FactSet Research Systems Inc.

Okay, perfect. I'll transfer us over to the main room. There'll be a brief moment of silence, and then I'll give the introduction. Transferring in three, two, one. Good day, and welcome to the FACSET third quarter earnings call. At this time, all participants are in listen-only mode. After the speaker's presentation, there'll be a question and answer session. Instructions will be given at that time. As a reminder, this call may be recorded. I would like to turn the call over to Kevin Toomey, head of investor relations. Please go ahead.

Thank you and good morning, everyone. Welcome to FactSet's third 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. 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. Discussions on this call may contain forward-looking statements. Such statements are subject to risks and uncertainties that may cause actual results to differ materially from results anticipated in these forward-looking statements. Additional information concerning these risks and uncertainties can be found in our Forms 10-K and 10-Q. Our slide presentation and discussions on this call will include certain non-GAAP financial measures. For such measures, reconciliations to the most directly comparable GAAP measures are in the appendix to the presentation and in our earnings release issued earlier today, both of which can be found on our website at investor.faxset.com. 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, FactSet 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 Chan, Chief Financial Officer, and Goran Skoko, Chief Revenue Officer. I will now turn the discussion over to Phil Snow.

Thank you, Kevin, and good morning, everyone. Thanks for joining us today. Before we discuss our Q3 results, I just want to take a moment to recognize an important milestone for FactSet and for me personally. Earlier this month, we announced my decision to retire after 30 years with FactSet and the past decade as CEO. It's been a privilege to spend my career here working alongside such a talented, collaborative, and mission-driven team. Together, we've expanded our data and workflow capabilities, deepened client relationships, and more than doubled our revenue over the past 10 years, positioning FactSet as a trusted global enterprise leader, empowering smarter, data-driven investment decisions. It's been an incredible journey, and I'm proud of all we've accomplished together. Looking ahead, I'm even more confident in FactSet's future. I'm also pleased to share that Sanok Viswanathan will become FactSet's next CEO in early September. Sanok brings over 25 years of global leadership experience in financial services and technology, most recently at JPMorgan Chase, and he has a strong strategic mindset and a proven track record of delivering technology-driven growth at scale. As FactSet prepares for its next chapter of leadership, I'm proud of the solid foundation we've established, built on innovation, client trust, and industry-leading data and workflow solutions. I'm confident Sunox leadership will guide FactSet through its next phase of growth and look forward to working with them closely to ensure a smooth and thoughtful transition. With that, let's turn to our third quarter results. In the third quarter, we achieved organic ASV growth of 4.5% year over year, fueled by recent wins in wealth, dealmakers, and partnerships. We also delivered an adjusted operating margin of 36.8% and adjusted diluted EPS of $4.27. As we previously indicated, we anticipated stronger growth in the second half of this fiscal year, and we're pleased with our Q3 performance. These results reflect the successful execution of our enterprise solution strategy and underscore our commitment to helping clients lower their total cost of ownership. We continue to see positive trends in ASV retention, and I am pleased to report that both expansion within existing accounts and new business accelerated in the quarter. As you may recall, the fourth quarter is seasonally our highest ASV of the year, and with a healthy pipeline and growing momentum, we are well-positioned for a strong close to the fiscal year. Accordingly, we are reaffirming our FY25 guidance. Helen will cover our financial results and guidance in more detail later in her remarks. Turning to third quarter results, ASV retention remained strong at over 95%, while client retention was at 91%. Our client base grew to over 8,800, driven by strong demand from corporate wealth management and buy-side clients, including those added through the liquidity book acquisition. Our user count rose to over 220,000, primarily reflecting growth among wealth management users. Starting with our performance by region, In the Americas, organic ASV increased by 5%. The strength of this quarter was driven by higher banking and asset manager retention, coupled with higher demand in wealth, hedge fund, and corporates. In EMEA, organic ASV growth was 2%. We saw improved retention in banking and wealth. However, this was offset by lower contributions from the annual price increase and buy-side headwinds. In Asia Pacific, organic ASV growth increased 7%, primarily driven by higher retention in the banking sector. This growth was partially offset by the reduced pricing uplift and asset owner headwinds. Now turning to our results from a firm-type perspective. Wealth organic ASV maintained its double-digit growth pace in Q3, marking a second consecutive quarter of acceleration. We continue to capture market share by displacing incumbent providers, with new business sales nearly double the number of new logos versus a year ago. Our product portfolio demonstrated broad-based strength among both new and existing clients, specifically a large seven-figure renewal and twice as many six-figure wins as a year ago. Notably, we are growing FactSet's presence in wealth by selling more data feeds and digital solutions to clients who already use our industry-leading desktop solution across their organization. The attach rate for off-platform products continues to rise, and so far in FY25, we are capturing attach rates that are around 1.5x what we saw in FY24. Within Dealmakers, this quarter's banking gains were largely driven by the favorable comparison to last year's third quarter, which included the impact of the UBS Credit Suisse merger. Over the past three years, our seat count has grown considerably as we continue to displace incumbent providers as clients increasingly choose our best-in-class banking solutions. We're also encouraged by meaningful improvements in retention highlighted by the signing of several multi-year deals, including a favorable outcome on a large global banking renewal. These long-term agreements reinforce FactSet's position as a trusted enterprise partner and create new opportunities for future growth. While it's still early to assess summer hiring trends, preliminary indications suggest they may be in line with last year's levels. We're optimistic about our ability to expand the footprint of FactSet services to drive add-on sales beyond the workstation. We continue to execute on our robust Pitch Creator pipeline, and within just six months of launch, we now have 10 signed deals and over 45 opportunities, with large banking clients in active trials and others in later stages of commercial negotiation. In addition to Pitch Creator, our recently acquired Logo Intern solution is proving to be a valuable utility tool for clients and strengthens our position in banker automation. Together, these tools are creating greater workflow efficiencies, driving adoption, client conversations, and closes. Outside of banking, PEVC remains a bright spot, with Q3 marking our fourth consecutive quarter of accelerating growth, driven by the strength of our private markets offering and Cobalt. Corporates also contributed meaningfully, supported by strong tailwinds from our Owen business, which drove increases in both ASV and seat count. Since the acquisition of Owen earlier this year, nearly half of new corporate's ASV has come from competitor displacements. This success validates our land and expand strategy using investor relations users as an entry point to deepen relationships within the office of the CFO. Within the institutional buy side, we had several positive developments this quarter. We secured strategic wins for our front and middle office solutions and improved retention with our asset management clients. One example is a new IRN 2.0 deal with a major US asset manager choosing us to replace their legacy research management system thanks to our advanced dashboard and Gen AI capabilities. Our managed services offering is also opening new growth channels as we replaced several incumbent vendors at a major asset manager who is now fully aligned with Vaxat. Hedge funds were another area of strength with growth accelerating due to new fund launches, greater adoption of the workstation and data products, and the positive impact of our recent street account price increases. We expect hedge fund demand to continue in fiscal 2025. At the same time, we face several headwinds. Reduced contribution from the annual price increase offset some of our gains. Additionally, as clients, especially asset owners, continue to optimize costs and streamline their vendor relationships, we are seeing more pressure in these areas. We are committed to leveraging our innovative solutions and client relationships to drive future growth. For partnerships in CGS, growth continued in the third quarter, driven by a significant real-time win and strength in the new issuance markets for CGS. New business and expansion activity remains strong across multiple partner types. Looking ahead, we expect this positive trajectory to continue into the fourth quarter. In summary, I want to reiterate that our number one priority is to drive top line growth. The breadth and quality of our opportunities give us visibility and confidence as we look ahead. We are well positioned to deliver in Q4 and meet our full year fiscal 2025 guidance. The majority of the pipeline for the remainder of the year is driven by the institutional buy side. As noted earlier, the demand for middle office solutions, in particular performance and managed services, is high as clients look for longer-term help as they upgrade their tech stack. Our innovation with using GenAI in our buy side solutions is supporting strong client engagement and opportunities as well. Demand for our data solutions is expected to be a notable contributor to our Q4 results. The need for fundamental and estimates data remains high, in part driven by hedge funds and wealth. Engagement on real-time and benchmarks has grown as clients look for modern technology quality and stability, and these solutions represent more than a third of the data opportunities. Wealth remains our growth engine. Our success in displacing incumbents and expanding from the advisor desktop into adjacent areas such as APIs, widgets, and data feeds is resulting in meaningful client demand. Our wealth pipeline is strong, spanning desktops and real-time data, and a growing demand for more sophisticated PLC tools where FactSet has deep industry credibility, giving us greater confidence to extend our success both geographically and within the Wealth home office. Our teams are capitalizing on Faxit's first mover advantage in Gen AI, executing our go-to-market strategy to deliver innovative solutions that streamline workflows and help clients unlock greater efficiencies. With the strong foundation we've built, we are well positioned to fulfill our mission of supercharging financial intelligence. I will now turn it over to Helen to take you through our third quarter performance and FY25 guidance in more detail.