FactSet Research Systems Inc. Q3 FY2025 earnings call

• Phil Snow announced his retirement after 30 years with FactSet, with Sanoke Viswanathan to become the next CEO in early September.
• Third quarter results: organic ASV growth of 4.5%, adjusted operating margin of 36.8%, adjusted diluted EPS of $4.27. ASV retention over 95%, client retention 91%, client base over 8,800, user count over 220,000.
• Regional performance: Americas organic ASV up 5%, EMEA up 2%, Asia Pacific up 7%.
• Firm-type performance: Wealth with double-digit growth, dealmakers with banking gains, PE/VC with four consecutive quarters of accelerating growth, corporates growing via Irwin acquisition, institutional buy side with strategic wins and retention, hedge funds with growth acceleration. Use of GenAI tools like Pitch Creator and LogoIntern to drive workflow efficiencies.

Organic ASV grew by 4.5% year-over-year in the third quarter, with an absolute increase of $22.6 million. By region, organic ASV increased by 5% in the Americas, 2% in EMEA, and 7% in Asia Pacific. In terms of firm type, wealth organic ASV maintained double-digit growth, dealmakers saw banking gains, PE/VC had four consecutive quarters of accelerating growth, corporates grew with the Irwin acquisition, institutional buy side had strategic wins and improved retention, and hedge funds saw growth acceleration. Wealth contributed through double-digit growth, dealmakers via banking gains, PE/VC via strong private markets offering, corporates through Irwin's impact, institutional buy side through front-office solutions and retention, and hedge funds through new fund launches and product adoption.

• Reaffirmed FY '25 guidance. Third quarter organic ASV growth was 4.5%, with confidence in Q4 performance as it's seasonally the highest ASV quarter. Anticipated Q4 to be the highest expense quarter of the fiscal year with investments in GenAI and infrastructure projects.

• Cost pressure due to higher employee and technology expenses. - Pricing affected by lower CPI in EMEA and Asia Pacific regions for annual price increases. - Pressure from clients, especially asset owners, to optimize costs and streamline vendor relationships.

Q: What's the impact of the macro environment on ASP growth?

A: Goran Skoko attributed most momentum to product resonance, Data Solutions, and GenAI tools like Pitch Creator and conversational API.

Q: Can you contrast where things are significantly better and weaker in 4Q outlook?

A: Americas and EMEA regions look strong, core business Workstation relatively flat, strength from enterprise solutions and buy side feeds business.

Q: Thoughts on fiscal '26?

A: Helen Shan said focused on current quarter and will discuss fiscal '26 in September call.

Q: Thoughts on asset owner headwinds?

A: Phil Snow said it's a competitive area, but future improvement expected with LiquidityBook and portfolio solutions.

Q: Adjusted operating margin for 4Q?

A: Helen Shan said investing in 3 pillars and will remain within guidance range of 36%-37% on adjusted basis.

Q: Progress of GenAI on internal efficiency?

A: Phil Snow and Helen Shan mentioned AI applications in coding assistance, fund descriptions, and cost events coverage with improved output.

Q: Monetization of GenAI and ASV contribution?

A: Phil Snow said tracking towards targets and expecting momentum to accelerate with multiple GenAI SKUs.

Q: Deployment of additional capital?

A: Helen Shan said will continue shareholder return through buybacks and acquisitions for inorganic growth.