FactSet Research Systems Inc.

Ladies and gentlemen, thank you for standing by and welcome to the FactSet Fourth Quarter 2020 Earnings Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. Who asks a question during the session will be to press star 1 on your telephone. If you require any further assistance, please press star then 0. I would now like to introduce today's conference call, Ms. Rima Hyder, Vice President of Investor Relations. You may begin.

Thank you, Kevin, and good morning, everyone. Welcome to FactSet's Fourth Quarter 2020 Earnings Call. We continue to be in various remote locations today, and if we have any audio quality issues, we certainly 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 website on the investor relations section of our website at factnet.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 to investors. To be fair to everyone, please limit yourself to one, that's one 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-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, Chief Financial Officer. I would now like to turn the discussion over to Phil Snow.

Thanks, Reema, and good morning and good afternoon, everyone. First, I hope everyone is healthy and continuing to do well. And when we started this fiscal year, none of us, I think, could have anticipated what we'd be faced with over the last six months. And I really couldn't be prouder of our team's performance and its resolve to be there for our clients as we all quickly adapted to new ways of working. Our resilience and ability to execute over the last three months meant our client-facing teams, armed with an expanding suite of products, achieved the highest quarter of incremental ASV in our history. We finished our fiscal year having delivered 40 consecutive years of top-line growth and 24 years of adjusted EPS growth. I'm pleased with how our digital transformation efforts are supporting this growth and increasing our ability to build personalized solutions for our expanding client base. Earlier this year, we partnered with Forbes Insights to survey 200 asset managers and asset owners from around the globe to better understand where they stood with their digital transformation programs and how they're leveraging next-generation technologies. And according to the results, 75% of executives believe their firms need to invest more in technology initiatives, and also 69% of executives believe that businesses are facing more competitive pressure than in the past as customers expect higher and more personalized levels of service. A successful digital strategy includes having a scalable cloud foundation, a modern data layer with best-of-breed content, streamlined processes, the use of cognitive computing, and a personalized client experience. This is the journey we ourselves are on as an organization. It makes us stronger, and more importantly, it will help our clients get to where they too are going. We believe we're making tremendous progress in our initiatives, and we were widely recognized by the industry in 2020 with numerous product awards for solutions that cross every aspect of our business, including best data provider to the buy and sell sides and best buy side analytics tool from Waters Technology. This past year, we executed well against the first year of the investment plan we laid out back in September of 2019. On the technology front, we've made significant progress on our move to the public cloud, and we have announced plans to migrate our real-time ticker plant to Amazon Web Services. This migration will create the first global ticker plant of its kind in the cloud. We also opened up many more APIs, creating new ways for clients to ingest, process, and program against our data and analytics. We added more industries to our deep sector program, made progress on our private market strategy, and executed on our wealth investments, expanding coverage of our street account offering in both Asia-Pac and Canada. We remain committed to our multi-year investment plan for both content and technology and believe continuing to invest now is the best long-term strategy. Turning to our results, we continue to execute well against our second-half pipeline, resulting in a strong fourth quarter. Our ASV growth rate accelerated 45 basis points to over 5%, and we maintained our margins as well as grew EPS for the quarter. Both the Americas and EMEA's growth rates accelerated, with both regions seeing strong contributions from our largest institutional asset management clients. Private equity venture capital and hedge fund clients also drove growth in the quarter, helped in large part by our increasing private market content. Asia-Pac continues to be our fastest growing region, even though our business in the region saw a fair amount of challenges this year due to the effects of the pandemic. We saw some bright spots in Australia and Singapore. particularly with sovereign wealth funds, and we believe we have good opportunities next year as the recovery proceeds, especially with our premium products, such as reporting and trading solutions. Looking at things globally, I'm happy to say that all our businesses contributed to the fourth quarter growth. The greatest contributions year on year were from wealth and analytics. Analytics grew 7% and was the biggest contributor to overall ASV. This business saw strength in our performance, reporting, fixed income, and risk solutions, And we believe these products will continue to benefit us as we go into 2021. CTS, the second biggest contributor, grew at 13% thanks to continuing demand for core data feeds. And we're confident that this business will maintain its high growth rate as we head into 2021, especially as we develop new content and broaden our distribution channels. Wealth continued to execute well on its pipeline with a well-distributed number of wins across various client segments and sizes, resulting in a 9% growth rate, and research saw increased retention this year and benefited from our investments in our industry-specific or deep sector content. We're particularly pleased to see the growth of this business remain stable at 1%, with a well-balanced client base that includes asset managers, asset owners, sell-side research, corporates, and portfolio managers. In summary, I'm pleased with our performance in fiscal 2020, and proud of our team, which has executed well across all areas of our company. Our business model combined with our strong liquidity and balance sheet position us well to continue to manage through uncertain markets. We believe our focus on providing solutions aimed at our clients' own digital transformations and an unwavering commitment to expanding our library of smart, connected content is a winning strategy that is delivering results. As our survey showed, digital transformation efforts are an increasingly integral part of our clients' businesses. In fact, it is supporting its own growth by accelerating our clients' journeys through technology innovation. We also have a strong and experienced sales team focused on deepening client relationships and further diversifying our client base. For these reasons, we remain confident that the execution of our investment plan, along with continued product innovation, open and flexible solutions, and retooling our workforce to adapt to a virtual environment will help us return to a higher growth rate over time. Having said that, we approach our 2021 guidance and future higher targeted growth with necessary caution. We do not yet know the full extent of the impact to our clients as it relates to the pandemic, and we acknowledge risks remain, such as delays in completing complex deals and challenges in client retention as budgets tighten. We are therefore viewing the new fiscal year carefully with projected ASV plus professional services growth anticipated to be in the range of $55 to $85 million. Helen will take you through the details of our 2021 guidance in a few moments. Just to wrap up, you know, we enter fiscal 2021 with a sense of excitement. We're in a period of accelerated innovation within our industry as clients look to differentiate themselves and be ever more efficient. There's a great opportunity for us to work in new ways, and create new products to improve the experience of both our clients and FactSetters around the globe. You'll now hear from Helen, who will take you through the specifics of our fourth quarter and four-year performance for 2020.