FactSet Research Systems Inc.

Good day, and thank you for standing by. Welcome to the FactSet Second Quarter 2025 Earnings Conference Call. At this time, all participants are in a listening mode. After the speaker's presentation, there will be a question and answer session. To ask a 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. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Yet He, with Investor Relations. Please go ahead.

Thank you and good morning everyone. Welcome to FactSet second fiscal quarter 2025 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 reenter 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 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 discussion of risks, 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 direct comparable GAAP measures are in the appendix to the presentation in our earnings release issued earlier today. During this call, unless otherwise noted, relative performance metrics reflect changes as compared to the respective fiscal 2024 period. Also, consistent with the last quarter, please note that starting fiscal 2025, FACSET is reporting organic ASV rather than organic ASV plus professional services to focus on the recurring nature of our revenues. Joining me today are Phil Snow, Chief Executive Officer, Helen Shan, Chief Financial Officer, and Goran Skoko, Chief Revenue Officer. I will now turn the discussion over to Phil Snow.

Thank you, Yat, and good morning, everyone. Thanks for joining us today. Before I begin, let me start by welcoming Kevin Toomey as our new head of investor relations and thanking Yat for serving in the role on an interim basis, maintaining strong investor engagement during the past six months, in addition to his role as head of corporate development. Kevin brings to facts that over two decades of experience in investor relations, equity research, and financial markets, And I look forward to working with him to continue growing our investor relations program. Now onto the results. In the second quarter, we grew organic ASV 4.1% year over year, delivering adjusted operating margin of 37.3% and adjusted diluted EPS of $4.28. We are encouraged by the positive momentum of deals progressing through the sales cycle this past quarter and have confidence that we are reaching an inflection point in ASV growth heading into the back half of the year. We anticipated a slow start to fiscal 2025 and continue to operate in a challenging market environment. Lower CPI has resulted in a lower year-over-year annual price increase, and softer results in asset management and banking amassed the significant progress we made developing and executing against our pipeline during the quarter. While acknowledging there remains market uncertainty, I'm pleased with the strength of our pipeline and the product-led innovation FACTSAT is bringing to the market. Our dialogue with clients continues to be constructive, positioning our business positively for the growth acceleration we anticipate in the second half of the year. With increased visibility into the remainder of the fiscal year, we are reaffirming the 5% midpoint of our organic ASV growth guidance and narrowing the range of anticipated top-line outcomes. Helen will cover the rest of our revised guidance in more detail later in her remarks. Turning back to the second quarter, ASV retention remained greater than 95%, and client retention was 91%. We grew our client base to over 8,600, led by an increase in corporates, wealth, and partners, and our user count increased to over 219,000, driven by our continued success in wealth. Starting with our performance by region, in the Americas, we grew organic ASV by 4%, Strength in wealth and hedge funds was offset by mixed results for asset managers, asset owners, and partners, where a few large losses masked the benefit of strategic seven-figure wins. In EMEA, organic ASV growth was 3%. We're continuing to see momentum with hedge funds and PEVC firms in the region, but these gains were offset by erosion headwinds faced in the quarter. This trend was most notable in asset management and banking. In Asia Pacific, we maintained 7% organic ASV growth driven by continued strong sales of data solutions, particularly among wealth, corporates, hedge funds, and PEVC firms. Now turning to our results from a firm-type perspective. Wealth reaccelerated to double-digit growth in the quarter, lapping last year's large cancellation. We continue to gain market share with leading clients in wealth, evidenced by UBS selecting FactSet to power their advisor desktops and client-facing portal in the Americas. This is another example of an enterprise deal where our digital and technology capabilities are winning in the market. Our differentiating wealth advisor solution and industry-leading client service were key to this success. Implementation and rollout are expected to occur throughout the remainder of the year. With this latest win, Backset is now the primary market data partner to half of the world's top 20 wealth management firms, including three of the four US wire houses and three of the top five Canadian wealth managers. The opportunity for our wealth business is global and we are seeing traction with clients outside North America. As we execute against our sales pipeline, I'm confident there is continued runway to extend our success both geographically and beyond the advisor desktop into the Wealth Home Office and adjacent workflows. Within Dealmakers, while banking was a drag to growth, we still saw renewal activity increase notably in the quarter. We signed more than a dozen large banking renewals, securing multi-year contracts on many of them to reinforce FactSet as a trusted partner and opening the opportunity for future upsells. We are confident FactSet's focus on workflow efficiency and total cost of ownership is top of mind for many of our banking clients. We launched Pitch Creator midway through the quarter and already have a robust pipeline with more than 50 opportunities. Almost two dozen of our largest banking clients actively trialing a product and several of our clients in the latest stages of commercial negotiation. Pitch Creator and our recently acquired Logo Intern solution are extending FactSet's lead in powering junior bankers by streamlining their daily workload. Clients are telling us they welcome the practical workhorse approach Faxhead is taking to boost the productivity of their junior employees who are increasingly asked to do more in the current environment. We expect acceleration of our banking business in the second half of the year, notwithstanding the more cautious sentiment and macro uncertainty of recent weeks. Outside of banking, PEVC remains a bright spot with accelerated double-digit growth in the second quarter. Corporates also added to growth fueled by the momentum from our Irwin acquisition in the first quarter. Within the institutional buy side, headwinds from cost rationalization and budget tightening persisted among our asset manager and asset owner clients. While retention pressured growth, particularly among active asset managers facing AUM outflows, the impact in the second quarter included a seven-figure cancel due to our proactive retirements of a legacy and bespoke solution that we are no longer supporting. As clients continue to cut costs and optimize headcount, our managed services offering is providing a natural hedge and an additional growth channel. We gained further momentum with a large seven-figure win, displacing a legacy performance system with attached managed services to support the operational workflows of a leading asset management client. Hedge funds were also a bright spot in the second quarter as we capitalized on fund launches, higher workstation retention, and strong data solution sales. During the second quarter, we announced the acquisition of LiquidityBook to enhance FactSet's ability to serve the integrated workflow needs of our clients across the entire portfolio lifecycle. Adding LiquidityBook's technology-forward OMS, free trade compliance, and eyeball capabilities to our workstation enables us to more seamlessly link adjacent steps in the front office trade workflow. We are excited about the bidirectional cross-sell opportunities that we are already executing on and expect this acquisition to be immediately accretive to FactSet's growth. For partnerships in CGS, growth in the second quarter remains solid. We are seeing robust new business and expansion activity across multiple partner segments, particularly amongst index providers, exchanges, and AI-focused fintechs. Similar to last quarter, CGS benefited from the continued strong new issuance market across several asset classes. In summary, I want to reiterate that our number one priority is to drive top line growth. As we head into the second half of the fiscal year, we have increasing visibility into a robust sales pipeline and positive underlying momentum. Wealth will continue to be a growth engine. Not only are we gaining market share and extending our track record of success, displacing the incumbent in this market, but we are also widening the aperture on the breadth of workflows our solutions can address. Leading clients are choosing FactSet to be their enterprise partner, and we continue to receive validating feedback that our products and service levels are positive differentiators versus the competition. There is ample runway for accretive growth across our smaller firm types. The acquisitions of Irwin and LiquidityBook in recent months are already driving cross-selling opportunities and pulling FactSet into higher volume, shorter sales cycle opportunities with corporates and hedge funds, where client purchase decisions are more rapid. Additionally, Cobalt, which we acquired a few years ago, continues to open doors and position us to cross-sell PEVC clients seeking enterprise solutions. Our banking products remain best in class, strengthened by content investments across private markets, deep sector, and fundamental data. Our clients consistently provide positive feedback on the breadth and quality of our data that we feel is a competitive advantage. We believe FactSet has the best banking product in the market, and we continue to extend this lead with our focus on workflow productivity. In the past 18 months, we renewed more than a third of our banking ASV representing over 40% of banking users, including more than a half of our top 25 investment banking clients to multi-year contracts, limiting downside risk in the second half of the year, and positioning Faxit to grow wallet share with our expanded enterprise data and workflow productivity solutions. For the institutional buy side, we are making steady progress, driving client engagement at the enterprise level with a focus on improving their total cost of ownership. Managed services and our expanded data solutions offering are contributing to a healthy second half pipeline and lowering the risk of large client cancellations. Our teams are intensely focused on capitalizing on FactSet's early mover status on Gen AI products, executing our go-to-market strategies across our new and differentiated solutions, and mitigating the headwinds that pressured retention in the first half. We are well positioned to deliver on our mission to supercharge financial intelligence, and I am confident in our path forward. I'll now turn it over to Helen to take you through our second quarter and first half 2025 performance in more detail.