FactSet Research Systems Inc.

Good morning and welcome to FactSet Q4 2024 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 the question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. I would now like to hand the conference over to Kate Kirby. You may begin.

Thank you and good morning, everyone. Welcome to FactSet's fourth fiscal quarter 2024 earnings call. Before we begin, the slides we referenced during this presentation can be found through the webcast on the investor relations section of our website at factset.com. A replay of today's call will be available on our website. After our prepared remarks, we will open the call to questions from investors. The call is scheduled to last for one hour. To be fair to everyone, please limit yourself to one question. You may re-enter the queue for additional follow-up questions, which we will take if time permits. Before we discuss our results, I encourage all listeners to review the legal notice on slide 2, which explains the risk of forward-looking statements and the use of non-GAAP financial measures. Additionally, please refer to Forms 10-K and 10-Q for discussion of risk factors that could cause actual results to differ materially from these forward-looking statements. Our slide presentation and discussion 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. During this call, unless otherwise noted, relative performance matrix reflect changes as compared to respective 2023 period. Joining me today on the call are Phil Snow, Chief Executive Officer, Helen Shan, Chief Financial Officer, and Gordon Scocco, Chief Revenue Officer. I will now turn the discussion over to Phil.

Thank you, Kate, and good morning, everyone. I'm pleased to share our fourth quarter and full year fiscal 2024 results. We ended fiscal 2024 with organic ASV plus professional services growth of $104 million, or 4.8%, which is just above the midpoint of our guidance range provided in June. Annual revenue increased to $2.2 billion, adjusted operating margin to 37.8%, and adjusted EPS to $16.45 or 12.3% growth, all above the high end of our most recent guidance. Amidst the ongoing backdrop of macro uncertainty, we continue to see evidence of the green shoots we observed last quarter. This positive trend paired with our solid execution resulted in sales momentum on large deals as we closed out the year. While we remain cautious, I'm encouraged by the reacceleration of our new business and growth to end the fiscal year. Turning now to our financial results. In the fourth quarter, we added $54 million of ASV, which was in line with what we delivered in Q4 last year. This was driven by several large multi-year renewals and seven-figure competitive displacements across multiple firm types. For our organic ASV performance by region, in the Americas, we had 6% growth, strength from strategic wins in wealth, and momentum from long-term renewals on the sell side were offset by softness on the buy side. In the EMEA region, growth decelerated to 2%. Gains from wealth were offset by headwinds to retention on the buy side across the region as market conditions continue to constrain the budgets of our mid to large sized asset manager clients. In particular, one third of the deceleration in the quarter was the result of a cancellation by one large buy side client. In the Asia Pacific region, we delivered growth of 7%. Winds across wealth with our analytics product suite and data solutions were offset by higher erosion from banking and asset management clients. Now looking at trends by firm types. Wealth management was the largest contributor to our ASV growth in fiscal 2024, even with the one-time loss earlier in the year of a client insourcing one of our services. In the fourth quarter, we experienced strong demand and organic ASV growth accelerated to 12% for the year, led by multiple large enterprise deals and a long-term renewal. These large wins in the fourth quarter build on our competitive displacement of an incumbent at a marquee wire house client in the first quarter. In the fourth quarter, we secured a win against the same competitor in the Canadian market, where we now hold significant share with three of the region's top five wealth managers. Another notable advisor desktop win in Q4 was a significant displacement of a competitor where we are replacing a high number of high-end terminals at a leading private bank. In total, we entered over 23,000 advisor desktops in fiscal 2024, representing over 30% growth in seat count to bring our total wealth users to north of 100,000. Our wealth workstation has proven to be a differentiator with clients seeking firm-wide enterprise deployments that improve productivity of their advisors, and we believe that Faxit is well-positioned to continue our momentum in competitive displacements. As we broaden our offering for wealth managers, we are seeing early success in adjacent workflows. In the fourth quarter, we captured our first enterprise deal in the wealth middle office for performance and managed services. We also achieved a significant milestone in the first sale of our conversational API. This large deal powers a leading private wealth client through programmatic access to FactSet Mercury, our GenAI-powered knowledge agent. In dealmakers, organic ASV growth was 4%. While headwinds impacted this segment earlier in the year, we observed a reacceleration in Q4. This growth was driven by gains from a seven-figure competitive win in banking to displace our main competitor in the space, and several multi-year contract renewals and a modest uptick in seasonal hiring. Conversations with our clients indicate a cautious optimism for more normalized hiring and banking in the months to come. On the institutional buy side, we faced a backdrop of tighter budgets and vendor consolidation that led to an organic ASV growth rate of 3%. These headwinds persisted throughout the year and were most pronounced for asset managers, where higher erosion and a large asset manager cancellation put pressure on retention. While ongoing fee compression continues to be a challenge for the industry, Faxit is among the few players that clients can choose to partner with to help consolidate spend and lower total cost of operations. For partnerships and CGS, organic ASV growth was 6%. Softness from partnerships was offset by continued strong performance from CGS. In the fourth quarter, new business and renewal expansions added to growth, while a lack of large deals and a significant cancellation were headwinds. As we transition to fiscal 2025, we continue to execute against the strategic multi-year investment plan we outlined last quarter. There are three main pillars driving our focus. First, the continued data expansion to finish what we started. Over the past several years, we have executed the largest content expansion in FactSet's history, including deep sector, private markets, and real time. These initiatives have added to the growing universe of proprietary connected data on our platform, which increasingly differentiates FactSet from our competition. Additionally, these data investments are not only helping us win on renewals, but also driving our success in many of our competitor displacements. The focus of our targeted investments in the upcoming year will be on bringing these offerings to maturity. Secondly, embed FactSet deeper into client workflows. Across each of the phone types we serve, there is continued runway for us to streamline and simplify our clients' workflows. For the institutional buy side, we are prioritizing investment in the front office where there is substantial opportunity to leverage our strongholds in portfolio performance, analytics, and risk to deliver differentiated value. With over 5.5 million institutional portfolios representing nearly $30 trillion of AOM flowing through our middle office systems each night, FactSet is in a privileged position to connect this holdings data with the portfolio workflows of front office users. In wealth management, we aim to capture further market share by building on factsets' growing presence on advisor desktops to expand into adjacent workflows, such as prospecting and digital reporting. And finally, for dealmakers, we continue to accelerate engagement with our banking clients to bring next-generation automation to their research, financial modeling, and pitch creation workflows. In addition to optimizing workflows to boost productivity for junior bankers, among whom Faxit has a strong and loyal following, we are also investing to expand on our technology-driven differentiation for senior professionals. The third pillar is accelerating innovation through generative AI. A fundamental element of our strategy is executing on our AI roadmap. Since announcing FactSet Mercury and our AI blueprint late last year, we have focused on integrating generative AI directly into our clients' workflows and enhancing their overall FactSet experience. There are early signs that FactSet's differentiated open ecosystem approach to GenAI is resonating, and our investments in this area are already paying off. Earlier this year, we launched multiple new GenAI-powered solutions, including Portfolio Commentary, Transcript Assistant, and Conversational API powered by Mercury, and we are seeing meaningful usage of each by clients, which is starting to drive incremental ASV and improve retention. I look forward to sharing more on our GenAI progress at our recently announced investor day on November 14th, including a number of exciting new AI products available in beta release through FactSet Explorer, our product preview program, which has now expanded to over 50 clients across banking, buy-side, and wealth. In addition to our own efforts, we are enabling third-party developers and technologists to build their own proprietary workflows on top of FactSet's data and technology. Through our AI partner program and GenAI data packages, we are providing programmatic access to our curated content and incubating an ecosystem of fintech firms who need data to fuel their solutions. In summary, I'm pleased with how our team closed out the year in a challenging market environment. In the face of industry headwinds, FactSet continues to be a trusted partner that clients can depend on to reduce their total cost of ownership. With our open platform, flexible approach, and history of innovation, we see tremendous opportunity in helping clients modernize away from incumbent processes to get out of legacy technology and data debt. We are well placed to meet this demand with our broad enterprise offering across data, workflow solutions, and services. We are guiding to organic ASV growth of 5% at the midpoint for the upcoming fiscal year, balancing a more muted outlook in the first half of the year with improvement in the second half. We're encouraged by the nascent market recovery and our solid execution this past quarter. This is positive momentum to build on, and I'm excited about our opportunity ahead. Over our 40-plus year history, FactSet has delivered a consistent track record of sustainable long-term growth. We remain committed to expense discipline and deploying capital responsibly to balance the trade-off between reinvesting to accelerate growth and expanding margins. I will now turn it over to Helen to discuss our fourth quarter and full year performance in more detail and take you through our fiscal 2025 guidance.