FactSet (FDS, Financial), a financial intelligence provider to the investment community, declined 11.2% in the quarter and penalized performance in the period by 45 bps. FactSet shares fell despite accelerated revenue growth with improved margins, as recent investments continue to generate strong returns. FactSet’s revenue growth accelerated due to the introduction of new tools, which the company has begun to sell to both new and existing clients. This has led to increased pricing power and new use cases. We expect further revenue and earnings growth in 2022 and beyond, as well as improved cash flow, which the company will likely use for additional acquisitions and share repurchases. FactSet’s prospects remain favorable due to its large addressable market, consistent execution on both new product development and financial results, and robust free cash flow.
From Ron Baron (Trades, Portfolio)'s Baron Focused Growth Fund second-quarter 2022 letter.
