REVENUE RECOGNITION

May 2014

and

July 2015,

the FASB issued accounting standard updates which clarified principles for recognizing revenue arising from contracts with customers (ASC

606

) and superseded most current revenue recognition guidance, including industry-specific guidance. The core principle of the revenue standard is that an entity recognizes revenue to depict the transfer of promised goods or services to clients in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new guidance applies a

five

-step model for revenue measurement and recognition and also requires increased disclosures including the nature, amount, timing, and uncertainty of revenue and cash flows related to contracts with clients.

The Company adopted the standard at the beginning of the

first

quarter of fiscal

2019,

using the modified retrospective method of adoption and applied the guidance to those contracts that were

not

completed as of

August

31,

2018.

Under the modified retrospective method of adoption, the cumulative effect of applying the new standard is recorded at the date of initial application, with

restatement of the comparative prior periods presented. The Company assessed its revenue contracts with clients under the new standards and determined that the adoption did

not

materially change the timing or amount of revenue recognized.

The Company derives most of its revenues by providing client access to its hosted proprietary data and analytics platform which can include various combinations of products and services available over the contractual term. The hosted platform is a subscription-based service that consists primarily of providing access to products and services including workstations, analytics, enterprise data, research management, and trade execution. The Company determined that the subscription-based service represents 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 Company determined that the nature of the promise to the client is to provide daily access to

one

overall data and analytics platform. This platform provides integrated financial information, analytical applications and industry-leading service for the investment community. Based on the nature of the services and products offered by FactSet, the Company applies an input time-based measure of progress as the client is simultaneously receiving and consuming the benefits of the platform. The Company records revenue for its contracts using the over-time revenue recognition model as a client is invoiced or performance in satisfied, which is comparable with how revenue is recognized today. FactSet does

not

consider payment terms a performance obligation for customers with contractual terms that are

one

year or less and has elected the practical expedient.

In FactSet’s assessment of contracts with clients, the Company did identify a small portion of contracts with certain fulfillment costs, which include up-front costs to allow for the delivery of services and products that are expected to be recovered. In connection with the adoption of the new standard, these fulfillment costs are recognized as an asset and amortized consistent with the associated revenue for providing the services, which prior to adoption were expensed. As a result, during the

first

quarter of fiscal

2019,

FactSet recorded an opening cumulative increase to Retained earnings of

$2.5

million, or

$2.0

million net of tax, with an offsetting increase related to the current asset portion in Prepaid expenses and other current assets and the non-current asset portion in Other assets based on the term of the license period. Prospectively, fulfillment costs will continue to be recognized in the same accounts used for the adoption impact, which include the Prepaid expenses and other current assets account for the current portion and Other assets for the non-current portion, based on the term of the license period. The differences between the Company’s reported operating results for the

three

months and

nine

months ended

May

31,

2019,

which reflect the application of the new standard on the Company’s contracts, and the results that would have been reported as if the accounting was performed pursuant to the accounting standards previously in effect, were

not

material. There are

significant judgments that would impact the timing of revenue recognition. The majority of client contracts have a duration of

one

year or less, or the amount FactSet is entitled to receive corresponds directly with the value of performance obligations completed to date, and therefore, the Company does

not

disclose the value of the remaining unsatisfied performance obligations.

Disaggregated Revenue

The Company disaggregates revenue from contracts with clients by demographic region which include U.S., Europe and Asia Pacific. FactSet believes these geographic regions are reflective of how the Company manages the business and the demographic markets in which it serves. The geographic regions best depict the nature, amount, timing and uncertainty of revenues and cash flows related to contracts with clients. Refer to Note

Segment Information for further information on revenues by geographic region.

The following table presents this disaggregation of revenue by geography:

	Three Months Ended May 31,				Nine Months Ended May 31,
(in thousands)	2019		2018		2019		2018
U.S.	$	226,961	$	210,308	$	672,479	$	627,976
Europe		102,499		98,856		299,197		286,789
Asia Pacific		35,073		30,747		99,392		89,518
Total Revenue	$	364,533	$	339,911	$	1,071,068	$	1,004,283