FACTSET RESEARCH SYSTEMS INC Q4 FY2024 earnings call

Financial Results

• Fiscal 2024 annual revenue reached $2.2 billion, adjusted operating margin 37.8%, adjusted EPS $16.45 (12.3% growth). Q4 organic ASV was $53.5 million, with annual organic ASV plus professional services growth of $104 million (4.8%).

Strategic Pillars

• Data Expansion: Focus on maturing deep sector, private markets, and real-time offerings to differentiate from competition.
• Embed in Client Workflows: Prioritize front office for buy-side, expand adjacent workflows for wealth, and accelerate automation for dealmakers.
• Generative AI: Integrating GenAI into workflows, launched solutions like Portfolio Commentary and conversational API, with Investor Day upcoming to share more AI products.

In the fourth quarter, FactSet added $54 million of ASV, in line with Q4 2023. Wealth management was the largest contributor to ASV growth in fiscal 2024, with organic ASV growth accelerating to 12% in Q4, adding over 23,000 advisor desktops. Dealmakers had 4% organic ASV growth, with a reacceleration in Q4. Institutional buy-side had 3% organic ASV growth due to tighter budgets. Partnerships and CGS had 6% organic ASV growth, with CGS performing strongly. Regionally, Americas had 6% growth, EMEA 2% growth (impacted by a large buy-side client cancellation), and Asia-Pacific 7% growth.

FactSet anticipates fiscal 2025 organic ASV growth midpoint 5%, expecting acceleration in the second half. Adjusted operating margin is projected to be 36%-37%. Adjusted EPS is expected to be in the range of $16.80 to $17.40. The company plans to repay the term loan in full by the second quarter of fiscal 2025.

Macro uncertainty impacting client budgets, particularly in EMEA buy-side with a large client cancellation. Competitive pressures and potential headwinds from market conditions constraining budgets of mid to large-sized asset manager clients.

Q: Toni Kaplan asks about margins and normal year A: Phil mentions it's a reset year, Helen explains expense actions in 2024 helped expand margin and they're investing well while maintaining focus on growth Q: Alex Kramm asks about buy-side and large asset management cancel A: Phil discusses top 10 wins (nine against competitors) and buy-side trends, noting some consolidation and cost pressure but anecdotally seeing more constructive buy-side Q: Manav Patnaik asks about CGS growth A: Phil states CUSIP drove growth in the partners business line, with CGS performing strongly Q: Faiza Alwy asks about ASV guide and GenAI impact A: Phil mentions optimism for second half, encouraged by GenAI progress and pipeline, Helen notes GenAI impact is baked in guidance range Q: Kelsey Zhu asks about GenAI impact on ASV and expenses A: Helen says GenAI impact is in the back half, baked in guidance, and about 30-50 basis points for ASV and 50+ basis points for expenses Q: Surinder Thind asks about pricing and AI pricing A: Helen discusses standard pricing and price realization above 80%, Phil talks about AI pricing models like usage-based for Portfolio Commentary and conversational API