Scott Wurtzel

Scott Wurtzel inquired about the impact of First Advantage's digital identity products on margins, particularly relative to other product offerings.

Answer

Steven Marks, Chief Financial Officer, stated that digital identity is a higher-margin product because it avoids the costs associated with acquiring court data, driver records, or drug screening data, functioning primarily as a core tech service. He reiterated that its discrete impact is challenging to separate due to bundling, but emphasized its significant benefit as it drives new customer opportunities, effectively acting as a "marketing mechanism."

Scott Wurtzel inquired about the impact of digital identity on margins relative to other products offered by First Advantage.

Answer

Steven Marks, CFO, stated that digital identity is a higher-margin product because it doesn't incur costs associated with acquiring external data like court or driver records. Scott Staples, CEO, added that it also acts as a marketing mechanism, driving overall opportunities and benefits.

Scott Wurtzel of Wolfe Research, LLC inquired about the primary focus of the "Collaborate" user conferences, asking whether they are geared towards sales or educating customers, particularly legacy Sterling clients, on the combined company's offerings.

Answer

CEO Scott Staples clarified that the Collaborate conferences are deliberately not sales-focused events. He explained their main purpose is to facilitate collaboration, discuss industry trends, and gather direct customer feedback to inform the company's product roadmap, though they do naturally generate a sales pipeline as a secondary benefit.

Scott Wurtzel asked about performance trends in the international business relative to the U.S. and requested more detail on the implementation and customer impact of AI agents in criminal records processing.

Answer

CEO Scott Staples reported strong international growth of 8%, noting it was broad-based across regions and verticals, and mentioned that international markets have a stronger focus on risk and compliance. Regarding AI agents, he described it as a 'behind-the-scenes' enhancement that improves turnaround time and quality for customers, deferring more specific details to the upcoming Investor Day to protect competitive information.

Scott Wurtzel inquired about the drivers of accelerated upsell and cross-sell growth at legacy Sterling and asked for growth expectations for the legacy First Advantage business in the coming year.

Answer

CFO Steven Marks attributed Sterling's recent upsell strength to a large 2023 healthcare win that annualized in 2024 and new opportunities from the Vault acquisition. CEO Scott Staples emphasized that they no longer operate as separate 'legacy' businesses, but as one integrated company. He pointed to the combined team's success, booking 25 large enterprise deals in Q4, as proof that the market has embraced the merger and the unified go-to-market strategy.

Scott Wurtzel asked what aspects of the merger Sterling's customers were most excited about, such as new products or features. He also requested a reminder on the company's capital allocation priorities and the expected cadence of debt paydown post-acquisition.

Answer

CEO Scott Staples highlighted that Sterling customers are excited about gaining access to First Advantage's automation, speed, and particularly the 'click to chat' customer service feature, which Sterling lacked. He also noted excitement for FA's annual 'Collaborate' customer event. CFO Steven Marks stated that the top capital allocation priorities are completing the integration, capturing synergies, retaining customers, and then deleveraging toward their target range through cash flow generation and debt paydown.

Scott Wurtzel followed up on earlier booking discussions, requesting qualitative or directional commentary on Apartments.com and Homes.com bookings for the quarter relative to the previous quarter.

Answer

CoStar Group CFO Chris Lown stated that the company has provided new disclosures with new segments and the second highest net new bookings number in company history. He reiterated confidence in the Apartments.com and Homes.com businesses and their trajectory, declining to provide specific segment-level booking numbers.

Scott Wurtzel requested commentary on Apartments.com and Homes.com bookings for the quarter, seeking directional or qualitative insights relative to the previous quarter.

Answer

CoStar Group CFO Chris Lown stated that the company has provided new segment disclosures and reported the second highest net new bookings number in company history. He reiterated confidence in the Apartments.com and Homes.com businesses and their trajectory, declining to provide specific booking numbers for individual segments.

Scott Wurtzel asked for more detail on the 97% of revenue coming from proprietary data and how tech-enabled services and workflows fit into that figure.

Answer

Matti Shem Tov (CEO) clarified that 97% of the business derives from proprietary data, with 60% from information services and 20% from enterprise software. He emphasized that value comes from curation, enhancement, and embedding data into customer workflows, citing Web of Science and Cortellis as examples. He also discussed the workflow element, mentioning IPMS, Alma, and Polaris software, and how AI accelerates development without commoditizing coding.

Scott Wurtzel requested more detail on how Clarivate's 97% proprietary data revenue is composed, specifically how tech-enabled services and workflows contribute to this figure.

Answer

CEO Matti Shem Tov clarified that 97% of the business uses proprietary data, with 60% from information services and 20% from enterprise software. He explained that value comes from curation, enhancement, and embedding data in customer workflows, citing Web of Science and Cortellis as examples. He also noted that AI amplifies their existing strengths in enterprise software, enhancing development and competitive advantages.

Scott Wurtzel from Wolfe Research asked for an update on Clarivate's value creation plan, focusing on new product innovations like Alma Spectre and the Authex AI research assistant, and their anticipated impact on the overall business.

Answer

Matti Tov, CEO, emphasized product innovation as a fundamental piece of the value creation plan, detailing AI enablement of existing products to improve retention and competitiveness, and the introduction of native AI-born products such as Riskmark and Web of Science Research Intelligence. He noted strong customer collaboration in product development and a renewed energy around innovation across all segments.

Scott Wurtzel requested an update on the competitive dynamics within the auto personal lines business, which has been a headwind to growth, and the actions Verisk is taking to address these competitive challenges.

Answer

Lee Shavel, President and CEO of Verisk Analytics, introduced Rob Kempa, who leads Verisk's auto underwriting business. Rob Kempa explained that challenges stem from one-time revenues peaking in 2024 due to lack of demand for non-rate action products, and competitive pressures on undifferentiated products. Verisk is focused on delivering differentiated analytics, such as a new enhancement to its flagship Coverage Verify product, which provides new ratable insights at the point of quote. This innovation is generating significant client interest and is central to Verisk's strategy for long-term subscription growth.

Scott Wurtzel requested an update on competitive dynamics in the personal lines auto segment, which has been a growth headwind, and the actions Verisk is taking to mitigate these challenges.

Answer

CEO Lee Shavel deferred to a Company Representative (Rob Kempa), who explained that challenges stem from peaked one-time revenues in 2024 due to lack of demand for non-rate action products, and competitive pressures on undifferentiated products. Verisk is focusing on delivering differentiated analytics to drive long-term subscription growth, exemplified by a new enhancement to their flagship Coverage Verifier product, which provides new ratable insights at the point of quote and is generating significant client interest.

Scott Wurtzel asked if Verisk could undertake any technical integration work for AccuLynx during the interim period of the FTC review delay to expedite the overall integration process once the deal is approved.

Answer

CFO Elizabeth Mann stated that, due to legal requirements, Verisk and AccuLynx must operate independently as two separate companies until the approval is granted, meaning no technical integration can occur.

Scott Wurtzel inquired whether Verisk could undertake any technical integration work for AccuLynx during the delay caused by the second FTC request, to potentially speed up the overall integration process once the deal is eventually closed.

Answer

Elizabeth Mann, Verisk's Chief Financial Officer, stated that legally, the companies must operate independently until approval is granted, meaning no technical integration can occur during this interim period.

Scott Wurtzel requested more details on the pull-forward of investments into the Market Intelligence (MI) business in Q4 2025 and sought qualitative insights into MI's expected expense growth and margin expansion for 2026.

Answer

Eric Aboaf, Chief Financial Officer, explained that Q4 MI expenses were impacted by the early integration of With Intelligence (which initially lowers margins but has strong expansion plans) and the pull-forward of strategic investments, particularly in technology, feature functionality, and AI infrastructure. These investments are aimed at expanding AI features and driving future growth. For 2026, S&P Global expects overall margin expansion of 50-75 basis points. While MI has the largest potential for margin expansion over time, it is expected to be solidly in the middle of the guide for 2026 due to the unpredictability of volumetric revenues. If volumetric growth mirrors 2025, MI could reach the higher end of the range.

Scott Wurtzel requested more details on the pull-forward of investments into the Market Intelligence business in Q4 and sought qualitative color on the expected expense growth or margins for MI in 2026.

Answer

Eric Aboaf, Chief Financial Officer, explained that Q4 MI expenses included the early integration of With Intelligence and pull-forward of technology feature functionality investments, particularly in AI infrastructure, to drive top-line growth. He noted that MI's margin would have been approximately 80 basis points higher without these incremental investments and the earlier-than-expected acquisition close. For 2026, MI is expected to be solidly in the middle of the aggregate 50-75 basis point margin expansion guide, with potential upside if volumetric revenue growth performs better.

Scott Wurtzel inquired about the strength of private markets growth, and how S&P Global's positioning in private markets data sets is evolving following partnerships with Cambridge Associates and Mercer, and the acquisition of With Intelligence.

Answer

Martina Cheung, President and CEO, attributed strong private markets growth to robust issuance in ratings (debt, structured finance, data center securitization, middle market). She highlighted the Cambridge Associates/Mercer partnership for addressing a market gap in like-for-like benchmark performance and the With Intelligence acquisition for accelerating initiatives in deal sourcing, allocation, and performance benchmarking with its unique multi-asset class data (private equity, credit, infrastructure, family offices, 30,000 managers/investors).

Scott Wurtzel asked about the strength of private markets growth, particularly after the Cambridge Associates and Mercer partnerships and the pending acquisition of With Intelligence, and how S&P Global's private markets data sets are positioned.

Answer

Martina Cheung, President and CEO, explained that strong private markets growth was driven by robust issuance in ratings, including debt ratings, structured finance, and middle market activity. She expressed excitement about the growth opportunities from the With Intelligence acquisition and the Cambridge Associates/Mercer partnership, which addresses market gaps by providing like-for-like benchmarking and unique data for deal sourcing and performance.

Scott Wurtzel asked for more detail on the Chief Client Office (CCO), specifically the criteria used for selecting strategic clients to be included in the initiative.

Answer

President & CEO Martina Cheung stated that the company is very selective, with about 130 clients currently in the CCO program. The goal is to keep the team relatively small to provide deep, individualized attention and partner with these key clients for value creation, citing the recent multiyear partnership with Barclays as an emblematic example of the CCO's success.

Scott Wurtzel asked for more details on the Chief Client Office (CCO) initiative, specifically the criteria used for selecting strategic clients to be included in the program.

Answer

President & CEO Martina Cheung stated that the company is very selective about adding clients to the CCO program, which currently includes about 130 customers. The goal is to keep the team relatively small to provide deep, individualized attention and partner with clients for value creation. She highlighted the recent Barclays deal as emblematic of the strategic engagements the CCO is fostering.

Scott Wurtzel asked about the performance of private credit within the Ratings division relative to expectations and the assumed growth contribution from this area for the remainder of the year.

Answer

CEO Martina Cheung stated that performance has been strong, with high demand for S&P ratings in private markets and good results in areas like middle-market CLOs. However, she cautioned that the company does not have 'heroic assumptions' for private credit growth for the rest of 2025, given tough year-over-year comparisons and a general moderation in the issuance environment.

Scott Wurtzel of Wolfe Research, LLC asked for more color on the investment priorities within the S&P Dow Jones Indices segment, where profits are being reinvested for future growth.

Answer

President and CEO Martina Cheung stated that the company sees a wide range of investment opportunities across the Indices division. She highlighted multi-asset class indices, factors, thematics, sustainability indices, and continued investment in exchange-traded derivatives (ETDs) as priorities justifying the reinvestment.

Scott Wurtzel asked about the source of revenue synergies, questioning if their divisional origins are shifting given the varied performance across segments like Market Intelligence and Ratings.

Answer

President and CEO Douglas Peterson stated that synergy performance is ahead of expectations, with cross-selling being a particularly strong contributor. He highlighted the new Chief Client Officer role, to be filled by Sally Moore, as a key initiative designed to unlock even more cross-divisional opportunities. He also noted that new product launches are a significant and successful component of the synergy strategy.

Scott Wurtzel asked if a ramp in Workforce Solutions (EWS) margins should be expected throughout the year, given new government revenue in the second half. He also inquired about the macro assumptions in key international geographies (Canada, UK, Brazil) underpinning Equifax's guidance for the year.

Answer

Mark Begor, Chief Executive Officer, stated that the goal is to maintain EWS's 50%+ EBITDA margins, which are highly accretive, while continuing investments in new products, technology, and AI to sustain double-digit top-line growth. The 75 basis points overall Equifax margin expansion (ex-FICO) is driven by EWS's faster growth and operating leverage across the rest of Equifax. For international markets, Mr. Begor acknowledged macro challenges in Canada (tariff conversations) and the UK (debt management pressure), expecting better performance from Canada in 2026 than 2025. Australia is stable, and Latin America, particularly Brazil (Boa Vista acquisition), is performing well despite some economic conditions. International guidance is at the lower end of its long-term range due to these weaknesses.

Scott Wurtzel asked if a ramp in EWS margins should be expected throughout the year, given new government revenue in the second half. He also inquired about the outlook on international markets, specifically macro assumptions in key geographies like Canada, the UK, and Brazil.

Answer

CEO Mark Begor stated that the goal is to maintain EWS's 50%+ EBITDA margins while investing in top-line growth (new products, technology, AI), which is accretive to overall Equifax margins. For international, Begor acknowledged macro challenges in Canada and the UK (debt management pressure, tariff conversations), but noted Australia is stable and Latin America (especially Brazil via Boa Vista) shows strong performance and share gains. International guidance is at the lower end of the long-term framework due to these weaknesses.

Scott Wurtzel asked about the potential impacts of an extended government shutdown on the government vertical, specifically concerning federal program contracts and any state-level programs tied to federal funding. He also inquired about the drivers behind the strong 16% vitality index in the quarter and the raised full-year guidance, beyond the I-9 virtual product.

Answer

Mark Begor, Chief Executive Officer, stated that any impacts from a shutdown are currently seen as a deferral of revenue, not a loss, as applicants would still need services. He noted that state-level programs are not directly impacted as states continue to deliver social services, and the current guidance assumes the shutdown will be resolved without material impact. Mark Begor attributed the strong vitality to groundwork laid over three to four years in product development, increased bandwidth post-cloud transformation, and enhanced DNA for innovation. He highlighted the Twin indicator for mortgage (and future auto, card, P loans), new identity scores leveraging account data, and AI-powered enhancements to the Ignite analytics engine as key drivers.

Scott Wurtzel asked about the potential impacts of an extended government shutdown on the government vertical, including state-level programs tied to federal funding. He also inquired about other products driving the 16% vitality index besides i9 Virtual and the reasons for raising guidance.

Answer

CEO Mark Begor stated that any shutdown impacts would likely be a deferral of revenue, not a loss, and states are not directly impacted. He noted that the guidance assumes a short shutdown. He attributed the strong vitality index to increased product resources, post-cloud bandwidth, and strong DNA, highlighting the Twin indicator for mortgage (and other verticals), new identity scores, and AI enhancements to the Ignite analytics engine as key drivers.

Scott Wurtzel inquired why the USIS margin guidance was maintained for the year despite an increase in the revenue growth forecast for the segment.

Answer

CFO John Gamble explained that the margin guidance was held steady because much of the revenue outperformance is in the lower-margin mortgage business due to FICO and TriMerge costs. Additionally, the segment is continuing to invest aggressively in new products to drive future growth, which also impacts the margin.

Scott Wurtzel asked for an update on the full-year outlook for U.S. hiring and questioned the rationale for maintaining the mortgage inquiries outlook after a strong Q1 performance.

Answer

CFO John Gamble confirmed the full-year guidance for U.S. hiring remains unchanged. CEO Mark Begor explained that while Q1 mortgage inquiries benefited from a temporary rate dip, rates have since risen and activity has slowed. The decision to maintain the full-year outlook reflects these more recent, weaker trends observed over the last couple of weeks.

Scott Wurtzel asked for the expected contribution from pricing and penetration to EWS revenue growth in 2025, relative to the company's medium-term framework.

Answer

CEO Mark Begor did not quantify the specific contribution but confirmed that pricing, penetration, new products, and record growth are all key pillars expected to drive EWS growth in 2025. He reiterated that EWS has a greater pricing advantage due to the uniqueness of its data, and that the Vitality Index is expected to again exceed the 10% goal.

Scott Wurtzel of Wolfe Research asked where the most significant 'white space' for penetration exists within the EWS government vertical. He also inquired about a potential widening gap between USIS mortgage inquiries and broader industry application data during the quarter.

Answer

CEO Mark Begor explained that the largest opportunity in the government vertical is not in a specific service but in penetrating state agencies where social service verifications are still performed manually. He emphasized this represents the bulk of the untapped $4 billion TAM. On the mortgage inquiry gap, CFO John Gamble stated that Equifax sees no meaningful changes in its share of hard inquiries and that while pre-qualification activity can shift, overall business performance is strong.

Scott Wurtzel asked about potential changes to Gartner's sales strategy or go-to-market approach for 2026, and the expected phasing of quota-bearing headcount (QBH) growth across GTS and GBS.

Answer

CEO Gene Hall highlighted ongoing sales innovations, including AI-based role-play tools for salesperson training, weekly identification of most valuable content for specific C-level roles, and expanding the role of business developers. He noted that business developer productivity remained strong in 2025, leading to a modest sales force expansion focused on BDs for 2026, positioning for future productivity.

Scott Wurtzel asked about potential changes to Gartner's sales or go-to-market strategy for 2026, given the expanded offerings and improved ease of use, and sought insight into the phasing of quota-bearing headcount (QBH) growth across GTS and GBS.

Answer

CEO Gene Hall explained that while BTI transformation is a major focus, sales innovation continues. Examples include using AI-based role-play tools for salesperson training, weekly identification of most valuable content for specific sales roles, and expanding the role of business developers due to their strong productivity. He noted a modest sales force expansion plan for 2026, particularly in business developers, to position for future growth.

Scott Wurtzel asked for more color on the quota-bearing headcount trend, specifically the increase in GTS and decrease in GBS quarter-over-quarter, given GBS is seen as a stronger growth engine.

Answer

Craig Safian (CFO, Gartner) advised not to read too much into quarter-by-quarter choppiness due to turnover timing. He highlighted that the numbers are net, and ex-US Fed headcount growth would be higher due to recalibration of the US federal sales force. He also emphasized continuous optimization of QBH allocation to target the most profitable, long-term growth opportunities.

Scott Wurtzel asked for more color on the quota-bearing headcount (QBH) trends, noting an increase in GTS and a decrease in GBS quarter-over-quarter, and inquired about the dynamics and optimization strategies behind these movements.

Answer

CFO Craig Safian advised against over-interpreting quarter-over-quarter QBH fluctuations due to the timing of departures and new hires. He clarified that the reported numbers are net, and QBH growth excluding U.S. federal business would be higher. He emphasized Gartner's continuous optimization of QBH allocation, where vacated territories are analyzed to ensure sales assets are aligned with the most profitable, long-term growth opportunities.

Scott Wurtzel asked if the next-gen platform and enterprise fraud solution, which are not yet generally available, are already contributing to the positive bookings growth in the software business.

Answer

CEO Will Lansing clarified that the current bookings growth in the software business predates the general availability of the enterprise fraud solution and the next-gen platform.

Scott Wurtzel from Wolfe Research asked if FICO's enterprise fraud solutions, despite not yet being generally available, are already contributing to the positive bookings growth in the software business.

Answer

Will Lansing, CEO, clarified that the current bookings growth in the software business predates the general availability of the enterprise fraud solutions, meaning they are not yet contributing to the reported growth.

Scott Wurtzel inquired about FICO's FY26 guidance regarding pricing in other score areas, such as auto, and the monetization opportunities there.

Answer

CEO Will Lansing explained that pricing adjustments in other segments are more modest than mortgage. FICO typically applies a cost-of-living/inflation-oriented adjustment across the board, with selective, larger price increases in areas with a significant value gap. He noted that this year's approach is similar to past years, with slightly more than inflation and selective higher adjustments.

Scott Wurtzel asked about FICO's FY2026 guidance assumptions for pricing in other score areas, such as auto, and the monetization opportunities in those segments.

Answer

CEO Will Lansing explained that pricing adjustments in other segments are typically more modest than mortgage, often reflecting a cost-of-living/inflation-oriented adjustment across the board. He noted selective areas with larger "value gaps" might see more significant price increases, but no dramatic changes are expected in any particular segment, similar to past years.

Scott Wurtzel from Wolfe Research, LLC asked if FICO would consider a differentiated pricing model for conforming versus non-conforming mortgages in light of the current regulatory environment.

Answer

CEO Will Lansing acknowledged that FICO constantly evaluates many different pricing models, including pricing differently in various markets. However, he emphasized that any changes would be implemented with extreme caution to avoid unforeseen consequences in such a critical industry.

Scott Wurtzel from Wolfe Research asked for an overall assessment of FICO's software business partner network and its current performance.

Answer

CEO Will Lansing described the indirect channel as a 'big opportunity' that FICO continues to invest in. He highlighted that System Integrators (SIs) are evolving from just handling professional services to building their own proprietary solutions on FICO's IP, creating a more valuable channel partnership.

Scott Wurtzel from Wolfe Research asked for management's overall assessment of the partner network within the software business and its current performance.

Answer

CEO Will Lansing described the indirect channel as a 'big opportunity' that the company continues to invest in to match its distribution strength with its product strength. He highlighted that the strategy involves geographic expansion, vertical diversification, and enabling systems integrators (SIs) to not only handle professional services but also build their own proprietary solutions using FICO's IP, making them a true sales channel.

Scott Wurtzel of Wolfe Research questioned the ACV bookings trend, noting the lack of a sequential increase in Q4, and asked for details on the expense growth assumptions within the fiscal 2025 guidance.

Answer

CFO Steven Weber explained that quarterly ACV bookings can be lumpy and suggested some deals may have been pulled forward into Q3. He noted that combined Q3 and Q4 bookings were consistent year-over-year. For FY25 expenses, Mr. Weber indicated that the guided growth rate is lower than in FY24, which will allow for margin expansion, and any revenue upside would likely come at a high incremental margin.

Scott Wurtzel from Wolfe Research asked about the shift to a more positive outlook for the active asset manager end market, seeking more color on the trends driving this sentiment.

Answer

Henry Fernandez, Chairman and CEO of MSCI, acknowledged the tough environment for active asset managers due to high index concentration. He explained MSCI's strategy to help the industry by facilitating the move of active portfolios to an ETF wrapper, helping create new investment products (shifting from cost center to profit center), and assisting clients in consolidating suppliers. He noted that a meaningful shift in approach in the first half of 2025 is now bearing fruit, with the journey still early but aiming for higher growth.

Scott Wurtzel inquired about the seemingly more positive outlook for the active asset manager end market, asking for more color on the trends driving this shift in sentiment.

Answer

Henry Fernandez, Chairman and CEO of MSCI, acknowledged the challenges faced by active asset managers but outlined MSCI's strategy to help them return to growth and profitability. This includes facilitating the move of active portfolios to ETF wrappers, helping clients create new investment products to turn MSCI into a profit center, and assisting with supplier consolidation. He noted that this changed approach, initiated in the first half of 2025, is beginning to yield positive results.

Scott Wurtzel asked about the nature of the sales momentum in the asset manager end market, specifically whether it represents incremental demand or a release of pent-up demand.

Answer

Andy Wiechmann (CFO, MSCI) stated that the environment for asset managers has been relatively stable, with Q3 strength in index and analytics, particularly in the Americas. He attributed momentum to upselling existing clients with additional content and services, enhanced by product development, and noted a solid 97% retention rate with asset managers.

Scott Wurtzel asked for clarification on the sales momentum within the asset manager end market, specifically whether the 11% sales growth represented incremental demand or a release of pent-up demand, and the expected timeline for these improvements to manifest.

Answer

Andy Wiechmann, Chief Financial Officer, MSCI, stated that the environment remained relatively stable. He attributed the strength in the quarter, particularly in Index and Analytics in the Americas, to selling more to existing clients and upselling additional content and services, enhanced by the product development pipeline. He noted that performance with asset managers can be lumpy but expressed encouragement from solid results and a strong retention rate of about 97% across the company in Q3.

Scott Wurtzel asked about the sustainability of the high-teens run rate growth seen in emerging opportunities like fixed income and wealth management.

Answer

President & COO Baer Pettit expressed confidence in these areas, stating they are important investment priorities for MSCI. While not committing to a specific future growth rate, he noted the company is focused on enhancing both product and go-to-market capabilities and plans to see these strong growth trends continue.

Scott Wurtzel asked if the acceleration in run rate growth for the Sustainability and Climate segment signals a potential inflection point for growth.

Answer

Chairman and CEO Henry Fernandez acknowledged a cyclical headwind for ESG but maintained a belief in the long-term secular growth trend. He described an evolution in demand from simple ratings to more granular underlying data and regulatory compliance tools. In Climate, he noted a shift in focus from long-term transition risk to more immediate physical risk, especially for banks and insurers, which presents a new opportunity for MSCI.

Scott Wurtzel inquired about MSCI's strategic roadmap and priorities for the Wealth segment in 2025, aiming to understand how the company plans to maintain its strong growth trajectory.

Answer

President & COO C. Pettit outlined a focus on helping wealth managers scale portfolios by balancing central risk control with effective advisor tools, often replacing legacy systems. He highlighted a significant opportunity to integrate Private Asset analytics into wealth offerings. Pettit described 2025 as a pivotal year for establishing greater credibility and securing larger deals within the Wealth segment.

Scott Wurtzel asked about the growth trajectory of the fixed income and multi-asset class analytics business and the potential for continued expansion.

Answer

President and COO Baer Pettit described fixed income as a critical component of MSCI's overall Analytics strength, supporting multi-asset class sales and increasingly being sold standalone. He highlighted that continued enhancements in areas like fixed income performance attribution are key to future growth. While not a fast-moving area, he expects the trend of solid growth to continue as MSCI builds its reputation for quality.

Scott Wurtzel asked about the overall bookings environment, specifically how growth trended in Q2 relative to Q1, and compared to the slowdown in sales cycles observed six to nine months prior. He also inquired about ADP's updated views on AI's impact on the broader labor market, given recent layoff announcements.

Answer

Maria Black, President and CEO, ADP, described the overall environment as stable and expressed satisfaction with Q2's solid, broad-based bookings performance, highlighting strength in enterprise (Lyric), compliance, small business (retirement, insurance), and mid-market. She noted healthy pipelines for the second half of the fiscal year. Peter Hadley, CFO, ADP, addressed AI's impact, stating that ADP's empirical data does not currently show discernible effects on hiring or layoffs across industry groups, despite headlines. He noted muted hiring and job openings but also continuing reductions in overall layoff levels, with consistency across verticals.

Scott Wurtzel asked about the overall bookings environment, specifically how growth trended in Q2 compared to Q1, and how sales cycles are trending now versus six to nine months ago. He also inquired about updated views on AI's impact on the broader labor market, particularly regarding layoffs.

Answer

Maria Black, President and CEO, described the Q2 bookings performance as solid and broad-based, with strong contributions from enterprise (Lyric), compliance, small business (retirement, insurance), and mid-market. She noted healthy pipelines for the back half of the year. Peter Hadley, CFO, stated that ADP's data does not indicate AI-driven layoffs in specific industry verticals, despite broader headlines, and that the labor market shows muted hiring but continuing reductions in overall layoffs.

Scott Wurtzel asked for an explanation of the widening gap in the PEO guidance between reported revenue growth and revenue growth excluding pass-throughs, and for an update on the embedded payroll partnership with Clover.

Answer

CFO Peter Hadley explained the PEO revenue gap is due to high growth in zero-margin benefits pass-throughs and an assumption of moderating wage growth affecting other revenues. President & CEO Maria Black reported the Clover partnership is progressing well, with a broader rollout planned for fiscal 2026, and while it will contribute to bookings, it's too early for a discernible impact on overall results.

Scott Wurtzel asked about the PEO segment, questioning if ADP was observing clients shifting to lower-cost benefit plans. He also inquired if the softer-than-expected pays per control growth was concentrated in any specific client segments.

Answer

CEO Maria Black stated that ADP has not seen a significant shift in benefits enrollment behavior, noting their PEO is fully insured and heading into its renewal season. CFO Don McGuire confirmed that the slightly softer pays per control growth was broad-based and not concentrated in any particular industry or region.

Scott Wurtzel asked for color on the PEO segment's bookings outperformance and whether the WorkForce Software solution could be extended to mid-market customers.

Answer

CEO Maria Black credited the strong PEO bookings to intense focus and execution by the sales team, emphasizing the strengthening value proposition of PEO offerings like health benefits and workers' comp. On WorkForce Software, she stated that while its primary focus is enterprise, ADP is evaluating how to best position its full suite of time and attendance solutions, including WorkForce Software's offerings, for clients across all segments, including the mid-market.

Scott Wurtzel asked for clarification on the Q3 revenue growth guidance of 18%, specifically how it implies Management Solutions growth given expected PEO acceleration and the timing of Paycor form filing revenue. He also inquired about the deployment status and noticeable productivity gains from the AI-powered sales engine.

Answer

CFO Bob Schrader stated that the Q3 guidance anticipates acceleration in PEO and Insurance due to easier comps (lapping annual enrollment headwinds) and continued progress on Paycor integration and synergy realization. He acknowledged an element of conservatism in the guidance but expects the business to continue accelerating. CEO John Gibson reported that the AI-powered sales engine, initially a pilot, quickly saw demand and is now largely fully deployed within the Paychex sales force (with some integration work remaining for Paycor). He noted that sales teams are 'loving it' but did not quantify specific productivity gains yet, as it's still early (launched ~60 days ago).

Scott Wurtzel asked for clarification on the Q3 revenue growth guide of 18%, specifically how it squares with expected PEO acceleration and Paycor form filing revenue, and then inquired about the deployment and productivity gains of the AI-powered sales engine.

Answer

CFO Bob Schrader indicated that the Q3 guide reflects expected acceleration in PEO and insurance due to easier comps and anniversarying enrollment headwinds, along with continued progress on Paycor integration and synergy realization. He noted an element of conservatism but expects business acceleration. CEO John Gibson stated that the AI-powered sales engine was launched into a pilot group about 60 days prior, quickly gaining demand, and is now largely fully deployed within the Paychex sales force, with additional integration work ongoing for Paycor. Sales teams are 'loving it.'

Scott Wurtzel requested an update on cost synergies, including milestones achieved, what remains, and potential sources of incremental synergies. He also asked for quantification of the retirement business's contribution to growth this quarter, considering equity market performance.

Answer

CFO Bob Schrader indicated that most actions for realizing cost synergies are complete, primarily from overlapping functions, with additional opportunities in procurement by leveraging combined spend. He noted a balance between dropping savings to the bottom line and investing in growth. Regarding the retirement business, Mr. Schrader stated it has been a strong growth area for some time, achieving near double-digit growth in Q1.

Scott Wurtzel requested an update on cost synergies, including milestones achieved, remaining tasks, and potential sources of incremental synergies. He also asked for quantification of the retirement business's contribution to growth in the quarter and any tailwinds from equity markets.

Answer

CFO Bob Schrader indicated that most actions for realizing cost synergies are complete, primarily stemming from functional overlap. He noted additional opportunities in procurement by leveraging combined spend, with a balance between dropping gains to the bottom line and reinvesting. Schrader also stated that the retirement business continued its strong growth, contributing near double-digit growth in Q1.

Scott Wurtzel of Wolfe Research asked about the underlying trends in the core Paychex PEO business during the quarter and the outlook for fiscal 2026, considering MPP headwinds and cross-sell opportunities.

Answer

CFO Bob Schrader highlighted strong underlying PEO performance in Q4, with double-digit sales demand and record worksite employee retention. President & CEO John Gibson added that the PEO value proposition remains highly relevant, with aggregate participation in health plans growing across the country, despite revenue headwinds from the unique Florida at-risk plan.

Scott Wurtzel asked about the underlying performance trends of the core Paychex PEO business, excluding the at-risk medical plan headwinds, and the outlook for fiscal 2026.

Answer

CFO Bob Schrader reported that core PEO performance was very strong in Q4, with double-digit sales demand and record worksite employee retention. President & CEO John Gibson added that the PEO value proposition is driving growth nationwide, and the revenue headwind is a unique issue in the Florida at-risk plan that does not impact profitability.

Scott Wurtzel asked for a quantitative split of the PEO segment's softness between the Florida MPP issues and the general trade-down to lower-cost health benefits.

Answer

Executive Robert Schrader explained that the softness is a combination of three factors impacting the Florida at-risk plan: lower new attachment due to conservative underwriting, existing clients buying down to lower-cost options at a rate nearly double historical levels, and smaller average client size. He stated that he could not provide an exact quantitative split of the impact from each factor.

Scott Wurtzel asked about the drivers behind the company's margin outperformance and whether clients are adopting more products during the initial sale.

Answer

CEO John Gibson attributed margin strength to a culture of continuous improvement, amplified by digital adoption and the use of AI for productivity gains like proactive client retention. He noted that while upsells remain common, the company is improving its 'integrated selling' approach to offer a fuller suite of products upfront, particularly in the mid-market.

Scott Wurtzel asked for more detail on the Q2 margin guidance and the drivers behind the strong high single-digit growth in HR outsourcing worksite employees (WSEs).

Answer

Executive Robert Schrader stated there was nothing specific to call out on Q2 margin beyond the ERTC headwind, noting underlying margin expansion remains strong. CEO John Gibson attributed the robust WSE growth to the powerful value proposition of their comprehensive HR outsourcing and PEO offerings, which combine technology with advisory services, resonating strongly in the current market.

Scott Wurtzel (Wolfe Research) inquired about FactSet's competitive position in private market data, given industry-wide investments, and whether this remains an investment priority for the company over the next 12 months.

Answer

Sanoke Viswanathan, CEO of FactSet, confirmed that private capital is a key investment area, with FactSet having a strong position in high-quality data covering over 10 million private companies. He highlighted FactSet's ability to support clients across the deal lifecycle and provide normalized risk assessments for total portfolios (public and private assets).

Scott Wurtzel inquired about FactSet's competitive position in private market data, given significant industry investment in this area, and whether it remains an investment priority for the company over the next 12 months.

Answer

CEO Sanoke Viswanathan confirmed that private capital is a key investment area, with FactSet having a strong position in the quality of its data sets, covering over 10 million private companies. He highlighted FactSet's ability to support clients from pre-deal to post-deal stages, leveraging its strong position in portfolio analytics to provide total portfolio views across public and private assets, and enabling risk assessments at greater frequency.

Scott Wurtzel inquired about the specific payback periods FactSet targets for its growth investments, particularly those on the growth investment side.

Answer

Helen Shan, CFO, explained that for larger, infrastructure-like investments such as real-time data or deep sector coverage, FactSet targets a payback period of approximately three years, similar to its approach for acquisitions. For content sales, she noted that quicker paybacks are expected, typically less than three years, due to the potential for rapid scaling.

Scott Wurtzel inquired about the specific payback periods FactSet targets when making growth investments, particularly for different types of projects.

Answer

Helen Shan, CFO, outlined that investments in larger infrastructure projects like real-time data or deep sector coverage typically have a payback period of around three years, similar to how acquisitions are evaluated. For content sales, she noted that quicker paybacks are expected, often less than three years, due to the potential for rapid scaling.

Scott Wurtzel asked Helen Shan about the specific payback periods FactSet targets for its growth investments, particularly those on the growth investment side.

Answer

Helen Shan, CFO, FactSet, explained that for larger infrastructure-like investments (e.g., real-time, deep sector), FactSet targets a payback period of around three years, similar to how it evaluates acquisitions. For other investments, especially those related to content sales, quicker paybacks are expected, often less than three years, due to the potential for rapid scaling.

Scott Wurtzel from Wolfe Research inquired about the CUSIP collaboration with JPMorgan's Omni platform and the overall demand for identifiers in the private markets.

Answer

CEO Philip Snow stated that FactSet is excited to be the 'gold standard' for private market identifiers with CUSIP. He highlighted the importance of partnerships with firms like JPMorgan Chase & Co. and noted that the company is building good momentum, particularly within the private credit space.

Scott Wurtzel asked a housekeeping question about the expected revenue contribution from the recent acquisition of Irwin for the current fiscal year.

Answer

Chief Financial Officer Helen Shan stated that the acquired revenue from Irwin will not have a material impact on FactSet's top line this year. CEO Frederick Snow added that the acquisition's performance is currently at or above their initial expectations.

Scott Wurtzel of Wolfe Research asked a housekeeping question about the expected revenue contribution from the recent acquisition of Irwin for the current fiscal year.

Answer

CFO Helen Shan stated that the acquisition will not have a material impact on total revenue for the year. CEO Frederick Snow added that early performance of the acquisition is on track with or slightly ahead of their internal expectations.

Scott Wurtzel asked for more color on the data expansion initiatives (deep sector, private markets, real time), their impact on client renewal conversations, and the product roadmap.

Answer

Executive Goran Skoko reported excellent progress in real-time data, with a large client now live, and noted strong client engagement in deep sector content. Executive Frederick Snow added that in private markets, coverage has doubled to around 9 million companies, providing a strong foundation for efforts in banking, private equity, and with asset owners. These investments are key differentiators that underpin success in competitive situations and renewals.

Scott Wurtzel of Wolfe Research inquired about the Q2 adjusted EPS guidance, specifically if there were any other significant factors besides the normalization of event-driven revenue contributing to the 13%-15% of full-year EPS outlook. He also asked for more details on the position growth trends observed in the quarter and how they aligned with expectations.

Answer

CFO Ashima Ghei clarified that the Q2 EPS guidance primarily reflected a tough comparison due to high event activity in the prior year's Q2, with no other significant factors to highlight. CEO Tim Gokey explained that position growth remained strong, with equity positions up 12% driven by managed accounts and self-directed growth, and revenue equity positions up 7%. He noted that fund growth of 2% was an anomaly due to timing, with underlying mid-single-digit growth expected. Tim Gokey emphasized that innovation, including direct indexing and emerging interest in tokenized equities, continues to drive long-term position growth.

Scott Wurtzel asked for additional factors impacting Broadridge's Q2 Adjusted EPS guidance, beyond the expected normalization of event-driven revenue. He also inquired about the quarter's position growth trends and how they aligned with expectations.

Answer

CFO Ashima Ghei confirmed that the primary factor for the Q2 EPS guidance is the tough comparison due to high event-driven revenue in the prior year's Q2, with no other significant callouts. CEO Tim Gokey reported strong position growth, with equity positions up 12% (7% revenue positions) driven by managed accounts and direct indexing. Fund position growth was 2%, attributed to a timing anomaly, with underlying growth still in the mid-single digits. He emphasized that innovation, like ETFs, managed accounts, zero-commission trading, direct indexing, and now tokenized equities, consistently drives long-term position growth.

Scott Wurtzel from Wolfe Research asked about the potential opportunities for Broadridge's ICS segment from tokenization and sought clarification on the drivers for the lower growth outlook for the Capital Markets segment in fiscal 2026.

Answer

CEO Tim Gokey explained that for the ICS segment, the opportunity in digital assets lies in helping wealth management clients offer these products and connecting them to traditional services like statements and tax reporting. He also mentioned a new disclosure product, ClearFi, to address potential future regulatory needs. CFO Ashima Ghei clarified that the Capital Markets growth outlook reflects a modest one-point drag from the transition of a single client to an alternate provider, which will persist into fiscal 2026.

Scott Wurtzel inquired if the observed elongations in the sales cycle were concentrated in specific product lines or geographies and asked about the drivers of Q4 margin expectations after a strong Q3.

Answer

CEO Timothy Gokey stated that the sales cycle elongation appears to be a broad trend and is not concentrated in any specific area, though it's based on only a few weeks of data. CFO Ashima Ghei explained that the company manages for full-year results and that margins are a tool to achieve the annual adjusted EPS target. She noted that Broadridge expects high levels of investment spend in Q4, which could impact quarterly margins, but the focus remains on hitting the midpoint of the full-year 8% to 12% EPS growth guidance.

Scott Wurtzel inquired about the specific areas where Broadridge is deploying incremental investment dollars from its event-driven revenue upside and asked for any early learnings from the recently closed SIS acquisition.

Answer

CEO Tim Gokey detailed that investments are being channeled into areas with strong sales momentum, including digital communications (Wealth and Focus), data and analytics, AI, capital markets simplification (DLT repo), and expanding solutions into Canada via the SIS platform. Regarding SIS, he noted a very positive reception from clients and a smooth integration of associates and technology. CFO Ashima Ghei added that the company maintains the flexibility to adjust these investment levels based on business performance.

Scott Wurtzel asked about the potential impact of growing concerns regarding the health of private credit on Moody's growth, including demand for risk understanding and the shift of data from private to public markets.

Answer

Rob Fauber, President and Chief Executive Officer, emphasized the importance of rigorous third-party independent credit risk assessment in the private credit market. He noted that credit stress drives demand for credit insight and research, and a flow back to public markets is occurring due to substantial savings on coupons, positioning Moody's to serve both markets effectively.

Scott Wurtzel asked about the potential impact of growing concerns regarding the health of private credit on Moody's growth, particularly if it could drive demand for risk understanding and ratings, or a shift from private to public markets.

Answer

Rob Fauber, President and Chief Executive Officer of Moody's Corporation, affirmed that credit stress in the private market, similar to public markets, drives increased demand for credit insight and research. He noted a flow back into public markets due to substantial savings on coupons compared to private market rates, positioning Moody's to serve both private and public market needs.

Scott Wurtzel asked if there was a pull-forward of debt issuance into Q2 from the second half, and how the improving public debt markets affected performance and activity in the private credit market.

Answer

CEO Robert Fauber stated there was no meaningful pull-forward of issuance. Regarding private credit, he explained that it is not an 'either/or' dynamic with public markets, as both can be healthy simultaneously. He emphasized that strong, broad-based demand drivers like fund finance and securitization continue to fuel growth in private credit, independent of short-term public market conditions.

Scott Wurtzel of Wolfe Research inquired about the current demand environment for Moody's Analytics (MA), asking how sales cycles are trending, particularly for new GenAI-powered products.

Answer

CEO Robert Fauber responded that sales cycles have not materially changed over the last 18-24 months and that demand patterns remain consistent. He highlighted a very strong pipeline for 2025, excellent new business production in 2024, and stable retention rates. CFO Noemie Heuland added that new business growth outpaced ARR growth, partly driven by strong uptake of the GenAI-powered Research Assistant.

Scott Wurtzel asked for an update on the current state of debt velocity and how management is thinking about its trajectory and impact on future issuance.

Answer

CEO Robert Fauber explained that while debt velocity has improved with the strong issuance environment, it remains below historical averages, at approximately 12% for fiscal 2024 versus a historical norm of about 14%. Fauber characterized this gap as a potential tailwind for future issuance growth, as the total stock of debt has grown faster than issuance over time.

Scott Wurtzel of Wolfe Research, LLC inquired about the mortgage pre-qualification environment, asking for TransUnion's observations on general consumer shopping activity and the competitive dynamics within that specific space.

Answer

EVP and CFO Todd Cello responded that the company has been pleased with its mortgage performance, with revenue outperforming expectations due to strong traction in the pre-qualification space. He noted that TransUnion has maintained or gained position there, and that growth was also supported by pricing and cross-selling other solutions like batch marketing and Trusted Call Solutions. The outlook for the second half remains for modestly declining inquiry volumes.

Scott Wurtzel of Wolfe Research, LLC inquired about the mortgage pre-qualification environment, focusing on current shopping activity and the competitive landscape.

Answer

EVP and CFO Todd Cello stated that mortgage performance has been positive, with revenue outperforming expectations due to strong pre-qualification activity. He noted that TransUnion has gained good traction and maintained or grown its position in the pre-qual space. Cello also highlighted success in cross-selling other products like batch marketing and Trusted Call Solutions into the mortgage vertical.

Scott Wurtzel asked for the drivers behind elevated mortgage demand, questioning the split between market demand and internal sales execution. He also inquired about the company's appetite for M&A given its current balance sheet strength.

Answer

President Larry Katz attributed the mortgage success to a strong product offering for the mid-market, improved sales execution, and a macro environment where clients are investing during a market low. CFO Elias Olmeta added that Q1 saw a volume uplift from refinancing. On M&A, Katz confirmed it is a core strategy, while Olmeta highlighted the strong balance sheet with nearly $130M in cash and significant borrowing capacity, noting the company remains active but disciplined on valuation.