FactSet Research Systems Inc.

Ladies and gentlemen, thank you for standing by, and welcome to the FACSET Q1 2020 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you'll need to press star 1 on your telephone. If you require any further assistance, press star 0. I would now like to hand your conference over to your speaker today, Reema Hyder. Go ahead, madam.

Thank you, Marcella, and good morning, everyone. Welcome to FACTSET's first fiscal quarter 2020 earnings call. We join you today from our brand new global headquarters in Norwalk, Connecticut. Before we begin, I would like to point out that the slides we will reference during the course of this presentation can be accessed via the webcast on the investor relations section of our website at FACTSET.com. The slides will be posted on our website at the conclusion of this call. A replay of today's call will be available via phone and on our website. After our prepared remarks, we will open the call to questions from investors. To be fair to everyone, please limit yourself to one question plus a follow-up. Before we discuss our results, I encourage all listeners to review the legal notice on slide two, which explains the risks of forward-looking statements and the use of non-YAC financial measures. Additionally, please refer to our forms 10-K and 10-Q for a discussion of risk factors that would cause actual results to differ materially from these overlooking statements. Our side presentation and discussions on this call will include certain non-GAAP financial measures. For such measures, reconciliations of the most directly comparable GAAP measures are in the appendix to the presentation and in our earnings release issued earlier today. Joining me today are Phil Snow, Chief Executive Officer, and Helen Shen, Chief Financial Officer. I'd now like to turn the discussion over to Phil Snow.

Thanks, Reema, and good morning, everyone. We begin our fiscal 20 with growth across most of our businesses, and I want to remind everyone that our first quarter is typically the smallest of the year, and it's important to look at half- and full-year performance as more appropriate measures of progress. I'm pleased that we have a healthy pipeline for the first half of our fiscal year, especially against the backdrop of sustained industry pressures. On our last earnings call, we outlined a three-year plan to accelerate the breadth and depth of our investments in targeted areas within contents and technology with the goal of driving higher top-line growth over the long term. Our team has hit the ground running, delivering encouraging early progress in Q1. Within content, our deep sector and private markets efforts are proceeding at pace, and we've hired more sector experts following the launch of our successful banking regulatory data. We're making good progress integrating third-party private markets data into FACTSAS and are expanding our valued street account coverage into new markets. We believe this expansion of coverage will resonate across all of our business lines, particularly research and wealth. Our continued efforts to grow our tech stack are also yielding early results. We've tripled the number of APIs available since the start of the fiscal year and are on track to release more in the second quarter. Our migration to the public cloud is well underway, and we've identified opportunities to reduce our fixed data center costs in the long run. From a product perspective, we are building momentum in analytics with multi-asset class risk, fixed income involved, our new performance measurement product, each showing particular strength. We're also very pleased with our wealth pipeline and the positive response from clients. Finally, we see growing demand for our open solutions. We announced this quarter that FactSet is now available on OpenFin, and we're proud to be the first market data provider to do so. As early adopters of the shift to more open and flexible product access, we believe the wind is on our backs, and we will continue to deliver information to clients where, when, and how they want it. In sales, we've evolved our compensation plan and sharpened our focus on client retention and expansion. These changes include growing our strategic client group, which looks after our top accounts to cover more clients and build upon the strong C-level relationships we have in the industry. We're also expanding our new business and sales engineering teams to capitalize on increasing technology opportunities. While these collective measures will take time to impact our top line as the industry evolves, we're continuing to take proactive steps from a position of strength to ensure continued growth. Looking at ASV in total, ASV professional services grew at 4%. This growth rate reflects a decrease in ASV in the quarter, driven by higher than expected cancellations in research and a decrease in our add-on business where we cross-sell to existing clients. In addition, new business sales increased year over year as we added more clients this quarter. Overall, we see continued cost pressures among institutional asset managers and churn within our banking clients. However, it's important to remember that the large banks are long-standing clients of FACTA, and when they hire later in our fiscal year next summer, we accordingly expect a benefit. This quarter, once again, we saw growth in users from corporate and private equity firms in the area where we're investing. In the Americas, we saw healthy growth in wealth, asset owners, and hedge funds. This was offset by seasonal banking churn in our research business. America has had a tougher comparison versus the first quarter of 2019 when we had larger deals that contributed to higher ASV. We remain optimistic about the Americas as we deepen existing client relationships and capitalize on new business opportunities. In EMEA, we have positive momentum with the buy side with wealth and institutional asset managers. This region is facing some of the same cost pressures we have previously seen in the Americas and uncertainty with regulations and the political environment. Our pipeline looks healthy for the year with institutional asset managers, asset owners, and wealth managers as we see a demand for our analytics solutions. CTS was a main driver of the 10% growth in Asia Pacific as we sold data fees across the region, primarily to local data providers. The opportunity in Asia PAC is with the five-side, driven by risk solutions for asset owners and our analytics offerings for the institutional asset managers, especially for the investment portfolio life cycle. We continue to be bullish about our opportunity in this region, and we're investing appropriately to capitalize on its potential. In the first quarter, we also saw promising growth in wealth, CTS, and analytics. Wealth was the largest contributor as we continued to earn market share in this space. Analytics was another bright spot driven by the strong performance of fixed income and risk products, while CTS continued to see solid demand for core and premium data feeds. Our adjusted operating margin and adjusted EPS came in strong this quarter, and we believe that this year will be more in line with our annual guidance as we continue to execute throughout the year in accordance with our investment plan. In closing, I want to reiterate that our fiscal year is a tale of two halves. Our pipeline is healthy, and we believe that we are on sound footing to deliver on the first half of our fiscal 20 and are well positioned for the year. We have a proven track record of returning consistent long-term value to shareholders, a record that we firmly believe we will continue. It is also increasingly clear that clients are demanding more open, flexible, and efficient technology to help them manage change, an area where we continue to excel. And as we execute our three-year plan, early signs indicate that we are taking a winning path to ensure continued growth through expanded opportunities with existing clients, higher retention, and new business. Let me now turn the call over to Helen,