Andrew Steinerman

Andrew Steinerman asked for an update on year-over-year 'ad stops' (customer employee base changes) and the expected revenue contribution from Q2 acquisitions for the second half of the fiscal year.

Answer

Todd Schneider, President and CEO, indicated that growth from current customers remains very stable and slightly positive, contributing to strong retention. Scott Garula, Executive Vice President and Chief Financial Officer, stated that Q2 acquisitions contributed approximately 70 basis points to growth, with an expected 30-35 basis point impact for the second half of the year, assuming no new acquisitions.

Andrew Steinerman asked for a compilation of year-over-year add/stops related to customer employee bases and the expected revenue contribution from second-quarter acquisitions for the second half of the fiscal year.

Answer

President and CEO Todd Schneider stated that growth from current customers is very stable, if not slightly positive, contributing to strong retention. Executive Vice President and CFO Scott Garula clarified that Q2 acquisitions contributed about 70 basis points to growth, and for the second half, the impact is expected to be approximately half of that, around 30-35 basis points, assuming no new acquisitions.

Andrew Steinerman from JPMorgan Chase & Co. asked about revenue momentum in the first six weeks of the new quarter and whether there have been any recent changes to the company's go-to-market strategy, particularly concerning national accounts.

Answer

President & CEO Todd Schneider responded that the start of the new fiscal year is proceeding as expected and is fully reflected in the company's guidance. He stated there have been no real changes to the go-to-market strategy, emphasizing the long-standing national accounts program and the successful vertical-focused strategy implemented over the last 5-10 years.

Andrew Steinerman from JPMorgan Chase & Co. asked about revenue momentum at the start of the current quarter and whether there have been any recent changes to the company's go-to-market strategy, particularly concerning national accounts.

Answer

President & CEO Todd Schneider responded that the new fiscal year has started as expected and is reflected in the guidance. He confirmed there have been no significant changes to the go-to-market strategy, noting the national account business is well-established, and highlighted the continued success of the company's vertical market strategy.

Andrew Steinerman asked for two specific data points: the energy and fuel cost as a percentage of revenue in Q3, and the implied sequential organic revenue growth for Q4 embedded in the full-year guidance.

Answer

EVP and CFO Mike Hansen stated that energy costs were 1.7% of revenue, flat year-over-year. Regarding Q4 guidance, he confirmed a normal seasonal pattern for underlying performance but noted an expected FX headwind and M&A contribution similar to Q3.

Andrew Steinerman questioned if price realization within the 7.1% organic growth has returned to its long-term average and asked if there were any notable changes in customer behavior or adoption rates compared to the previous quarter.

Answer

CEO Todd Schneider confirmed that securing price increases has become more challenging and is now back at historical levels as inflation moderates. He added that overall customer behavior remains stable, with strong new business and attractive customer retention rates.

Andrew Steinerman of JPMorgan Chase & Co. asked about the trend in merchandise amortization during the quarter and the company's assumptions for this line item for the full fiscal year.

Answer

EVP and CFO Mike Hansen explained that material cost has been a tailwind for the business. This positive trend is driven by successful global supply chain initiatives that lower product costs and increased garment sharing from stock rooms, which reduces the number of new garments put into service. He expects these favorable trends to continue through the fiscal year.

Andrew Steinerman requested detailed assumptions for Vestis Corporation's fiscal 2026 free cash flow guidance of $50-$60 million, including CapEx, working capital, and the phasing of cash flow throughout the year. He also asked if there would be a need to raise capital for planned investments.

Answer

EVP and CFO Kelly Janzen outlined the free cash flow guidance, starting with a $300 million EBITDA midpoint, deducting approximately $95 million for annual interest, $50 million for cash taxes, and $25 million for restructuring charges. CapEx is estimated at $60 million-$65 million, consistent with the prior year. She expects cash flow phasing to be relatively even throughout the year, with potential lumpiness from restructuring charges. Kelly Janzen confirmed that Vestis does not anticipate needing to raise capital, as current CapEx is sufficient if allocated strategically.

Andrew Steinerman from JPMorgan inquired about the detailed assumptions behind the guided fiscal 2026 free cash flow of $50-$60 million, including embedded CapEx and working capital injections. He also asked about the phasing of free cash flow throughout the year and whether there might be a need to raise capital for planned investments.

Answer

Kelly Janzen, EVP and CFO, outlined the free cash flow guidance, starting with a $300 million EBITDA midpoint, subtracting approximately $95 million for annual interest, $50 million for cash taxes, and $25 million for restructuring charges. She estimated CapEx at $60 million-$65 million, generally in line with the prior year, and assumed operating working capital would remain relatively flat, though some use might occur during transformation. Ms. Janzen expects the phasing of free cash flow to be relatively even throughout the year, with CapEx and other items distributed consistently, though restructuring charges could be lumpy. She confirmed there is no need to raise capital, as the focus is on allocating existing CapEx effectively rather than increasing the total amount.

Andrew Steinerman asked for an update on the direction of Net Promoter Scores (NPS) and for qualitative comments on how Vestis has reduced service issues.

Answer

CEO Kimberly Scott stated that while NPS is an annual metric, daily leading indicators like service requests (SRs) show significant improvement, particularly in on-time delivery and product shortages. She added that successful cross-selling to existing customers also serves as a strong positive indicator of customer satisfaction and experience.

Andrew Steinerman questioned why the core revenue growth guidance for fiscal 2025 is only 1-2% given positive momentum in retention, pricing, and sales. He also asked for more detail on tactical selling strategies.

Answer

CFO Rick Dillon and CEO Kim Scott explained the modest growth guide is due to lapping significant pricing headwinds from the first half of fiscal 2024, with underlying growth emerging in the back half. Scott elaborated that their tactical selling involves bifurcated strategies for winning business from competitors versus converting non-programmers, which is yielding a healthy balance of new wins.

Andrew Steinerman asked for a breakdown of the organic revenue drivers, specifically net new business, price increases, and other base business growth, for both the fiscal 2026 guidance and the recently completed fiscal 2025.

Answer

CFO Jim Tarangelo provided the breakdown: For fiscal 2025, base business growth (volume and price) was about 3.5% (with pricing around 3%), net new contribution was about 1.5%, and the 53rd week added approximately 2%, totaling 7% organic revenue growth. For the fiscal 2026 outlook, he expects 3-4% base business growth (roughly 3% from price) and 4-5% from net new contribution, leading to a total organic revenue growth guide of 7-9% on a 52-week comparison.

Andrew Steinerman asked for a breakdown of the organic revenue drivers—net new business, price increases, and other base business growth—for both the fiscal 2026 guide and the recently completed fiscal 2025.

Answer

CFO Jim Tarangelo detailed that for fiscal 2025, base business growth (volume and price) was about 3.5% (with pricing around 3%), net new contributed 1.5%, and the 53rd week added 2%, totaling 7%. For fiscal 2026, he projected 3-4% base business growth (roughly 3% from price) and 4-5% from net new contribution, leading to the 7-9% organic revenue guide on a 52-week comparison.

Andrew Steinerman asked for the revenue contribution from tuck-in acquisitions in Q2 and requested a specific breakdown of the 3% organic revenue headwind between client exits, calendar shifts, and weather.

Answer

CFO Jim Tarangelo explained that revenue from recent M&A, including Quantum and First Class Vending, was de minimis for the quarter. He then quantified the 3% headwind as approximately 2% from the previously discussed facilities client exits and the remaining 1% from a combination of the education calendar shift and weather-related closures.

Andrew Steinerman sought clarification on whether the guided double-digit revenue growth for the second half applies to both the third and fourth quarters and if it includes the impact of the 53rd week. He also asked for the base revenue growth in Q1.

Answer

CFO James Tarangelo confirmed the 53rd week is embedded in the double-digit H2 growth guidance, causing Q4 growth to be higher than Q3, but declined to break out the quarters further. He stated that in Q1, 2% to 3% of growth was from price, with the remainder from volume and net new business.

Andrew Steinerman questioned the breakdown of new business growth between first-time outsourcing and competitive takeaways. He also asked if the profitability and upfront investment required for new outsourcing contracts remain conducive to growth.

Answer

CEO John Zillmer confirmed a continued robust environment for both first-time outsourcing and market growth, citing strong pipelines across the business. He affirmed that the economic profile of winning new business remains consistent, with profitability in line with historical margins and investment costs at a low single-digit rate of 2.5% to 3%.

Andrew Steinerman inquired about forward-looking, multi-year CapEx targets, particularly in light of the dividend increase and the industry's shift towards mega data center projects, asking about the CapEx approach for 2026 and beyond.

Answer

President and CEO Bill Meaney stated that the focus is on inference and cloud buildout, not chasing 1-gigawatt large language model campus projects, though some larger campuses could accommodate such needs. EVP and CFO Barry Hytinen added that data center CapEx will gradually rise with the pre-leased backlog and pipeline, emphasizing that capital is deployed for high-return, pre-leased contracts with high credit quality clients.

Andrew Steinerman inquired about multi-year forward-looking CapEx targets, particularly in light of the shift towards mega projects in the data center industry, and Iron Mountain's approach to preparing for these opportunities in 2026 and beyond.

Answer

President and CEO Bill Meaney clarified that Iron Mountain's focus is on inference and cloud buildout, not chasing 1 GW Large Language Model campuses, though large campuses (500+ MW) are considered. EVP and CFO Barry Hytinen stated that data center CapEx is expected to gradually rise to build out pre-leased backlog and support additional leasing, emphasizing investment in high-return, pre-leased contracts with high-credit quality clients.

Andrew Steinerman sought clarification on the sequential decline in Q4 organic storage revenue, asking if the decline was on a constant currency basis and requesting details on 'normal seasonality' and the de-emphasis of the consumer business.

Answer

Barry Hytinen, EVP and CFO, attributed the sequential decline primarily to a significant foreign exchange headwind of approximately $10 million from a stronger U.S. dollar. He also confirmed a strategic, intentional reduction in the lower-margin consumer business. Hytinen assured that the core records management business, excluding these factors, was up sequentially in line with normal trends and pricing actions.

Andrew Steinerman asked about the InSight DXP platform, seeking clarity on the revenue model for its 24 recent wins and the overall significance of this customer adoption.

Answer

CEO William Meaney clarified that the 24 DXP deals are profitable service contracts with gross margins typically between 20% and 40%. He stressed that the company does not offer services for free and that the SaaS platform drives significant value by automating metadata and workflow for both physical and digitally-born information, which is reflected in its pricing.

Andrew Steinerman sought to confirm the implied Q4 organic revenue growth rate (under 4%) based on the full-year guidance, acknowledging the tough year-over-year comparison to Q4 2024. He asked if any other factors, such as the exiting of service lines, would affect Q4 2025 revenues that did not impact Q3 2025.

Answer

CFO Ryan Robinson confirmed a similar Q4 outlook as last quarter, which enabled raising full-year guidance. He reiterated that the biggest factor for Q4's growth rate is the tough comparison to Q4 2024, which saw 9.5% total organic growth and 13.9% organic growth in Industrial, partly due to pull-forward revenue ahead of expected tariffs. He added that the strong Q3 performance in Software and Advisory might moderate in Q4, and the exiting of service lines is not expected to have a material effect on Q4 revenues, being more impactful in 2026.

Andrew Steinerman sought to confirm the implied Q4 organic revenue growth rate (under 4%) from the full-year guidance, acknowledging the tough year-over-year comparison. He asked if there were any other specific callouts affecting Q4 2025 that didn't impact Q3, such as the exiting of service lines through the restructuring.

Answer

CFO Ryan Robinson explained that the Q4 outlook is similar to previous expectations, leading to raised full-year guidance. The lower Q4 organic growth is primarily due to a tough 9.5% organic growth comp in Q4 2024 (13.9% in industrial), and potential moderation in Software & Advisory after a strong Q3. He clarified that exiting service lines is more likely to impact 2026, not materially Q4 2025, with the biggest Q4 effect being the comparison to last year's strength ahead of tariff anticipation.

Andrew Steinerman of JPMorgan Chase & Co. sought clarification on the full-year mid-single-digit organic growth guidance, questioning if the tougher second-half comps imply growth might fall below that range.

Answer

EVP & CFO Ryan Robinson acknowledged the tougher comps in H2 (9.3% in Q3 and 9.5% in Q4 of the prior year) and confirmed the company's confidence in the full-year outlook. He noted that while market clarity is improving, some uncertainty remains, making them confident but cautious.

Andrew Steinerman sought more details on the With Intelligence acquisition, asking for a comparison to BlackRock Preqin in terms of relative data coverage across asset classes, especially given With Intelligence's hedge fund heritage and expansion.

Answer

Martina Cheung, President and CEO, expressed excitement for With Intelligence, noting its evolution from hedge funds to a "truly multi-asset class platform" covering private equity, private credit, infrastructure, and unique data like family offices. She highlighted its scale (30,000 managers, 30,000 investors) and data quality, which, combined with Market Intelligence's existing company data and the Cambridge Mercer Partnership, creates a compelling offering to expand private markets revenues.

Andrew Steinerman inquired for more details on the With Intelligence acquisition, specifically asking for a comparison between With Intelligence and BlackRock Preqin regarding private markets data coverage across asset classes.

Answer

Martina Cheung, President and CEO, highlighted With Intelligence's evolution into a multi-asset class platform covering private equity, private credit, infrastructure, and unique data on family offices, with information on 30,000 managers and investors. She emphasized the high quality of With Intelligence's data and its ability to accelerate S&P Global's organic initiatives in deal sourcing, allocation, and performance benchmarking, especially when combined with existing Market Intelligence data and the Cambridge Mercer partnership.

Andrew Steinerman questioned why the second-half outlook for the Ratings division wasn't raised more significantly, given that the full-year guidance increase was primarily due to Q2 outperformance and June was a strong issuance month.

Answer

President & CEO Martina Cheung explained the cautious stance is due to several factors: lingering market volatility with the potential for a freeze like in April, a relatively flat refinancing wall in the second half compared to last year, and conservative assumptions about a significant M&A rebound, which is viewed as a more likely driver for 2026.

Andrew Steinerman questioned why the second-half outlook for the Ratings division wasn't raised more significantly, given that Q2 outperformance and a strong June suggested continued momentum into July.

Answer

President & CEO Martina Cheung explained the cautious outlook is due to persistent market volatility, citing the risk of a freeze like the one in April. She also noted that the refinancing wall in the second half is roughly flat year-over-year, and the company is not making 'overly heroic assumptions' on M&A activity, which may be more of a 2026 story. While acknowledging potential upside, she stressed that performance is highly dependent on market stability.

Andrew Steinerman posed two questions: what share count is implied in the 2025 guidance, and what are S&P Global's current M&A ambitions.

Answer

CFO Eric Aboaf addressed the first part by suggesting the share count could be calculated from public disclosures and buyback plans. CEO Martina Cheung answered the second, reiterating no plans for transformative M&A and a primary focus on organic growth, while remaining open to attractive tuck-in acquisitions that create shareholder and customer value.

Andrew Steinerman of JPMorgan Chase & Co. asked if Ratings revenue has stabilized into a more regular growth pattern and requested more specific details on the M&A volume assumptions embedded in the 2025 guidance.

Answer

President and CEO Martina Cheung acknowledged that 2024 results created a challenging comparable for 2025, but general market volumes are back to expected levels. She characterized the M&A assumptions in the guide as 'prudent' and 'modest,' reflecting a balanced view rather than high optimism seen elsewhere in the market.

Alex Hess, on behalf of Andrew Steinerman, asked about the S&P Dow Jones Indices business, seeking conviction on pricing actions and the drivers of strength in Data & Custom Subscriptions amid a challenging market.

Answer

Interim CFO Christopher Craig explained that the company prioritizes long-term customer relationships over short-term pricing economics. He noted that while Data & Custom Subscriptions grew 5%, the underlying commercial initiatives are gaining traction, evidenced by mid-teens growth in ACV for the largest product group, with further acceleration expected.

Andrew Steinerman asked about the dynamics affecting auto underwriting solutions revenues, specifically Lightspeed, and whether decelerating policy growth or shopping activity were headwinds, as well as Lightspeed's unique value proposition.

Answer

CFO Elizabeth Mann clarified that the auto business has no direct linkage to premiums and shopping activity has been stable. She reiterated Lightspeed's value in delivering real-time bindable quotes. President and CEO Lee Shavel added that improved rate adequacy in auto insurance has reduced countercyclical opportunities in non-rate action areas.

Andrew Steinerman inquired about the dynamics affecting auto underwriting solutions revenues, specifically LightSpeed. He asked if decelerating auto policy growth and shopping activity were headwinds and what Verisk sees as LightSpeed's unique value proposition for insurers now.

Answer

Elizabeth Mann, Verisk's Chief Financial Officer, clarified that the auto business doesn't have a direct linkage to premiums and shopping activity has been in line. She reiterated LightSpeed's value in enabling carriers to deliver real-time bindable quotes. Lee Shavel, President and Chief Executive Officer, added that improved rate adequacy has reduced countercyclical opportunities in the non-rate action area.

Andrew Steinerman from JPMorgan Chase & Co. asked about the competitive landscape for AccuLinks, inquiring about its main competitors and its key points of differentiation.

Answer

CEO Lee Shavel identified competitors like ServiceTitan and JobNimbus but clarified they are more generalist platforms. He stated that AccuLinks' competitive advantage lies in its deep specialization for the specific workflow needs of roofing contractors. President of Property Estimating Solutions, Aaron Brunko, affirmed that AccuLinks is the premier provider in its niche.

Andrew Steinerman of JPMorgan Chase & Co. asked for more detail on the depreciation and amortization (D&A) line in the guidance, its future trend as a percentage of revenue, and the resulting implications for ROIC.

Answer

CFO Elizabeth Mann explained that current D&A levels reflect large, long-term projects being placed into service. She anticipates the D&A growth rate will moderate. CEO Lee Shavel clarified that for ROIC calculations, D&A is excluded from profit, while the underlying CapEx is included in the invested capital base, ensuring a proper measure of return.

Andrew Steinerman asked for clarification on the 2025 guidance, specifically regarding assumptions for share buybacks and the reasons for the step-up in interest expense and D&A.

Answer

CFO Elizabeth Mann confirmed that the guidance assumes share buyback activity. She explained the higher interest expense reflects the annualized run-rate from a 2024 refinancing at higher rates. The increase in D&A is a direct result of significant past capital investments in projects that are now being placed into service.

Andrew Steinerman asked why the ongoing conversion of transactional to subscription revenue was not listed as a 2025 headwind and sought clarification on a prior growth metric mentioned by the CEO.

Answer

CFO Elizabeth Mann clarified that the conversion is considered a geographic shift of revenue between categories (transactional to subscription), not a headwind to overall company growth. President and CEO Lee Shavel added that this shift does not impact the long-term growth opportunity. Shavel also confirmed his earlier comment of 8% growth referred to the two-year compound annual growth rate for total organic constant currency revenue.

Andrew Steinerman asked for an adjective to describe Robert Half's fourth-quarter revenue guidance compared to the third quarter, specifically questioning if the guide was conservative given that the sequential revenue pickup was below typical seasonal patterns.

Answer

CEO Keith Waddell described the guidance as conservative. He explained that current run rates from September and October suggest a higher sequential growth (1.5% to 2%) than the barely positive growth forecast in the guidance, creating a cushion. He also noted that while a seasonal uptick is traditional, it hasn't occurred in the last three years, making the current trend not purely seasonal.

Andrew Steinerman asked CEO Keith Waddell to describe the fourth quarter revenue guidance using an adjective, noting that the sequential pickup on the flex side was still below typical seasonal patterns.

Answer

CEO Keith Waddell described the Q4 revenue guide as conservative. He explained that current September and early October run rates suggest a 1.5-2 point sequential growth, while the forecast is barely positive, providing a cushion. He acknowledged that traditional seasonal upticks haven't occurred in the last three years, making the current trend not purely normal.

Andrew Steinerman inquired about the long-term trend in Robert Half's bill rates, asking for the unadjusted year-over-year increase to understand the impact of the company's ongoing shift towards higher-skilled roles.

Answer

President & CEO M. Keith Waddell confirmed that the unadjusted bill rate would be higher than the reported 3.8% mix-adjusted figure. He noted that the positive mix shift has historically contributed an additional 100 to 200 basis points to bill rate growth, reflecting a multi-year trend.

Andrew Steinerman asked for more details on the administrative cost-saving efficiencies in both the Talent Solutions and Protiviti segments. He sought to understand if these were technology-enabled and what the impact would be on the productivity of revenue-generating staff.

Answer

Executive M. Waddell explained that the cost reductions were a response to negative leverage on administrative overhead and were enabled by technology improvements and lower business volumes. He clarified that the majority of the cuts were in corporate services and field management, ensuring there would be 'very, very little impact' on the support provided to revenue-producing roles.

Andrew Steinerman of JPMorgan Chase & Co. asked whether the recent surge in business confidence has translated into an actual increase in new orders for Robert Half's contract business. He also questioned if the IT contract segment, which has shown relative strength, is expected to have a different and potentially faster recovery trajectory than the Finance & Accounting (F&A) segment.

Answer

Executive M. Waddell acknowledged that while the tone of client conversations has improved significantly, it is still too early to see an uptick in actual starts and placements, noting the Q1 guidance conservatively assumes a flat trend. Waddell confirmed that the technology segment has performed better, driven by data and ERP modernization, and agreed it wouldn't be surprising if tech outperforms F&A in the next cycle, while remaining optimistic about F&A as well.

Andrew Steinerman inquired about recent trends in new orders for contract staffing and which specific areas of the business are expected to rebound first.

Answer

CEO M. Waddell highlighted a 14-week period of stable and consistent weekly results, a positive shift from the previous downward drift, indicating a modest pickup in orders. He anticipates that higher-skilled roles, particularly within Robert Half Technology, will likely lead the recovery.

Andrew Steinerman sought clarification on the discrepancy between a Wall Street Journal article citing a decline in U.S. refi walls and Moody's more favorable outlook presented in slide six.

Answer

Rob Fauber, President and Chief Executive Officer, clarified that the article likely referred to U.S. spec grade, which was down 5-6% and represents only a subset of broader maturities. He highlighted that a significant portion of maturities are beyond four years, and shortening average tenors due to the steepening yield curve will ultimately be positive for future refinancing.

Andrew Steinerman sought clarification on a Wall Street Journal article citing a decline in U.S. refi walls, contrasting it with Moody's more favorable outlook presented in their report and on slide six.

Answer

Rob Fauber, President and Chief Executive Officer of Moody's Corporation, clarified that the article likely referred to a subset of broader maturities, specifically U.S. spec-grade, which was down 5% to 6%. He noted that a significant portion of maturities extends beyond the four-year horizon due to shortening average tenors, which he believes will be positive for future refinancing needs.

Andrew Steinerman of JPMorgan Chase & Co. asked about the contribution from M&A to revenue in the fourth quarter for both MA and MIS, and whether the recent CAPE Analytics acquisition was included in the 2025 guidance.

Answer

CFO Noemie Heuland reported that the M&A contribution in 2024 was minimal, at about 25 basis points for MA. For the full-year 2025 guidance, she stated that the net impact from M&A tailwinds and FX headwinds is not material. Both she and CEO Robert Fauber confirmed that the CAPE Analytics acquisition is factored into the 2025 outlook.

Andrew Steinerman asked for confirmation on recent acquisition activity, specifically inquiring about the revenue and ARR contribution from the Praedicat acquisition in Q3 and the Q4 forecast.

Answer

CEO Robert Fauber clarified that besides Praedicat, Moody's also acquired the remaining interest in GCR, an African rating agency, but stated both are financially immaterial. He confirmed Praedicat's results are not in Q3 and that ARR is an organic metric, so it would not include acquisition contributions. He emphasized Praedicat's strategic value in expanding into casualty risk analytics.

Andrew Steinerman inquired about the specific drivers behind the general corporate expense line in the third quarter.

Answer

John Gamble, Chief Financial Officer, and Mark Begor, Chief Executive Officer, clarified that the increase in general corporate expense was primarily driven by higher variable compensation, reflecting the company's substantially better overall performance, higher revenue, and operating income in the second half of 2025 compared to prior guidance.

Andrew Steinerman inquired about the drivers behind the general corporate expense line increase in the third quarter.

Answer

CFO John Gamble attributed the increase in general corporate expense primarily to higher variable compensation, reflecting the company's substantially better overall performance, higher revenue, and operating income in the second half of 2025 compared to prior guidance.

Andrew Steinerman asked for the percentage of total revenue that mortgage represented in the second quarter and inquired about the current trends in non-mortgage lender and consumer credit activity at the start of the third quarter.

Answer

CFO John Gamble stated that mortgage revenue was 22% of total revenue in Q2. He noted that non-mortgage activity continues to be relatively good, with auto remaining strong and the Financial Institutions (FI) segment expected to strengthen in Q3 after a slight dip in growth rate due to a tough prior-year comparison.

Andrew Steinerman requested the percentage of U.S. mortgage revenues for the quarter and asked for a reconciliation of the low first-quarter free cash flow conversion rate with the strong full-year guidance.

Answer

CFO John Gamble stated that U.S. mortgage revenue was 21% of total revenue. He explained that first-quarter free cash flow is seasonally low due to the payout of prior-year variable compensation, which was substantially larger this year than in Q1 2024. Normalizing for this, FCF growth would be over 20% YoY, consistent with the full-year $900 million guidance.

Andrew Steinerman asked for the percentage of total revenue from mortgage in Q4 2024 and for a definition of "U.S. hard mortgage credit inquiries," questioning why it differs from MBA application data.

Answer

CFO John Gamble stated that mortgage revenue was 17.7% of total revenue in Q4 2024. He defined hard inquiries as those that impact a consumer's credit file, unlike soft inquiries for pre-qualification, and noted this metric has been disclosed consistently for over a decade and correlates well with originations over time.

Andrew Steinerman asked about the expected early cycle pickup in flexible staffing volumes when business confidence improves beyond Q4 2025 guidance, and commented on the unusual simultaneous softness in outplacement and permanent recruitment impacting gross margins.

Answer

Chairman and CEO Jonas Prising noted the current 'frozen labor market' with little hiring or workforce reductions, impacting perm, RPO, and Right Management. He expressed hope for a return to industry dynamics with better Manpower growth and benefits for other brands when employer confidence returns.

Andrew Steinerman asked about the expected early cycle pickup in flexible staffing volumes when business confidence improves beyond Q4 2025 guidance, and inquired if the current simultaneous softness in outplacement and permanent recruitment impacting gross margins is an unusual trend.

Answer

Chairman and CEO Jonas Prising characterized the current labor market as 'frozen' with little hiring or workforce reductions, impacting perm and RPO, as well as Right Management. He expressed hope for a return to industry dynamics with better Manpower growth and benefits for other brands once employer confidence returns. EVP and CFO Jack McGinnis attributed gross margin impacts primarily to a mix shift towards enterprise accounts, softer permanent recruitment, and lower outplacement activity, noting no dramatic changes in pricing.

Andrew Steinerman from JPMorgan Chase & Co. asked about the accelerated 9% growth in the U.S. Manpower brand, seeking to understand the drivers between Light Industrial and Clerical, and whether it was due to market improvement or share gains.

Answer

Chairman & CEO Jonas Prising attributed the strong performance to a combination of factors. He noted that the manufacturing side is slightly stronger and that ManpowerGroup is actively taking share through more granular and accurate targeting of industry verticals, enabled by its PowerSuite technology. He also added that he senses the overall market is starting to improve.

Andrew Steinerman asked about the potential for a business rebound ManpowerGroup might anticipate if the uncertainty around U.S. tariffs were to be resolved in a reasonable manner.

Answer

CEO Jonas Prising responded that a resolution to the trade policy uncertainty could lead to a very quick turnaround in employer confidence. He noted that the first quarter was already stronger than anticipated in some areas, with positive growth in the U.S., Italy, and Spain. Prising emphasized that the core issue is employer confidence, and removing the policy hurdle could unlock pent-up demand, especially as European policymakers are already focused on improving competitiveness.

Andrew Steinerman asked for a detailed bridge explaining the sequential earnings per share (EPS) decline from the reported Q4 adjusted EPS of $1.02 to the Q1 guidance midpoint of $0.52.

Answer

Chief Financial Officer John McGinnis attributed the decline to a 60 basis point sequential drop in EBITDA margin, which he noted is consistent with historical seasonality. McGinnis explained that revenue is also impacted by recent business dispositions in Korea and Austria, fewer workdays in the quarter, and typical seasonal contract resets in the Americas and APME, particularly within the Talent Solutions and Manpower brands.

Andrew Steinerman of JPMorgan Chase & Co. sought clarification on whether the positive July trends related to base revenue or total organic growth. He also asked about the role of voluntary debt prepayments in achieving the company's net leverage target.

Answer

CFO Steven Marks clarified that the positive July trends were seen in both base revenue normalization and total organic growth, driven by go-to-market success and easier comps. He also confirmed that the plan to reach the ~3x net leverage target includes continued voluntary debt prepayments, which are expected to occur roughly quarterly, supported by strong and recently enhanced free cash flow projections.

Andrew Steinerman asked if the original IPO growth algorithm target of 2-4% for base revenue is a reasonable medium-term expectation after the company gets back to neutral this year, considering current labor market trends like quits.

Answer

CEO Scott Staples affirmed that while key labor metrics have shown 'stability despite uncertainty,' he believes returning to a 2-4% positive base growth is achievable but likely not until early 2026. He stated the model has them reaching neutral base growth by the end of 2025, supported by easier comps and the conversion of a record number of deal wins from the previous year into the base.

Andrew Steinerman asked if First Advantage is tracking Net Promoter Scores (NPS) pre- and post-merger to monitor client satisfaction, and requested an update on the financial impact of its verified database following the Sterling combination.

Answer

CEO Scott Staples confirmed the continued use of NPS to measure customer and candidate experience, noting increased communication with Sterling's client base has been met with excitement for the merger. He clarified that the proprietary database has grown to 900 million records due to new third-party data partnerships, but this figure does not yet include Sterling's data, which is a project for later in the year.

Andrew Steinerman questioned the comment that 2025 EPS accretion from the Sterling deal would be 'more neutral,' asking if this represented a change in outlook and what underlying base revenue assumptions were being made for the combined entity.

Answer

CEO Scott Staples and CFO Steven Marks clarified this was not a change in the ultimate synergy outlook but a comment on the timing of reported results. They explained that interest expense and share dilution are recognized immediately, while the financial benefits of synergies are realized over time. Therefore, the actual reported EPS accretion in 2025 will appear more neutral before the full run-rate synergies are achieved. They deferred providing specific 2025 base revenue assumptions.

Andrew Steinerman of JPMorgan Chase & Co. asked for clarification on the new Westlaw Advantage product, specifically if it's a separate, higher subscription tier creating a new penetration opportunity. He also inquired about improvements to the user interface integration across the Westlaw and CoCounsel suite.

Answer

Chief Product Officer David Wong confirmed that Westlaw Advantage is a new, higher subscription tier that customers must upgrade to in order to access the 'crown jewel' capability, Deep Research. He also stated that the recent launch of CoCounsel Legal introduces a much more seamlessly integrated experience for CoCounsel, Westlaw, and Practical Law, and that continuing to enhance the user experience is a top priority.

Andrew Steinerman of JPMorgan Chase & Co. asked about the magnitude of expenses that shifted from Q1 to Q2 and inquired about the end-user adoption rates for AI products among existing law firm and in-house legal clients.

Answer

CFO Mike Eastwood confirmed some expense timing shifted from Q1 to Q2, impacting the quarterly margin profile, but reaffirmed the full-year guidance of approximately 39%. CEO Steve Hasker described end-user adoption of AI tools as 'healthy,' particularly in the corporate legal space, and noted the company is investing heavily in customer success teams to support and monitor usage.

Speaking for Andrew Steinerman of JPMorgan Chase & Co., Stephanie Yee asked about the drivers of the strong organic revenue growth in the Corporates segment and whether it was primarily attributable to Legal or Tax products.

Answer

CFO Mike Eastwood highlighted the Corporates segment's 10% organic growth in H1 2024, noting comparable growth in the underlying net sales book of business gives them confidence. He attributed the strong performance to execution across the portfolio, including Practical Law, CLEAR, Indirect Tax (which includes Pagero), and international businesses, rather than one specific product category. He expressed cautious optimism about overcoming previously noted elongated sales cycles.

Andrew Steinerman of JPMorgan Chase & Co. sought clarification on the 'low single-digit' enrollment growth forecast for the full-service segment, asking for a more specific figure and an update on how September enrollments were trending.

Answer

Chief Financial Officer Elizabeth Boland clarified that 'low single-digit' means approximately 2% growth, similar to the current quarter. She added that the fall enrollment cycle is in 'full froth' with good lead generation, and the company feels positive about achieving that level, with a particular focus on infant and toddler enrollment.

Andrew Steinerman asked about the expected trajectory of the mid-60s utilization rate for full-service centers throughout 2025 and the timeline to return to pre-COVID levels.

Answer

CFO Elizabeth Boland projected that utilization would increase in Q2 before tapering in the second half, averaging in the mid-60s for the full year. She stated that at the current pace of 2-3% annual enrollment growth, it would likely take another couple of years to reach the pre-COVID 70% occupancy threshold, a process involving both enrollment growth and pruning underperforming centers.

Andrew Steinerman questioned the 2025 forecast of a mere 0.5% revenue drag from net center closings, noting it seemed low compared to the 1-2% drag seen in pre-COVID years. He also asked for the specific revenue drag from closings in the fourth quarter.

Answer

CFO Elizabeth Boland clarified that the 0.5% figure is a net impact of openings and closings. She explained that centers being closed are already significantly under-enrolled with tapered revenue, thus their closure has a smaller impact than historical averages. For Q4, the net headwind from center activity was approximately 100 basis points.

Andrew Steinerman inquired about Bright Horizons' organic constant currency revenue growth for the third quarter after accounting for center closings, and also asked about the contribution from M&A over the past year.

Answer

Chief Financial Officer Elizabeth Boland clarified that for the Full Service segment, total revenue growth was 9.4%. Of this, organic constant currency growth was 8%, with foreign exchange contributing approximately 100 basis points and M&A adding about 50 basis points.

Andrew Steinerman from JPMorgan Chase & Co. asked about the momentum in alternative data bureaus like Factor Trust and its connection to loan growth, and also requested an update on the performance of the pending Mexico acquisition and the reasons for its extended closing timeline.

Answer

President and CEO Chris Cartwright attributed the strong momentum of Factor Trust to its re-platforming onto the OneTrue platform, which has enabled significant product innovation, leading to more business wins, particularly in consumer lending and auto. Regarding the Mexico acquisition, he stated the asset is performing well and on plan, and the lengthy closing process is standard for the jurisdiction and not a cause for concern.

Andrew Steinerman inquired about two topics: whether the 90% free cash flow conversion target for 2026 remains intact and the expected growth trend for U.S. Financial Services in the second quarter.

Answer

EVP and CFO Todd Cello reaffirmed the 90%-plus free cash flow conversion target for 2026, attributing it to the conclusion of one-time transformation spending and a reduction in CapEx to 6% of revenue. Regarding Q2 trends, Mr. Cello noted that strong Q1 performance in Financial Services has continued into the current quarter with no signs of negative impact, though the auto segment is being watched closely for a potential pull-forward effect.

Andrew Steinerman asked for a breakdown of the 2025 Consumer Interactive (CI) revenue outlook, inquiring about the expected performance of the direct versus indirect channels and the potential impact of the new freemium offering on other indirect partners.

Answer

CEO Christopher Cartwright emphasized the strategic importance of the new freemium model with Credit Sesame, highlighting how it broadens the product suite with identity protection and offers capabilities. He explained this reset is designed to improve growth across both direct and indirect channels over time by providing a more comprehensive and appealing consumer product.

Andrew Steinerman of JPMorgan Chase & Co. asked for TransUnion's assumptions regarding consumer credit activity for the fourth-quarter guidance and the directional outlook heading into 2025.

Answer

EVP and CFO Todd Cello stated that the Q4 guide assumes stable but muted, flattish volumes, with an expectation of mid-single-digit growth in Financial Services (ex-mortgage) as comparisons ease. He clarified that the guidance does not assume a material benefit from recent interest rate cuts in 2024, but expects a positive medium-term impact in 2025, particularly for rate-sensitive areas like consumer lending (Fintech) and auto.

Andrew Steinerman of JPMorgan Chase & Co. asked if the company is now realizing benefits from its CRM/ABS system, particularly in merchandise control, and questioned whether the new ERP system includes route management.

Answer

President & CEO Steven Sintros confirmed the company is "absolutely" realizing benefits from the ABS system, linking it to recent improvements in merchandise costs. He clarified that the new ERP system does not specifically handle route optimization. However, he explained that the ABS system's data, combined with a new telematics implementation for the fleet, will provide the necessary tools to advance route optimization efforts separately.

Andrew Steinerman asked for UniFirst's current Net Promoter Score (NPS), how improved service quality should translate into market share gains, and the frequency of the NPS surveys.

Answer

President and CEO Steven Sintros declined to provide a specific NPS figure but confirmed the scores are improving and correlate with better staffing stability and customer retention. He affirmed the strategic belief that enhancing the customer experience and service quality is key to winning more business and reducing customer losses. He described the NPS survey as an ongoing, fluid program rather than a single event.

Andrew Steinerman of JPMorgan Chase & Co. asked about the company's new Net Promoter Score (NPS) program, inquiring if management would share the current score and future ambitions. He also questioned if the current score reflects UniFirst's goal of achieving the industry's highest quality of service.

Answer

President and CEO Steven Sintros explained that since the NPS program is only about a year old, they are not disclosing the specific score externally at this time but may do so in the future. He emphasized that the program is a critical tool for gathering unfiltered customer feedback to drive toward their service vision. Sintros believes the company is starting from a 'solid place' and is now establishing internal improvement goals by location and region.

Andrew Steinerman asked for confirmation of the company's medium-term growth algorithm, specifically the 1-2% annual occupancy growth target, and requested the revenue contribution from M&A over the last 12 months.

Answer

CEO Paul Thompson reaffirmed the company's confidence in its long-term growth algorithm, anticipating 1-2% annual occupancy growth beginning in 2026. CFO Tony Amandi specified that revenue from tuck-in acquisitions totaled $5.5 million over the trailing 12 months.

Andrew Steinerman asked for insight into first-quarter 2025 performance relative to the full-year guidance and inquired about the specific revenue contribution from M&A in the fourth quarter of 2024.

Answer

CFO Tony Amandi stated that Q1 2025 trends were consistent with the full-year outlook but declined to provide specific quarterly guidance. He confirmed that acquisitions not yet in the same-center pool contributed $4.6 million to revenue in Q4 2024.

Andrew Steinerman asked for the specific revenue contribution from M&A in Q3 and sought clarification on whether the 1% enrollment growth was from same-centers or included new centers.

Answer

CFO Anthony Amandi stated that $9.1 million in Q3 revenue came from centers not in the same-center base, which includes both acquisitions and new builds. He clarified that the 1% enrollment growth figure includes all centers and that year-to-date same-center enrollment was relatively flat, with the increase primarily driven by new centers.

Asked for clarification on the fourth-quarter organic revenue growth guidance, excluding acquisitions, and requested an update on the HUGO digital platform's business traction and performance.

Answer

The company clarified that at the midpoint, Q4 organic same-day revenue is expected to be down 17% year-over-year, excluding the Reference Point acquisition. Regarding HUGO, it has been integrated into the On-Demand segment and has improved talent-side operations. However, the client self-service model has not gained traction, leading to a strategic shift to push it as a managed service within the existing client base while reducing its standalone costs.

Andrew Steinerman asked about the pace of project endings in November and December compared to a typical year and requested the year-over-year revenue change implied by the Q3 guidance.

Answer

Executive Bhadresh Patel responded that project cyclicality is less pronounced than in the past and they manage project endings continuously, not seeing unusual end-of-year cliffs. CFO Jennifer Ryu stated that the midpoint of the Q3 revenue guidance represents a 15% year-over-year decline on an organic, same-day, constant currency basis.

Andrew Steinerman asked which software partnerships remain key channels for Sales & Marketing solutions following the recent exits, and whether this indicates a broader strategic shift toward a more direct-to-client sales model.

Answer

CEO Anthony Jabbour confirmed a strategic emphasis on a direct-to-client approach, noting that while they remain open to complementary alliances, strengthening their own go-to-market capabilities is a priority. CFO Bryan Hipsher added that this direct model allows Dun & Bradstreet to capture more of the economic value from its client relationships.

Andrew Steinerman inquired about the launch of the D&B Credit Insights product, asking how it will boost revenue for the Credibility segment, how it differs from legacy products, and its relative pricing.

Answer

CEO Anthony Jabbour explained that the updated product is easier for clients to use, which has materially improved attrition. He emphasized the new money-back guarantee as a powerful and simple value proposition that is already showing positive sales results. CFO Bryan Hipsher added that the product's pricing is consistent with legacy offerings and that the use of broader data assets, like financial statements and utility payments, provides a more holistic credit picture, potentially lifting client credit scores by 20%.

Andrew Steinerman of JPMorgan Chase & Co. asked about the overall health of Dun & Bradstreet's clients and their receptivity to buying services, specifically focusing on the sales cycle for cross-selling and new logos.

Answer

CEO Anthony Jabbour stated that client health is consistent with the guidance provided in February, with sales cycles remaining stable. He noted that while supply chain concerns are a tailwind, the Sales and Marketing segment has seen some softness in digital marketing due to tough comparisons from the prior year. CFO Bryan Hipsher added that the strength of the Master Data Management (MDM) solutions provides a stable and growing foundation for the overall Sales and Marketing business.