2,068
21,815
5,078
26,298
(42,750)
(8,304)
645,573
538,277
555,226
Purchases of property, equipment, leasehold improvements and capitalized
internal-use software
(60,786)
(51,156)
(61,325)
Acquisition of businesses, net of cash and cash equivalents acquired
(23,593)
(1,981,641)
(58,056)
Purchases of investments
Proceeds from maturity or sale of investments
Net cash provided by (used in) investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from debt
Repayments of debt
Payments of debt issuance costs
Dividend payments
Proceeds from employee stock plans
Repurchases of common stock
Other financing activities
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
Supplemental Disclosure of Cash Flow Information
Cash paid during the year for interest
Cash paid during the year for income taxes, net of refunds
Supplemental Disclosure of Non-Cash Transactions
Dividends declared, not paid
(11,014)
(878)
(18,787)
—
—
(95,393)
(2,033,675)
2,176
(135,992)
—
2,238,355
(375,000)
(825,000)
—
(138,601)
72,006
(176,720)
(13,709)
(632,024)
4,015
(77,829)
503,273
425,444 $
(9,736)
(125,934)
86,047
(18,639)
(5,859)
1,339,234
(22,428)
(178,592)
681,865
503,273 $
—
—
—
(117,927)
64,177
(264,702)
(4,259)
(322,711)
(263)
96,260
585,605
681,865
76,524 $
91,170 $
29,525 $
76,252 $
8,021
46,588
$
$
$
$
37,265 $
33,860 $
30,845
The accompanying notes are an integral part of these Consolidated Financial Statements.
59
FactSet Research Systems Inc.
Consolidated Statements of Changes in Stockholders’ Equity
(in thousands, except share data)
Shares
Par
Value
Common Stock
Additional
Paid-in
Capital
Treasury Stock
Shares
Amount
Accumulated
Other
Comprehensive
Loss
Total
Stockholders’
Equity
Retained
Earnings
Balance as of August 31, 2020
40,767,708 $ 408 $
939,067
2,737,456 $
(636,956) $ 633,149 $
(39,293) $
896,375
399,590
399,590
331
331
Net income
Other comprehensive income
(loss)
Common stock issued for
employee stock plans
360,877
4
64,173
Vesting of restricted stock
34,607
—
Repurchases of common stock
Stock-based compensation
expense
Dividends declared
Net income
Other comprehensive income
(loss)
Common stock issued for
employee stock plans
450,527
5
86,042
Vesting of restricted stock
39,499
—
Repurchases of common stock
Stock-based compensation
expense
Dividends declared
318
12,614
(104)
(4,155)
797,385
(264,702)
45,065
(120,224)
260
14,229
46,200
(128)
(6,031)
(18,639)
56,003
(129,693)
Balance as of August 31, 2021
41,163,192 $ 412 $ 1,048,305
3,547,773 $
(905,917) $ 912,515 $
(38,962) $
1,016,353
396,917
396,917
(69,421)
(69,421)
64,073
(4,155)
(264,702)
45,065
(120,224)
85,919
(6,031)
(18,639)
56,003
(129,693)
Balance as of August 31, 2022
41,653,218 $ 417 $ 1,190,350
3,608,462 $
(930,715) $ 1,179,739 $
(108,383) $
1,331,408
Net income
Other comprehensive income
(loss)
Common stock issued for
employee stock plans
Vesting of restricted stock
Excise tax on share repurchases
Repurchases of common stock
Stock-based compensation
expense
Dividends declared
Other
468,173
468,173
21,242
21,242
360,375
83,035
3
1
72,003
410
(166)
(1)
32,034
(13,544)
(932)
430,350
(176,720)
62,038
(759)
(142,816)
71,840
(13,544)
(932)
(176,720)
62,038
(142,816)
(759)
Balance as of August 31, 2023
42,096,628 $ 421 $ 1,323,631
4,071,256 $ (1,122,077) $ 1,505,096 $
(87,141) $
1,619,930
The accompanying notes are an integral part of these Consolidated Financial Statements.
60
Notes to the Consolidated Financial Statements
Note 1
Note 2
Note 3
Note 4
Note 5
Note 6
Note 7
Note 8
Note 9
Note 10
Note 11
Note 12
Note 13
Note 14
Note 15
Note 16
Note 17
Note 18
Description of Business
Summary of Significant Accounting Policies
Revenue Recognition
Fair Value Measures
Derivative Instruments
Acquisitions
Property, Equipment and Leasehold Improvements
Goodwill
Intangible Assets
Income Taxes
Leases
Debt
Commitments and Contingencies
Stockholders' Equity
Earnings Per Share
Stock-Based Compensation
Employee Benefit Plans
Segment Information
Page
61
62
68
69
72
74
76
77
77
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81
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85
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88
89
93
93
1. DESCRIPTION OF BUSINESS
FactSet Research Systems Inc. and its wholly-owned subsidiaries (collectively, "we," "our," "us," the "Company" or "FactSet")
is a global financial digital platform and enterprise solutions provider with open and flexible products that drive the investment
community to see more, think bigger and do its best work.
Our platform delivers expansive data, sophisticated analytics, and flexible technology used by global financial professionals to
power their critical investment workflows. As of August 31, 2023, we had nearly 8,000 clients comprised of almost 190,000
investment professionals, including asset managers, bankers, wealth managers, asset owners, partners, hedge funds, corporate
users and private equity & 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.
We drive our business based on our detailed understanding of our clients’ workflows, which helps us to solve their most
complex challenges. We provide financial data and market intelligence on securities, companies, industries and people to enable
our clients to research investment ideas, as well as to analyze, monitor and manage their portfolios. Our on- and off-platform
solutions span the investment life cycle of investment research, portfolio construction and analysis, trade execution,
performance measurement, risk management and reporting. We provide open and flexible technology offerings, including a
configurable desktop and mobile platform, comprehensive data feeds, cloud-based digital solutions and application
programming interfaces ("APIs"). Our CUSIP Global Services ("CGS") business supports security master files relied on by the
investment industry for critical front, middle and back-office functions. Our platform and solutions are supported by our
dedicated client service teams.
We operate our business through three reportable segments ("segments"): the Americas, EMEA and Asia Pacific. Refer to Note
18, Segment Information, for further discussion. For each of our segments, we execute our strategy through three workflow
solutions: Research & Advisory; Analytics & Trading; and Content & Technology Solutions ("CTS"). CGS operates as part of
CTS.
61 Revised Organizational Approach
We have a long-term view of our business and are committed to investing for growth and efficiency. Starting September 1,
2023, the beginning of our fiscal 2024 year, we revised our internal organization by firm type to better align with our clients, as
follows:
• Analytics & Trading will become "Institutional Buyside," focusing on asset managers, asset owners, and hedge fund
companies.
•
Research & Advisory will become two groups:
◦
◦
"Dealmakers," focusing on banking and sell-side research, corporate, and private equity and venture capital
workflows; and
"Wealth," focusing on wealth management workflows.
• We will discuss the results of our Partnerships and CGS groups, in combination. Partnerships delivers solutions
primarily to content providers, financial exchanges, and rating agencies, while CGS is the exclusive issuer of CUSIP
and CINS identifiers globally.
•
The activities of CTS will be reassigned to Institutional Buyside, Dealmakers, Wealth, and Partnerships and CGS.
This realignment of firm types is not expected to impact our segment reporting for fiscal 2024.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
We conduct business globally and manage our business on a geographic basis. The accompanying Consolidated Financial
Statements and Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K are prepared in
accordance with generally accepted accounting principles in the United States ("GAAP") for annual financial information and
the instructions to Form 10-K and Article 10 of Regulation S-X. The accompanying Consolidated Financial Statements include
our accounts and those of our wholly-owned subsidiaries; all intercompany activity and balances have been eliminated.
We have evaluated subsequent events through the date that the financial statements were issued.
Reclassifications
In fiscal 2023, we separated the components of Interest expense, net to present Interest income and Interest expense separately
in the Consolidated Statements of Income. We conformed the comparative figures for fiscal 2022 and 2021 to the current year's
presentation.
Use of Estimates
The preparation of our Consolidated Financial Statements and related disclosures in conformity with GAAP required
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses
during the reporting period. Significant estimates may include income taxes, stock-based compensation, goodwill and
intangible assets, business combinations, long-lived assets, contingencies and impairment assessments. We base our estimates
on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis
for making judgments about the carrying values of assets and liabilities. Actual results could differ from those estimates.
Revenue Recognition
Revenues are measured as the amount of consideration expected to be received in exchange for fulfilling our contractual
performance obligations with our clients. The majority of our revenues are derived from client access to our multi-asset
solutions powered by our suite of connected content available over the contractual term (referred to as the "hosted platform").
The hosted platform is a subscription-based service that provides client access to various combinations of products and services
including workstations, portfolio analytics and enterprise solutions. In addition, through our CGS platform, we provide
subscription access to a database of universally recognized identifiers reflecting differentiating characteristics for issuers and
their financial instruments (referred to as the "identifier platform").
62 We determined the majority of our contracts with clients, whether for our hosted platform or identifier platform services, each
represent a single performance obligation covering a series of distinct products and services that are substantially the same and
that have the same pattern of transfer to the client. The primary nature of our promise to the client is to provide daily access to
each of these data and analytics platforms, with revenue recognized over-time as performance is satisfied on an output time-
based measure of progress, as the client is simultaneously receiving and consuming the benefits of the platform.
We record deferred revenues when payments are received in advance of performance under the contract.
Stock-Based Compensation
Our stock-based awards include stock options, restricted stock units ("RSUs"), performance share units ("PSUs") and common
stock purchased by eligible employees under our employee stock purchase plan ("ESPP"). We measure and recognize stock-
based compensation for all stock-based awards granted to our employees and our non-employee members of the Board of
Directors ("non-employee directors") based on their estimated grant date fair value. To estimate the grant date fair value, we
utilize a lattice-binomial option-pricing model ("binomial model") for our employee stock options and the Black-Scholes model
for non-employee director stock options and common stock purchased by eligible employees under our ESPP.
Both the binomial model and Black-Scholes model involve certain estimates and assumptions such as:
•
•
•
•
Risk-free interest rate - based on the U.S. Treasury yield curve in effect at the time of grant with maturities equal to
the expected terms of the stock-based awards granted.
Expected life - the weighted average period the stock-based awards are expected to remain outstanding.
Expected volatility - based on a blend of historical volatility of the stock-based award's useful life and the weighted
average implied volatility for call option contracts traded in the 90 days preceding the stock-based award's valuation
date.
Dividend yield - the expectation of dividend payouts based on our history.
The binomial model also incorporates market conditions, vesting restrictions and exercise patterns.
For RSUs and PSUs, the grant date fair value is measured by reducing the grant date price of our common stock by the present
value of the dividends expected to be paid on the underlying stock during the requisite service period, discounted at the
appropriate risk-free interest rate. The number of PSUs granted assumes target-level achievement of the specified performance
levels within the payout range. The ultimate number of common shares that may be earned from a PSU is determined based on
the actual achievement of the specified performance levels within the payout range.
Stock-based compensation expense for stock option and RSU awards is recognized over the requisite service period using the
straight-line method. The amount of stock-based compensation expense recognized on any date, for stock options and RSUs
granted, is at least equal to the vested portion of the award on that date.
Our PSUs require management to make assumptions regarding the probability of achieving specified performance levels
established at the time of grant, and recognize stock-based compensation expense using the straight-line method over the
requisite service period. The probability of achieving the specified performance levels is reviewed on a quarterly basis to ensure
the amount of stock-based compensation expense appropriately reflects the expected achievement.
For our ESPP, compensation expense is recognized on a straight-line basis over the offering period.
Stock-based awards are subject to the continued employment and continued service at the time of vesting by employees and
non-employee directors, respectively. Compensation expense for stock-based awards is recorded net of estimated forfeitures,
which are based on historical forfeiture rates and are revised if actual forfeitures differ from those estimates.
Research and Product Development Costs
We do not have a separate research and product development ("R&D") department, but rather these costs primarily consist of
employee expenses, such as salaries and related benefits for our product development, software engineering and technical
support departments, and certain third parties. These teams collaborate with our strategists, product and content managers,
technologists, sales and other team members to develop new products and process innovations and enhance existing products.
Our R&D costs are expensed as incurred and are primarily recorded in employee compensation costs, which are included in our
Cost of services and Selling, general and administrative ("SG&A") expenses in the Consolidated Statements of Income,
dependent on the nature of the team. We incurred R&D costs of $267.4 million, $255.1 million and $250.1 million during fiscal
2023, 2022 and 2021, respectively.
63 Income Taxes
We account for income taxes using the asset and liability method. Under this method deferred tax assets and liabilities are
recorded for the temporary differences between the financial statement and the tax basis of assets and liabilities. In addition,
deferred tax assets and liabilities are recorded for net operating loss carryforwards ("NOLs") and tax credit carryforwards.
Deferred tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effect for
the years in which they are expected to be realized or settled. Deferred tax assets are evaluated for future realization and
reduced by a valuation allowance to the amount that is more likely than not (defined as a likelihood of more than 50%) to be
realized.
Applicable accounting guidance prescribes a comprehensive model for financial statement recognition, measurement,
classification and disclosure of uncertain tax positions that a company has taken or expects to take on a tax return. We follow a
two-step approach in recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for
recognition by determining if the weight of available evidence indicates that it is more likely than not (defined as a likelihood of
more than 50%) that a tax position will be sustained based on its technical merits as of the reporting date. The second step, for
those positions that meet the recognition criteria, is to measure and recognize the largest amount of benefit that is greater than
50% likely of being realized upon effective settlement with a taxing authority. We classify the liability for unrecognized tax
benefits as Taxes Payable (non-current) and to the extent we anticipate payment of cash within one year, the benefit is classified
as Current taxes payable in the Consolidated Balance Sheets.
The determination of liabilities related to uncertain tax positions and associated interest and penalties requires significant
estimates and assumptions; as such, there can be no assurance that we will accurately predict the outcomes of these audits. For
this reason and due to ongoing audits by multiple tax authorities, we regularly engage in discussions and negotiations with tax
authorities regarding tax matters in various jurisdictions. We adjust these reserves in light of changing facts and circumstances,
such as the closing of a tax audit or the refinement of an estimate. To the extent that the final outcome of these matters is
different than the amounts recorded, such differences will affect the provision for income taxes in the period in which such
determination is made.
We accrue interest on all tax exposures for which reserves have been established consistent with jurisdictional tax laws, and
classify this interest as Provision for income taxes in the Consolidated Statements of Income and Current taxes payable or
Taxes payable (non-current), based on the expected timing of the payment, within the Consolidated Balance Sheets.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash and highly liquid investments including demand deposits and money market funds
available for withdrawal without restriction or with original maturities of 90 days or less. The carrying value of our cash and
cash equivalents approximates fair value.
Accounts Receivable
Accounts receivable are recorded at the invoiced amount, net of an allowance for any potential uncollectible amounts. Accounts
receivable also includes unbilled receivables reflecting revenues earned but not yet invoiced. Amounts included in accounts
receivable are expected to be collected within one year. We evaluate our allowance to include expected credit losses and
collectability trends based on a variety of factors, including our historical write-off activity, current economic environment,
customer-specific information and expectations of future economic conditions. Our allowance is recorded to SG&A in the
Consolidated Statements of Income and we assess the adequacy of the allowance on a quarterly basis. Recoveries of accounts
previously reserved are recognized as a reversal to SG&A when payment is received. We write-off accounts receivable
balances when we have exhausted our collection efforts.
Property, Equipment and Leasehold Improvements
Property, equipment and leasehold improvements ("PPE") are stated at cost, less accumulated depreciation and amortization.
Property and equipment are depreciated based on the straight-line method over the estimated useful lives of the assets, ranging
from three to five years for computers and related equipment and seven years for furniture and fixtures. Leasehold
improvements are amortized on a straight-line basis over the shorter of their respective useful lives or the related lease term.
Repairs and maintenance expenditures, which are not considered leasehold improvements, and do not extend the useful life of
the property and equipment, are expensed as incurred.
We review our PPE to determine if any indicators of impairment are present on a quarterly basis or whenever events or changes
in circumstances indicate that the carrying amount of an asset group may not be recoverable. If indicators of impairment are
64 present, the asset group is tested for impairment by comparing the carrying value to undiscounted cash flows and, if impaired,
written down to fair value based on discounted cash flows. In addition, we periodically evaluate the estimated remaining useful
lives of long-lived intangible assets to determine whether events or changes in circumstances warrant a revision to the
remaining period of depreciation or amortization.
Goodwill
We recognize the excess of the purchase price over the fair value of identifiable net assets acquired at the acquisition date as
goodwill. Goodwill is not amortized but is tested for impairment at the reporting unit level annually, or more frequently if
impairment indicators occur. Goodwill is deemed to be impaired and written-down in the period in which the carrying value of
the reporting unit exceeds its fair value. We have three reporting units, Americas, EMEA and Asia Pacific, which are consistent
with our operating segments.
When assessing goodwill for impairment, we may first elect to perform a qualitative analysis for the reporting units to
determine whether it is more likely than not (a likelihood of more than 50 percent) that the fair value of the reporting unit is less
than its carrying value. If the qualitative analysis indicates that it is more likely than not the fair value of a reporting unit is less
than its carrying amount or if we elect not to perform a qualitative analysis, a quantitative analysis is performed to determine
whether a goodwill impairment exists.
The quantitative goodwill impairment analysis is used to identify potential impairment by comparing the carrying amount of a
reporting unit with its fair value. To perform this analysis, we apply the income approach which utilizes discounted cash flows,
along with other relevant market information. The annual review of the carrying value of goodwill requires us to develop
estimates of expected cash flows by reporting unit, based on future business performance, discounted by their respective
weighted average cost of capital. Changes in our estimates can impact the present value of expected cash flows used in
determining fair value of a reporting unit. If the carrying value of the reporting unit exceeds the fair value, then the goodwill is
considered impaired and written down to the reporting unit’s fair value. The impairment loss for the reporting unit cannot
exceed the carrying amount of the goodwill allocated to that reporting unit.
Intangible Assets
Acquired Intangible Assets
We amortize intangible assets over their estimated useful lives, assuming no residual value. We evaluate the useful lives
annually to determine whether events and circumstances warrant a revision to the remaining period of amortization. If the
estimate of the remaining useful life is changed, the remaining carrying amount of the intangible asset is amortized
prospectively over that revised remaining useful life.
Intangible assets are tested for impairment qualitatively on a quarterly basis or whenever events or changes in circumstances
indicate that the carrying amount of an asset group is not recoverable. If indicators of impairment are present, amortizable
intangible assets are tested for impairment by comparing the carrying value to undiscounted cash flows and, if impaired, written
down to fair value based on discounted cash flows.
Developed Technology
Our developed technology intangible assets include capitalized internal-use software related to internal and external costs
incurred during the application development stage related to developing, modifying or obtaining software for internal-use.
Costs related to software upgrades and enhancements are capitalized if it is determined that these upgrades or enhancements
provide additional functionality to the software. The capitalized software is amortized using the straight-line method over the
estimated useful life of the software, generally three to five years. These assets are subject to the impairment test guidance
specified in the Acquired Intangible Assets disclosure above.
Leases
Our lease portfolio consists of operating leases primarily related to our office space. We determine if an arrangement qualifies
as a lease at inception by evaluating if there is an identified asset and whether we obtain substantially all the economic benefits
of and have the right to control the use of an asset. For operating leases with a term greater than one year, we recognize lease
right-of-use ("ROU") assets and lease liabilities as the present value of future minimum lease payments over the reasonably
certain lease term beginning at the commencement date. The future minimum lease payments include fixed lease payments and
certain qualifying index-based variable payments. Our lease ROU assets may further be impacted by prepayments, lease
65 incentives received and initial direct costs incurred. Our operating leases are classified within Lease right-of-use assets, net,
Current lease liabilities and Long-term lease liabilities on our Consolidated Balance Sheets.
Our leases generally do not have a readily determinable implicit rate, therefore we use our incremental borrowing rate ("IBR")
at the lease commencement date, or on the date of lease modification, if applicable, in determining the present value of future
payments. Our IBR is derived by selecting U.S. corporate yield curves observed for public companies that are reflective of our
credit rating, adjusted to approximate a secured rate of borrowing. We also consider revisions to the rate to reflect the
geographic location where the leased asset is located.
Certain of our lease agreements include options to extend and options to terminate the lease, which we do not include in our
minimum lease terms unless management is reasonably certain to exercise. We account for the lease and non-lease components
as a single lease component, which we recognize over the expected term on a straight-line expense basis in occupancy costs (a
component of SG&A expense in the Consolidated Statements of Income). Variable lease payments are not included in the
calculation of lease ROU assets and lease liabilities and are expensed as incurred within occupancy costs.
We review our lease ROU assets for impairment when there is an indication that an asset may no longer be recoverable. The
impairment assessment requires significant judgments and estimates, including estimating subtenant rental income, calculating
an appropriate discount rate and assessing other applicable future cash flows associated with the leased location. These
estimates are based on our experience and knowledge of the market in which the property is located, previous efforts to dispose
of similar assets and the assessment of existing market conditions. Impairments are recognized as a reduction to the carrying
value of the Lease right-of-use assets, net with a corresponding increase to Asset impairments on our Consolidated Balance
Sheets and Consolidated Statements of Income, respectively.
Derivative Instruments
We use derivative financial instruments (“derivatives”) to manage exposure to foreign currency exchange rates and variable
interest rates. Our primary objective in holding derivatives is to reduce the volatility in cash flows associated with foreign
currency fluctuations and funding activities arising from changes in interest rates. We do not employ derivatives for trading or
speculative purposes.
Foreign Currency Forward Contracts
As we conduct business outside the U.S. in several currencies, we utilize derivative instruments (foreign currency forward
contracts) to mitigate our currency exposures from fluctuations in foreign currency exchange rates that can create volatility in
our results of operations, cash flows and financial condition. Our primary currency exposures include the Indian Rupee, Euro,
British Pound Sterling and Philippine Peso. In designing a specific hedging approach, we consider several factors, including
offsetting exposures, significance of exposures, forecasting risk and potential effectiveness of the hedge.
Interest Rate Swap Agreement
We leverage interest rate swap agreements to hedge the variability of our cash flows resulting from floating interest rates on our
debt. Through a swap agreement, for the portion of the debt that is hedged, we pay interest at a fixed interest rate as opposed to
a floating interest rate per the contractual terms of our debt agreement, at specified intervals throughout the life of the interest
rate swap agreement.
Derivative Instrument Classification
At inception of the hedge accounting relationship and on a quarterly basis, we formally assess whether derivatives designated as
cash flow hedges are highly effective in offsetting changes to the forecasted cash flows of the hedged items. If the cash flow
hedges are deemed to be highly effective, the gain or loss on the cash flow hedges are initially reported as a component of
Accumulated other comprehensive loss ("AOCL") on the Consolidated Balance Sheets. These changes are subsequently
reclassified to the Consolidated Statements of Income and recorded in SG&A for the foreign currency forward contracts and
Interest expense for the interest rate swap agreements, when the hedged exposure affects earnings. All our derivatives are
assessed for effectiveness at each reporting period and are designated as hedging instruments.
Treasury Stock
We account for treasury stock under the cost method and include treasury stock as a component of Stockholders' equity on the
Consolidated Balance Sheets. We may repurchase shares of our common stock under our share repurchase program in the open
market and via privately negotiated transactions, subject to market conditions. Repurchased shares of our common stock are
recorded at the market price on the trade date and are held as treasury shares until they are reissued or retired. When treasury
66 shares are reissued, if the issuance price is higher than the average price paid to acquire the shares ("the cost"), the excess of the
issuance price over the cost is credited to additional paid-in capital ("APIC"). If the issuance is lower than the cost, the
difference is first charged against any credit balance in APIC from treasury stock, with the remaining balance charged to
Retained earnings.
We account for the formal retirement of treasury shares by deducting its par value from common stock, reflecting any excess
over par value as a reduction to APIC (to the extent created by previous issuances of the shares) and then Retained earnings.
The Inflation Reduction Act of 2022 ("IRA"), which was enacted into law on August 16, 2022, imposed a nondeductible 1%
excise tax on the net value of certain stock repurchases made after December 31, 2022. During fiscal 2023, we reflected the
applicable excise tax in treasury stock as part of the cost basis of the stock repurchased, and recorded a corresponding liability
for the excise taxes payable in Accounts payable and accrued expenses on the Consolidated Balance Sheets.
Fair Value Measurements
Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability (i.e., the "exit price")
in an orderly transaction between market participants at the measurement date. In determining fair value, the use of various
valuation methodologies, including market, income and cost approaches is permissible. The inputs to these methodologies
consider market comparable information taking into account the principal or most advantageous market in which we would
transact. The accounting guidance for fair value measurements establishes a fair value hierarchy that requires an entity to
maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. There are three
levels of inputs that may be used to measure fair value based on the reliability of inputs. A financial instrument’s categorization
within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
Foreign Currency Translation and Remeasurement
Certain wholly-owned subsidiaries operate under a functional currency different from the U.S. dollar, including our primary
currency exposures of the Indian Rupee, Euro, British Pound Sterling and Philippine Peso.
The financial statements of our foreign subsidiaries that are local currency functional are translated into U.S. dollars using
period-end rates of exchange for assets and liabilities and average monthly rates for revenues and expenses. The resulting
translation gains and losses that arise from translating these assets, liabilities, revenues and expenses of our foreign operations
are recorded in AOCL in the Consolidated Balance Sheets.
For the financial statements of our foreign subsidiaries that are U.S. dollar functional, but maintain their books of record in their
respective local currency, we remeasure our revenues and expenses into U.S. dollars at the average rates of exchange for the
period, monetary assets and liabilities using period-end rates and non-monetary assets and liabilities at their historical rates. The
resulting remeasurement gains and losses that arise from remeasuring the assets and liabilities of our foreign operations are
recorded to SG&A in the Consolidated Statements of Income.
Concentrations of Credit Risk
Credit risk arises from the potential nonperformance by counterparties to fulfill their financial obligations. Our financial
instruments that potentially subject us to concentrations of credit risk consist primarily of our cash and cash equivalents,
accounts receivable, investments in mutual funds and derivative instruments. The maximum credit exposure of our cash and
cash equivalents, accounts receivable and investments in mutual funds is their carrying values as of the balance sheet date. The
maximum credit exposure related to our derivative instruments is based upon the gross fair values as of the balance sheet date.
Cash and Cash Equivalents and Investments
We are exposed to credit risk on our cash and cash equivalents and investments in mutual funds in the event of default by the
financial institutions with which we transact. We invest our cash and cash equivalents and investments in mutual funds in
accordance with our restrictive cash investment practices with the primary objective to preserve capital and maintain liquidity
while minimizing our exposure to credit risk. We have not experienced any losses in such accounts and we limit our exposure
to credit loss by placing our cash and cash equivalents and investments in mutual funds with multiple financial institutions that
we believe are high-quality and credit-worthy.
67 Accounts Receivable
Our accounts receivable credit risk is dependent upon the financial stability of our individual clients. Our receivable reserve was
$7.8 million and $2.8 million as of August 31, 2023 and August 31, 2022, respectively. We do not require collateral from our
clients; however, no single client represented more than 3.5% of our total subscription revenues in any fiscal year presented.
Our concentration of credit risk related to our accounts receivable is generally limited, due to our large and geographically
dispersed client base.
Derivative Instruments
Our use of derivative instruments exposes us to credit risk to the extent counterparties may be unable to meet the terms of their
agreements. To mitigate credit risk, we limit counterparties to financial institutions we believe are credit-worthy and use several
institutions to reduce concentration risk. We do not expect any losses as a result of default by our counterparties.
Concentrations of Data Providers
We integrate data from various third-party sources into our hosted proprietary data and analytics platform. As certain data
sources have a limited number of suppliers, we make every effort to assure that, where reasonable, alternative sources are
available. We are not dependent on any individual third-party data supplier to meet the needs of our clients, with only two data
suppliers each representing more than 10% of our total data costs for the year ended August 31, 2023.
Concentrations of Cloud Providers
Our clients rely on us for the delivery of time-sensitive, up-to-date data and applications. Our business is dependent on our
ability to process substantial volumes of data and transactions rapidly and efficiently. We currently use multiple providers of
cloud services; however, one supplier provided the majority of our cloud computing support for fiscal 2023. We maintain back-
up facilities and other redundancies at our major data centers, take security measures and have emergency planning procedures
to minimize the risk that an event will disrupt our operations.
Recently Adopted Accounting Pronouncements
We did not adopt any new standards or updates issued by the Financial Accounting Standards Board ("FASB") during fiscal
2023 that had a material impact on our Consolidated Financial Statements.
Accounting Pronouncements Not Yet Adopted
There were no new accounting pronouncements issued or effective as of August 31, 2023 that had, or are expected to have, a
material impact on our Consolidated Financial Statements.
3. REVENUE RECOGNITION
We derive most of our revenues by providing client access to our multi-asset class solutions powered by our content refinery,
over the associated contractual term (referred to as the "Hosted Platform"). The Hosted Platform is a subscription-based service
that provides client access to various combinations of products and services including workstations, portfolio analytics, and
enterprise solutions. In addition, through our CGS platform, we provide subscription access to a database of universally
recognized identifiers enabling differentiating characteristics for issuers and their financial instruments (referred to as the
"Identifier Platform").
We determined that the majority of our contracts with clients, whether for our Hosted Platform or Identifier Platform services,
each represent a single performance obligation covering a series of distinct products and services that are substantially the same
and that have the same pattern of transfer to the client. We also determined the primary nature of the promise to the client is to
provide daily access to each of these data and analytics platforms. These platforms provide integrated financial information,
analytical applications and industry-leading service for the investment community. Based on the nature of the services and
products offered by these platforms, we apply an output time-based measure of progress as the client is simultaneously
receiving and consuming the benefits of the platform. We recognize revenue for the majority of these platforms in accordance
with the 'as invoiced' practical expedient as the amount of consideration that we have the right to invoice corresponds directly
with the value of our performance to date.
Due to our election of the practical expedient, we do not consider payment terms as a financing component within a client
contract when, at contract inception, the period between the transfer of the promised services to the client and the payment
timing for those services will be one year or less.
68 The majority of client contracts have a duration of one year or the amount we are entitled to receive corresponds directly with
the value of performance obligations completed to date, and therefore, we do not disclose the value of the remaining unsatisfied
performance obligations. There are no significant judgments that would impact the timing of revenue recognition.
Disaggregated Revenues
We disaggregate revenues from contracts with clients by our segments which consist of the Americas, EMEA and Asia Pacific.
We believe these segments are reflective of how we manage our business and the markets in which we serve and best depict the
nature, amount, timing and uncertainty of revenues and cash flows related to contracts with clients. Segment revenues reflect
sales to our clients based on their respective geographic locations. Refer to Note 18, Segment Information, for further
information.
The following table presents revenues disaggregated by segment:
(in thousands)
Americas
EMEA
Asia Pacific
Total Revenues
Years ended August 31,
2022
2023
1,335,484 $ 1,173,946 $
$
539,843
210,181
484,279
185,667
$
2,085,508 $ 1,843,892 $
2021
1,008,046
427,700
155,699
1,591,445
We have not disclosed revenues from external clients by product and service, as it is impracticable for us to do so.
4. FAIR VALUE MEASURES
Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability (i.e., the "exit price")
in an orderly transaction between market participants at the measurement date. In determining fair value, the use of various
valuation methodologies, including market, income and cost approaches are permissible. The inputs to these methodologies
consider market comparable information, taking into account the principal or most advantageous market in which we would
transact, when pricing the asset or liability.
Fair Value Hierarchy
The accounting guidance for fair value measurements establishes a fair value hierarchy that requires an entity to maximize the
use of observable inputs and minimize the use of unobservable inputs when measuring fair value. There are three levels of
inputs that may be used to measure fair value based on the reliability of inputs. A financial instrument’s categorization within
the fair value hierarchy is based upon the lowest level input that is significant to the fair value measurement. Our assessment of
the significance of a particular input to the fair value measurement requires judgment and may affect its placement within the
fair value hierarchy levels. We have categorized our cash equivalents, investments and derivatives within the fair value
hierarchy as follows:
Level 1 – applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
Level 2 – applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or
liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in
markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which
significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
Level 3 – applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant
to the measurement of the fair value of the assets or liabilities.
(a) Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following tables show, by level within the fair value hierarchy, our assets and liabilities that are measured at fair value on a
recurring basis as of August 31, 2023 and 2022. We did not have any transfers between levels of fair value measurements
during fiscal 2023 and 2022.
69
(in thousands)
Assets
Money market funds(1)
Mutual funds(2)
Derivative instruments(3)
Total assets measured at fair value
Liabilities
Derivative instruments(3)
Contingent liability(4)
Total liabilities measured at fair value
(in thousands)
Assets
Money market funds(1)
Mutual funds(2)
Derivative instruments(3)
Fair Value Measurements at August 31, 2023
Level 1
Level 2
Level 3
Total
137,125 $
—
—
137,125 $
— $
32,210
4,383
36,593 $
— $
—
—
— $
137,125
32,210
4,383
173,718
— $
—
— $
608 $
—
608 $
— $
8,008
8,008 $
608
8,008
8,616
$
$
$
$
Fair Value Measurements at August 31, 2022
Level 1
Level 2
Level 3
Total
$
179,330 $
— $
— $
179,330
—
—
33,219
12,412
—
—
33,219
12,412
Total assets measured at fair value
$
179,330 $
45,631 $
— $
224,961
Liabilities
Derivative instruments(3)
Total liabilities measured at fair value
$
$
— $
— $
8,307 $
8,307 $
— $
— $
8,307
8,307
(1) Our money market funds are readily convertible into cash and the net asset value of each fund on the last day of the reporting period is
used to determine its fair value. Our money market funds are included in Cash and cash equivalents within the Consolidated Balance
Sheets.
(2) Our mutual funds' fair value is based on the fair value of the underlying investments held by the mutual funds, allocated to each share of
the mutual fund using a net asset value approach. The fair value of the underlying investments is based on observable inputs. Our mutual
funds are included in Investments within the Consolidated Balance Sheets.
(3) Our derivative instruments include our foreign exchange forward contracts and interest rate swap agreements. We utilize the income
approach to measure fair value for our foreign exchange forward contracts. The income approach uses pricing models that rely on market
observable inputs such as spot, forward and interest rates, as well as credit default swap spreads. To estimate fair value for our interest
rate swap agreements, we utilize a present value of future cash flows, leveraging a model-derived valuation that uses observable inputs
such as interest rate yield curves. Refer to Note 5, Derivative Instruments for more information on our derivative instruments and their
classification within the Consolidated Balance Sheets.
(4) The contingent liability resulted from the acquisition of a business during fiscal 2023. This liability reflects the present value of potential
future payments that are contingent upon the achievement of certain specified milestones. The acquisition date fair value of the
contingent liability was $7.9 million and was valued using a scenario-based method. This method incorporates unobservable inputs and
assumptions made by management, including the probability of achieving specified milestones, expected time until payment and the
discount rate. The fair value of the contingent liability is remeasured each reporting period until the contingency is resolved, with any
changes in fair value recorded in SG&A in the Consolidated Statements of Income. The change in the fair value of the contingent
liability from the acquisition date through August 31, 2023 was driven by the passage of time, with no changes made to key assumptions
used in our fair value estimates.
70
(b) Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis
Assets that are measured at fair value on a non-recurring basis primarily relate to our tangible fixed assets, lease ROU assets,
goodwill and intangible assets. The fair values of these non-financial assets are determined based on valuation techniques using
the best information available, and may include quoted market prices, market comparable information, and discounted cash
flow projections. These non-financial assets are required to be assessed for impairment whenever events or circumstances
indicate their carrying value may not be fully recoverable, and at least annually for goodwill.
Asset impairments in the Consolidated Statements of Income were $25.9 million and $64.3 million during fiscal 2023 and
2022, respectively, to reflect the difference between the fair market value and carrying value of certain assets. These
impairments were mainly driven by an $18.0 million and $62.2 million charge during fiscal 2023 and 2022, respectively,
related to our lease ROU assets and PPE. These charges were associated with vacating certain leased office space to resize our
real estate footprint for the hybrid work environment. For those locations we anticipated subleasing, we estimated the fair value
of the lease ROU assets as of the cease use date, using a market approach, based on expected future cash flows from sublease
income. To complete this assessment we relied on certain assumptions, which included estimates of the rental rate, period of
vacancy, incentives and annual rent increases.
As there were no expected future cash flows associated with lease ROU assets for locations we will not sublease nor PPE
associated with the related vacated leased office space, we determined these assets had no remaining fair value and were fully
impaired. Due to the subjective nature of the unobservable inputs used, the fair value measurement for the asset impairments are
classified within Level 3 of the fair value hierarchy.
The remaining asset impairments for fiscal 2023 and 2022 were $7.9 million related to impairment of Developed technology
and Trade names and $2.1 million related to Developed technology, respectively.
(c) Assets and Liabilities Measured at Fair Value for Disclosure Purposes Only
We elected not to carry our Long-term debt on the Consolidated Balance Sheets at fair value. The carrying value of our Long-
term debt is net of related unamortized discounts and debt issuance costs.
Our Senior Notes are publicly traded; therefore, the fair value of our Senior Notes is estimated based on quoted prices in active
markets as of the reporting date, which are considered Level 1 inputs. The fair value of our 2022 Credit Facilities is estimated
based on quoted market prices for similar instruments, adjusted for unobservable inputs to ensure comparability to our
investment rating, maturity terms and principal outstanding, which are considered Level 3 inputs. Refer to Note 12, Debt for
definitions of these terms and more information on the Senior Notes and 2022 Credit Facilities.
The following table summarizes information on our outstanding debt as of August 31, 2023 and 2022:
(in thousands)
2027 Notes
2032 Notes
2022 Term Facility
2022 Revolving Facility
Total principal amount
Total unamortized discounts and debt issuance costs
Total net carrying value of debt
August 31, 2023
August 31, 2022
Fair Value
Hierarchy
Principal
Amount
Estimated
Fair Value
Principal
Amount
Estimated
Fair Value
Level 1
Level 1
Level 3
Level 3
$ 500,000 $ 460,890 $ 500,000 $ 470,525
438,205
750,975
249,075
$ 1,625,000 $ 1,507,871 $ 2,000,000 $ 1,908,780
500,000
375,000
250,000
500,000
750,000
250,000
423,700
376,406
246,875
(12,300)
$ 1,612,700
(17,576)
$ 1,982,424
71
5. DERIVATIVE INSTRUMENTS
Cash Flow Hedges
In designing our hedging approach, we consider several factors, including offsetting exposures, the significance of exposures,
the forecasting of risk and the potential effectiveness of the hedge to reduce the volatility of our earnings and cash flows.
Factors considered in the decision to hedge an underlying market exposure include the materiality of the risk, the volatility of
the market, the duration of the hedge, the degree to which the underlying exposure is committed, and the availability,
effectiveness and cost of derivative instruments. Derivative instruments are only utilized for risk management purposes and are
not used for speculative or trading purposes. We limit counterparties to financial institutions we believe are credit-worthy. Refer
to Note 2, Summary of Significant Accounting Policies - Concentrations of Credit Risk, for further discussion on counterparty
credit risk.
We leverage foreign currency forward contracts and interest rate swaps to mitigate certain operational exposures from the
impact of changes in foreign currency exchange rates and to manage our interest rate exposure. For a derivative that was
designated and qualified as a cash flow hedge, the effective portion of the change in fair value of the derivative is recorded in
AOCL, net of tax, in the Consolidated Balance Sheets. Realized gains or losses resulting from settlement of our foreign
currency forward contracts and swap agreements are subsequently reclassified into SG&A and Interest expense, respectively, in
the Consolidated Statements of Income when the hedges are settled. All of our derivatives qualified and were designated as
cash flow hedges, and none of our derivatives were deemed ineffective for fiscal 2023 and 2022.
Foreign Currency Forward Contracts
As we operate globally, we are exposed to the risk that our financial condition, results of operations and cash flows could be
impacted by changes in foreign currency exchange rates. As of August 31, 2023, we maintained a series of foreign currency
forward contracts to hedge a portion of our primary currency exposures of the Indian Rupee, Euro, British Pound Sterling and
Philippine Peso. To mitigate our currency exposure, we entered into these contracts to hedge between 25% to 75% of our
projected primary currency operating expenses over their respective hedge periods which range from the first quarter of fiscal
2024 through the fourth quarter of fiscal 2024.
The following table summarizes the gross notional value of our foreign currency forward contracts to purchase the respective
local currency with U.S. dollars:
(in thousands)
British Pound Sterling
Euro
Indian Rupee
Philippine Peso
Total
August 31, 2023
August 31, 2022
Local Currency
USD
Local Currency
USD
£
€
Rs
₱
45,000 $
39,000
3,363,150
1,888,541
$
56,098 £
42,646 €
40,300 Rs
33,600 ₱
172,644
44,200 $
37,500
2,667,928
1,462,060
$
55,567
40,679
33,600
27,000
156,846
There was no discontinuance of our foreign currency cash flow hedges during fiscal 2023 and 2022, as such, no corresponding
gains or losses related to changes in the value of our contracts were reclassified into earnings prior to settlement. Refer to Part
II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk, of this Annual Report on Form 10-K for further
discussion of our exposure to foreign exchange rate fluctuations.
Interest Rate Swap Agreements
2022 Swap Agreement
On March 1, 2022, we entered into an interest rate swap agreement ("2022 Swap Agreement") with a notional amount of $800.0
million to hedge a portion of our outstanding floating Secured Overnight Financing Rate ("SOFR") rate debt with a fixed
interest rate of 1.162%. The notional amount of the 2022 Swap Agreement declines by $100.0 million on a quarterly basis
beginning May 31, 2022 and is maturing on February 28, 2024. Effective December 30, 2022, we partially novated our 2022
Swap Agreement to equally apportion the then outstanding notional amount of the interest rate swap between two
counterparties. No other terms of the 2022 Swap Agreement were amended, terminated, or otherwise modified. As of
August 31, 2023, the notional amount of the 2022 Swap Agreement was $200.0 million.
72 Refer to Note 12, Debt, for further discussion of our outstanding floating SOFR rate debt and refer to Part II, Item 7A.
Quantitative and Qualitative Disclosures About Market Risk, of this Annual Report on Form 10-K for further discussion of our
exposure to interest rate risk on our long-term debt outstanding.
2020 Swap Agreement
On March 5, 2020, we entered into an interest rate swap agreement ("2020 Swap Agreement") with a notional amount of $287.5
million. The 2020 Swap Agreement hedged a portion of our then outstanding floating London Interbank Offer Rate ("LIBOR")
rate debt with a fixed interest rate of 0.7995% to mitigate our interest rate exposure. On March 1, 2022, we terminated the 2020
Swap Agreement, which resulted in a one-time benefit of $3.5 million recognized in Interest expense in the Consolidated
Statements of Income during the third quarter of fiscal 2022, based on its fair market value.
Gross Notional Value and Fair Value of Derivative Instruments
The following is a summary of the gross notional values of our derivative instruments:
Gross Notional Value
(in thousands)
Foreign currency forward contracts
Interest rate swap agreement
Total cash flow hedges
$
$
August 31, 2023
August 31, 2022
156,846
172,644 $
200,000
372,644 $
600,000
756,846
The following is a summary of the fair values of our derivative instruments:
Fair Value of Derivative Instruments
(in thousands)
Derivatives designated
as hedging instruments
Foreign currency
forward contracts
Interest rate swap
agreement
Balance Sheet
Classification
Prepaid expenses
and other current
assets
Derivative Assets
August 31,
2023
August 31,
2022
Derivative Liabilities
August 31,
2023
August 31,
2022
$
1,260 $
—
$
608 $
8,307
Balance Sheet
Classification
Accounts payable
and accrued
expenses
Prepaid expenses
and other current
assets
3,123
10,621
Accounts payable
and accrued
expenses
Other assets
—
1,791 Other liabilities
—
—
—
—
Total cash flow hedges
$
4,383 $
12,412
$
608 $
8,307
Derivative Recognition
The following table provides the pre-tax effect of derivative instruments in cash flow hedging relationships for the years ended
August 31, 2023, 2022 and 2021:
(in thousands)
Derivatives in Cash Flow
Hedging Relationships
Foreign currency forward
contracts
Gain (Loss) Recognized in
AOCL on Derivatives
2023
2022
2021
Location of Gain (Loss)
Reclassified from
AOCL into Income
Gain (Loss) Reclassified from
AOCL into Income
2023
2022
2021
$
5,783 $ (16,356) $
1,660
SG&A
$
(3,176) $
(7,867) $
5,027
Interest rate swap agreement
4,368
17,245
745
Interest expense
13,657
1,854
(1,956)
Total cash flow hedges
$ 10,151 $
889 $
2,405
$ 10,481 $
(6,013) $
3,071
As of August 31, 2023, we estimate that net pre-tax derivative gains of $3.8 million included in AOCL will be reclassified into
earnings within the next 12 months. As of August 31, 2023, our cash flow hedges were highly effective with no amount of
ineffectiveness recorded in the Consolidated Statements of Income. All components of each derivative’s gain or loss were
included in the assessment of hedge effectiveness.
73
Offsetting of Derivative Instruments
We enter into master netting arrangements designed to permit net settlement of derivative transactions among the respective
counterparties, settled on the same date and in the same currency. As of August 31, 2023 and 2022, there were no material
amounts recorded net on the Consolidated Balance Sheets.
6. ACQUISITIONS
We completed acquisitions of several businesses during fiscal 2021 through fiscal 2023, with the most significant cash flows
related to the acquisitions of CGS, Cobalt Software, Inc. ("Cobalt") and Truvalue Labs, Inc. ("TVL").
CUSIP Global Services
On March 1, 2022, we completed the acquisition of CGS for a cash purchase price of $1.932 billion, inclusive of working
capital adjustments. CGS manages a database of 60 different data elements uniquely identifying more than 50 million global
financial instruments. It is the foundation for security master files relied on by critical front, middle and back-office functions.
CGS, operating on behalf of the American Bankers Association ("ABA"), is the exclusive issuer of Committee on Uniform
Security Identification Procedures ("CUSIP") and CUSIP International Number System ("CINS") identifiers globally and also
acts as the official numbering agency for International Securities Identification Number ("ISIN") identifiers in the United States
and as a substitute number agency for more than 30 other countries. We acquired CGS to expand our critical role in the global
capital markets. The CGS purchase price was in excess of the fair value of net assets acquired, resulting in the recognition of
goodwill. We finalized the purchase accounting for the CGS acquisition during the fourth quarter of fiscal 2022 and did not
record any material changes to the preliminary purchase price allocation.
The acquisition date fair values of major classes of assets acquired and liabilities assumed are as follows:
Current assets(1)
Amortizable intangible assets
ABA business process
Client relationships
Acquired databases
Goodwill
Current liabilities(2)
Deferred revenues, long-term
Total purchase price
Acquisition Date Fair
Value
Acquisition Date
Useful Life
Amortization
Method
(in thousands)
(in years)
$
29,728
36 years
26 years
15 years
Straight-line
Straight-line
Straight-line
1,583,000
164,000
46,000
214,970
(104,691)
(1,481)
1,931,526
$
(1) Included an accounts receivable balance of $29.5 million.
(2) Included a deferred revenues balance of $99.4 million. The CGS acquisition was accounted for in accordance with ASU No. 2021-08,
Business Combinations: Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (Topic 805); as such,
the deferred revenues did not include a fair value adjustment.
Goodwill totaling $215.0 million represents the excess of the CGS purchase price over the fair value of net assets acquired and
considers future economic benefits that we expect to achieve as a result of the acquisition. The goodwill is included in the
Americas segment and is deductible for income tax purposes. The majority of the net assets acquired relate to an ABA business
process intangible which is a renewable license agreement with the ABA to manage the issuance, maintenance and access to the
CUSIP numbering system and related database of CUSIP identifiers. This intangible asset's valuation and associated useful life
considers the nature of the business relationship, multi-year term of the current agreement and the likelihood of long-term
renewals. The useful life assigned to the Client relationships intangible asset considers the strong historical client retention and
client renewals as a basis for expected future retention. The useful life assigned to Acquired databases considers the historical
period of data collection and the limited changes to the data on an annual basis.
The results of CGS's operations have been included in our Consolidated Financial Statements, within the Americas, EMEA, and
Asia Pacific segments, beginning with the closing of the acquisition on March 1, 2022. CGS operates as part of our CTS
74 workflow solution. Pro forma information has not been presented because the effect of the CGS acquisition was not material to
our Consolidated Financial Statements.
Cobalt Software, Inc.
On October 12, 2021, we acquired all of the outstanding shares of Cobalt for a purchase price of $50.0 million, net of cash
acquired, and inclusive of working capital adjustments. Cobalt is a leading portfolio monitoring platform for the private capital
industry. We acquired Cobalt to scale our data and workflow solutions through targeted investments as part of our multi-year
investment plan and to expand our private markets offering. The Cobalt purchase price was in excess of the fair value of net
assets acquired, resulting in the recognition of goodwill. We finalized the purchase accounting for the Cobalt acquisition during
the fourth quarter of fiscal 2022 and did not record any material changes to the preliminary purchase price allocation.
The acquisition date fair values of major classes of assets acquired and liabilities assumed are as follows:
Current assets
Amortizable intangible assets
Software technology
Client relationships
Goodwill
Other assets
Current liabilities
Other liabilities
Total purchase price
Acquisition Date Fair
Value
Acquisition Date
Useful Life
Amortization
Method
(in thousands)
(in years)
$
540
5 years
11 years
Straight-line
Straight-line
7,750
4,800
41,338
34
(4,437)
(7)
50,018
$
Goodwill totaling $41.3 million represents the excess of the Cobalt purchase price over the fair value of net assets acquired
and considers future economic benefits that we expect to achieve as a result of the acquisition. The goodwill is included in the
Americas and EMEA segments and is not deductible for income tax purposes. The useful life assigned to Software technology
considers our historical experience and anticipated technological changes. The useful life assigned to the Client relationships
intangible asset considers the historical client retention as a basis for expected future retention.
The results of Cobalt's operations have been included in our Consolidated Financial Statements, within the Americas and
EMEA segments, beginning with its acquisition on October 12, 2021. Pro forma information has not been presented because
the effect of the Cobalt acquisition was not material to our Consolidated Financial Statements.
Truvalue Labs, Inc.
On November 2, 2020, we acquired all of the outstanding shares of TVL for a purchase price of $41.9 million, net of cash
acquired. TVL is a leading provider of sustainability information. TVL applies artificial intelligence driven technology to over
100,000 unstructured text sources in multiple languages, including news, trade journals, and non-governmental organizations
and industry reports, to provide daily signals that identify positive and negative sustainability behavior. We acquired TVL to
further enhance our commitment to providing industry leading access to sustainability data across our platforms. The TVL
purchase price was in excess of the fair value of net assets acquired, resulting in the recognition of goodwill. We finalized the
purchase accounting for the TVL acquisition during the third quarter of fiscal 2021.
75 The acquisition date fair values of major classes of assets acquired and liabilities assumed are as follows:
Current assets
Amortizable intangible assets
Software technology
Trade names
Client relationships
Goodwill
Other assets
Current liabilities
Other liabilities
Total purchase price
Acquisition Date
Fair Value
(in thousands)
$
812
Acquisition Date
Useful Life
(in years)
Amortization
Method
7 years
15 years
12 years
Straight-line
Straight-line
Straight-line
8,100
2,800
900
30,058
5,299
(3,069)
(2,984)
41,916
$
Goodwill totaling $30.1 million represents the excess of the TVL purchase price over the fair value of net assets acquired and
considers future economic benefits that we expect to achieve as a result of the acquisition. The goodwill is included in the
Americas segment and is not deductible for income tax purposes. The results of TVL's operations have been included in our
Consolidated Financial Statements, within the Americas segment, beginning with its acquisition on November 2, 2020. Pro
forma information has not been presented because the effect of the TVL acquisition is not material to our Consolidated
Financial Statements.
7. PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Property, equipment and leasehold improvements consist of the following:
(in thousands)
Leasehold improvements
Computers and related equipment
Furniture and fixtures
Subtotal
Less accumulated depreciation and amortization
Property, equipment and leasehold improvements, net
August 31,
2023
2022
$
97,000 $
184,425
70,641
32,601
104,514
58,143
$
$
200,242 $
(114,135)
347,082
(266,239)
86,107 $
80,843
Depreciation expense was $18.1 million, $24.3 million and $30.4 million for fiscal 2023, 2022 and 2021, respectively.
During fiscal 2023 and 2022, we incurred impairment charges of $3.6 million and $30.7 million, respectively, for PPE related
to vacating certain leased office space. The impairment charges are included within Asset impairments in the Consolidated
Statements of Income. Refer to Note 4, Fair Value Measures, for more information on the PPE impairment methodology.
During fiscal 2023, we disposed of fully depreciated assets that were no longer in use and derecognized these assets and related
accumulated depreciation from the Consolidated Balance Sheets.
76
8. GOODWILL
Changes in the carrying amount of goodwill by segment for the years ended August 31, 2023 and 2022 are as follows:
(in thousands)
Balance at August 31, 2021
Acquisitions
Foreign currency translations
Balance at August 31, 2022
Acquisitions
Foreign currency translations
Balance at August 31, 2023
Americas
EMEA
Asia Pacific
$
430,088 $
321,150 $
2,967 $
256,324
—
686,412 $
18,347
—
704,759 $
428
(44,491)
277,087 $
—
20,647
297,734 $
$
$
Total
754,205
256,752
(45,109)
965,848
18,347
—
(618)
2,349 $
—
(106)
20,541
2,243 $ 1,004,736
We performed our annual goodwill impairment test during the fourth quarter of fiscal 2023 and 2022. During fiscal 2023, we
utilized a quantitative analysis, electing to bypass the optional qualitative assessment, and concluded there was no impairment
as the fair value of each of the Company's reporting units exceeding its carrying value. During fiscal 2022, we utilized a
qualitative analysis and concluded there was no impairment as it was more likely than not that the fair value of each of our
reporting units was not less than its respective carrying value.
9. INTANGIBLE ASSETS
We amortize intangible assets on a straight-line basis over their estimated useful lives. The estimated useful life, gross carrying
amounts and accumulated amortization totals related to our identifiable intangible assets are as follows:
August 31, 2023
August 31, 2022
(in thousands, except
useful lives)
Estimated
Useful
Life
(years)
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
ABA business process
36
$ 1,583,000 $
65,958 $ 1,517,042 $ 1,583,000 $
21,986 $ 1,561,014
68,701
196,614
263,163
55,405
207,758
Client relationships
11 to 26
Developed technology
Acquired databases
Software technology
Data content
Non-compete agreements
Trade names
Total
3 to 5
15
2 to 10
7 to 20
4
15
265,315
109,222
46,000
45,560
4,600
142,395
108,702
35,021
28,508
290
12
63,662
41,400
33,693
6,513
278
80,956
46,000
122,363
32,305
—
—
$ 2,181,243 $
—
—
322,041 $ 1,859,202 $ 2,134,480 $
6,693
33,676
1,533
96,567
24,973
—
47,280
44,467
25,796
7,332
—
4,431
2,262
238,571 $ 1,895,909
The weighted average useful life of our intangible assets at August 31, 2023 was 32.6 years. As described in Note 6,
Acquisitions, we acquired several intangible assets as part of the CGS acquisition. The weighted average useful life of our
intangible assets at August 31, 2023, excluding those acquired from CGS, was 8.9 years.
During fiscal 2023 and 2022, we incurred impairment charges of $7.9 million related to impairment of Developed technology
and Trade names and $2.1 million related to Developed technology, respectively, which is included in Asset impairments in the
Consolidated Statements of Income. We did not identify a material change to the estimated remaining useful lives of our
intangible assets during fiscal 2023 and 2022. The intangible assets have no assigned residual values.
Amortization expense recorded for intangible assets was $87.3 million, $62.4 million, and $31.5 million during fiscal 2023,
2022, and 2021, respectively.
77
As of August 31, 2023, estimated intangible asset amortization expense for each of the next five years and thereafter are as
follows:
(in thousands)
Fiscal Years Ended August 31,
2024
2025
2026
2027
2028
Thereafter
Total
10. INCOME TAXES
Estimated Amortization
Expense
$
$
91,788
85,673
79,453
66,007
63,462
1,472,819
1,859,202
We are subject to taxation in the United States and various foreign jurisdictions in which we conduct our business. Income tax
expense is based on taxable income determined in accordance with current enacted laws and tax rates. Deferred income taxes
are recorded for the temporary differences between the financial statement and the tax basis of assets and liabilities using
currently enacted tax rates.
Income Taxes Provision and Components of Income Taxes
The provision for income taxes is as follows:
(in thousands)
U.S. operations
Non-U.S. operations
Income before income taxes
U.S. operations
Non-U.S. operations
Total provision for income taxes
Effective tax rate
Years ended August 31,
2023
2022
2021
$
382,702
$
281,971
$
311,767
201,252
161,623
155,850
$
583,954
$
443,594
$
467,617
$
54,337
61,444
$
115,781
$
$
18,107
28,570
46,677
$
$
40,595
27,432
68,027
19.8 %
10.5 %
14.5 %
78
The components of the provision for income taxes consist of the following:
(in thousands)
Current
U.S. federal
U.S. state and local
Non-U.S.
Total current taxes
Deferred
U.S. federal
U.S. state and local
Non-U.S.
Total deferred taxes
Total provision for income taxes
Years ended August 31,
2023
2022
2021
$
$
38,625 $
38,600
69,675
146,900 $
12,766 $
10,936
31,690
55,392 $
26,734
13,894
32,001
72,629
$
(17,235) $
(4,722) $
(5,652)
(8,232)
$
$
(31,119) $
115,781 $
(874)
(3,119)
(8,715) $
46,677 $
1,031
(1,064)
(4,569)
(4,602)
68,027
Our effective tax rate is based on recurring factors and non-recurring events, including the taxation of foreign income. Our
effective tax rate will vary based on, among other things, changes in levels of foreign income, as well as other non-recurring
events.
The following table presents a reconciliation between the U.S. corporate income tax rate and our effective tax rate:
(expressed as a percentage of income before income taxes)
2023
Years ended August 31,
2022
2021
Tax at U.S. Federal statutory tax rate
Increase (decrease) in taxes resulting from:
State and local taxes, net of U.S. federal income tax benefit
Foreign income at other than U.S. rates
Foreign derived intangible income ("FDII") deduction
Income tax benefits from R&D tax credits
Stock-based payments
One-time adjustment(1)
Other, net
Effective tax rate
21.0 %
21.0 %
21.0 %
3.1
(0.1)
(1.6)
(3.8)
(2.2)
3.8
(0.4)
1.8
(1.2)
(2.2)
(4.1)
(3.4)
—
(1.4)
2.1
(1.0)
(1.9)
(3.9)
(2.2)
—
0.4
19.8 %
10.5 %
14.5 %
(1) During fiscal 2023, we recorded an out-of-period adjustment related to a review and analysis of certain tax positions, resulting in a one-
time net charge of $22.1 million. The adjustment related to the accounting of tax balance sheet accounts. All local, federal and foreign
taxes payable have been paid in a timely manner, subject to normal audits of open years.
79
Deferred Tax Assets and Liabilities
The significant components of deferred tax assets and liabilities recorded within the Consolidated Balance Sheets were as
follows:
(in thousands)
Deferred tax assets:
Lease liabilities
Stock-based compensation
Unrealized tax loss on investment
Capitalization of R&D costs
Other
Total deferred tax assets
Deferred tax liabilities:
August 31,
2023
2022
$
$
55,608 $
32,611
—
58,709
21,701
168,629 $
45,842
30,382
4,216
—
19,943
100,383
19,855
57,098
27,540
1,537
84,102
33,900
1,087
$
$
148,137 $
106,030
20,492 $
(5,647)
Depreciation on property, equipment and leasehold improvements
$
29,048 $
Purchased intangible assets, including acquired technology
Lease right-of-use assets
Other
Total deferred tax liabilities
Total deferred tax assets (liabilities), net
At August 31, 2023, our pre-tax federal and state NOLs were approximately $27.1 million and $9.9 million, respectively. These
carryforwards may be used to offset future taxable income. Our federal NOLs have various expiration dates, beginning August
31, 2036, with some federal NOLs having an unlimited carryforward, and our state NOLs have various expiration dates,
beginning August 31, 2025. Utilization of the NOLs may be subject to an annual limitation due to the ownership limitations
provided by the Internal Revenue Code of 1986, as amended (the “Code”), and similar state provisions. Any annual limitation
may result in the expiration of net operating losses before utilization.
Unrecognized Tax Benefits
The determination of liabilities related to uncertain tax positions and associated interest and penalties requires significant
estimates and assumptions; as such, there can be no assurance that we will accurately predict the outcomes of these audits. We
have no reason to believe that such audits will result in the payment of additional taxes and/or penalties that would have a
material adverse effect on our results of operations or financial position, beyond current estimates.
The following table summarizes the changes in the balance of gross unrecognized tax benefits:
(in thousands)
Unrecognized tax benefits as of August 31, 2020
Additions based on tax positions related to the current year
Release for tax positions of prior years
Unrecognized tax benefits as of August 31, 2021(1)
Additions based on tax positions related to the current year
Release for tax positions of prior years
Unrecognized tax benefits as of August 31, 2022(1)
Additions based on tax positions related to the current year
Release for tax positions of prior years
Unrecognized tax benefits as of August 31, 2023(1)
$
$
$
$
12,331
4,259
(1,720)
14,870
7,959
(2,658)
20,171
4,372
(3,490)
21,053
(1) The unrecognized tax benefits include accrued interest of $1.6 million, $1.4 million and $1.3 million as of August 31, 2023, 2022 and
2021, respectively.
80
We do not currently anticipate that the total amounts of unrecognized tax benefits will significantly change within the next 12
months. If our unrecognized tax benefits as of fiscal 2023, 2022, and 2021 were realized in a future period, this would result in
a tax benefit of $19.1 million, $16.5 million and $14.9 million, respectively, which would affect the effective tax rate in a future
period.
In the normal course of business, our tax filings are subject to audit by federal, state and foreign tax authorities. At August 31,
2023, we remained subject to examination in the following significant tax jurisdictions for the fiscal years as indicated below:
Significant Tax Jurisdiction
U.S.
Federal
State (various)
Europe
United Kingdom
France
Germany
Undistributed Foreign Earnings
Open Tax Fiscal Years
2019
2016
through
through
2022
2022
2020
2020
2019
through
through
through
2022
2022
2022
As of August 31, 2023, we had approximately $204.0 million of undistributed foreign earnings. We permanently reinvest all
foreign undistributed earnings, except in jurisdictions where earnings can be repatriated substantially free of tax. It is not
practicable to determine the deferred tax liability that would be payable if these earnings were repatriated to the U.S.
Inflation Reduction Act of 2022
On August 16, 2022, the IRA was signed into law. The IRA contains several revisions to the Code effective for taxable years
beginning after December 31, 2022, including a 15% minimum income tax on certain large corporations. We do not expect this
revision to have a material impact on our Consolidated Financial Statements.
11. LEASES
Our lease portfolio is primarily related to our office space, under various operating lease agreements. We review new
arrangements at inception to evaluate whether we obtain substantially all the economic benefits of and have the right to control
the use of an asset. Our lease ROU assets and lease liabilities are recognized based on the present value of future minimum
lease payments at lease commencement (which includes fixed lease payments and certain qualifying index-based variable
payments) over the reasonably certain lease term, leveraging an estimated IBR. Certain adjustments to calculate our lease ROU
assets may be required due to prepayments, lease incentives received and initial direct costs incurred. We account for lease and
non-lease components as a single lease component, which we recognize over the expected term on a straight-line expense basis
in occupancy costs (a component of SG&A expense) in our Consolidated Statements of Income.
As of August 31, 2023, we recognized $141.8 million of Lease ROU assets, net and $227.2 million of combined Current lease
liabilities and Long-term lease liabilities in the Consolidated Balance Sheets. Such leases have a remaining lease term ranging
from less than one year to just over 12 years and did not include any renewal or termination options that were not yet
reasonably certain to be exercised.
81 The following table reconciles our future undiscounted cash flows related to our operating leases and the reconciliation to the
combined Current lease liabilities and Long-term lease liabilities in the Consolidated Balance Sheets as of August 31, 2023:
(in thousands)
Years Ended August 31,
2024
2025
2026
2027
2028
Thereafter
Total
Less: Imputed interest
Present value
Minimum Lease
Payments
38,292
37,423
37,036
35,825
31,465
88,629
268,670
41,449
227,221
$
$
$
The following table includes the components of our occupancy costs in our Consolidated Statements of Income:
(in thousands)
Operating lease cost(1)
Variable lease cost(2)
Years ended August 31,
2023
2022
2021
$
$
32,330 $
17,940 $
38,830 $
11,542 $
42,846
14,585
(1) Operating lease costs include costs associated with fixed lease payments and index-based variable payments that qualified for lease
accounting under ASC 842, Leases and complied with the practical expedients and exceptions we elected.
(2) Variable lease costs include costs that were not fixed at the lease commencement date and are not dependent on an index or rate. These
costs were not included in the measurement of lease liabilities and primarily include variable non-lease costs, such as utilities, real estate
taxes, insurance and maintenance, as well as lease costs for those leases that qualified for the short-term lease exception.
The following table summarizes our lease term and discount rate assumptions related to the operating leases recorded on the
Consolidated Balance Sheets:
Weighted average remaining lease term (in years)
Weighted average discount rate (IBR)
August 31,
2023
2022
7.8
4.5 %
8.6
4.4 %
The following table summarizes supplemental cash flow information related to our operating leases:
(in thousands)
Cash paid for amounts included in the measurement of lease liabilities
Lease ROU assets obtained in exchange for lease liabilities(1)
Reductions to ROU assets resulting from reductions to lease liabilities(2)
$
$
$
Years ended August 31,
2022
2021
2023
39,392 $
16,934 $
(1,376) $
43,032 $
9,348 $
(17,597) $
42,076
6,355
(700)
(1) Primarily includes new lease arrangements entered into during the respective year and contract modifications that extend our lease terms
and/or provide additional rights.
(2) Primarily relates to lease term reassessments based on contractual options to early terminate, resulting in a reduction to the lease liability
and the corresponding lease ROU asset.
During fiscal 2023 and 2022, we incurred impairment charges of $14.4 million and $31.5 million, respectively, related to our
lease ROU assets associated with vacating certain leased office space, which are included in Asset impairments in the
Consolidated Statements of Income. Refer to Note 4, Fair Value Measures, for more information on the lease ROU assets
impairment methodology.
82
12. DEBT
We elected not to carry our Long-term debt at fair value. The carrying value of our debt is net of related unamortized discounts
and debt issuance costs. Our total debt obligations as of August 31, 2023 and August 31, 2022 consisted of the following:
(in thousands)
2022 Credit Agreement
2022 Term Facility
2022 Revolving Facility
Senior Notes
2027 Notes
2032 Notes
Issuance
Date
Contractual
Maturity
Date
August 31, 2023 August 31, 2022
3/1/2022
3/1/2022
3/1/2025 $
3/1/2027
375,000 $
250,000
750,000
250,000
3/1/2022
3/1/2022
3/1/2027
3/1/2032
500,000
500,000
500,000
500,000
Total unamortized discounts and debt issuance costs
(12,300)
(17,576)
Total Long-term debt
$
1,612,700 $
1,982,424
As of August 31, 2023, annual maturities on our total debt obligations, based on contract maturity, were as follows:
(in thousands)
Years Ended August 31,
2024
2025
2026
2027
2028
Thereafter
Total
2022 Credit Agreement
$
$
Maturities
—
375,000
—
750,000
—
500,000
1,625,000
On March 1, 2022, we entered into a credit agreement (the "2022 Credit Agreement") and borrowed an aggregate principal
amount of $1.0 billion under its senior unsecured term loan credit facility (the "2022 Term Facility") and $250.0 million of the
available $500.0 million under its senior unsecured revolving credit facility (the "2022 Revolving Facility" and, together with
the 2022 Term Facility, the “2022 Credit Facilities”). The 2022 Term Facility matures on March 1, 2025, and the 2022
Revolving Facility matures on March 1, 2027. The 2022 Revolving Facility allows for the availability of up to $100.0 million in
the form of letters of credit and up to $50.0 million in the form of swingline loans. We may seek additional commitments under
the 2022 Revolving Facility from lenders or other financial institutions up to an aggregate principal amount of $750.0 million.
We pay a commitment fee on the daily unused amount of the 2022 Revolving Facility using a pricing grid based on our senior
unsecured non-credit enhanced long-term debt rating and our total leverage ratio. The commitment fee remained consistent at
0.125% from the borrowing date through August 31, 2023.
We used these borrowings, along with the net proceeds from the issuance of the Senior Notes (as defined below) and cash on
hand, to finance the consideration for the CGS acquisition, to repay borrowings under the 2019 Credit Agreement (as defined
below) and to pay related transaction fees, costs and expenses.
83
During fiscal 2022, we incurred approximately $9.5 million in debt issuance costs related to the 2022 Credit Facilities. Debt
issuance costs are presented in the Consolidated Balance Sheets as a direct deduction from the carrying amount of the debt
liability. Debt issuance costs are amortized to Interest expense in the Consolidated Statements of Income on a straight-line basis
over the contractual term of the debt, which approximates the effective interest method.
We may voluntarily prepay loans under the 2022 Credit Facilities at any time without premium or penalty. During fiscal 2023,
we repaid $375.0 million under the 2022 Term Facility, inclusive of voluntary prepayments of $325.0 million. Since loan
inception on March 1, 2022, we have repaid $625.0 million under the 2022 Term Facility, inclusive of voluntary prepayments
of $562.5 million.
As of August 31, 2023, the outstanding borrowings under the 2022 Credit Facilities bore interest at a rate equal to the
applicable one-month Term SOFR rate plus a 1.1% spread (comprised of a 1.0% interest rate margin based on a debt leverage
pricing grid plus a 0.1% credit spread adjustment). The spread remained consistent from the borrowing date through August 31,
2023. Interest on the 2022 Credit Facilities is currently payable on the last business day of each month, in arrears.
The 2022 Credit Agreement contains usual and customary event of default provisions for facilities of this type, which are
subject to usual and customary grace periods and materiality thresholds. If an event of default occurs under the 2022 Credit
Agreement, the lenders may, among other things, terminate their commitments and declare all outstanding borrowings
immediately due and payable.
The 2022 Credit Agreement contains usual and customary affirmative and negative covenants for facilities of this type,
including a financial covenant requiring maintenance of a total leverage ratio of no greater than 3.75 to 1.00 as of August 31,
2023. We were in compliance with all covenants and requirements of the 2022 Credit Agreement as of August 31, 2023.
Swap Agreements
On March 5, 2020, we entered into the 2020 Swap Agreement to hedge a portion of our then outstanding floating LIBOR rate
debt with a fixed interest rate of 0.7995%. On March 1, 2022, we terminated the 2020 Swap Agreement and concurrently
entered into the 2022 Swap Agreement to hedge a portion of our outstanding floating SOFR rate debt with a fixed interest rate
of 1.162%. Effective December 30, 2022, we apportioned the then outstanding notional amount of the 2022 Swap Agreement
between two counterparties. Refer to Note 5, Derivative Instruments for further discussion of the 2020 Swap Agreement and
2022 Swap Agreement.
Senior Notes
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
(the “2032 Notes” and, together with the 2027 Notes, the “Senior Notes”). The Senior Notes were issued pursuant to an
indenture, dated as of March 1, 2022, by and between us and U.S. Bank Trust Company, National Association, as trustee (the
"Trustee"), as supplemented by the supplemental indenture, dated as of March 1, 2022, between us and the Trustee (the
"Supplemental Indenture").
The Senior Notes were issued at an aggregate discount of $2.8 million and we incurred approximately $9.1 million in debt
issuance costs. Debt discounts and debt issuance costs are presented in the Consolidated Balance Sheets as a net direct
deduction from the carrying amount of the debt liability. The debt discounts and debt issuance costs are amortized to Interest
expense in the Consolidated Statements of Income over the contractual term of the debt, leveraging the effective interest
method.
Interest on the Senior Notes is payable semiannually in arrears on March 1 and September 1 of each year, with the first payment
made on September 1, 2022.
We may redeem the Senior Notes, in whole or in part, at any time at specified redemption prices, plus any accrued and unpaid
interest. Upon the occurrence of a change of control triggering event (as defined in the Supplemental Indenture), we must offer
to repurchase the Senior Notes at 101% of their principal amount, plus any accrued and unpaid interest.
84 2019 Credit Agreement
On March 29, 2019, we entered into a credit agreement with PNC Bank, National Association (the "2019 Credit Agreement")
and borrowed $575.0 million of the available $750.0 million provided by the revolving credit facility thereunder (the "2019
Revolving Credit Facility"). Borrowings under the 2019 Revolving Credit Facility bore interest on the outstanding principal
amount at a rate equal to the daily LIBOR plus a spread using a debt leverage pricing grid. Interest on the amounts outstanding
under the 2019 Revolving Credit Facility was payable quarterly, in arrears, and on the maturity date. We incurred
approximately $0.9 million in debt issuance costs related to the 2019 Credit Agreement.
On March 1, 2022, we repaid in full and terminated the 2019 Credit Agreement and amortized the remaining related $0.4
million of capitalized debt issuance costs into Interest expense in the Consolidated Statements of Income.
Interest Expense
On March 1, 2022, the 2019 Revolving Credit Facility and 2020 Swap Agreement were both terminated and concurrently
replaced with the 2022 Credit Facilities, Senior Notes and 2022 Swap Agreement. The following table presents the interest
expense on our outstanding debt which is included in Interest expense in our Consolidated Statements of Income:
(in thousands)
Interest expense on outstanding debt(1)
Years Ended August 31,
2022
2021
2023
$
66,283 $
35,152 $
8,066
(1) Interest expense on our outstanding debt includes the related amortization of debt issuance costs and debt discounts, net of the effects of
the related interest rate swap agreements.
Including the related amortization of debt issuance costs and debt discounts, net of the effects of the related interest rate swap
agreement, the year-to-date weighted average interest rate on amounts outstanding under our outstanding debt was 3.44% and
2.02% as of August 31, 2023 and August 31, 2022, respectively. Refer to Note 5, Derivative Instruments for further discussion
of the 2020 Swap Agreement and 2022 Swap Agreement.
13. COMMITMENTS AND CONTINGENCIES
Commitments represent obligations, such as those for future purchases of goods or services that are not yet recorded on the
balance sheet as liabilities. We record liabilities for commitments when incurred (i.e., when the goods or services are received).
We accrue non-income-tax liabilities for contingencies when we believe that a loss is probable and the amount can be
reasonably estimated. Judgment is required to determine both the probability and the estimated amount of loss. If the reasonable
estimate of a probable loss is a range, we record the most probable estimate of the loss or the minimum amount when no
amount within the range is a better estimate than any other amount. We review accruals on a quarterly basis and adjust, as
necessary, to reflect the impact of negotiations, settlements, rulings, advice of legal counsel and other current information.
Contingent gains are recognized only when realized.
Uncertain income tax positions are accounted for in accordance with applicable accounting guidance, refer to Note 10, Income
Taxes for further details.
Purchase Commitments with Suppliers and Vendors
Purchase obligations represent our legally-binding agreements to purchase fixed or minimum quantities at determinable prices.
As of August 31, 2023 and 2022, we had total purchase obligations with suppliers of $362.2 million and $373.9 million,
respectively. Our total purchase obligations as of August 31, 2023 and 2022 primarily related to hosting services, acquisition of
data and, to a lesser extent, third-party software providers. Hosting services support our hybrid cloud strategy, the majority of
which rely on third-party hosting providers. Data is an integral component of the value we provide to our clients, and our
commitments to third-party software providers mainly include internal-use software licenses.
We also have contractual obligations related to our lease liabilities and outstanding debt. Refer to Note 11, Leases and Note 12,
Debt, for information regarding lease commitments and outstanding debt obligations, respectively.
Capital Commitments
As of August 31, 2023 and 2022, we had outstanding capital commitments related to an investment of $0.7 million and $1.1
million, respectively.
85 Letters of Credit
From time to time, we are required to obtain letters of credit in the ordinary course of business. As of August 31, 2023 and
2022, we had approximately $0.6 million and $0.5 million of standby letters of credit outstanding, respectively. No liabilities
related to these arrangements are reflected in the Consolidated Balance Sheets.
Our 2022 Revolving Facility allows for the availability of up to $100.0 million in the form of letters of credit, which were
unused as of both August 31, 2023 and August 31, 2022. Refer to Note 12, Debt, for information regarding the 2022 Revolving
Facility.
Contingencies
Legal Matters
We are engaged in various legal proceedings, claims and litigation that have arisen in the ordinary course of business. The
outcome of all the matters against us are subject to future resolution, including the uncertainties of litigation. Based on
information available at August 31, 2023, our management believes that the ultimate outcome of these unresolved matters
against us, individually or in the aggregate, will not have a material adverse effect on our consolidated financial position, our
results of operations or our cash flows.
Income Taxes
As a multinational company operating in many states and countries, we are routinely audited by various taxing authorities and
have reserved for potential adjustments to our provision for income taxes that may result from examinations by, or any
negotiated settlements with, these tax authorities. We believe that the final outcome of these examinations or settlements will
not have a material effect on our consolidated financial position, results of operations or our cash flows. If events occur which
indicate payment of these amounts is unnecessary, the reversal of the liabilities would result in the recognition of tax benefits in
the period we determine the liabilities are no longer necessary. If our estimates of the federal, state and foreign income tax
liabilities are less than the ultimate assessment, additional expense would result.
Sales Tax Matters
On August 8, 2019, we received a Notice of Intent to Assess (the "First Notice") additional sales taxes, interest and
underpayment penalties (the “Sales Taxes”) from the Commonwealth of Massachusetts Department of Revenue (the
"Commonwealth") relating to the tax periods from January 1, 2006 through December 31, 2013. On July 20, 2021, we received
a Notice of Intent to Assess (the "Second Notice") additional Sales Taxes from the Commonwealth relating to the tax periods
from January 1, 2014 through December 31, 2018. On December 29, 2022, we received a Notice of Intent to Assess (the “Third
Notice"; cumulatively with the First and Second Notices, the “Notices”) additional Sales Taxes from the Commonwealth
relating to the tax periods from January 1, 2019 through June 30, 2021. We requested pre-assessment conferences with the
Department of Revenue's Office of Appeals to appeal the Notices and on May 24, 2023, we received a Letter of Determination
from the Commonwealth upholding the Notices, along with a Notice of Assessment for all the periods covered by the Notices.
On June 22, 2023, we filed an Application for Abatement with the Commonwealth disputing all amounts assessed, which was
subsequently denied. We are filing petitions with the Appellate Tax Board to appeal all amounts assessed by the
Commonwealth and believe that we will ultimately prevail; however, if we do not prevail, the amount of these assessments
could have a material impact on our consolidated financial position, results of operations and cash flows.
We have concluded that some payment to the Commonwealth is probable. We have recorded an accrual which is not material to
our consolidated financial statements. While we believe that the assumptions and estimates used to determine the accrual are
reasonable, future developments could result in adjustments being made to this accrual.
Indemnifications
As permitted or required under Delaware law and to the maximum extent allowable under that law, we have certain obligations
to indemnify each of our current and former officers and directors for certain events or occurrences while the officer or director
is, or was, serving at our request in such capacity. These indemnification obligations are valid as long as the director or officer
acted in good faith and in a manner the person reasonably believed to be in, or not opposed to, the best interests of FactSet, and,
with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. It is not
possible to determine the maximum potential amount for claims made under the indemnification obligations due to the unique
set of facts and circumstances likely to be involved in each particular claim and indemnification provision; however, we have
purchased a director and officer insurance policy that mitigates our exposure and may enable us to recover a portion of any
86 future amounts paid. We do not believe, based on historical experience and information currently available, that it is probable
that any material amounts will be required to be paid under such indemnification obligations.
14. STOCKHOLDERS’ EQUITY
Share Repurchases
(in thousands, except share data)
Repurchases of common stock under the share repurchase program(1)
Total cost of shares repurchased(1)(2)
Years ended August 31,
2022
2021
2023
430,350
176,720 $
$
46,200
18,639 $
797,385
264,702
(1) Amounts do not include the fiscal 2023, 2022 and 2021 repurchases of 32,444 shares ($13.7 million), 14,489 shares ($6.2 million) and
12,932 shares ($4.3 million) of common stock, respectively, primarily to satisfy tax withholding obligations due upon the vesting of
stock-based awards.
(2) For fiscal 2023, amount excludes a 1% excise tax of $0.9 million on corporate stock repurchases required under the IRA for publicly
traded U.S. corporations after December 31, 2022.
We may repurchase shares of our common stock under our share repurchase program from time-to-time in the open market and
via privately negotiated transactions, subject to market conditions. We suspended our share repurchase program beginning in
the second quarter of fiscal 2022, with the exception of potential minor repurchases to offset dilution from grants of equity
awards or repurchases to satisfy withholding tax obligations due upon the vesting of stock-based awards, to prioritize the
repayment of debt under the 2022 Credit Facilities. We resumed our share repurchase program in the third quarter of fiscal
2023.
There is no defined number of shares to be repurchased over a specified timeframe through the life of our share repurchase
program. As of August 31, 2023, we had $4.5 million authorized under our share repurchase program for future share
repurchases, which was not available for use after August 31, 2023. On June 20, 2023, our Board of Directors authorized up to
$300.0 million for share repurchases on or after September 1, 2023.
Equity-based Awards
Refer to Note 16, Stock-Based Compensation for more information on equity awards issued during fiscal 2021 through fiscal
2023.
87
Dividends
Our Board of Directors approved the following dividends:
Year Ended
Dividends per
Share of
Common Stock
Record Date
Total Amount
(in thousands)
Payment Date
Fiscal 2023
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Total Dividends
Fiscal 2022
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Total Dividends
Fiscal 2021
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Total Dividends
$
$
$
$
$
$
$
$
$
$
$
$
0.89 November 30, 2022
$
34,010 December 15, 2022
0.89 February 28, 2023
0.98 May 31, 2023
0.98 August 31, 2023
0.82 November 30, 2021
0.82 February 28, 2022
0.89 May 31, 2022
0.89 August 31, 2022
$
$
34,099 March 16, 2023
37,442
June 15, 2023
37,265 September 21, 2023
142,816
30,973 December 16, 2021
31,065 March 17, 2022
33,795
June 16, 2022
33,860 September 15, 2022
$
129,693
0.77 November 30, 2020
0.77 February 26, 2021
0.82 May 31, 2021
0.82 August 31, 2021
29,266 December 17, 2020
29,141 March 18, 2021
30,972
June 17, 2021
30,845 September 16, 2021
$
120,224
In the third quarter of fiscal 2023, our Board of Directors approved a 10% increase in the regular quarterly dividend from $0.89
to $0.98 per share. Future cash dividend payments will depend on our earnings, capital requirements, financial condition and
other factors considered relevant by us and are subject to final determination by our Board of Directors.
Accumulated Other Comprehensive Loss
The components of AOCL are as follows:
(in thousands)
Accumulated unrealized gains (losses) on cash flow hedges, net of tax
Accumulated foreign currency translation adjustments
Total AOCL
15. EARNINGS PER SHARE
August 31, 2023
August 31, 2022
$
$
2,880 $
(90,021)
(87,141) $
3,149
(111,532)
(108,383)
Basic earnings per common share ("Basic EPS") is computed by dividing net income by the number of weighted average
common shares outstanding during the year. Diluted earnings per common share ("Diluted EPS") is computed using the
treasury stock method, by dividing net income by the cumulative weighted average common shares that are outstanding or are
issuable upon the exercise of outstanding stock-based compensation awards during the year. Stock-based compensation awards
that are out-of-the-money and PSUs in which the performance criteria have not been met as of the end of the respective fiscal
year are omitted from the calculation of Diluted EPS.
88
A reconciliation of the weighted average shares outstanding used in the Basic EPS and Diluted EPS computation is as follows:
(in thousands, except per share data)
Numerator
Net income used for calculating Basic EPS and Diluted EPS
Denominator
Weighted average common shares used in the calculation of Basic
EPS
Common stock equivalents associated with stock-based
compensation plan(1)
Shares used in the calculation of Diluted EPS
Basic EPS
Diluted EPS
Years Ended August 31,
2022
2021
2023
$
468,173 $
396,917 $
399,590
38,194
37,864
37,856
704
38,898
12.26 $
12.04 $
872
38,736
10.48 $
10.25 $
714
38,570
10.56
10.36
$
$
(1) Dilutive potential common shares consist of stock options and unvested PSUs. As of August 31, 2023, 2022 and 2021, we excluded a
respective 566,173, 329,189 and 1,750 common stock equivalents related to stock options from our calculation of Diluted EPS. As of
August 31, 2023, 2022 and 2021, we excluded a respective 59,478, 60,725 and 68,990 common stock equivalents related to PSUs from
our calculation of Diluted EPS.
16. STOCK-BASED COMPENSATION
We measure and recognize stock-based compensation for all stock-based awards granted to our employees and non-employee
directors based on their estimated grant date fair value. We recognized total stock-based compensation expense of $62.0
million, $56.0 million and $45.1 million in fiscal 2023, 2022 and 2021, respectively. There was no stock-based compensation
capitalized as of August 31, 2023 and 2022. As of August 31, 2023, $114.5 million of total unrecognized compensation expense
related to non-vested stock-based awards is expected to be recognized over a weighted average vesting period of 2.9 years.
89
Stock Option Awards
A summary of stock option activity is as follows:
Number
Outstanding
(thousands)
Weighted
Average
Exercise Price
Per Share
Weighted
Average Grant
Date Fair
Value
Aggregate
Intrinsic Value
(millions)(1)
Weighted
Average
Remaining
Contractual
Life (years)
Outstanding as of August 31, 2020
Granted – employees
Granted – non-employee directors
Exercised(2)
Forfeited
Outstanding as of August 31, 2021
Granted – employees
Granted – non-employee directors
Exercised(2)
Forfeited
Outstanding as of August 31, 2022
Granted – employees
Granted – non-employee directors
Exercised(2)
Forfeited
Outstanding as of August 31, 2023
Options vested and exercisable as of
August 31, 2023
Options expected to vest as of
August 31, 2023
2,254
418
12
(322)
(85)
2,277
348
6
(414)
(128)
2,089
268
5
(318)
$
$
$
$
$
$
$
$
$
$
$
$
$
$
(56)
$
1,988 (3) $
1,076
839
$
$
78.31
82.01
103.49
109.11
189.32
317.17 $
318.20 $
166.36
237.23
214.89
433.09 $
428.71 $
178.57
301.05
253.85
426.22 $
428.70 $
125.57
128.84
181.67
373.04
285.95
221.45
358.37
$
$
$
268.8
231.3
65.5
6.0
4.5
7.6
(1) The aggregate intrinsic value represents the difference between our closing stock price as of August 31, 2023 of $436.41 and the exercise
price, multiplied by the number of options exercisable as of that date.
(2) The total pre-tax intrinsic value of stock options exercised during fiscal 2023, 2022 and 2021 was $77.5 million, $104.1 million and
$54.3 million, respectively.
(3) As of August 31, 2023, a total of 1,987,662 shares underlying the stock option awards were unvested and outstanding, which results in
unamortized stock-based compensation of $59.1 million to be recognized as stock-based compensation expense over the remaining
weighted average vesting period of 3.1 years.
Employee Stock Option Awards
Stock options are granted to our employees under the FactSet Research Systems Inc. Stock Option and Award Plan as Amended
and Restated (the "LTIP"). The majority of our employee stock options granted under the LTIP for fiscal 2021 through fiscal
2023 relate to our annual grants on November 1, 2022, November 1, 2021 and November 9, 2020.
90
The following table includes the weighted average inputs to the binomial model to estimate the grant-date fair value of the
employee stock options granted:
2023
2022
2021
Stock options granted(1)
Risk-free interest rate
Expected life (years)
Expected volatility
Dividend yield
Weighted average grant date fair value
Weighted average exercise price
268,185
417,546
3.37% - 5.05% 0.07% - 2.99% 0.04% - 1.67%
7.1
348,458
6.6
6.9
24% - 25%
0.83 %
$125.57
$426.22
24% - 25%
0.86 %
$103.49
$433.09
26% - 27%
0.12 %
$78.31
$317.17
(1) Includes the annual employee grant on November 1, 2022, November 1, 2021 and November 9, 2020 of 266,051, 292,377 and 408,093
stock options, respectively. The majority of the stock options granted, including the annual employee grants, vest 20% annually on the
anniversary date of the grant and are fully vested after five years, expiring ten years from the date of grant.
Restricted Stock Awards
We refer to RSUs and PSUs, collectively, as "Restricted Stock Awards". A summary of Restricted Stock Award activity is as
follows:
(in thousands, except per award data)
Balance at August 31, 2020
Granted - employee Restricted Stock Awards(1)
Vested - employee RSUs
Forfeited
Balance at August 31, 2021
Granted - employee Restricted Stock Awards(1)
Granted - non-employee directors RSUs
Vested - employee Restricted Stock Awards
Forfeited
Balance at August 31, 2022
Granted - employee Restricted Stock Awards(1)
Performance adjustment - employee PSUs(2)
Granted - non-employee directors RSUs
Vested - Restricted Stock Awards
Forfeited
Balance at August 31, 2023
Number
Outstanding
Weighted Average Grant
Date Fair Value Per Award
146
99
(35)
(13)
197
103
2
(40)
(29)
233
97
9
2
(83)
$
$
$
$
$
$
$
$
$
$
$
$
$
$
(14)
$
244 (3) $
231.55
312.86
208.67
267.23
274.10
418.16
425.29
242.87
323.16
338.87
416.58
245.67
425.06
291.80
369.71
381.15
(1) During fiscal 2023, 2022 and 2021, we granted 63,009 RSUs and 34,482 PSUs; 71,978 RSUs and 30,704 PSUs; and 62,960 RSUs and
36,424 PSUs, respectively.
(2) During fiscal 2023, there were an additional 8,542 PSUs granted that related to the achievement of specified performance levels included
in a 2019 grant.
(3) As of August 31, 2023, a total of 243,552 shares underlying the Restricted Stock Awards were unvested and outstanding, which resulted
in unamortized stock-based compensation of $55.4 million to be recognized as stock-based compensation expense over the remaining
weighted average vesting period of 2.7 years.
Employee Restricted Stock Awards
Restricted Stock Awards are granted to our employees under the LTIP. These awards entitle the holders to shares of common
stock as the Restricted Stock Awards vests, but not to dividends declared on the underlying shares while the stock subject to the
Restricted Stock Awards is unvested.
91
Our Restricted Stock Awards granted during fiscal 2021 through fiscal 2023 primarily relate to our annual grants on
November 1, 2022, November 1, 2021 and November 9, 2020. The majority of the RSUs included in each these grants vest
20% annually on the anniversary date of the grant and are fully vested after five years. The PSUs included in each of these
grants cliff vest on the third anniversary of the grant date, subject to the achievement of certain performance metrics. The
ultimate number of common shares that may be earned pursuant to these PSU awards in each year range from 0% to 150% of
the number of target shares, depending on the level of achievement of the stated financial performance objectives.
Employee Stock Purchase Plan
Shares of FactSet common stock may be purchased by eligible employees under our ESPP in three-month intervals. The
purchase price is equal to 85% of the lesser of the fair market value of our common stock on the first day or the last day of each
three-month offering period. Employee purchases may not exceed 10% of their gross compensation and there is a $25,000
contribution limit per employee for each calendar year. Shares purchased through our ESPP cannot be sold or otherwise
transferred for 18 months after purchase. Dividends paid on shares held in our ESPP are used to purchase additional ESPP
shares at the market price on the dividend payment date.
During fiscal 2023, employees purchased 39,873 shares at a weighted average price of $348.55, compared with 36,244 shares at
a weighted average price of $332.30 in fiscal 2022, and 38,848 shares at a weighted average price of $273.59 in fiscal 2021.
Stock-based compensation expense related to our ESPP was $2.7 million, $2.3 million and $2.0 million for fiscal 2023, 2022
and 2021, respectively. At August 31, 2023, our ESPP had 62,839 shares reserved for future issuance. The weighted average
estimated fair value of our ESPP shares during fiscal 2023, 2022 and 2021 was $71.74, $66.35 and $54.00 per share,
respectively.
Stock-based Awards Available for Grant
A summary of stock-based awards available for grant is as follows:
(in thousands)
Balance at August 31, 2020
Granted - stock option awards
Granted - RSUs(1)
Granted - PSUs(1)
Forfeited - stock-based awards(1)
Balance at August 31, 2021
Granted - stock option awards
Granted - RSUs(1)
Granted - PSUs(1)
Forfeited - stock-based awards(1)
Balance at August 31, 2022
Granted - stock option awards
Granted - RSUs(1)
Granted - PSUs(1)
Performance adjustment - PSUs(2)
Forfeited - stock-based awards(1)
Balance at August 31, 2023
Stock-based Awards
Available for Grant under the
LTIP
Stock-based Awards
Available for Grant under the
FactSet Research Systems Inc.
Non-Employee Directors’ Stock
Option and Award Plan as
Amended and Restated (the
“Director Plan”)
5,626
(418)
(157)
(91)
120
5,080
(348)
(180)
(77)
194
4,669
(268)
(158)
(86)
(21)
90
4,226
250
(12)
—
—
—
238
(6)
(4)
—
4
232
(5)
(4)
—
—
—
223
(1) Under the LTIP, for each Restricted Stock Award granted or canceled/forfeited, an equivalent of 2.5 shares is deducted from or added
back to, respectively, the aggregate number of stock-based awards available for grant.
(2) During fiscal 2023, there were additional PSUs granted that related to the achievement of specified performance levels included in a
2019 grant.
92
17. EMPLOYEE BENEFIT PLANS
Defined Contribution Plan
We established our 401(k) Plan in fiscal 1993. The 401(k) Plan is a defined contribution plan covering all full-time, U.S.
employees of FactSet and is subject to the provisions of the Employee Retirement Income Security Act of 1974 and the Internal
Revenue Code of 1986 ("IRC"). Each year, participants may contribute up to 60% of their eligible annual compensation, subject
to annual limitations established by the IRC. We match up to 4% of employees’ earnings, capped at the Internal Revenue
Service annual maximum. Company matching contributions are subject to a five-year graduated vesting schedule. All full-time,
U.S. employees are eligible for the matching contribution by FactSet. We contributed $16.6 million, $12.0 million and $11.6
million in matching contributions to employee 401(k) accounts during fiscal 2023, 2022 and 2021, respectively.
18. SEGMENT INFORMATION
Operating segments are defined as components of an enterprise that have the following characteristics: (i) they engage in
business activities from which they may earn revenue and incur expense, (ii) their operating results are regularly reviewed by
the chief operating decision maker ("CODM") for resource allocation decisions and performance assessment, and (iii) their
discrete financial information is available. Our Chief Executive Officer functions as our CODM.
We have three operating segments: Americas, EMEA and Asia Pacific. This is how we and our CODM manage our business
and the geographic markets in which we operate. These operating segments are consistent with our reportable segments.
The Americas segment serves our clients throughout North, Central, and South America. The EMEA segment serves our clients
in Europe, the Middle East, and Africa. The Asia Pacific segment serves our clients in Asia and Australasia. Segment revenues
reflect sales to our clients based on their respective geographic locations.
Each segment records expenses related to its individual operations, with the exception of expenditures associated with our data
centers, third-party data costs and corporate headquarters charges, which are recorded by the Americas segment and are not
allocated to the other segments. The expenses incurred at our content collection centers, located in India, the Philippines and
Latvia, are allocated to each segment based on their respective percentage of revenues as this reflects the benefits provided to
each segment.
93 The following tables reflect the results of operations of our segments:
(in thousands)
Year Ended August 31, 2023
Revenues
Operating income(1)
Depreciation and amortization(2)
Stock-based compensation
Capital expenditures(3)
Year Ended August 31, 2022
Revenues
Operating income(1)
Depreciation and amortization(2)
Stock-based compensation
Capital expenditures(3)
Year Ended August 31, 2021
Revenues
Operating income(1)
Depreciation and amortization
Stock-based compensation
Capital expenditures(3)
Americas
EMEA
Asia Pacific
Total
$ 1,335,484 $
239,438 $
$
539,843 $
243,028 $
210,181 $ 2,085,508
629,207
146,741 $
$
$
$
89,602 $
51,574 $
54,609 $
7,305 $
7,280 $
2,317 $
8,477 $
3,184 $
105,384
62,038
3,860 $
60,786
Americas
EMEA
Asia Pacific
Total
$ 1,173,946 $
159,140 $
$
484,279 $
196,231 $
185,667 $ 1,843,892
475,482
120,111 $
$
$
$
64,916 $
45,319 $
44,114 $
11,794 $
8,271 $
1,427 $
9,973 $
2,413 $
5,615 $
86,683
56,003
51,156
Americas
EMEA
Asia Pacific
Total
$ 1,008,046 $
427,700 $
155,699 $ 1,591,445
$
$
$
$
218,180 $
159,704 $
96,157 $
474,041
39,415 $
14,847 $
10,214 $
35,113 $
38,146 $
8,401 $
1,551 $
1,424 $
21,755 $
64,476
45,065
61,325
(1) Includes asset impairment charges further disclosed in the Segment Asset Impairments section below.
(2) The Americas includes CGS intangible asset amortization of $53.7 million and $26.8 million during fiscal 2023 and 2022, respectively.
(3) Capital expenditures includes purchases of PPE and capitalized internal-use software.
Segment Asset Impairments
The following table reflects asset impairments by segment for each fiscal year in which impairment charges were incurred:
(in thousands)
Year Ended August 31, 2023
Lease ROU assets and PPE(1)
Intangible assets(2)
Total asset impairments
Year Ended August 31, 2022
Lease ROU assets and PPE(1)
Intangible assets(2)
Total asset impairments
Americas
EMEA
Asia Pacific
Total
11,017 $
7,009 $
7,920
—
18,937 $
7,009 $
— $
—
— $
18,026
7,920
25,946
Americas
EMEA
Asia Pacific
Total
57,647 $
2,067
59,714 $
4,237 $
—
4,237 $
321 $
—
321 $
62,205
2,067
64,272
$
$
$
$
(1) Asset impairments of our lease ROU assets and related PPE associated with vacating certain leased office space to resize our real estate
footprint for the hybrid work environment. See Note 4, Fair Value Measures, Note 7, Property, Equipment and Leasehold Improvements
and Note 11, Leases for additional information.
(2) Asset impairments related to Trade names and Developed technology for fiscal 2023 and Developed technology for fiscal 2022.
94
Segment Total Assets
The following table reflects the total assets for our segments:
(in thousands)
Segment Assets
Americas
EMEA
Asia Pacific
Total assets
Geographic Information
As of August 31,
2023
2022
$
$
3,148,192 $
558,393
256,337
3,962,922 $
3,191,313
580,450
242,542
4,014,305
The following tables reflect our revenues and long-lived assets, split geographically by our country of domicile (the United
States) and other countries where major subsidiaries are domiciled.
Geographic Revenues
The following table sets forth revenues by geography, attributed to countries based on the location of the client:
(in thousands)
Revenues
United States
United Kingdom
Other European Countries
All Other Countries
Total revenues
Geographic Long-Lived Assets
Years ended August 31,
2023
2022
2021
$ 1,265,002 $ 1,106,602 $
952,423
223,809
316,034
280,663
215,369
268,910
253,011
190,044
237,656
211,322
$ 2,085,508 $ 1,843,892 $ 1,591,445
The following table sets forth long-lived assets by geographic area. Long-lived assets consist of Property, equipment and
leasehold improvements, net and Lease right-of-use assets, net and excludes goodwill, intangible assets, deferred taxes and
other assets.
(in thousands)
Long-lived Assets
United States
Philippines
India
United Kingdom
All Other Countries
Total long-lived assets
August 31,
2023
2022
$
$
109,787 $
55,934
25,223
11,532
25,468
227,944 $
111,301
63,879
29,440
12,637
23,044
240,301
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
95
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, including our principal executive officer and principal financial officer, have evaluated the effectiveness of
our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), as of the end of the annual period covered by this report, and our Principal Executive Officer
and Principal Financial Officer have concluded that our disclosure controls and procedures were effective as of the end of the
annual period covered by this report.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and
15d-15(f) under the Exchange Act) during our fourth quarter of fiscal 2023 that have materially affected, or are reasonably
likely to materially affect, our internal control over financial reporting.
Management’s Report on Internal Control over Financial Reporting
See Part II, Item 8. Management’s Report on Internal Control over Financial Reporting of this Annual Report on Form 10-K,
which is incorporated herein by reference.
Report of Independent Registered Public Accounting Firm
See Part II, Item 8. Report of Independent Registered Public Accounting Firm of this Annual Report on Form 10-K, which is
incorporated herein by reference.
ITEM 9B. OTHER INFORMATION
Rule 10b5-1 Trading Plans
During the quarter ended August 31, 2023, none of our directors or officers (as defined in Section 16 of the Securities Exchange
Act of 1934, as amended), adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement
(each as defined in Item 408(a) and (c) of Regulation S-K).
Refer to Part II, Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities, of this Annual Report on Form 10-K for the information required by Item 408(d) of Regulation S-K.
96 Part III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information required to be furnished by this Item 10 is incorporated herein by reference to our Notice of Annual Meeting of
Stockholders and Proxy Statement to be filed within 120 days of August 31, 2023 (the "Proxy Statement").
Pursuant to General Instruction G(3) of Form 10-K, the information required by this item relating to our executive officers is
included in Part I, Item 1. Executive Officers of the Registrant of this Annual Report on Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
The information required to be furnished by this Item 11 is incorporated herein by reference to our Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The information required to be furnished by this Item 12 is incorporated herein by reference to our Proxy Statement.
Equity Compensation Plan Information
The following table summarizes, as of August 31, 2023, the number of outstanding equity awards granted to employees and
non-employee directors, as well as the number of equity awards remaining available for future issuance, under our equity
compensation plans:
Number of securities
to be issued upon
exercise
of outstanding
options, warrants
and rights
(a)
Weighted-average
exercise price of
outstanding options,
warrants and rights
(b)
Number of securities
remaining
available for future
issuances under
equity compensation
plans (excluding
securities reflected
in column (a))
(c)(3)
2,231,214 (1) $
285.95 (2)
4,511,758 (4)
—
2,231,214 (1) $
—
285.95 (2)
—
4,511,758 (4)
Plan category
Equity compensation plans approved by security
holders
Equity compensation plans not approved by
security holders
Total
(1) Includes 1,987,662 shares issuable upon exercise of outstanding options, 152,796 shares issuable upon vesting of outstanding RSUs and
90,756 shares issuable upon the conversion of outstanding PSUs.
(2) Weighted average exercise price of outstanding options only.
(3) In accordance with the LTIP and Director Plan, each Restricted Stock Award granted or canceled/forfeited is equivalent to 2.5 shares
deducted from or added back to, respectively, the aggregate number of stock-based awards available for grant.
(4) Includes 4,226,221 shares available for future issuance under the LTIP, 222,698 shares available for future issuance under the Director
Plan, and 62,839 shares available for purchase under the ESPP.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
The information required to be furnished by this Item 13 is incorporated herein by reference to our Proxy Statement.
97
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The information required to be furnished by this Item 14 is incorporated herein by reference to our Proxy Statement.
98 ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Part IV
(a) Documents filed as part of this Annual Report on Form 10-K:
1. Financial Statements
The information required by this item is included in Item 8. Financial Statements and Supplementary Data, of this
Annual Report on Form 10-K which is incorporated herein.
2. Financial Statements Schedule
FactSet Research Systems Inc.
Schedule II – Valuation and Qualifying Accounts
(in thousands)
Description
Accounts Receivable Allowance:
Balance at
Beginning of Year Charged to Expense
Write-offs,
Net of Recoveries
Balance at
End of Year
2023
2022
2021
$
$
$
2,776 $
6,431 $
7,987 $
6,668 $
1,324 $
918 $
(1,675) $
(4,979) $
(2,474) $
7,769
2,776
6,431
Additional financial statement schedules are omitted since they are either not required, not applicable, or the
information is otherwise included.
3. Exhibits
The information required by this Item is set forth below.
Exhibit
Number
Exhibit
Description
Incorporated by Reference
Form
File No.
Exhibit No.
Filing Date
Filed
Herewith
FactSet Research Systems Inc. Second
Amended and Restated Articles of
Incorporation
FactSet Research Systems Inc.
Amended and Restated By-Laws
8-K
8-K
Form of Common Stock
S-1/A
333-04238
001-11869
3.1
1/10/2023
001-11869
8-K
001-11869
3.2
4.1
4.1
1/10/2023
6/26/1996
3/1/2022
Indenture, dated as of March 1, 2022,
between FactSet Research Systems Inc.
and U.S. Bank Trust Company,
National Association, as trustee
Supplemental Indenture, dated as of
March 1, 2022, between FactSet
Research Systems Inc. and U.S. Bank
Trust Company, National Association,
as trustee
Form of 2.900% Global Note due 2027
(included in Exhibit A-1 to Exhibit 4.2
above)
Form of 3.450% Global Note due 2032
(included in Exhibit A-2 to Exhibit 4.2
above)
8-K
001-11869
4.2
3/1/2022
8-K
001-11869
4.3
3/1/2022
8-K
001-11869
4.4
3/1/2022
3.1
3.2
4.0
4.1
4.2
4.3
4.4
99 DEF-
14A
DEFR
-14A
001-11869
Exhibit A
11/10/2004
001-11869
Appendix
A
12/6/2010
8-K
001-11869
10.1
12/21/2017
DEF-
14A
001-11869
Appendix
A
10/30/2008
8-K
001-11869
10.2
12/21/2017
10-Q
001-11869
10.1
4/9/2018
8-K
001-11869
10.1
3/5/2020
8-K
001-11869
10.2
3/5/2020
8-K
001-11869
4.5
3/1/2022
10-Q
001-11869
10.1
7/1/2022
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
10.10
21
23
31.1
31.2
32.1
FactSet Research Systems Inc. 2004
Employee Stock Option and Award
Plan(1)
FactSet Research Systems Inc. 2004
Stock Option and Award Plan, as
Amended and Restated(1)
FactSet Research Systems Inc. Stock
Option and Award Plan as Amended
and Restated(1)
FactSet Research Systems Inc. 2008
Non-Employee Directors’ Stock
Option Plan(1)
FactSet Research Systems Inc. Non-
Employee Directors’ Stock Option and
Award Plan, as Amended and
Restated(1)
Lease, dated February 14, 2018,
between FactSet Research Systems Inc.
and 45 Glover Partners, LLC(2)
FactSet Research Systems Inc.
Executive Severance Plan(1)
Form of FactSet Research Inc. Equity
Award Agreement(1)
Credit Agreement dated as of March 1,
2022, among FactSet Research
Systems Inc., the Borrowing
Subsidiaries party thereto, the Lenders
party thereto, and PNC Bank, National
Association, as the Administrative
Agent
Separation Agreement and General
Release of Claims dated April 26, 2022
between FactSet Research Systems Inc.
and Gene Fernandez
Subsidiaries of FactSet Research
Systems Inc.
Consent of Ernst & Young LLP
Certification of the Chief Executive
Officer pursuant to Rule 13a-14(a) and
Rule 15d-14(a) of the Securities
Exchange Act, as amended.
Certification of the Chief Financial
Officer pursuant to Rule 13a-14(a) and
Rule 15d-14(a) of the Securities
Exchange Act, as amended.
Certification of the Chief Executive
Officer pursuant to 18 U.S.C. 1350, as
adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
X
X
X
X
X
100 32.2
97
101.INS
Certification of the Chief Financial
Officer pursuant to 18 U.S.C. 1350, as
adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
FactSet Research Systems Inc.
Incentive Compensation Recoupment
Policy
XBRL Instance Document
101.SCH XBRL Taxonomy Extension Schema
101.CAL XBRL Taxonomy Extension
Calculation Linkbase
101.DEF XBRL Taxonomy Extension Definition
Linkbase Document
101.LAB XBRL Taxonomy Extension Label
Linkbase
101.PRE XBRL Taxonomy Extension
104
Presentation Linkbase
Cover page Interactive Data File
(formatted as Inline XBRL and
contained in Exhibit 101
(1)
Indicates a management contract or compensatory plan or arrangement.
(2) Confidential treatment has been granted for portions of this exhibit.
ITEM 16. FORM 10-K SUMMARY
None.
X
X
X
X
X
X
X
X
X
101 Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this
Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
Date: October 27, 2023
FACTSET RESEARCH SYSTEMS INC.
(Registrant)
/s/ F. PHILIP SNOW
F. Philip Snow
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report on Form 10-K has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Name
/s/ F. PHILIP SNOW
F. Philip Snow
Title
Chief Executive Officer and Director
(Principal Executive Officer)
Date
October 27, 2023
/s/ LINDA S. HUBER
Executive Vice President, Chief Financial Officer
October 27, 2023
Linda S. Huber
(Principal Financial Officer)
/s/ GREGORY T. MOSKOFF
Gregory T. Moskoff
Managing Director, Controller and Chief Accounting Officer
(Principal Accounting Officer)
October 27, 2023
/s/ ROBIN A. ABRAMS
Director
Robin A. Abrams
/s/ SIEW KAI CHOY
Director
Siew Kai Choy
/s/ MALCOLM FRANK
Malcolm Frank
Director
/s/ JAMES J. MCGONIGLE
Director
James J. McGonigle
/s/ LEE SHAVEL
Lee Shavel
/s/ LAURIE SIEGEL
Laurie Siegel
Director
Director
/s/ MARIA TERESA TEJADA
Maria Teresa Tejada
Director
/s/ ELISHA WIESEL
Director
Elisha Wiesel
October 27, 2023
October 27, 2023
October 27, 2023
October 27, 2023
October 27, 2023
October 27, 2023
October 27, 2023
October 27, 2023
102