The paragraph is an introduction to FactSet's Third Fiscal Quarter 2025 Earnings Call. It starts with the operator announcing the call and handing it over to Kevin Toomey, the Head of Investor Relations. Toomey welcomes participants and mentions that slides for the presentation are available on the company's website, and a replay of the call will also be accessible there. The call will last for one hour and will include a discussion of the company's results, followed by a Q&A session. Listeners are advised to review a legal notice regarding forward-looking statements, which contain risks and uncertainties outlined in FactSet’s SEC filings. The presentation will also include certain non-GAAP financial measures, with reconciliations available on the website. Toomey notes that starting from fiscal 2025, FactSet is reporting organic ASV to emphasize recurring revenues. The call features key executives including CEO Phil Snow, CFO Helen Shan, and Chief Revenue Officer Goran Skoko.

In the paragraph, Frederick Snow announces his retirement as CEO of FactSet after 30 years with the company, with Sanoke Viswanathan set to succeed him in early September. Snow reflects on his tenure, highlighting achievements such as expanded capabilities, strengthened client relationships, and doubled revenue. He expresses confidence in FactSet's future under Sanoke's leadership, citing his extensive experience and strategic mindset. Snow also reports FactSet's Q3 results, including a 4.5% growth in organic ASV, a 36.8% adjusted operating margin, and an adjusted diluted EPS of $4.27.

The paragraph discusses the company's strong performance in the third quarter, highlighting successful execution of their enterprise solutions strategy and increased growth within existing accounts and new business. Client and ASV retention rates were high, with the client base expanding to over 8,800, partly due to the acquisition of LiquidityBook. The user count rose to over 220,000, driven by demand in wealth management. Regionally, organic ASV growth in the Americas was 5% due to strong banking and asset energy retention, while EMEA experienced 2% growth, with improved banking and wealth retention offset by lower price increases and buy-side challenges. In Asia Pacific, growth reached 7%, driven by banking sector retention, although reduced pricing and asset owner challenges had some impact. Overall, the company reaffirmed its FY '25 guidance, anticipating a strong end to the fiscal year.

In Q3, Wealth organic ASV sustained its strong growth, marking the second quarter of acceleration, with new business sales nearly doubling. FactSet's product portfolio exhibited significant success among new and existing clients, evidenced by large renewals and an increase in six-figure wins. The company has expanded its presence in the wealth sector by enhancing data feeds and digital solutions, resulting in a higher attach rate for off-platform products, which is 1.5 times higher than the previous fiscal year. Banking solutions also saw growth, partly due to favorable comparisons and increased seat counts from clients choosing FactSet over competitors. Retention rates improved with multiyear deals, confirming FactSet's reliable enterprise reputation and providing growth possibilities. Hiring trends appear consistent with the previous year, and the company is optimistic about expanding service footprints. FactSet actively advances its Pitch Creator pipeline, with 10 deals signed and many opportunities in trials or negotiations with banking clients.

The paragraph highlights the growth and success of various tools and services provided by the company, particularly in automating banking processes and expanding into private equity, venture capital, and corporate sectors. Tools like Pitch Creator, LogoIntern, and Cobalt are driving efficiencies and adoption, while the acquisition of Irwin has led to significant corporate growth by displacing competitors. The company's strategy involves using Investor Relations as a gateway to deepen financial relationships. On the institutional buy side, improvements in client retention and strategic wins are noted, specifically with the launch of IRN 2.0 and managed services. Hedge funds also show growth due to new launches and greater adoption of products. However, some gains are offset by reduced contributions from annual price increases.

The paragraph discusses the company's strategic focus on driving top-line growth despite client pressures to optimize costs and streamline vendor relationships. The company is leveraging innovative solutions and strong client relationships to support this growth, with a particular emphasis on partnerships in CGS and new business expansion. Growth is robust across various partner types, and the company remains confident in achieving its fiscal 2025 guidance, driven mainly by institutional buy-side demand. High demand for middle-office solutions, particularly performance and managed services, as well as GenAI integration in buy-side solutions, is aiding client engagement. Additionally, Data Solutions, including real-time data and benchmarks, are expected to significantly contribute to Q4 results, with wealth management serving as a key growth area.

The paragraph discusses FactSet's strong financial performance and strategic positioning. The company has a robust wealth pipeline with a focus on sophisticated PLC tools, supported by FactSet's industry credibility. Their strategy includes leveraging their first-mover advantage in GenAI to offer innovative solutions that enhance efficiencies for clients. Helen Shan reports a strong third quarter, with organic Annual Subscription Value (ASV) increasing by $22.6 million, and a 5.9% year-over-year growth in GAAP revenues to $586 million. Organic revenue rose by 4.4% to $577 million, with growth across different regions: 5% in the Americas, 2% in EMEA, and 6% in Asia Pacific. The company reaffirms its guidance for FY '25 despite facing a minor pricing headwind due to lower CPI.

The paragraph reports an 11.7% year-over-year increase in GAAP operating expenses to $391 million, driven by higher employee and technology costs. Adjusted operating expenses grew by 10.6%. Employee expenses rose by 12%, reflecting a return to normal bonus accruals and excluding a one-time payroll tax adjustment from the previous year. This increase, along with workforce growth of 2.6% due to strategic acquisitions, accounts for approximately two-thirds of the year-over-year change. While headcount in core operations was reduced, technology expenses grew by 21% due to amortization of software and investments in generative AI. This led to technology costs making up 11% of revenue, up from 10% last year. Third-party content and real estate expenses were effectively managed, each representing under 5% and 3% of revenue, respectively. The GAAP operating margin decreased by 350 basis points to 33.2% compared to the previous year. The appendix of the earnings presentation offers a detailed breakdown of expenses and margins.

In the third quarter, the company experienced a decrease in adjusted operating margin by 270 basis points year-over-year and a slight increase in SG&A as a percentage of revenue, primarily due to higher compensation and professional fees from acquisitions. On a GAAP basis, the effective tax rate rose to 17.5% from 17%, influenced by lower tax benefits from stock-based compensation. GAAP diluted EPS dropped by 5.4% to $3.87, while adjusted EPS decreased by 2.3% to $4.27. EBITDA was down by 1.7% to $236 million, attributed to reduced net income. However, free cash flow increased by 5% to $229 million, driven by stronger operational cash flows. The company repurchased 184,000 shares worth $81 million, with $106 million remaining under the $300 million share repurchase authorization.

The Board of Directors approved a $400 million share repurchase set for September 1, 2025, and distributed an increased quarterly dividend of $1.10 per share. Over the past year, the company returned $415 million to shareholders through dividends and buybacks. A new credit facility has been established, enhancing liquidity, which includes a term loan of $500 million and a $1 billion undrawn revolver. Debt management continued with the repayment of $62.5 million. With a focus on growth, third-quarter organic ASV increased, bolstering confidence in Q4 performance and reaffirming guidance. Investments are focused on GenAI, infrastructure, and go-to-market initiatives for sustainable shareholder value.

The executive leadership team expressed gratitude to Phil for his leadership and contributions, highlighting his focus on family and FactSet. They are excited to welcome Sanoke, who will bring a client-first perspective, as the new leader in September. The team wishes Phil the best and is ready to transition with Sanoke’s leadership. During a Q&A session, in response to Shlomo Rosenbaum's question about market changes affecting FactSet's ASP growth, Phil mentioned that there hasn't been much change in the macro environment this fiscal year. The markets were dynamic in April, but FactSet is well-positioned to support clients undergoing multiyear technology and data transformations, which is reflected in their pipeline for the rest of the year.

In the paragraph, Goran Skoko discusses the increase in client positivity and momentum attributed to their products, especially in Data Solutions and buy-side offerings, with expectations for a significant boost in the fourth quarter. Their GenAI solutions, including the Pitch Creator and conversational API, are contributing to this progress. Following this, Alex Kramm from UBS inquires about the fourth-quarter outlook, emphasizing the financial guidance being unchanged and seeking clarification on areas of potential improvement or weakness compared to last year. Frederick Snow responds, highlighting that their current position is significantly ahead of the previous two years, with growth anticipated primarily in the Americas and EMEA regions.

The paragraph discusses the company's business performance, highlighting that while their core business, the Workstation, is stable compared to last year, significant growth is driven by their enterprise solutions and feeds business. The momentum for Q4 appears strong, especially from the institutional asset management sector, which represents a substantial portion of the top 15 deals. Goran Skoko adds that their committed Annual Subscription Value is ahead of last year, with improved retention and visibility into cancellations. The company's diverse pipeline and quick-developing deals in Q4 provide confidence in meeting projected targets. The discussion concludes with a transition to a question from Faiza Alwy of Deutsche Bank.

In the paragraph, Faiza Alwy inquires about expectations for fiscal year 2026, particularly regarding any potential acceleration beyond Q4. Helen Shan responds that the focus is currently on the present quarter, with plans to discuss the next year in the upcoming September call. Ashish Sabadra congratulates Phil on his retirement and asks about asset owners optimizing costs and vendor relationships, including headwinds and growth strategies. Frederick Snow explains that while there are headwinds due to competition in the asset owners' space, the pipeline for Q4 looks promising. Goran Skoko adds that the current quarter is somewhat unusual in this regard.

The paragraph discusses a financial outlook and investment strategy for the company, as addressed in a Q&A format during an earnings call. Phil's earlier comments indicate a competitive market, but with optimism for future improvements, especially with investments in LiquidityBook and portfolio solutions. Owen Lau from Oppenheimer inquires about an anticipated drop in the adjusted operating margin for the fiscal fourth quarter, which Helen Shan, the CFO, confirms is aligned with their investment plans. She explains that the increased spending relates to investments in expertise, GenAI solutions, acquisition integrations, and technology costs. Despite these expenses, the company expects to meet its full-year margin guidance of 36% to 37%.

In the paragraph, Andrew Nicholas from William Blair asks about internal efficiency progress related to GenAI. Frederick Snow and Helen Shan discuss the company's focus on utilizing AI internally to enhance efficiency. They are providing developers with tools for more efficient coding and reducing administrative tasks for client-facing employees to increase productivity. Additionally, they are automating data collection processes further. This internal application of AI is part of a strategic plan for the next three years to improve efficiency and productivity across the company.

The paragraph discusses the importance of evaluating the return on investment (ROI) in projects and strategies. The speaker highlights the impact of investments on output and costs, mentioning that internal cost events coverage increased significantly, engineering output improved by 10% due to coding assistance, and AI-generated fund descriptions were completed more efficiently and with higher quality. The speaker notes that while measuring ROI can be challenging, the benefits are evident, such as maintaining a stable or reduced headcount. The paragraph also touches on future benefits expected from 50 opportunities within engineering and product roles. Additionally, during a Q&A segment, Surinder Thind questions the relationship between growth, expenses, and margins, while Helen Shan expresses confidence that their margins will remain within guidance range despite varying investment levels.

The paragraph discusses the company's financial situation, specifically noting the impact of recent actions that led to some dilution. They mention efforts to self-fund investments through reduced hiring and efficiency improvements. Although they do not provide detailed new information about their longer-term outlook, they indicate that certain trends observed for 2025 are expected to continue in the coming years. Craig Huber from Huber Research asks about cost increases, particularly related to onetime items and sales force investments. Helen Shan explains that the primary cost increase affecting margins is due to bonus accruals and compensation adjustments from the previous year. She highlights a 21% increase in tech expenses, driven by internal-use software amortization and cloud-related spending. However, she notes that facilities and third-party costs have decreased relative to revenue, indicating efforts to manage these expenses amidst increased tech investments.

The paragraph is a segment from a Q&A session during an earnings call. Craig Huber asks about the sales force, to which Helen Shan responds that it is relatively flat, with investments mostly in product specialty areas. Toni Kaplan from Morgan Stanley congratulates Phil on his retirement and asks about the adoption of a product called Pitch Creator, which is part of FactSet. Goran Skoko responds that most deals involving Pitch Creator are with existing clients, contributing to cross-selling and upselling, and additional deals are in the pipeline. An unknown analyst, filling in for Jeff Silber from BMO Capital Markets, inquires about the broad range of guidance outcomes for the final quarter, asking about swing factors or macro impacts, particularly concerning the pipeline from institutional buy side, to which Frederick Snow responds affirmatively, though the specific response is not detailed in this paragraph.

In the paragraph, Phil and Helen Shan discuss their company's solid position with a wide portfolio of deals, emphasizing no reliance on any major deal or negative events. They are optimistic about execution within their guidance range despite needing to close many deals in the next 2.5 months. Brendan, speaking on behalf of Manav Patnaik from Barclays, inquires about the company's focus on Data Solutions. Frederick Snow responds by noting that the company's Data Solutions are regaining momentum and have expanded to include new capabilities like real-time pricing and reference data. This expansion is helping the company enter more workflows beyond their traditional focus, contributing to growth.

The paragraph discusses recent organizational changes within the company, such as moving the CTS business into the data segment to create a unified "data factory" aimed at delivering consistent data feeds to clients, partners, and engineers. Goran Skoko highlights the positive impact of refocusing the team on data sales, which is resulting in improved performance and contributions from real-time exchange data feeds and price reference data. The current environment shows increased demand for data. The operator introduces a question from David Motemaden, who congratulates Phil on his retirement and inquires about the progress of achieving a 30 to 50 basis points contribution to ASV from GenAI this year. Frederick Snow responds affirmatively, mentioning advancements in multiple SKUs, including Pitch Creator, that are generating significant revenue across various areas.

The paragraph discusses a company's recent activities and future plans. They have released a fixed income component for their Portfolio Commentary product and are optimistic about increased adoption next year. They intend to expand their focus to include agentic workflows, which involve developing interactive agents. The conversation then switches to a question about the company's collaboration with Omni on CUSIP identifiers, emphasizing the opportunity and demand for private market identifiers, particularly with firms like JPMorgan. They are making progress, especially in private credit, building positive momentum for CUSIP development. Lastly, there's a mention of Helen referencing new liquidity available to support growth.

In the paragraph, Helen Shan discusses the company's strategy regarding the deployment of capital. They have increased their share buyback program from $300 million to $400 million, as part of their commitment to shareholder returns. This move is well-aligned with their market cap. The company intends to capitalize on market dislocations for share buybacks and focus on inorganic growth through acquisitions, as they have done previously. Meanwhile, an unknown analyst questions the confidence in the EMEA region's growth, given challenges like buy-side headwinds. Goran Skoko responds, expressing confidence in a reacceleration in EMEA due to improved retention, a strong and diverse pipeline, despite recent challenges in the region.

The paragraph discusses the business outlook and pricing strategy for EMEA in Q4. Helen Shan acknowledges that the annual price increase for Q3 was lower compared to the previous year, but anticipates improvements in Q4 due to a more consistent comparison. Goran Skoko emphasizes confidence in the pipeline's breadth and diversity for Q4. George Tong from Goldman Sachs inquires about the international pricing environment, specifically mentioning EMEA and APAC regions, and any competitive changes. Helen Shan explains the company's pricing strategy, which includes an annual contractual price increase impacted by CPI and adjustments at the product level. She notes they have seen solid pricing increases particularly in the corporate and hedge fund sectors.

In the paragraph, the speaker discusses recent pricing strategies, noting that the company raised prices for their street account product, which was well-received by clients for its value. Although they previously offered greater discounts to boost volume due to pressure on new business price realization, they've now stabilized and improved price realization in wealth asset management, with banking remaining flat and some pressure on assets. The company's guidance considers the lower inflation rate, with global trends aligning outside the Americas. Frederick Snow, the outgoing CEO of FactSet, concludes the call by expressing confidence in reaching full-year targets, highlighting strong momentum and commitment to client solutions. He mentions his upcoming transition and welcomes his successor, Sanoke, while thanking everyone for their support.

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