Factset Research Systems Inc (FDS)

ASV Growth Acceleration
Q: Should we expect acceleration in ASV growth in Q2?
A: Management is optimistic about ASV growth accelerating in the second quarter due to positive momentum across various firm types. They highlighted strong performance in wealth management, with top 10 deals for the year—half are from wealth, including several 7-figure deals. - They see increased momentum in private equity, venture capital, and hedge funds, expecting these markets to potentially grow at 10% this year. - Good renewal conversations in banking and positive feedback on their Pitch Creator product are also encouraging. -

AI Products Monetization
Q: Can you provide color on gen AI products' traction and ASV contribution?
A: Management reports exceptional feedback on their generative AI products and sees great potential for monetization. - They expect 30 to 50 basis points of growth in FY '25 from monetizing gen AI, which is included in their guidance but could potentially exceed expectations. - Products like the conversational API, Pitch Creator, and Portfolio Commentary are gaining traction, with deals ranging from tens of thousands to hundreds of thousands of dollars. - - The focus is on efficiency gains for clients, such as saving time in pitch creation and portfolio commentary generation. - -

M&A Appetite and AI Investments
Q: Has your M&A appetite changed due to AI investments?
A: The company maintains a high appetite for M&A and is in a better position to pursue acquisitions, focusing on filling gaps in their product suite. - While they are not specifically targeting AI-related assets, they prefer companies with modern technology stacks, which may include AI capabilities. - Their conviction in monetizing AI investments does not materially change their M&A strategy. -

Pricing Dynamics
Q: What are your pricing expectations this fiscal year versus last?
A: Management expects realized pricing this fiscal year to be similar to last year but notes that the CPI increase they can capture is lower due to inflation coming down. - - In some new business and renewals, they've adjusted pricing structures to be more competitive, resulting in higher volumes despite slightly lower price realization. - - Overall, they expect the value provided to clients to translate into stable pricing year-over-year. -

Client Budgets and Pipeline Optimism
Q: Clients' budgets remain flat; what's driving pipeline optimism?
A: Despite expecting clients' budgets to remain flat and cost-focused, management is optimistic due to increased client engagement. - - Trials have increased 23% in the Americas and 13% in Europe, and RFPs are up 30% year-over-year in Q1. - - They see potential for market share gains as clients reassess providers and are encouraged by improved M&A activity, which may lead to increased spending on the sell side. -

Managed Services Growth
Q: What are your thoughts on managed services as a growth driver?
A: Managed services are seen as a key growth driver for buy-side ASV. - Recent wins include a deal with an outsourced CIO provider, and they have a partnership with JPMorgan involving managed services. - These services augment clients' internal capabilities, particularly in performance and risk reporting, helping clients reduce total cost of ownership. - While they don't provide a market size due to lack of direct competition, they see considerable upside. -

Margin Expectations
Q: Should we expect margin compression in the back half of the year?
A: Management reaffirms guidance of margins being slightly down for 2025. - They expect expenses to ramp up starting in the second quarter due to higher people costs and increased technology expenses, particularly in cloud-related areas. - They anticipate H1 margins to be closer to the midpoint of their guidance range. -

Client Retention and ASV
Q: Why didn't higher retention translate to ASV acceleration?
A: Client retention improved to 91% this quarter, up from 90%. - This improvement is attributed to fewer full client cancellations and efforts to enhance retention processes. - However, the ASV retention rate remains above 95%, and the 1% increase in client retention may not significantly impact overall ASV acceleration due to churn among smaller clients. -

Competitive Pricing Strategy
Q: How are you tweaking pricing to improve conversions?
A: Management has proactively adjusted pricing and packaging to be more competitive, especially in new business where price pressure is highest due to switching costs. - They've targeted specific firm types and changed pricing structures, resulting in higher volumes despite lower price realization. - Increased rate cards mean overall ASV has increased due to higher volumes, even if price realization percentages appear lower. - -

7-Figure Landmark Win
Q: What were key reasons for the 7-figure win over incumbent?
A: The win involved an outsourced CIO, with key factors including the quality of FactSet's technology, analytics solutions, and open platform allowing flexibility and connectivity with partners. - Their multi-asset class capabilities and managed services offerings also played significant roles. -

Wealth Segment Competitiveness
Q: Are you seeing elongated decision-making in wealth?
A: While they didn't have a large wealth win in Q1 similar to last year's, management expects wealth to reaccelerate for the rest of the year. - They are confident due to increased new business, seat growth, and successful displacement of competitors. - They do not see significant changes in decision-making timelines or competitive dynamics in the wealth segment. -

Client Segments Improvement
Q: Which client segments will improve most in H2?
A: Management expects strong growth in private equity, venture capital, and hedge funds, anticipating these markets to potentially grow at 10% this year. - - Wealth management is also expected to perform well. - - They are optimistic about the sell side if banking activity increases, while the buy side linked to active management remains more uncertain. -

Softness in Clients' Budget Priorities
Q: Can you provide color on clients deprioritizing budgets?
A: Clients remain cost-sensitive, with budgets expected to be flat. - Management is encouraged by increased activity—trials and RFPs are up—indicating optimism for the remainder of the year. - They focus on helping clients with efficiency gains through managed services and AI tools to perform well even in cost-constrained environments. - -

Contribution of Irwin Acquisition
Q: How should we think about Irwin's revenue contribution?
A: The Irwin acquisition will not have a material impact on top-line revenue but will help the corporates business overall. - The acquisition is meeting or exceeding expectations, and early signs are positive. -

AI Products' Value Proposition
Q: What's the value proposition of AI products for clients?
A: The value proposition focuses on saving clients time and improving efficiency. - Products like Portfolio Commentary generate auditable commentary quickly, and Pitch Creator saves analysts significant time in creating pitches. - - Management focuses on efficiency gains rather than large-scale monetization, with deals ranging from tens of thousands to hundreds of thousands of dollars. - -

Recent Pickup in Client Decision-Making
Q: What's causing the recent pickup in client decisions?
A: The recent pickup in the last six weeks is attributed to increased client-facing activities and a more optimistic market. - Management has implemented processes to increase client outreach, and there's a sense of improved optimism among the sales force and clients. -