FactSet Research Systems Inc.

Good day, and thank you for standing by. Welcome to FACSEC's fourth quarter 2022 earnings conference 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. To ask the question during the session, you will need to press star 1 1 on your telephone. I would now like to hand the conference over to your speaker for today, Kendra Brown. You may begin.

Thank you and good morning, everyone. Welcome to FactSet's fourth fiscal quarter 2022 earnings call. 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, as well as a replay of today's call, will be posted on our website at the conclusion of this call. 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 two, which explains the risk 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 is in the appendix to the presentation and in our earnings release issued earlier today. Joining me today are Phil Snow, Chief Executive Officer, and Linda Huber, Chief Financial Officer. I will now turn the discussion over to Phil Snow.

Thank you, Kendra, and hello, everyone. Thanks for joining us today. I'm pleased to share our strong fourth quarter and full year results. We ended fiscal 2022 with organic ASV plus professional services growth of 158 million, accelerating nearly 200 basis points year over year to over 9%, topping the high end of our guidance. We achieved annual revenue of $1.84 billion, an adjusted EPS of $13.43, with both metrics also above the high end of our guidance range. Our strategy to become the leading open contents and analytics platform is resonating with clients and driving our strong performance as we continue to gain market share. We saw growth across firm types with corporates, private equity, and venture capital firms, wealth managers, hedge funds, and banking continuing their trend of double-digit organic ASV growth. Specifically, we saw improved retention with most clients this year with further growth coming from better price realization. Our investments in content and technology supported both stronger retention and expansion, as well as significant acceleration in new business. Year over year, buy side and sell side growth rates have increased by 200 and 180 basis points respectively. On the buy side, the success of our portfolio lifecycle products has been key to our expanded footprint with institutional asset managers. We continue to capture more of our addressable market by increasing and connecting our analytics, content, and delivery capabilities across the front, middle, and back office. Fiscal 2022 was not only a strong financial year for us, but also a milestone year for FACSA. We completed the largest acquisition in our history with QSIP Global Services, issued our inaugural senior notes with investment grade ratings from both Moody's and Fitch, joined the S&P 500, and advanced our sustainability efforts with a commitment to the science-based targets initiative and the 2040 net zero emissions goal. In addition, we continue to expand our content and technology offerings with several key partnerships. It also marked the culmination of our three-year investment plan. Our foresight to invest in content and technology is paying dividends, accelerating top-line growth by over 400 basis points since 2019. These investments fueled the largest content expansion in FACTSHIP's history. Today, we have deep sector coverage for eight sectors. We are making strides in our private market strategy with private company coverage across our content refinery, workflow solutions for private equity and venture capital firms, and cohesive connected workstation integration. We expanded our ESG content through the acquisition of True Value Labs and now partner with more than 45 other ESG providers to aggregate a comprehensive set of data and solutions. And in Wealth, our market-leading workstation, advisor dashboard, and portfolio analytics tools are helping advisors work more efficiently while driving new business wins with access. We also invested in and accelerated our digital transformation. Our digital platform is a competitive differentiator, enabling clients to access our content and analytics via open, modern solutions. We are now a preferred partner for clients on their cloud migration journeys. Our acquisition of Q-SIP global services aligns very well with the strategy and is a natural extension of our content refinery capabilities. The performance of CGS has exceeded our expectations with the integration progressing well, and we see opportunities to expand further by innovating and building new products. While early on in these efforts, we are currently exploring new business opportunities to extend Q-SIP identifiers to additional entities. We continue to invest in our people, helping us retain the best talent and stabilize retention, even in this competitive market. We've embraced a hybrid work model that trusts our employees to select the work paradigm that allows them to be their most productive selves. We've invested in technology for home offices to ensure all employees, regardless of location, have setups that facilitate collaboration and efficiency. We've instituted global wellness days to give employees time to reconnect and charge. And we've also seen an increase in traveling and in-person engagement as our leaders encourage employees to meet one another and clients face-to-face wherever possible. And we've invested in compensation. To combat the effects of inflation, we proactively increased salaries for critical roles and extended participation in our bonus and equity pools. Headcount increased year over year thanks to our recruiting team who did an amazing job of backfilling critical open positions and sourcing new talent to support our investments. We also progressed as a firm with diversity, equity, and inclusion. Central to our culture is the commitment to hiring and supporting talent from diverse backgrounds and experiences. With the addition of Kate Steff as our chief technology officer, we've now comprised half of our executive leadership team. That's just one example of our success and achievement that makes us proud. As we enter our next phase of investment, our focus remains the same. scaling up our content refinery to provide the most comprehensive and connected set of industry, proprietary, and third-party data for the financial market, enhancing the client experience by delivering hyper-personalized solutions so clients can discover meaningful insights faster, and driving next-generation workflow-specific solutions for asset managers, asset owners, the sell side, wealth management, private equity venture capital, and corporate clients. We're committed to investing in our people and our products and have invested about $40 million or about 360 basis points of margin in this effort during fiscal 2022. These investments are split pretty evenly between people and products and will ensure that the continued healthy growth of FACTS has revenue. As we move forward, we will continue to take the same strategic approach to our investments, investing at a similar pace for FY23 while delivering on our commitment to margin expansion. This includes the continued build-out of deep sector data, real-time, ESG, private markets, and wealth data as core parts of our content strategy. In addition, we will continue to invest in our digital platform and in our people. The connected nature of our content and products gives us continued confidence in meeting our medium-term outlook of 8% to 9% organic ASV growth adjusted operating margin of 35 to 36 percent, and adjusted diluted EPS growth of 11 to 13 percent. Turning now to our results. In the fourth quarter, ASV plus professional services grew 9.3 percent. Revenue growth in the fourth quarter was 21 percent, driven by both organic revenue and contribution from CGS, and adjusted EPS increased almost 9 percent from the prior year period. a fourth quarter adjusted operating margin decelerated slightly year-over-year to 31.5%, primarily due to higher personnel expenses and technology costs. This quarter's strong performance was driven by continued expansion in analytics and trading and research and advisory. New business growth also accelerated as we added small and medium wins, as well as some notable larger wins, including the expansion of our relationship with Raymond James, This win reflects the significant investments we have made on the wealth management side, where we are recognized for having market-leading products. Now looking across our regions, we continue to see broad-based organic ASV growth over the last year. The Americas continue to lead ASV performance, contributing more than half of fiscal 2022's total ASV growth and surpassing $1 billion in total ASV. In the Americas, we grew organic ASV by 9% over the past 12 months. Research and advisory and analytics and trading performed particularly well this quarter with strength from our banking, wealth, private equity, and venture capital clients and asset managers. In EMEA, our organic ASV growth accelerated to 8% this quarter with strength across the product portfolio. Specifically, growth was driven by analytics and trading wins at asset managers combined with capturing research and advisory and CTS opportunities at banks, wealth managers, and corporate partners. In Asia-Pac, we saw organic 12% ASB growth driven by analytics and trading, with particular strength from asset managers and owners. Growth from wealth managers in the region also accelerated, driven by higher retention. Now turning to our businesses. Research and advisory was the largest contributor to our organic ASV growth this year with a growth rate of 9% driven by banking, wealth, and private equity and venture capital firms. We saw diverse wins from the workstation with new products such as Advisor Dashboard and Cobalt's portfolio monitoring capabilities gaining traction. We increased research and advisory workstation users by 12% this quarter versus a year ago with growth across both the sell side and buy side clients. ASV growth from sell-side clients was 13.8%, reflecting increased price realization, strong seasonal hiring, and increased wallet share from our solutions. Analytics and trading ended the year with an impressive 10% organic ASV growth rate, demonstrating continued momentum in our portfolio lifecycle strategy. This quarter marked six consecutive quarters of accelerating LTM ASV growth for analytics. We saw an uptick in larger wins, driven by portfolio reporting and performance, with gains among asset managers across all regions being led by the middle office. Performance and analytics professional services also contributed to this acceleration. As we look ahead, we believe demand for our market-leading analytics, expanding asset class coverage, and leading technology on and off platform will continue to drive growth. Finally, CTS grew organic ASV by 11% with wins across asset managers and partners being key contributors. We saw strength in core company data, data management services, benchmarks, and security data. In the fourth quarter, we saw several ESG wins with continued client growth. Real time also gained traction with our all cloud solution appealing to clients looking to reduce costs. In summary, I'm proud of our fourth quarter and full year performance and the results of our three year investment plan. As we look ahead, we remain confident in our strategy and our ability to weather volatile markets. We are entering fiscal 2023 in a position of strength as our clients recognize the value of our solutions. Our fiscal 2023 guidance reflects our ongoing confidence in the business, and Linda will provide more details shortly. I want to wrap up by thanking our incredible FactSet team. We couldn't have achieved the strong quarter and year that we did without them. We have the best team in the business and remain committed to attracting, retaining, and developing this top talent. I'll now turn it over to Linda to discuss our fourth quarter and full year performance in more detail and take you through our fiscal 2023 guidance.