FACTSET RESEARCH SYSTEMS INC Q1 FY2025 earnings call

Key Points - Phil Snow: Shared first quarter results, organic ASV growth, adjusted operating margin, and adjusted diluted EPS. Discussed strategy from Investor Day, demand for solutions, client and ASV retention, regional and firm type performance, Gen AI initiatives, and workflow solutions. - Helen Shan: Talked about organic ASV, revenue growth, expense details (GAAP operating expenses up 6.8%, adjusted operating expense up 4.9%, technology spend up 18%, employee expenses up ~2%, third-party content costs up 4%, real estate/facilities expense down 4%), tax rate, and reaffirmed guidance. - Operational Highlights: Demand for solutions remains steady with ASV retention over 95% and client retention at 91%; grew client base to almost 8,250 and user count over 218,000; leveraged Gen AI to bring speed, accuracy, and efficiency to clients; launched intelligent initiative integrating conversational AI for next-gen search intelligence.

Organic ASV grew 4.5% in Q1 2025. Americas: grew 5% with new business in wealth, hedge funds, asset owners but softness in budget reprioritization. EMEA: 4% growth from partnerships, asset owners, PEVC, hedge funds, and improved retention. Asia Pacific: 7% growth driven by seasonal hiring and data solutions, offset by lower asset manager retention. Firm type-wise: Wealth had subdued growth but strong pipeline; Dealmakers had in-line growth with banking deceleration; PEVC had double-digit growth; Corporates saw acquisition of ON; Institutional buy side had growth with a landmark win; Partnerships in CGS had solid growth. Revenue contribution: GAAP revenue was $569M, organic revenue (excluding acquisitions/dispositions and FX) was $568M, organic revenue grew 4.7%, with 5% in Americas, 3% in EMEA, 6% in Asia Pacific.

Guidance - Reaffirmed fiscal 2025 guidance, with ASV growth expected to be second-half weighted. - Expect Gen AI monetization to contribute 30-50 bps to growth in FY 2025. - Margin expectations: H1 margin expected to be closer to midpoint of guidance range due to ramp-up in expenses, including higher people costs and tech costs.

Risks - General risk factors related to forward-looking statements and use of non-GAAP financial measures, as mentioned in the opening remarks. Specific operational risks not extensively detailed in the transcript beyond general market uncertainty and client budget reprioritization.

Q: Alex Kramm asked about ASV growth cadence and if we should expect acceleration in second quarter.

A: Phil Snow and Goran Skoko responded, discussing momentum in various segments like wealth, private equity venture capital, hedge funds, and the positive feedback on Gen AI pitch creator product.

Q: Shlomo Rosenbaum asked about ASV growth components.

A: Helen Shan explained that CGS issuance contributed about 25 basis points to the organic ASV growth rate, causing the disconnect between buy side, sell side, and overall growth.

Q: Kelsey Xu asked about managed services as a key growth driver.

A: Phil Snow, Goran Skoko, and Helen Shan discussed managed services, its value in cost-sensitive environments, attach rates, and how it helps clients gain scale.

Q: Faiza Alwy asked about Gen AI product traction.

A: Phil Snow responded that Gen AI monetization is expected to contribute 30-50 bps to FY 2025 growth, with encouraging signs from products like Pitch Creator and conversational API, and monetization of several Gen AI initiatives.

Q: Ashish Sabadra asked about client budgets.

A: Goran Skoko responded that client budgets are expected to remain flat, but clients continue to engage in technology transformation, with increased trials and RFPs indicating optimism.