FactSet (FDS): The Banker's Bloomberg Alternative

1. Executive Summary

FactSet is the "quiet compounder" of financial data. While Bloomberg dominates the trading floor, FactSet owns the investment banker's spreadsheet and the portfolio manager's attribution analysis. It is a mission-critical utility with high retention and steady pricing power.

Key Thesis Points

1. Workstation Stickiness: Finance professionals build their workflow around FactSet's Excel plugin. Switching costs involve retraining entire analyst classes.
2. Private Markets: Aggressive expansion into private equity/credit data (via acquisitions) addresses the fastest-growing segment of asset management.
3. Margin Expansion: Shift to cloud (Azure partnership) and off-shoring of content collection continues to drive 50-100bps of margin expansion annually.

2. Business Overview

• Research & Advisory: Tools for Investment Bankers (comps, models).
• Analytics: Portfolio construction and risk tools for Asset Managers.
• Content & Technology: Data feeds (APIs) for quant funds.

3. Financial Analysis

(See Financials Tab for live data)

• ASV (Annual Subscription Value): The key metric. Growing mid-single to low-double digits consistently for decades.
• Retention: Client retention typically >90%; User retention >85%.
• Capital Allocation: Serial acquirer of niche data assets; steady dividend grower.

4. Valuation

FDS rarely trades "cheap."

• Quality Premium: Investors pay ~25x-30x earnings for the certainty of cash flows.
• Defensive: Outperforms during volatility as financial firms cannot simply turn off their data terminals.

5. Risks

• Cost Cutting: Investment banks are shrinking headcounts. Fewer junior bankers = fewer seats.
• AI Disruption: LLMs could theoretically replace the manual data fetching/modeling workflow FactSet facilitates.