June 16, 2009 / 3:59 PM / 9 years ago

UPDATE 2-FactSet Q3 earnings beat Street, sees strong Q4

* Q3 adj EPS $0.73 beat est of $0.72: Reuters Estimates

* Q3 revenue misses Street view

* Sees Q4 EPS above estimates

* Sees Q4 sales of $152-$157 mln

* Raises qtrly dividend by 11 pct (Adds details, analyst comments, updates share movement)

By Shrutika Verma

BANGALORE, June 16 (Reuters) - FactSet Research Systems Inc (FDS.N), which provides financial information to the investment community, reported quarterly profit above market estimates, helped by higher operating margins, and it forecast strong fourth-quarter earnings and boosted its dividend by 11 percent.

However, annual subscription value (ASV) — which the company defines as revenue for the next 12 months from all annual subscription services currently being supplied to clients — fell $8 million during the quarter, and the number of users declined by 1,600 to 37,100, weighed down by weak equity markets.

Shares of the company pared initial gains and fell as much as 3 percent Tuesday morning on the New York Stock Exchange.

“FactSet’s third quarter operating results were a mixed-bag, with key metrics deteriorating in the context of financial market pressures, but operating earnings per share in line our expectations based on favorable cost trends,” Piper Jaffray analyst Peter Appert wrote in a note to clients.

The negative trends in password count and subscription value suggest continued deceleration in earnings growth in the next several quarters, Appert said by phone.

The three forward indicators of FactSet’s operating results — ASV, client count, and password count — were weaker than his expectations, the analyst said.

Piper Jaffray, which has a “sell” rating on the stock, makes a market in the securities of the company.

For the third quarter ended May 31, net income increased to $38.5 million, or 79 cents per share, from $32.5 million, or 65 cents per share, a year earlier. [ID:nWNAB0077]

According to Reuters Estimates, the company earned 73 cents a share, excluding an income tax benefit of 6 cents, while analysts were looking for a profit of 72 cents on that basis.

Total revenue rose 5 percent to $154.4 million, compared with analyst expectations of $155.4 million. Revenue from the United States rose 3 percent to $105 million. ASV was $615 million at May 31.

Operating margins for the third quarter rose to 34.5 percent, said the company, which competes with Thomson Reuters (TRI.TO) TRIL.L (TRI.N), privately owned Bloomberg, RiskMetrics Group Inc and Dealogic Plc DL.L.

For 2009, the company now expects capital expenditures, net of landlord contributions, to be $22 million to $26 million, compared with its previous expectations of $22 million to $28 million.

The company forecast fourth-quarter earnings of 73 cents to 75 cents a share on revenue of $152 million to $157 million. Analysts were looking for earnings of 72 cents a share, excluding items, on revenue of $155.6 million.

The company also raised its quarterly dividend to 20 cents a share from 18 cents.

Shares of the Norwalk, Connecticut-based company, which have gained 35 percent over last three months, were down 2 percent at $49.90 in morning trade. They had risen as much as 3.5 percent earlier. (Editing by Deepak Kannan)

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