FactSet Research Systems Inc.

Ladies and gentlemen, thank you for standing by, and welcome to the FactSet Q3 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star then 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star then 0. I would now like to hand the conference over to your speaker today, Ms. Reema Haider, Vice President of External Communications. Thank you. Please go ahead.

Thank you, Jimmy. Good morning, everyone. Welcome to FACTSAT's third fiscal quarter 2020 earnings call. Like last quarter, we are in various remote locations today. We may have some audio quality issues, and we appreciate your patience should we experience a disruption. Before we begin, I would like to point out that the slides we will reference during 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 one follow-up. Before we discuss our results, I encourage all listeners to review the legal notice on slide 2, which explains the risks of forward-looking statements and the use of non-GAAP financial measures. Additionally, please refer to our forms 10-K and 10-Q for a discussion of risk factors that could cause actual results to differ materially from these forward-looking statements. Our slide presentation and discussions on this call will include certain non-GAAP financial measures. For such measures, reconciliation to 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 Chan, our Chief Financial Officer. I'd now like to turn the discussion over to Phil Snow.

Thanks, Reema, and good morning and good afternoon to everyone. To start things off, I'd really like to thank the entire FactSet team for its remarkable efforts over the last quarter. It's really inspiring to see how FactSetters are going above and beyond each day to support our clients and each other as we all explore new ways of working. We've been positively surprised on how quickly we've been able to adapt to working in new ways, and are actively evaluating what this could mean in terms of efficiency, productivity, client experience, talent, and work-life balance for our employees. We've maintained a high level of engagement with both clients and employees over the last quarter, and we show healthy trends in client usage and interactions with our client service team. Our annual hackathon had a record number of projects submitted this year with some fantastic ideas, and fact-setters around the world continue to support our communities through company-wide volunteering and donation efforts. Let me talk a little bit about digital transformation and our investment plan. The events of this year and the uncertainty in what form the recovery might take is likely to put continued pressure on our end markets. There's even more urgency for firms to revamp their legacy platforms and accelerate their digital transformation efforts, developing next-generation manufacturing capabilities and delivering a more personalized, experience is going to be the key to winning for asset managers and asset owners. And the success that firms on both the buy side and sell side have seen in working remotely could be a meaningful catalyst in transforming historically inefficient workflows. The transition to a more digitally driven future, which was already taking place, is accelerating at a pace few would have predicted three months ago. More firms are moving to the public cloud, and upgrading their data and technology faster to meet the needs of a virtual workforce, manage volatility, and continue to adapt, evolve, and compete. Our investment plan addresses these trends and is rooted in migration to the cloud and our longstanding mission of providing clients with actionable data and insights where, when, and how they want it. Every day, we are supporting our customers with their own digital transformation efforts, delivering personalized and value-added solutions and as a result, deepening our relationships with them. We remain confident and on track with the programs in our three-year investment plan. Our focus on transforming our technology landscape, creating a new universe of data for private markets, along with our expansion of critical content for banking and wealth, positioned us well to capture market share. We found this is a good market for talent and made some key industry hires in the third quarter. Our business model has shown its resilience and confirmed that our solutions are mission critical for clients, particularly during times of market stress. We launched many new enhancements in the quarter and added deeper, richer content in finance, insurance, and real estate. Also, we reached an important milestone last week where we had our last VMS install, marking the end of Project NextGen. For those of you that recall this project, it's been a large undertaking for our engineers over many years, and completing this project allows them to focus on some of the newer things we're doing, such as the shift to the public cloud. Let me talk a little bit about ASV and the geographic breakdown this quarter. Turning to results, I'm pleased with our performance for the quarter. We executed well on our pipeline, and we were effective at managing costs. While we remain cautious given the uncertainty in the markets and economy, we remain on track to meet our revised ASV guidance for fiscal 2020, which we have narrowed to $60 to $75 million. This quarter, our organic ASV plus professional services grew 5%. Our Americas region had a solid quarter with 5% growth, benefiting from a healthy pipeline built earlier in the year. Asia Pacific rebounded with strong growth of 9%. and saw an acceleration in new business and the easing of pandemic-related restrictions in key markets. And our EMEA region, which grew at 4%, benefited from an uptick in demand for CTS and the international price increase. ASV growth in our third quarter was largely driven by wealth and research. We continue to expand our wealth pipeline and add wins this year, despite facing some delays due to the pandemic. Research grew thanks to healthy demand from investments, and asset management clients, especially in the Americas region, as well as our international price increase and improved client retention. Our deep sector strategy continues to have a positive impact on both retention and our ability to expand our client base beyond the traditional investment space, particularly with corporate clients. Content and technology solutions also performed well, driven by continued strong demand for premium and core data feeds, and a strategic win with GPIF, Japan's largest pension investment fund. Analytics had a slightly weaker quarter, primarily due to some large deals being pushed out to the fourth quarter, but it's been a solid contributor to date and has a healthy pipeline, especially across performance reporting and fixed income. Additionally, we delivered strong results in our adjusted operating margin and EPS, seeing some cost benefits related to the pandemic, and Helen will walk you through these in a few minutes. In summary, we're executing well and remain confident in our ability to finish fiscal 2020 on a strong note. At the same time, we're aware that the uncertainty surrounding the coronavirus pandemic makes it more difficult to predict the longer-term impact on our pipeline. We're excited about the pace of innovation at FACSAT on our industry and believe we are well-positioned to meet the needs of the virtual workforce, and we are pleased with the high levels of engagement and productivity we have seen throughout the quarter. As the world around us changes seemingly daily, I'm proud to say that we are still closing deals, bringing on new clients, and finding new ways to collaborate. Before I turn the call over to Helen, I want to take a moment to talk about the four changes we announced yesterday. I particularly want to thank Bill Hadley, who has decided to retire from our board, and to welcome Robin Abrams as incoming chair. Many of you know Phil, who was FACSED CEO for 15 years and served as our board chair for 20 years. I want to thank him both personally and on behalf of the entire FactSet community for his visionary leadership and profound contribution to FactSet's success. Additionally, I'd like to thank Scott Bilodeau, who's going to be with us until the end of the calendar year, for his years of client perspective as well as steering the audit committee. And we also look forward to working with Xu Kai Choi and Lee Chavelle, who both bring a breadth of experience to our board. You'll now hear from Helen, who will take you through more details for our third quarter.