The paragraph outlines the structure and guidelines of FactSet's Second Quarter 2025 Earnings Conference Call. The call, which is in a listen-only mode, starts with introductory remarks from Yet He from Investor Relations, and includes an agenda featuring a presentation and a Q&A session. Participants are asked to limit themselves to one question, with opportunities for additional queries if time permits. The conference will include references to slides available on FactSet’s website, and the call will be recorded with a replay accessible later. It encourages reviewing the legal notice concerning forward-looking statements and non-GAAP financial measures. Participants are directed to company forms for risk discussions, with reconciliations of non-GAAP measures provided in the presentation and earnings release. Performance metrics are compared to the fiscal 2024 period unless specified otherwise.

Starting fiscal 2025, FactSet will focus on reporting organic ASV to highlight the recurring nature of its revenues. Phil Snow, the CEO, announced Kevin Toomey as the new Head of Investor Relations, succeeding Yet who served as interim. In the second quarter, FactSet achieved a 4.1% growth in organic ASV year-over-year, an adjusted operating margin of 37.3%, and an adjusted diluted EPS of $4.28. The company is optimistic about the sales momentum and expects an inflection point in ASV growth. Despite challenges like a slow start to fiscal 2025, lower CPI, and softer asset management and banking results, FactSet is confident about its product-led innovation and pipeline progress.

The paragraph discusses the company's positive dialogue with clients, leading to anticipated growth acceleration in the latter half of the year. They reaffirm their 5% organic ASV growth guidance. In Q2, ASV retention stayed above 95%, and client retention was 91%, with the client base exceeding 8,600, largely due to success in the wealth sector. In different regions, organic ASV grew: 4% in the Americas, despite asset management challenges; 3% in EMEA, facing banking headwinds; and 7% in Asia-Pacific, driven by strong Data Solutions sales. Wealth sector growth returned to double digits, highlighted by UBS choosing FactSet for advisor and client portals due to their Wealth Advisor Solution and client service expertise.

The paragraph highlights FactSet's successful expansion and partnerships in the wealth management sector, particularly with major firms in North America and globally. There is confidence in further extending their reach and influence into new markets and workflows. Despite challenges in the banking sector, renewal activities have increased, with many large multi-year contracts secured, and new products like Pitch Creator are showing promise. FactSet's approach to enhancing workflow efficiency and productivity is well-received, especially in boosting junior bankers' productivity. The banking business is expected to grow in the latter half of the year, and private equity and venture capital sectors continue to show strong growth.

In the second quarter, corporates experienced growth driven by the Irwin acquisition, despite challenges like cost rationalization and budget tightening among asset managers. Although retention issues and a significant cancellation due to a retired solution impacted growth, managed services offered a growth channel, leading to a large win replacing a legacy system. Hedge funds performed well, benefiting from fund launches, workstation retention, and Data Solution sales. The acquisition of LiquidityBook aims to enhance FactSet’s portfolio lifecycle services and create cross-sell opportunities. Additionally, partnerships in CGS showed solid growth with strong business and expansion activity, especially with index providers, exchanges, and AI-focused FinTechs, aided by a robust new issuance market.

The paragraph emphasizes FactSet's focus on driving top-line growth and highlights its strong sales pipeline and market momentum. FactSet is gaining market share, displacing incumbents, and expanding the range of workflows its solutions address. Acquisitions like Irwin and LiquidityBook are creating cross-selling opportunities, especially with corporates and hedge funds, while Cobalt supports growth among PEVC clients. FactSet's banking products are considered top-tier, bolstered by significant data investments, and the company has renewed significant banking contracts, reducing risk and setting the stage for growth in the latter half of the year. Client feedback consistently praises their data's quality and breadth, solidifying their competitive advantage.

The paragraph discusses FactSet's steady progress with institutional buy-side clients, focusing on reducing total ownership costs and enhancing client engagement. Their efforts in managed services and data solutions have helped build a strong pipeline and mitigate cancellation risks. FactSet is leveraging its early position on Gen AI products and has refined go-to-market strategies. This has positioned them well towards achieving their financial intelligence goals. Helen Shan reports strong financial performance in the first half of fiscal year 2025, utilizing acquisitions and shareholder returns effectively. The company has updated its fiscal guidance, narrowing its organic ASV growth range to a 5% midpoint and reaffirming adjusted operating margin and EPS targets. Organic ASP grew by $19.6 million, a 4.1% increase year-over-year.

The paragraph details the financial performance and expenses of a company for the fiscal year, highlighting a price increase influenced by declining CPI and a $7 million impact on ASV growth. GAAP revenues rose 4.5% to $571 million, with organic revenues increasing 4% to $568 million, driven by growth across geographic segments. Operating expenses increased due to acquisition costs and technology investments, leading to decreases in both GAAP and adjusted operating margins. Technology expenses rose significantly, reflecting investment in Generative AI, while employee expenses increased slightly, primarily due to adjustments in bonus accruals. Employee expenses make up 40% of the company's revenue.

The paragraph discusses various financial metrics and strategies of the company, emphasizing efforts to boost efficiency and manage costs through automation and strategic investments. Third-party content costs increased by 7% but are still under 5% of total revenues. They reduced these costs by replacing third-party data providers with self-collected data. Real estate expenses fell, and the cost of services rose slightly due to higher technology expenses, despite lower compensation costs. SG&A costs were slightly higher due to acquisition-related fees but were lower on an adjusted basis excluding one-time items. The effective tax rate decreased to 15.9% due to lower U.S. taxes on foreign earnings, despite reduced tax benefits from stock-based compensation.

In the reported quarter, the company saw a 3% increase in GAAP diluted EPS to $3.76, driven by higher revenue but offset by increased expenses. Adjusted EPS rose to $4.28, and EBITDA grew by 3.6% to $225 million. Free cash flow rose by 23% to $150 million due to improved working capital. The company repurchased 137,000 shares for $64 million and paid a quarterly dividend of $1.04 per share. It returned $392 million to shareholders over the past year and paid off a $1 billion loan for a previous acquisition. The recent LiquidityBook acquisition was funded with new borrowings, leading to a gross leverage ratio of 1.7 times. The company remains confident in its growth and has reaffirmed a 5% organic growth guidance.

In the latest guidance update, the company narrows its ASV growth range to $100 million to $130 million, with a growth rate of 4.4% to 5.8%, and increases its revenue guidance to $2.305 billion to $2.325 billion, reflecting recent acquisitions. Despite expected margin and EPS dilution from these acquisitions, the company maintains its adjusted operating margin guidance at 36% to 37% and adjusted diluted EPS at $16.80 to $17.40. GAAP operating margin and EPS are slightly reduced due to non-recurring acquisition expenses. The effective tax rate guidance remains at 17% to 18%. The company plans to invest in Gen AI and infrastructure projects, leveraging its product offerings to drive future growth. Strategic focus areas include ASV growth, operational efficiencies, and smart capital allocation to deliver long-term shareholder value.

In the paragraph, Phil Snow discusses the positive traction FactSet is experiencing with its Generative AI products, specifically highlighting a strong response to PitchCreator from the banking sector. He mentions that six new product offerings (SKUs) have been launched, with more on the way, and anticipates significant monetization progress by capturing 30 to 50 basis points this year. The Conversational API, which integrates AI search capabilities into client environments, is also noted for gaining considerable interest across various firm types. Phil expresses optimism about monetizing these products more extensively in the upcoming quarters.

The paragraph discusses the positive developments and strategies of a firm's product offerings, particularly in research and data services. Larger firms are combining external data sources like FactSet with their own data, although there is reluctance to release some data to the public. The firm is successfully monetizing Portfolio Commentary, albeit slowly, and plans to launch new products in Q3 and Q4. Goran Skoko adds that clients are responding well to their pricing structure and they are seeing productivity gains with products like PitchCreator, which is undergoing trials with large clients. The firm is also supporting clients' internal projects with their Conversational API and ready-to-implement vectorized data packages. Overall, the company’s solutions and pricing are well-received.

In the paragraph, Phil Snow reports that the company is making significant progress, particularly in securing key renewals and seeing growth across various markets, including the Americas, Europe, and Asia. There's a resurgence in asset management and improvements in enterprise-level sales. The managed services continue to perform well, and there is a notable comeback in their feeds business, including real-time, reference, and benchmark data feeds. Additionally, smaller firms like hedge funds, private equity, and wealth management are experiencing substantial growth. Overall, despite the challenging environment, the company is seeing positive developments.

In the paragraph, the speaker emphasizes that their financial projections do not rely on banking performance, noting that the banking environment remains challenging with no increase in deals. They express optimism about their buy-side business, highlighting improvements and activity in EMS and front-office solutions. The liquidity book is particularly beneficial for hedge fund and mid-size buy-side clients, offering cross-sell opportunities, especially for FactSet solutions. The speaker expresses excitement for the second half of the year, as they feel equipped to tackle upcoming challenges. In response to a question from Alex Kramm of UBS about their reliance on banking to achieve financial targets, it is clarified that they do not depend on banking performance to meet even the low end of their projections.

In the paragraph, Phil Snow and Goran Skoko discuss factors affecting their company's financial guidance and hiring expectations. They note that while banking hiring has been conservatively estimated in their projections, the PitchCreator initiative shows promise. Goran adds that their guidance assumes stable or slightly reduced headcount compared to the previous year, with potential for reaching the higher end of their guidance range. In response to a question from Faiza Alwy of Deutsche Bank, Goran confirms that the UBS Vault deal is included in the current quarter's ASV and notes that the positive impact was offset by lower price increases and strategic cancellations. He assures that no additional product retirements are expected for the remainder of the year, as the impact has already been accounted for in Q2.

In the paragraph, the company discusses a significant deal with UBS, highlighting it as a strategic win for its fastest-growing portfolio segment. The contract was signed in the current quarter, with implementation set to occur over the next five to six months, commencing in Q3. The deal is viewed as a product strength testament and positions the company to expand services to clients. Phil Snow notes that while the income from this deal was recorded in Q2, it will not impact the company's revenue significantly until the subsequent quarters as the rollout progresses. Ashish Sabadra from RBC raises a question about pricing pressures due to lower CPI, asking for clarification on pricing impacts for existing, new, and renewed deals, and whether this trend will similarly affect international pricing. Helen Shan responds, indicating that annual price increases are tied to CPI, RPI, or a fixed percentage, and the company's guidance accounts for lower inflation rates compared to the previous year.

The paragraph discusses the company's strategy and financial performance related to price increases and new business growth. They expect international prices to align with those in the Americas and have already raised global rate cards, especially benefiting corporates and hedge funds. Although new business price realization is slightly lower year-over-year, volume has increased by nearly 25%, boosting the company's annual subscription value (ASV) from new business by about 10%. The company leverages a "land and expand" strategy, driving growth through renewals and new business separate from annual price hikes. Additionally, there's mention of tech costs rising by 25% and the impact of acquisitions on costs, with a focus on efficiency programs to manage people costs.

In the paragraph, the speaker discusses financial results and strategies from a recent quarter. They note that the company has benefited from lower people costs, despite higher year-on-year comparisons due to changes in bonus accrual last year. Additionally, content and technology costs are being actively managed, with actions like vendor credits and contract cancellations, along with favorable foreign exchange impacts contributing positively in the first half. However, expenses are expected to rise in the second half as strategic investments in areas such as technology, particularly in Generative AI and infrastructure, are prioritized. These actions help the company absorb dilution from acquisitions. The subsequent part involves an operator facilitating a Q&A session where Owen Lau from Oppenheimer asks about the impact of market uncertainty on the company's data and feeds business and the implications of a slowdown in M&A activities on the company's full-year ASV guidance.

The paragraph discusses FactSet's adaptability and growth through various market cycles, emphasizing its role as an enterprise partner for clients. The company is expanding its offerings, including desktop, analytics, API, and AI solutions, and has introduced new products. Goran Skoko notes the high demand for FactSet's high-quality data, particularly among hedge funds and AI-focused startups, which drives the company's growth. FactSet is developing strategic partnerships and enhancing its real-time data feeds and security master offerings, leading to several new client wins and improved operational efficiency for users.

The paragraph discusses the progress and outlook of a company's data feed and data management services, highlighting their profitability and expected growth. Helen Shan notes the success in managing complex data feed sets and emphasizes the expansion of Data Management Services, which integrates client and company data technologically. Goran Skoko comments on recent smaller M&A activities that have created synergies and cross-sell opportunities, such as the acquisition of LiquidityBook, which serves around 170 clients, primarily hedge funds. This acquisition enhances FactSet's portfolio management capabilities by combining various services and opens up new market opportunities with existing clients. Skoko also mentions anticipated synergies from a fixed network acquisition.

The paragraph is a response by Goran Skoko to a question from Andrew Nicholas regarding growth strategies in the wealth sector. Goran explains that their growth strategy involves regional expansion, particularly in Europe (Switzerland and the UK) and Asia, as well as increasing the number of users and replacing higher-end terminals. Additionally, they aim to enhance client services by adding new offerings, such as lead generation tools and portfolio management workflows, to support and expand client operations.

The paragraph features an interaction during a Q&A session, with Craig Huber from Huber Research Partners asking about future organic revenue growth and investments in technology. Helen Shan responds, explaining that their investment in technology aims to support mid to high-single-digit growth as outlined in their three-year plan. While there are no additional large investment plans like in 2019-2020, they are focusing on consistent investments in technology and cost rationalization. The session then moves on to George Tong from Goldman Sachs, who asks about market downturns and buy-side budget changes, which Phil Snow begins to address.

The paragraph features a discussion on market resilience and the impact of economic factors on pricing and growth. The speaker notes that although there is uncertainty in the market, they have built a strong pipeline, especially on the buy-side, which they believe is not heavily affected by current market conditions. They mention working through challenges, including the shift from active to passive strategies and the impact of lower CPI on price increases, which are lower this year compared to last year. Despite this, there is confidence in achieving growth due to a strong pipeline of deals, particularly in terms of booked Annual Subscription Value (ASV), which is higher year-over-year. This confidence is attributed to the international and U.S. market dynamics and potentially the competitive environment.

The paragraph discusses the company's improved sales pipeline, comparing it to previous years and highlighting that it is more similar to 2023 than 2024. They have better visibility into potential downsides and do not anticipate significant losses in the second half of the year, which should lead to improved year-over-year retention. The pipeline includes a mix of large and mid-sized deals, suggesting confidence in achieving organic growth. The discussion then shifts to a Q&A session, where Ryan Griffin asks about the impact of selling more into tech budgets amid macroeconomic changes compared to financial services and market data budgets. Phil Snow responds that investing in tech is positive and current deals are not solely reliant on market data budgets, which have been under pressure. Goran Skoko adds that there has been no significant change on the sell-side recently.

In the article paragraph, the discussion highlights a shift in client investments towards generative AI (Gen AI) tools, with technological budgets increasingly funding larger deals in the latter half of the year. Conversations with clients have been positive, focusing on high-level technical discussions. Following this update, Jason Haas from Wells Fargo asked about the dynamics behind the increased client count and a decrease in users per client, wondering if M&A activities or new client types were influencing this trend. Goran Skoko explained that the rise in private equity clients, who typically have fewer users, has impacted this metric. Additionally, Phil Snow and Helen Shan noted the integration of clients from the Irwin acquisition, some of whom may not yet have users reflected in the numbers.

In the paragraph, Surinder Thind inquires about the company's proactive measures regarding renewal cycles and whether there has been an increase in renewal activities. Goran Skoko explains that the current cycle activities are linked to contract expiration dates, but the company is becoming more organized with renewals by creating playbooks and trying to disperse renewals throughout the year. Helen Shan adds that recent large banking renewals have either maintained or increased their pricing, indicating that the company is not sacrificing price to achieve renewals.

In this paragraph, Phil Snow emphasizes FactSet's focus on client retention and highlights the company's significant investments in banking products, technology, and data, particularly private company data and sector-specific initiatives. These improvements have strengthened FactSet's offerings, contributing to banking client renewals. The company anticipates strong performance in the second half of the year due to solid financial results and strategic execution. The paragraph concludes by thanking participants for their questions and closing the call.

This summary was generated with AI and may contain some inaccuracies.