Q3 2024 FactSet Research Systems Inc Earnings Call

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Operator: Good day, and thank you for standing by. Welcome to the third quarter of FactSet's earnings call. At this time, all participants are in listen-only mode.

Unknown Executive: Good day, and thank you for standing by. Welcome to the third quarter of FactSet earnings call. At this time, all participants are on listen-only mode.

Good day, and thank you for standing by welcome to the third quarter earnings call.

At this time, all participants are in listen only mode.

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Unknown Executive: After the speaker's presentation, there will be a question-and-answer session. To ask the question during the session, you will need to press Start 1-1 on your telephone. You will then hear an automatic message: revising your hand is raised. To withdraw your question, please press start 1-1 again.

Speaker Change: After the Speakers' presentation there'll be a question and answer session traffic question. During the session you will need to press star one on your telephone you didn't hear an automated message advising oriented race to withdraw your question. Please press star one again she's been advised that today's conference is being recorded I would now like.

Operator: To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Ali Menes, Head of IR, Investor Relations. Please go ahead.

Unknown Executive: Please be advised that today's conference is being recorded.

Ali Menes: I would not like to hand the conference over to your first speaker today. Ali Menes, head of IR investor relations. Please go ahead. Thank you and good morning, everyone. Welcome to FactSet's third fiscal quarter 2024 earnings call. Before we begin, the slides we referenced during this presentation can be found through the webcast on the Investor Relations section of our website at factset.com. A replay of today's call will be available on our website. After our prepared remarks, we will open the call to questions from investors. The call is scheduled to last for one hour. To be fair to everyone, please limit yourself to one question.

Speaker Change: [noise] to hand, the conference over to your first speaker today.

Speaker Change: And then as head of IR Investor Relations. Please go ahead.

Ali Menes: Thank you and good morning everyone. Welcome to FactSet's third fiscal quarter 2024 earnings call. Before we begin, the slides we referenced during this presentation can be found in the webcast on the Investor Relations section of our website at factset.com. A replay of today's call will also be available on our website. After our prepared remarks, we will open the call to questions from investors. The call is scheduled to last for one hour. To be fair to everyone, please limit yourself to one question.

Speaker Change: Thank you and good morning, everyone welcome to Factset third fiscal quarter 2024 earnings call before we begin the slides we reference during this presentation can be found through the webcast on the Investor Relations section of our website at fact that dot com a replay.

Speaker Change: Today's call will be available on our website.

Speaker Change: After our prepared remarks, we will open the call to questions from investors.

Speaker Change: Call is scheduled to last for one hour to be fair to everyone. Please limit yourself to one question you may re enter the queue for additional follow up question, which we will take if time permits.

Ali Menes: You may re-enter the queue for additional follow-up questions, which we will take if time permits.

Ali Menes: Before we discuss our results, I encourage all listeners to review the legal notice on slide 2, which explains the risks of forward-looking statements and the use of non-GAAP financial measures. Additionally, please refer to our forms 10-K and 10-Q for discussion of risk factors that could cause actual risk. The results differ materially from these forward-looking statements. Our slides presentation and discussions on this call will include certain non-GAAP financial measures. For such measures, reconciliation to the most directly comparable gap measures is in the appendix to the presentation and in our earnings release issued earlier today.

Ali Menes: You may re-enter the queue for additional follow-up questions, which we will take if time permits. Before we discuss our results, I encourage all listeners to review the legal notice on slide 2, which explains the risks of forward-looking statements and the use of non-GAAP financial measures. Additionally, please refer to our Forms 10-K and 10-Q for a discussion of risk factors that could cause actual results to differ materially from these forward-looking statements

Speaker Change: Before we discuss our results I encourage all listeners to review the legal notice on slide two which explains the risks of forward looking statements and the use of non-GAAP financial measures.

Speaker Change: Additionally, please refer to our Form 10-K, and 10-Q for a discussion of risk factors that could cause actual results to differ materially from these forward looking statements.

Ali Menes: Our slide presentation and discussions on this call will include certain non-GAAP financial measures. For such measures, reconciliations to the most directly comparable GAAP measures are in the appendix to the presentation and in our earnings release issued earlier today. Joining me today are Phil Snow, Chief Executive Officer, and Linda Huber, Chief Financial Officer. We will also be joined by Helen Shan, Chief Revenue Officer, for the Q&A portion of today's call. I will now turn the discussion over to Phil. Thank you, Ali, and good morning, everyone.

Speaker Change: Our slide presentation and discussions on this call will include certain non-GAAP financial measures for such measures reconciliations to the most directly comparable GAAP measures are in the appendix to the presentation and in our earnings release issued earlier today.

Ali Menes: Joining me today are Phil Snow, Chief Executive Officer, and Linda Hubert, Chief Financial Officer. We will also be joined by Helen Shan, Chief Revenue Officer, for the Q&A portion of today's call.

Speaker Change: Joining me today are Phil Snow, Chief Executive Officer, and Linda Huber Chief Financial Officer will also be joined by Helen Shan Chief revenue Officer for the Q&A portion of today's call I will now turn the discussion over to Phil Snow.

Phil Snow: I will now turn the discussion over to Phil Snow. Thank you, Ali, and good morning, everyone. Thanks for joining us today.

Frederick Philip Snow: Thanks for joining us today. Before I speak about this quarter's results, I just want to point out that we scheduled today's call on a Friday to allow for observance of the Juneteenth holiday earlier this week. We finished our third quarter with organic ASV and professional services growth of 5%. Adjusted diluted EPS rose to $4.37 for the quarter, and our adjusted operating margin was 39.4%. This quarter, we continue to see the impact of clients' tightened budgets and cost rationalization, trends we highlighted last quarter that were echoed by others in the industry. These pressures extend decision-making and lengthen sales cycles.

Frederick Philip Snow: Thank you Allie and good morning, everyone and thanks for joining us today before I speak about this quarter's results I just want to point out that we scheduled today's call on a Friday you allow for observance of the June 10th holiday earlier this week.

Phil Snow: Before I speak about this quarter's results, I just want to point out that we scheduled today's call on a Friday to allow for observance of the Juneteenth holiday earlier this week. We finished our third quarter with organic ASV and professional services growth of 5%. Adjusted diluted EPS rose to $4.37 for the quarter, and our adjusted operating margin was 39.4%. This quarter, we continue to see the impact of clients, Titan budgets, and cost rationalization. Trends we highlighted last quarter that were echoed by others in the industry. These pressures extend decision making and lengthen sales cycles.

Frederick Philip Snow: We finished our third quarter with organic ASB and professional services growth of 5% adjusted diluted EPS rose to $4 37 for the quarter and our adjusted operating margin was 39, 4%.

Frederick Philip Snow: This quarter, we continued to see the impact of clients' tightened budgets and cost rationalization trends, we highlighted last quarter that were echoed by others in the industry. These pressures extend decision, making and lengthened sales cycles.

Frederick Philip Snow: Also, as you may recall, the third quarter is seasonally our weakest of the year. Against this backdrop, we continue to build on FactSet's history of 44 consecutive years of revenue growth and 28 consecutive years of adjusted EPS growth, and in these 44 years, we have successfully navigated through even more difficult market conditions. Stanley Faiz, right.

Phil Snow: Also, as you may recall, the third quarter is seasonally our weakest of the year. Against this backdrop, we continue to build on facts that history of 44 consecutive years of revenue growth and 28 consecutive years of adjusted EPS growth. And in these 44 years, we have successfully navigated through even more difficult market conditions than we face right now. Despite challenge and markets, this is an exciting time in our industry, particularly for technology companies with valuable data assets. We are harnessing the power of Gen AI to build cutting-edge solutions and capture market share. For example, we held our 11th Client Symposium in Miami in April, showcasing new products and the value they bring to clients.

Frederick Philip Snow: Also as you may recall, the third quarter is seasonally our weakest of the year.

Frederick Philip Snow: This backdrop, we continued to build on Factset history of 44 consecutive years of revenue growth and 28 consecutive years of adjusted EPS growth and then these 44 years, we have successfully navigated through even more difficult market conditions that we face right now.

Frederick Philip Snow: Despite challenging end markets, this is an exciting time in our industry, particularly for technology companies with valuable data assets. We are harnessing the power of Gen AI to build cutting-edge solutions and capture market share. For example, we held our 11th Client Symposium in Miami in April showcasing new products and the value they bring to clients. These new products are driving requests for hundreds of product demonstrations, creating new leads for our sales. Returning now to our third quarter, we concluded with 8,029 clients and nine net new logos. Our user count exceeded 208,000.

Frederick Philip Snow: Despite challenged end market. This is an exciting time in our industry, particularly for technology companies with valuable data assets. We are harnessing the power of journey II to build cutting edge solutions and capture market share.

Frederick Philip Snow: For example, we held our 11th clients symposium in Miami in April showcasing new product and the value. They bring to clients. These new products are driving requests for hundreds of product demonstrations, creating new leads for our sales team.

Phil Snow: These new products are driving requests for hundreds of product demonstrations, creating new leads for our sales team. Returning now to our third quarter, we concluded with 8,029 clients, and 9 net new logos. Our use account exceeded 208,000. Overall, ASV retention remained higher than 95%, and client retention was 90%. Currently, we expect to finish the fiscal year with annual organic ASV plus professional services growth between 4% and 5.5%.

Frederick Philip Snow: Returning now to our third quarter, we concluded with 8029 clients 90, net new logos, our user count exceeded 208000.

Frederick Philip Snow: Overall ASP your retention remained higher than 95% client retention was 90%.

Frederick Philip Snow: Currently we expect to finish the fiscal year with annual organic ASB, plus professional services growth between 4% and five 5%.

Phil Snow: Linda will provide further updates to guidance in a few minutes. Turning now to our performance by region, we saw slower growth in the third quarter due to continued market headwinds and the effect of the cancellation from the Credit Suisse UBS merger, which impacted all of our regions. Overall, this cancellation accounted for approximately 30 basis points, or two-thirds of our ASV deceleration quarter over quarter. In the Americas, gains from asset owners and wealth managers were offset by continued client cost rationalization, and the America's region's organic ASV growth rate was 5.7%. In the AMIA region, growth was driven by our price increase, sales to asset owners, and higher ASV from the analytics product suite.

Speaker Change: Linda will provide further updates to guidance in a few minutes.

Frederick Philip Snow: Overall, ASV retention remained higher than 95%, and client retention was 90%. Currently, we expect to finish the fiscal year with annual organic ASV plus professional services growth between 4% and 5.5%. Linda will provide further updates to guidance in a few minutes. Turning now to our performance by region, we saw slower growth in the third quarter due to continued market headwinds and the effect of the cancellation of the Credit Suisse UBS merger, which impacted all of our regions.

Speaker Change: Turning now to our performance by region, we saw slower growth in the third quarter due to continued market headwinds and the effects of the cancellation from the credit Suisse, UBS merger, which impacted all of our regions.

Frederick Philip Snow: Overall, this cancellation accounted for approximately 30 basis points or two-thirds of our ASV deceleration quarter over quarter. In the Americas, gains from asset owners and wealth managers were offset by continued client cost rationalization, and the Americas Region's organic ASV growth rate was 5.7%. In the EMEA region, growth was driven by a price increase, sales to asset owners, and higher ASV from the analytics product suite. The EMEA region's organic ASV growth rate was 4.4%. And in the Asia-Pacific region, we saw acceleration from buy-side firms driven by front office solutions and growing transactional revenue. The Asia-Pacific region's organic ASV growth rate was 6.1%.

Speaker Change: Overall this cancellation accounted for approximately 30 basis points or two thirds of our ASB deceleration quarter over quarter.

Speaker Change: In the Americas gains from asset owners and wealth managers were offset by continued client cost rationalization and the Americas regions organic ASB growth rate was five 7%.

Speaker Change: The EMEA region growth was driven by our price increase sales to asset owners and higher ASP from the analytics product suite. The EMEA region. The organic <unk> growth rate was four 4% and then the Asia Pacific region, we saw acceleration from buy side firms driven by front office solutions and growing transactional revenues the Asia Pacific.

Phil Snow: The AMIA region's organic ASV growth rate was 4.4%, and in the Asia-Pacific region, we saw acceleration from buy-side firms driven by front-office solutions and growing transactional revenues. The Asia-Pacific region's organic ASV growth rate was 6.1%. Looking now at trends by firm types, on the institutional buy-side, we had a notable win this quarter, displacing a competitor at a large asset manager in the US. This win was driven by our advanced fixed-income analytics. We took an enterprise sales approach, and the client chose our portfolio performance solutions and analytics capabilities. We had another significant win with a global asset manager.

Speaker Change: Regionally organic ASD growth rate was six 1%.

Frederick Philip Snow: Looking now at trends by firm types, on the institutional buy side, we had a notable win this quarter, displacing a competitor at a large asset manager in the U.S. This win was driven by our advanced fixed income analytics. We took an enterprise sales approach, and the client chose our portfolio performance solutions and analytics capabilities.

Speaker Change: Looking now at trends by farm types on the institutional buy side, we had a notable win this quarter displacing a competitor at a large asset manager in the U S. This win was driven by our advanced fixed income analytics, we took an enterprise sales approach and the client chose our portfolio performance solutions and analytics.

Frederick Philip Snow: We had another significant win with a global asset manager. It moved to a multi-year agreement, including middle office portfolio services. This contract aligns with the client's strategy to consolidate vendors and reduce total cost of ownership. These victories demonstrate our ability to provide tailored, high-value solutions to our clients. These clients also recognize that our ongoing management of their complex portfolio holdings positions us well to do more for them. In banking, we saw a decline from the Credit Suisse cancellation.

Speaker Change: Capabilities.

Speaker Change: We had another significant win with a global asset manager it moved to a multi year agreement, including Middle office portfolio services. This contract aligns with the client strategy to consolidate vendors and to reduce total cost of ownership.

Phil Snow: It moved to a multi-year agreement, including middle office portfolio services. This contracted lines with the client's strategy to consolidate vendors and to reduce total cost of ownership. These victories demonstrate our ability to provide tailored, high-value solutions to our clients. These clients also recognize that our ongoing management of their complex portfolio holdings positioned us well to do more for them. In banking, we saw a decline from the Credit Suisse cancellation. This segment is still impacted by cautious hiring and a wait-and-see attitude toward overall capital market conditions. In wealth management, although growth was modest this quarter, the sector remains a tremendous opportunity for facts at given our active pipeline.

These victory has demonstrated our ability to provide tailored high value solutions to our clients. These clients also recognize that our ongoing management of that complex portfolio of holdings positioned us well to do more for them.

Speaker Change: In banking, we saw a decline from the credit Suisse cancellation.

Frederick Philip Snow: This segment is still impacted by cautious hiring and a wait-and-see attitude toward overall capital market conditions. In wealth management, although growth was modest this quarter, the sector remains a tremendous opportunity for FactSet, given our active pipeline. We're committed to enhancing our offerings to capture future growth and deliver compelling value to wealth advisors and their clients. A great example of this is our recent investment in AIdentified, which was announced last week. By incorporating AI-identified relationship management data into FactSet's intelligent prospecting solution, we are able to accelerate new client acquisitions for WealthAdvisor.

Speaker Change: This segment is still impacted by cautious hiring and a wait and see attitude towards overall capital market conditions.

Speaker Change: In wealth management, although growth was modest this quarter. This sector remains a tremendous opportunity for factset given our active pipeline, we're committed to enhancing our offerings to capture future growth and deliver compelling value to wealth advisors and their clients are Great example of this is our recent investments in AI identified which was announced.

Phil Snow: We're committed to enhancing our offerings to capture future growth and deliver compelling value to wealth advisors and their clients. A great example of this is our recent investment in AI-identified, which was announced last week, by incorporating AI-identified relationship management data into facts that intelligent prospecting solution were able to accelerate new clients' acquisitions for wealth and buy them.

Speaker Change: Last week by incorporating AI identified relationship management data into Factset intelligent prospecting solution, we're able to accelerate new client acquisitions for wealth advisers.

Phil Snow: This brings us to the fast evolving technology landscape where FactSet is well positioned to lead. We have more than 40 years of meticulously curated and connected data. We are trusted by institutional asset managers and retail wealth advisors with 16 million portfolios on our system, representing more than $30 trillion in assets. And on the cell side, FactSet is well established as the platform of choice for fundamental research workflows. For users on both the buy side and the sell side, FactSet has a unique breadth of data curated for their specific use cases. Our rich data ecosystem is a singularly robust and safe foundation for harnessing the power of generative AI.

Frederick Philip Snow: This brings us to the fast evolving technology landscape where FactSet is well positioned to lead. We have more than 40 years of meticulously curated and connected data. We are trusted by institutional asset managers and retail wealth advisors, with 16 million portfolios on our system, representing more than $30 trillion in assets. And on the cell side, FactSet is well-established as the platform of choice for fundamental research workflows. For users on both the buy side and the sell side, FactSet has a unique breadth of data curated for their specific use. A rich data ecosystem is a singularly robust and safe foundation for harnessing the power of generative AI.

Speaker Change: This brings us to the fast evolving technology landscape, where factset is well positioned to lead we have more than 40 years of meticulously curated and connected data we are trusted by institutional asset managers and retail wealth advisors with.

Speaker Change: With 16 million portfolios on our system, representing more than 30 trillion dollars in assets.

Speaker Change: The sell side Factset is well established as the platform of choice for fundamental research workflows.

Speaker Change: Users on both the buy side and the sell side Factset has a unique breadth of data curated for their specific use cases.

Speaker Change: Our rich data ecosystem.

A singularly robust safe foundation by harnessing the power of generative AI, specifically, our clients benefit from the combination of our data and knowledge of clients' workflows and new generative AI tools together, they are producing unique insights and efficiencies for our clients. The fact that we are.

Phil Snow: Specifically, our clients benefit from the combination of our data, our knowledge of clients' workflows, and our new generative AI tools. Together, they are producing unique insights and efficiencies for our clients. At FactSet, we are energized to help our clients find new ways to surface insights to set them apart from their peers. We're doing this with live demonstrations of our new products that are available right now. As a result, FactSet is the trusted partner of choice, given that accuracy requires both seasoned judgment and traceable data sources. At FactSet, we have both. A prime example is our portfolio commentary product release last month, which generates complete, detailed investment performance summaries in about a minute.

Frederick Philip Snow: Specifically, our clients benefit from the combination of our data, our knowledge of clients' workflows, and our new generative AI tools. Together, they are producing unique insights and efficiencies for our clients. At FactSet, we are energized to help our clients find new ways to surface insights to set them apart from their peers. We're doing this with live demonstrations of our new products that are available right now. As a result, FactSet is the trusted partner of choice, given that accuracy requires both seasoned judgment and traceable data sources, and FactSet has both. A prime example is our portfolio commentary product released last month, which generates complete detailed investment performance summaries in about a minute.

<unk> is to help our clients find new ways to surface insights to set them apart from their peers were doing this with live demonstrations of our new products that are available right now as a result, factset as the trusted partner of choice given that accuracy requires both seasoned judgment and traceable data sources that.

Speaker Change: At Factset, we have both.

Speaker Change: A prime example is our portfolio commentary product released last month, which generates complete detailed investment performance summary in about a minute portfolio.

Phil Snow: Portfolio commentary combines our comprehensive data and deep domain expertise to provide tailored and highly efficient outputs. We also launch the new portfolio manager hub and enter and solution that integrates all elements of a portfolio manager's workflow from news and research to analysis and trade simulation. PM hub adds a Jenny I back chatbot called Portfolio Assistance to tap into our data to provide precise, traceable answers, all without leaving the platform. Enthusiastic client response, the portfolio commentary and PM hub give us confidence that we can extend our buy side middle office presence to front office users. And on the cell side, FactSet Mercury optimizes the company research workflow for junior bankers using a single trusted conversational interface.

Frederick Philip Snow: Portfolio Commentary combines our comprehensive data and deep domain expertise to provide tailored and highly efficient. We also launched the new Portfolio Manager Hub, an end-to-end solution that integrates all elements of a portfolio manager's workflow, from news and research to analysis and trade simulation. PMHub adds a GenAI-backed chatbot called Portfolio Assistance to tap into our data to provide precise, traceable answers, all without leaving the platform.

Speaker Change: Portfolio commentary combines our comprehensive data and deep domain expertise to provide tailored and highly efficient outputs.

Speaker Change: We also launched a new portfolio manager hub and end to end solution that integrates all elements of our portfolio managers workflow from news and research to analysis and trade stimulation.

PM hub adds a gen AI chatbot called portfolio assistance to tap into our data to provide precise traceable answers all without leaving the platform.

Frederick Philip Snow: Enthusiastic Client Response to Portfolio Commentary and PM Hub gives us confidence that we can extend our by-site middle office presence to front office users. And on the sell side, FactSet Mercury optimizes the company research workflow for junior bankers. Using a single trusted conversational interface, we are working towards producing pitch books and charts on demand.

Speaker Change: Enthusiastic client response, the portfolio commentary RPM hub give us confidence that we can extend our buy side and middle office presence to front office users.

Speaker Change: And on the sell side Factset Mercury Optimizes the company research workflow for junior bankers using a single trusted conversational interface, we are working towards producing petroquest and charts on demand. We expect users to save another 10 hours per week using this tool. In addition to the five to 10 hours per week.

Phil Snow: We are working towards producing pet books and charts on demand. We expect users to save another 10 hours per week using this tool in addition to the five to 10 hours per week that they said they saved with FactSet before we release Mercury. As banking conditions improve, we are confident that bankers will seek out FactSet Mercury to give them better speed, accuracy, and efficiency.

Frederick Philip Snow: We expect users to save another 10 hours per week using this tool in addition to the 5 to 10 hours per week that they said they saved with FactSet before we released Mug. As banking conditions improve, we are confident that bankers will seek out FactSet Mercury to give them better speed, accuracy, and efficiency. Looking ahead, we have a multi-year strategic investment plan built on three key pillars. First, we are expanding our market data for the deep sector, private markets, alternatives, and real-time applications.

Speaker Change: They said they stay with Factset before we release Mercury.

Speaker Change: As banking conditions improve we are confident that bankers will seek out factset mercury to give them better speed accuracy and efficiency.

Phil Snow: Looking ahead, we have a multi-year strategic investment plan built on three key pillars. First, we are expanding our market data for deep sector private markets, alternatives, and real-time applications. With real-time market data, for example, we aim to compete for market share by transitioning to cloud-based solutions. By enhancing our thicker plans, cloud capabilities, and expanding content coverage, we can offer more scalable, reliable, and cost efficient data services. We are well positioned to capture market share when clients demand modern cloud-based infrastructure. Architecture.

Speaker Change: Looking ahead, we have a multiyear strategic investment plan built on three key pillars.

Speaker Change: First we are expanding our market data for deep sector private market alternatives and real time applications with real time market data. For example, we aim to compete for market share by transitioning to cloud based solutions by.

Frederick Philip Snow: With real-time market data, for example, we aim to compete for market share by transitioning to cloud-based solutions. By enhancing Artika Plan's cloud capabilities and expanding content coverage, we can offer more scalable, reliable, and cost-efficient data services.

Speaker Change: By enhancing our pick up plans cloud capabilities and expanding content coverage, we can offer more scalable reliable and cost efficient data services, we're well positioned to capture market share when clients demand modern cloud based infrastructure.

Frederick Philip Snow: We're well positioned to capture market share when clients demand modern cloud-based infrastructure. Secondly, client workflow. Beyond our middle office business, we are heavily investing in our front office capabilities, covering both fundamental and quantitative research. Our offerings for the sell side, particularly in banking automation, are gaining traction with top global banks and boutiques. A wealth franchise also continues to grow with significant new opportunities in the pipeline. Thirdly, Generative AI.

Phil Snow: Secondly, client workflow. Beyond our middle office business, we are heavily investing in our front office capabilities covering both fundamental and quantitative research. Our offerings for the South Side, particularly in banking automation, are gaining traction with top global banks and boutique funds. Our well franchise also continues to grow with significant new opportunities in the pipeline. Thirdly, generative AI, this foundational strategic initiative we believe will begin delivering incremental ASV in fiscal 2025. As we mentioned, our new portfolio commentary in FactSet Mercury is already driving demand. And last week, we announced our off-platform AI solutions for technologists. These include a new generative AI data package, a conversational API powered by FactSet Mercury, and a new AI partner program to bring syntax and AI startups onto FactSet's platform.

Speaker Change: <unk> client workflow beyond our middle office business, we are heavily investing in our process capabilities covering both fundamental and quantitative research our offerings for the sell side, particularly in banking automation are gaining traction with top global banks and boutique firms.

Speaker Change: Wealth franchise also continues to grow with significant new opportunities in the pipeline.

Frederick Philip Snow: This foundational strategic initiative, we believe, will begin delivering incremental ASV in fiscal 2025. As we mentioned, our new portfolio commentary and FactSet Mercury are already driving demand. And last week, we announced our off-platform AI solutions for technology. These include a new generative AI data package, a conversational API powered by FactSet Mercury, and a new AI partner program to bring fintechs and AI startups onto FactSet's platform.

Speaker Change: Thirdly generative AI. This foundational strategic initiatives, we believe will begin delivering incremental ASC in fiscal 2025, as we mentioned on new portfolio commentary and Factset Mercury are already driving demand and last week, we announced our off platform AI solutions for technologists.

Speaker Change: These include a new generative AI data package, a conversational API powered by Factset Mercury and the new AI partner program to bring Fintech and AI startups onto Factset platform together, we expect to see ASC growth from tech savvy financial firms and hedge funds.

Phil Snow: Together, we expect to see ASV growth from tech-savvy financial funds and hedge funds.

Frederick Philip Snow: Together, we expect to see ASV growth from tech-savvy financial firms and hedge funds. In summary, I am extremely excited about our competitive opportunity. As demand for traceable, quality data grows, particularly for financial decision-making, we are adding critical AI tools to deliver real advantages for our clients.

Phil Snow: In summary, I am extremely excited about our competitive opportunity as demand for traceable quality data grows, particularly for financial decision making. We are adding critical AI tools to deliver real advantages for our clients. Our partnership focus approach has made FactSet a preferred provider at positions as well for even greater success when market conditions improve.

Speaker Change: In summary, I am extremely excited about our competitive opportunity.

Speaker Change: Demand for traceable quality data grows, particularly for financial decision, making we are adding critical AI tools to deliver real advantages for our clients.

Linda S. Huber: Our partnership-focused approach has made FactSet a preferred provider and positions us well for even greater success when market conditions improve. I will now hand it over to Linda to discuss our second quarter performance in more detail. Thanks, Phil. And hello to everyone.

Speaker Change: Our partnership focused approach has made facts that a preferred provider and positions us well for even greater success when market conditions improve.

Linda Hubert: I will now hand it over to Linda to discuss our second quarter performance in more detail. Thanks, Phil, and hello to everyone. As you've seen from our press release this morning, despite slower ASV growth in the third quarter, we improved margins and DPS, and we are increasing guidance on both of these for the fiscal year. I will say more about that later.

Speaker Change: I will now hand, it over to Linda to discuss our second quarter performance in more detail.

Linda S. Huber: As you saw from our press release this morning, despite slower ASV growth in the third quarter, we improved margins and EPS, and we are increasing guidance on both of these for the fiscal year. I'll say more about that later. First, our results for this quarter. As Ali noted, our usual reconciliation of our adjusted metrics to comparable gap figures is included at the end of our press release. For the third quarter, Organic ASV grew 5%, while Adjusted Operating Margin improved 340 basis points to 39.4%, and Adjusted Diluted EPS rose 15% to $4.37.

Linda S. Huber: Thanks, Phil and Hello to everyone as you've seen from our press release. This morning, despite slower asset growth in the third quarter, we improved margins and EPS and we are increasing guidance on both of these for the fiscal year I'll say more about that later first our results for this quarter as Ali noted our usual reconciliation of our.

Linda Hubert: First, our results for this quarter. As Ali noted, our usual reconciliation of our adjusted metrics to comparable GAAP figures is included at the end of our press release. For the third quarter, organic ASV grew 5%, while the justice operating margin improved 340 basis points to 39.4%, and adjusted diluted DPS rose 15% to $4.37. For the quarter, gap revenue increased 4% to $553 million on sales to institutional asset managers, affid owners, partners, and corporates. For our geographic segments, organic revenues grew by 5.5% in the Americas, 2.4% in Amaya, and 3% in Asia Pacific. Turning now to expenses, gap operating expenses decreased 2% year over year to $350 million.

Linda S. Huber: Adjusted metrics to comparable GAAP figures is included at the end of our press release for the third quarter organic ASB grew 5%, while adjusted operating margin improved 340 basis points to 39, 4% and adjusted diluted EPS rose, 15% to $4 37.

Linda S. Huber: For the quarter, GAAP revenue increased 4% to $553 million on sales to institutional asset managers, asset owners, partners, and corporate. For our geographic segments, organic revenues grew by 5.5% in the Americas, 2.4% in EMEA, and 3% in Asia-Pacific.

Speaker Change: For the quarter GAAP revenue increased 4% to $553 million on sales to institutional asset managers asset owners partners and corporate.

Speaker Change: For our geographic segments organic revenues grew by five 5% in the Americas, two 4% in EMEA and 3% in Asia Pacific.

Linda S. Huber: Turning now to expenses, GAAP operating expenses decreased 2% year-over-year to $350 million. This was driven by lower compensation expense, mainly due to a reduction of $8 million to our annual bonus accrual, as well as a reduction in salary expenses and payroll taxes, partially offset by higher intangible amortization and cloud-related costs. Compared to the previous year, the GAAP operating margin increased by approximately 420 basis points to 36.6%. This was due to increased revenues combined with reduced operating expenses as a result of lower compensation expenses. On an adjusted basis, operating expenses decreased by 1.2%.

Speaker Change: Turning now to expenses GAAP operating expenses decreased 2% year over year to $350 million. This was driven by lower compensation expense, mainly due to a reduction of $8 million to our annual bonus accrual as well as the reduction in salary expenses and payroll taxes, partially offset by higher intangible amortization.

Linda Hubert: This was driven by lower compensation expense, mainly due to a reduction of $8 million to our annual bonus accrual, as well as a reduction in salary expenses and payroll taxes, partially offset by higher intangible amortization and cloud-related costs. Compared to the previous year, gap operating margin increased by approximately 420 basis points to 36.6%. This was due to increased revenues combined with reduced operating expenses as a result of lower compensation expense. On an adjusted basis, operating expenses decreased 1.2%, and now looking at each of our four major cost buckets in turn, first, as we have frequently discussed, technology continues to be our main area of expense growth. Specifically, technology costs increased 26% year over year.

Speaker Change: Possession, and cloud related costs compared to the previous year GAAP operating margin increased by approximately 420 basis points to 36, 6%. This was due to increased revenues combined with reduced operating expenses as a result of lower compensation expense.

On an adjusted basis operating expenses decreased one 2% and now looking at each of our four major cost buckets in turn first as we have frequently discussed technology continues to be our main area of expense growth, specifically technology costs increased 26% year over year technology costs now represent about <unk>.

Linda S. Huber: And now looking at each of our four major cost buckets in turn. First, as we have frequently discussed, technology continues to be our main area of expense growth. Specifically, technology costs increased 26% year over year. Technology costs now represent about 9.5% of revenue. Secondly, in contrast, employee expenses fell 8.6% year over year, driven by lower compensation expenses due to earlier cost reduction efforts and lower bonus accrual.

Linda Hubert: Technology costs now represent about 9.5% of revenues. Secondly, in contrast, employee expenses fell 8.6% euro per year, driven by lower compensation expenses due to earlier cost reduction efforts and the lower bonus accrual. Third, our third party content costs increased by 9% due to the timing of changes in variable fee expenses. And finally, real estate and related expenses saw a 14% decrease year over year, as we saw the benefits of early and significant steps we took to reduce this expense bucket.

Speaker Change: Nine 5% of revenue secondly.

Speaker Change: Secondly, in contrast employee expenses fell eight 6% year over year, driven by lower compensation expenses due to earlier cost reduction efforts and the lower bonus accrual.

Linda S. Huber: Third, our third-party content costs increased by 9% due to the timing of changes in variable fee expenses. And finally, real estate and related expenses saw a 14% decrease year over year, as we saw the benefits of early and significant steps we took to reduce this expense bucket. As we've mentioned before, Thoughtful Expense Management is positioning the company for future growth while allowing us to continue to invest in technology and strategic initiatives.

Speaker Change: Third our third party content costs increased by 9% due to the timing of changes in variable fee expenses.

And finally real estate and related expenses saw a 14% decrease year over year as we saw the benefits of early and significant steps we took to reduce this expense bucket.

Linda Hubert: As we've mentioned before, thoughtful expense management is positioning the company for future growth while allowing us to continue to invest in technology and strategic initiatives. Turning now to margin, adjusted operating margin improved by 340 basis points to 39.4%. This was primarily due to an adjustment to the bonus accrual, a one-time payroll tax adjustment, and lower salary expense. The bonus accrual was reduced by about $8 million for the fiscal year, given our lower ASV achievement. This change added about 160 basis points to our adjusted operating margin in the quarter. Additionally, earlier cost rationalization efforts resulted in another 130 basis points of the 340 basis point adjusted operating margin improvement.

Speaker Change: As we've mentioned before thoughtful expense management is positioning the company for future growth, while allowing us to continue to invest in technology and strategic initiatives.

Linda S. Huber: Turning now to Margin, Adjusted Operating Margin improved by 340 basis points to 39.4%. This was primarily due to an adjustment to the bonus accrual, a one-time payroll tax adjustment, and lower salary expense. The bonus accrual was reduced by about $8 million for the fiscal year, given our lower ASV achievement.

Speaker Change: Turning now to margin adjusted operating margin improved by 340 basis points to 39, 4%. This was primarily due to an adjustment to the bonus accrual a onetime payroll tax adjustment and lower salary expense.

Speaker Change: Bonus accrual groups was reduced by about $8 million for the fiscal year, given our lower ASP achievements. This change added about 160 basis points to our adjusted operating margin in the quarter. Additionally earlier cost rationalization efforts resulted in another 130 basis points of the 340 basis point adjusted.

Linda S. Huber: This change added about 160 basis points to our adjusted operating margin in the quarter. Additionally, earlier cost rationalization efforts resulted in another 130 basis points of the 340 basis point adjusted operating margin improvement. And as always, you will find an expense block from revenue to adjusted operating income in the appendix of today's earnings report. As a percentage of revenue, our cost of services declined by 90 basis points year-over-year on a gap basis.

Linda Hubert: And, as always, you will find an expensive lock from revenue to adjusted operating income in the appendix of today's earnings presentation. As a percentage of revenue, our cost of services declined by 90 basis points year over year on a GAAP basis. Cost of services was approximately 40 basis points lower on an adjusted basis. The decrease was primarily due to lower compensation expense, partially offset by an increase in intangible amortization and cloud related costs. And in S-GNA as a percentage of revenue, it was 320 basis points lower year over year on a GAAP basis. S-GNA was approximately 300 basis points lower on an adjusted basis.

Speaker Change: Operating margin improvement and as always you will find an expressive block from revenue to adjusted operating income in the appendix of todays earnings presentation.

Speaker Change: As a percentage of revenue our cost of services declined by 90 basis points year over year on a GAAP basis cost.

Linda S. Huber: The cost of services was approximately 40 basis points lower on an adjusted basis. The decrease was primarily due to lower compensation expense, partially offset by an increase in intangible amortization and cloud-related costs. And SG&A, as a percentage of revenue, it was 320 basis points lower year over year on a gap basis. SG&A was approximately 300 basis points lower on an adjusted basis. The decrease was primarily due to lower compensation expense, a reduction in bad debt expense, and lower facilities costs.

Speaker Change: Cost of services was approximately 40 basis points lower on an adjusted basis.

Speaker Change: The decrease was primarily due to lower compensation expense, partially offset by an increase in intangible amortization and cloud related costs.

And then SG&A as a percentage of revenue it was 320 basis points lower year over year on a GAAP basis, SG&A was approximately 300 basis points lower on an adjusted basis.

Linda Hubert: The decrease was primarily due to lower compensation expense, a reduction in bad debt expense, and lower facilities costs. Turning now to tax, our tax rate for the quarter was 17%, compared to last year's rate of 16.9%. This slight increase was primarily due to higher pre-tax income, partially offset by increased utilization of foreign tax credits and additional tax benefits from stock-based compensation. Turning now to EPS, gap to EPS increased 18.2% to $4.9 this quarter versus $3.46 in the prior year period. This was driven by higher revenues, margin expansion, and a lower share count, partially offset by higher interest expense.

Speaker Change: The decrease was primarily due to lower compensation expense a reduction in bad debt expense and lower facilities costs.

Linda S. Huber: Turning now to taxes, our tax rate for the quarter was 17% compared to last year's rate of 16.9%. This slight increase was primarily due to higher pre-tax income, partially offset by increased utilization of foreign tax credits and additional tax benefits from stock-based compensation. Turning now to EPS, Gap's Gap to EPS increased 18.2% to $4.09 this quarter versus $3.46 in the prior year period. This was driven by higher revenues, margin expansion, and a lower share count, partially offset by higher interest expense.

Speaker Change: Turning now to tax our tax rate for the quarter was 17% compared to last years rate of 16, 9%.

Speaker Change: <unk> increase was primarily due to higher pretax income, partially offset by increased utilization of foreign tax credits and additional tax benefits from stock based compensation.

Speaker Change: Turning now to EPS GAAP EPS increased 18, 2% to $4 nine since this quarter versus $3 46 in the prior year period.

Speaker Change: This was driven by higher revenues margin expansion and a lower share count partially offset by higher interest expense.

Linda Hubert: On an adjusted basis, EPS increased 15.3% to $4.37, also driven by revenue growth and margin expansion, as well as reduced share count, partially offset by higher interest expense. EBITDA increased to $240 million, up 16.9% year over year, due to higher net income. Free cash flow, which we defined as cash generated from operations, less capital spending, was $217 million for the quarter and increased the 13% over the same period last year. This was primarily driven by higher net cash from operating activities and reduced spend on property, equipment, and leasehold improvements.

Linda S. Huber: On an adjusted basis, EPS increased 15.3% to $4.37, also driven by revenue growth and margin expansion, as well as a reduced share count, partially offset by higher interest. EBITDA increased to $240 million, up 16.9% year-over-year due to higher net income. Pre-cash flow, which we define as cash generated from operations, less capital spending, was $217 million for the quarter, an increase of 13% over the same period last year. This was primarily driven by higher net cash from operating activities and reduced spending on property, equipment, and leasehold improvements.

Speaker Change: On an adjusted basis EPS increased 15, 3% to $4 37.

Also driven by revenue growth and margin expansion as well as reduced share count partially offset by higher interest expense.

Speaker Change: EBITDA increased to $240 million up 16, 9% year over year due to higher net income.

Speaker Change: Free cash flow, which we define as cash generated from operations less capital spending was $217 million for the quarter, an increase of 13% over the same period last year. This was primarily driven by higher net cash from operating activities and reduced spend on property equipment and leasehold improvements factset continues to be.

Linda Hubert: Backset continues to be a strong producer of free cash flow. Turning now to share repurchases for the quarter, we repurchased 135,150 shares for approximately $60 million and an average share price of $442.12. Our fiscal 2024 share repurchase plan targets $250 million of repurchases. As of May 31st, 2024, we had $128.1 million remaining for repurchases in fiscal 2024. Also, yesterday, we paid a quarterly dividend of $1.04 per share, which represented a 6% increase in the regular quarterly dividend from the previous quarter. This marks the 25th consecutive year we have increased dividends on a stock split-adjusted basis.

Linda S. Huber: FactSet continues to be a strong producer of free cash flow. In turning now to share repurchases for the quarter, we repurchased 135,150 shares for approximately $60 million at an average share price of $442.12. Our fiscal 2024 share repurchase plan targets $250 million of share repurchase. As of May 31, 2024, we had $128.1 million remaining for repurchases in fiscal 2024.

Speaker Change: A strong producer of free cash flow.

Speaker Change: And turning now to share repurchases for the quarter, we repurchased 135150 shares for approximately $60 million and an average share price of $442 12 set our fiscal 2024, a share repurchase plan targets $250 million of repurchases.

Speaker Change: As of May 31, 2024, we had $128 $1 million remaining for repurchases in fiscal 2024.

Linda S. Huber: Also, yesterday we paid a quarterly dividend of $1.04 per share, which represented a 6% increase in the regular quarterly dividend from the previous quarter. This marks the 25th consecutive year we have increased dividends on a stock split adjusted basis. We remain disciplined in our buyback program and committed to returning long-term value to our shareholders. Combining our dividends and share repurchases, we've returned $430.1 million to our shareholders over the last 12 months. And during the third quarter, we paid down $62.5 million of our term loan, which brings our gross leverage down to 1.7 times.

Speaker Change: Also yesterday, we paid a quarterly dividend of $1 <unk> per share, which represented a 6% increase in the regular quarterly dividend from the previous quarter. This marks the 25th consecutive year, we have increased dividends on a stock split adjusted basis, we remain.

Linda Hubert: We remain disciplined in our buyback program and committed to returning long-term value to our shareholders. Combining our dividends and share repurchases, we return $430.1 million to our shareholders over the last 12 months. And during the third quarter, we paid down $62.5 million of our term loan, which brings our gross leverage down to 1.7 times. This is consistent with our plan to repay the term loan in full by the second quarter of fiscal 2025. As Phil mentioned earlier, given the delayed recovery in our end market, we are now guiding to incremental organic ASV plus professional services growth of $85 to $120 million for the fiscal year, reflecting 4.8% growth at the midpoint, down from our recent guide to approximately 5%.

Speaker Change: And disciplined in our buyback program and committed to returning long term value to our shareholders.

Speaker Change: Adding our dividends and share repurchases, we returned $431 million to our shareholders over the last 12 months.

Speaker Change: And during the third quarter, we paid down $62 $5 million of our term loan which brings our gross leverage down to one seven times. This is consistent with our plan to repay the term loan in full by the second quarter of fiscal 2025.

Linda S. Huber: This is consistent with our plan to repay the term loan in full by the second quarter of fiscal 2025. As Phil mentioned earlier, given the delayed recovery in our end markets, we are now guiding to incremental organic ASV plus professional services growth of $85 to $120 million for the fiscal year, reflecting 4.8% growth at the midpoint, down from our recent guidance of approximately 5%. Revenues are now expected to be in the range of $2.18 billion to $2.19 billion for the year.

Speaker Change: As Phil mentioned earlier, given the delayed recovery in our end markets. We are now guiding to incremental organic ASC plus professional services growth of $85 million to $120 million for the fiscal year, reflecting four 8% growth at the midpoint down from our recent guide to approximately 5%.

Linda Hubert: Revenues are now expected to be in the range of $2.18 billion to $2.19 billion for the year. On the other hand, our expectations from margin and EPS growth for the year have gone up. Specifically, gap operating margin is expected to be in the range of 33.7% to 34%, up approximately 100 basis points from prior guidance. And adjusted operating margin is expected to be in the range of 37 to 37.5%, up 70 to 80 basis points from prior guidance. Adjusted EPS is now expected to be 40 cents higher than prior guidance in the range of $16 to $16.40.

Speaker Change: Revenues are now expected to be in the range of $2 1 billion to $2, one 9 billion for the year.

Linda S. Huber: On the other hand, our expectations for margin and EPS growth for the year have gone up. Specifically, GAAP operating margin is expected to be in the range of 33.7% to 34%, up approximately 100 basis points from prior guidance. And adjusted operating margin is expected to be in the range of 37% to 37.5%, up 70 to 80 basis points from prior guidance. Adjusted EPS is now expected to be $0.40 higher than prior guidance in the range of $16 to $16.40. The effective tax rate guidance remains unchanged at 16.5% to 17.5%.

Speaker Change: On the other hand, our expectations for margin and EPS growth for the year has gone up.

Speaker Change: Specifically GAAP operating margin is expected to be in the range of 33, 7% to 34% up approximately 100 basis points from prior guidance and adjusted operating margin is expected to be in the range of 37% to 37, 5% up 70 to 80 basis points from prior guidance.

Speaker Change: Adjusted EPS is now expected to be 40 cents higher than prior guidance in the range of $16 to $16 40.

Linda Hubert: The effective tax rate guidance remains unchanged in the range of 16.5% to 17.5%.

Speaker Change: The effective tax rate guidance remains unchanged in the range of 16, 5% to 17, 5% and.

Linda Hubert: In closing, we continue to manage our cost-based carefully so that we can deliver value to our shareholders while maintaining investment in Gen AI and other strategic initiatives. We believe that we are well positioned for growth as the market to pick up.

Linda S. Huber: In closing, we continue to manage our cost base carefully so that we can deliver value to our shareholders while maintaining investment in Gen AI and other strategic initiatives. We believe that we are well positioned for growth as the markets pick up. We're now ready for your questions, Operator.

In closing, we continue to manage our cost base carefully so that we can deliver value to our shareholders, while maintaining investment in gen AI and other strategic initiatives.

Speaker Change: We believe that we are well positioned for growth as the markets pick up.

Unknown Executive: We're now ready for your question.

Unknown Executive: Operator? Thank you.

Speaker Change: We're now ready for your questions operator.

Operator: Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again. Please limit yourself to one question.

Unknown Executive: At this time, we will conduct the question-and-answer session. Everyone might ask a question. You'll need to press start 1-100 telephone and wait for your name to be announced. To withdraw your question, please press start 1-1 again. Please limit yourself to one question. Please stand by while we compile the Q&A roster.

Thank you at this time, we will conduct a question and answer session. As a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, please limit yourself to one question. Please standby, while we compile the Q&A roster.

Operator: Please stand by while we compile the Q&A roster. Our first question comes from the line of Toni Kaplan of Morgan Stanley. Your line is now open.

Toni Kaplan: Our first question comes from a line of Tony, captain of Morgan Stanley. Your line is now open. Perfect. Thank you so much. I wanted to ask regarding ASV. The guidance seemed pretty wide in terms of the range. Are there sort of a wide range of array of outcomes that could happen? I think the midpoint sort of assumes that things maybe stay flat sequentially. That would maybe be a little bit better than the last few quarters. I just want to get a sense of you talked about the challenging environment, like any green shoots there, and how we should be thinking about that.

Speaker Change: Our first question comes from the line of Toni Kaplan of Morgan Stanley. Your line is now open.

Toni Michele Kaplan: Terrific. Thank you so much. Regarding ASV, the guidance seems pretty wide in terms of the range. Are there sort of a wide range of outcomes that could happen?

Toni Michele Kaplan: Perfect. Thank you so much.

Toni Michele Kaplan: I wanted to ask regarding ASC.

Toni Michele Kaplan: Guidance seems.

Toni Michele Kaplan: Pretty wide in terms of the range.

Speaker Change: Are there sort of a wide range of array of outcomes that could could happen I think the midpoint sort of assumes that.

Frederick Philip Snow: I think the midpoint sort of assumes that things maybe stay or are flat sequentially. And so, therefore, that would maybe be a little bit better than the last few quarters. So just want to get a sense of, you know. We talked about the challenging environment, like any green shoots there, and how we should be thinking about that. Thanks. Thanks, Toni. It's Phil.

Speaker Change: Things, maybe stay are are flat sequentially and so therefore.

Speaker Change: That would maybe be a little bit better than the last few quarters. So just wanted to get a sense of you know.

Frederick Philip Snow: You talked about the challenging environment like any green shoots there and how we should be thinking about that thanks. Thanks, Toni its Phil I'll start and I think how long we will have a bit more detail here. So yes, we definitely have more visibility now on Q4.

Phil Snow: Thanks, Toni, it's Phil.

Frederick Philip Snow: I'll start, and I think Helen will have a bit more detail here. So, yeah, we definitely have more visibility now in Q4. 4.75 is the mid-range now, the middle of the range that we just gave you. We wanted to make sure we de-risked sort of the low end, so the low end is at 4. So we feel really confident about this range and are confident about the middle of the range. But I do think there's reason for optimism here.

Phil Snow: I'll start, and I think Helen will have a bit more detail here. So, yeah, we definitely have more visibility now on Q4. 4.75 is the mid-range now of the range that we just gave you. We wanted to make sure we de-rest sort of the low end. So the low end isn't for us. So we feel really confident about this range until confidence about the middle of the range. There are, though, I mean, it is our biggest quarter. And there are a lot of swing deals in the quarter, a lot of seven-figure opportunities. So you never really know until the quarter is over whether or not you're going to get all of those.

Speaker Change: <unk> 75 is the mid range now.

Mid of the range that we just gave you.

Speaker Change: We wanted to make sure we derisked.

Speaker Change: The low end so the low end does that for us. So we feel really confident about this range and feel confident about the middle of the range. There are though I mean, it is our biggest quarter and there are a lot of swing deals in the quarter a lot of seven figure opportunities.

Speaker Change: So you never really know until the quarters over whether or not you're going to get all of those but I do think there is reason for optimism here as I mentioned in my comments, we had some very nice wins.

Helen Shan: But I do think this reason for optimism here. As I mentioned in my comments, we had some very nice wins in Q3 that were strategic. New kinds of wins for us across the portfolio lifecycle are really helping clients with total cost of ownership. So, becoming more encouraged in our ability to go out, help clients save money with the existing portfolio lifecycle set of products, as well as the tools that we're now building for generative AI. Yeah, no, I think as Phil had mentioned, we had some very good wins earlier in Q3. And so when we take a look at Q4, we've also had a number of deals that have longer decision cycles, and that's moved us a bit as well.

Helen L. Shan: As I mentioned in my comments, we had some very nice wins in Q3 that were strategic, new kinds of wins for us across the portfolio lifecycle, really helping clients with total cost of ownership. So I'm becoming more encouraged in our ability to go out and help clients save money with the existing portfolio lifecycle set of products, as well as the tools that we're now building for generative AI. Yeah, no, I think, as Phil had mentioned, we had some very good wins earlier in Q3.

Speaker Change: In Q3 that was strategic new kinds of wins for us.

Speaker Change: Across the portfolio lifecycle are really helping clients with total cost of ownership, so becoming more encouraged in our ability to go out.

Speaker Change: Helped clients save money with the existing portfolio lifecycle set of products as well as the tools that we're now building for generative AI.

Speaker Change: Yes, no I think as Phil had mentioned we had some very good wins earlier.

Helen L. Shan: And so when we take a look at Q4, we've also had a number of deals that have longer decision cycles, and that's moved us a bit as well. But if I look at the weighted pipeline for Q4, it's in line with last year, and we've been able to sell at the same pace. It's really the end market that's been impacting us from an erosion perspective and cost decision. So that's why we've gone for a wider range to allow for that. But we're very confident right now at this point that we've de-risked. Thanks a lot.

Speaker Change: Q3, and so when we take a look at Q4, we've also had a.

Speaker Change: Of deals that have.

Longer decision cycles, and that's moved us a bit as well.

Phil Snow: But if I look at the weighted pipeline for Q4, it's in line with last year. And we've been able to sell at the same pace. It's really the end market that's been impacting us from an erosion perspective and cost decision. So that's why we've gone for a wider range to allow for that. But we're very confident right now at this point that we've de-risked it. Thanks a lot.

Speaker Change: But if I look at the weighted pipeline for Q4 its in line with last year, and we've been able to sell at the same pace.

Speaker Change: That's really the end market that's been impacting us.

Speaker Change: From an erosion perspective and cost decisions. So that's why we've gone for a wider range to allow for that but we're very confident right now at this point we've derisked it.

Unknown Executive: Welcome.

Speaker Change: Thanks, a lot.

Operator: Welcome. Thank you one moment for our next question. Our next question comes from the line of Alex Kramm of UBS. Your line is now open. Yes, hey, everyone.

Welcome.

Alex Kramm: Thank you. One moment for next question. Our next question comes from a line of ex-cram of UBS. Your line is now open. Yes. Hey, hello, everyone. Phil, you talked about, I think, three areas of investments here that you're excited about or that you'll focus on rather.

Speaker Change: Thank you Bob for next question.

Speaker Change: Our next question comes from the line of Cram of UBS. Your line is now open.

Alexander Kramm: Phil, you talked about, I think, three areas of investments here that you're excited about or that you're focused on rather than, you know, if I go back a few years ago, I think we found ourselves in the same kind of situation; growth had come down, maybe because of the environment, and you felt like you needed to spend a little bit more to get the growth going again. So when you talk about these investments, if I think about the next couple years, do you think the company needs another kind of boost from investments? Or do you think you can do all this in the current kind of cost space that you have in front of you? Thanks. It's a fair question,

Yes, Hey, Hello, everyone Phil.

Frederick Philip Snow: You talked about I think three areas of investments here that you're excited about all that youre focused on rather.

Phil Snow: If I go back a few years ago, I think we found ourselves in the same kind of situation: growth had come down, maybe from the environment, and you felt like you need to spend a little bit more to get the growth going again. So when you talk about these investments, if I think about the next couple of years, do you think the company needs another kind of boost of investments, or do you think you can do orders in the current kind of cost base that you have in front of you? Thanks. It's a fair question.

Speaker Change: Go back a few years ago I think we found ourselves in the same kind of situation growth had come down maybe from the environment didn't you felt like you needed to spend a little bit more to get the growth going again. So when you talk about these investments if I think about the next couple of years do you think the company needs another kind of boost of investments or do you think it can do all this in.

Speaker Change: In the current kind of cost base that you have in front of you. It's a fair question. Thank you Alex so.

Frederick Philip Snow: Thank you, Alex. So, you know, I think the reasons for optimism are we have a lot of ongoing multi-year initiatives that are still being built out, and we expect to drive growth in the future. So that would be deep sector, private markets, and more recently real time, so a bit of an old advantage. But those things are still chugging along quite nicely and are promising. And in the last, you know, 18 months or so, we really have done a good job of freeing up incremental dollars to invest in generative AI and the data platform. And I think we've unleashed another wave of innovation at the company, honestly, in terms of how we've approached it. So I do feel optimistic. It is a fair question, though.

Phil Snow: Thank you, Alex. So, you know, I think the reasons for optimism; we have a lot of ongoing multi-year initiatives that are still being built out, and we expect to drive growth in the future. So that would be deep sector, private markets, more recently real time, so bit of an old advantage. So those things are still chugging along quite nicely and are promising. And in the last, you know, 18 months or so, we really have done a good job of freeing up incremental dollars to invest in generative AI and the data platform. And I think we've unleashed another wave of innovation at the company, honestly, in terms of how we approach.

Speaker Change: I think the reasons for optimism we have a lot of ongoing multi year initiatives that are still being built out and we expect to drive growth in the future. So that would be deep sector private markets more recently real time, so bit of an older vintage. So those things are still chugging along quite nicely.

Speaker Change: Lee and a promising and in the last 18 months or so we really have done a good job of freeing up incremental dollars to invest in generative AI and the data platform and I think we've unleashed another wave of innovation at the company honestly in terms of how we've approached us so I do feel optimistic.

Phil Snow: So I do feel optimistic.

Phil Snow: It is a fair question though, so as we go through Q4 and we do our rolling three-year plan, I think we are going to evaluate whether or not there are some things that we'd want to invest more in, but we can't really give you any real guidance on that until the September call. But it's a good question. Thank you.

Frederick Philip Snow: So as we go through Q4 and we, you know, do our rolling three-year plan, I think we are going to evaluate whether or not there are some things that we'd want to invest more in, but we can't really give you any real guidance on that until the September call, but fair enough. Thank you. Thank you. Thank you. We'll move on to our next question. Our next question comes from the line of Kelsey Zhu of Otter Anonymous. Your line is now open. Hi, good morning.

Speaker Change: It is a fair question now so as we go through Q4, and we do a rolling three year plan I think we are going to evaluate whether or not there are some things that we'd want to invest more and but we cant really give you any.

Speaker Change: Real guidance on that until the September call, but it's a it's a good question.

Speaker Change: Fair enough. Thank you.

Kelsey Zhu: We will move for our next question. Our next question, question online that's Kelsey Zhu of Autonomous. Your line is now open. Hi, good morning. Thanks for taking my question. So the industry data we track suggests that there are some early signs of capital markets activity recovery.

Speaker Change: Thank you <unk> for our next question.

Kelsey Zhu: Thanks for taking my question. So the industry data we track suggests that there are some early signs of capital markets activity recovery. So just curious, what are you hearing from your South by customers? And when do you expect South by ASB growth to reaccelerate? Well, thanks, Kelsey.

Our next question comes from the line of Kelsey Xu of Autonomous Your line is now open.

Speaker Change: Hi, Good morning, Thanks for taking my question. So the industry data. We track suggest that there are some early signs of capital markets activity recovery. So just curious what are you hearing from your felt by customers and when do you expect south by ASD growth to react to Reaccelerate.

Phil Snow: So just curious, what are you hearing from your self-by-customers, and when do you expect self-by-ASB growth to re-accelerate? Well, thanks, Kelsey. So I think we're certainly seeing more activity on the M&A front with the bankers. I think we're seeing a little bit better hiring than we did.

Frederick Philip Snow: So I think we certainly are seeing more activity on the M&A front with the bankers. I think we're seeing a little bit better hiring than we did. Helen might have some more comments on this.

Kelsey: Well, thanks Kelsey so.

Speaker Change: We certainly are seeing more activity on the M&A front with the bankers.

Speaker Change: I think we're seeing a little bit better hiring than we did.

Helen Shan: Helen might have some more comments on this. And I think if you look at the trends historically, as banking fees go up, historically banking hiring has followed that, and then historically fax at ASV on the sell side follows that. So, if historical trends remain true, no guarantees. I think there are some reasons to be optimistic there.

Helen L. Shan: And I think if you look at the trends historically, as banking fees go up, historically, banking hiring has followed that. And then, historically, FactSet's ASV on the sell side follows that. So if historical trends remain true, no guarantees, you know, I think there are some reasons to be optimistic. Yeah, I'll add a little bit to that. I think what we're seeing from the large investment banks, the universal banks, is that hiring has been pretty muted. So they're being more conservative themselves.

Speaker Change: How it might have some more comments on this.

Speaker Change: And I think if you look at the trends historically as banking fees go up.

Speaker Change: Historically banking hiring has followed that and then historically factset ASC on the sell side follows that so.

Speaker Change: Historical trends remain true.

Speaker Change: No guarantees I think there are some reasons to be optimistic there.

Helen Shan: Yeah, I'll add a little bit to that. I think what we're seeing up from the large investment banks, the universal banks, the hiring has been pretty muted. So they're being more conservative themselves. We're seeing higher numbers from the middle market banks, the boutiques. So I would say that right now seasonal hiring for the quarter is for the first quarter this year, for the first time this year, higher than the previous year.

Helen L. Shan: We're seeing higher numbers from the middle market banks and the boutiques. So I would say that right now, seasonal hiring for the quarter is, for the first time this year, higher than the previous year. But I would say we're not necessarily building that in as a big recovery into our Q4. Thank you. Thank you. Please take a moment for our next question. Our next question comes from the line of Manav Patnaik of Barclays. Your line is now open. Thank you. Good morning.

Speaker Change: Yes, I'll add a little bit to that I think what we're seeing from the large investment banks in universal banks. The hiring has been pretty muted. So they are being more conservative themselves.

Speaker Change: We're seeing higher numbers from the middle market banks of boutiques.

Speaker Change: So I would say that right now seasonal hiring for the quarter.

Speaker Change: <unk> for the first quarter this year for the first time this year.

Speaker Change: Higher than the previous year, but I would.

Unknown Executive: But I would, we're not necessarily building that in as a big recovery into our Q4 numbers. Thank you.

Speaker Change: We're not necessarily building that in as a big recovery until our Q4 numbers.

Speaker Change: Thank you.

Many Panick: One more mix for next question. Our next question, because in line of many of panic of Barclays, your line is now open. Thank you.

Speaker Change: Thank you our next question.

Manav Shiv Patnaik: I guess I just had a little bit of a run rate question, and it was kind of a two-part one. On the top line, is the UBSCS impact now fully in the run rate, or do you anticipate more impact? And then just specific to expenses as well, you know, all the headcount efforts and stuff you've made thus far, is that, is there more to flow through? Just trying to appreciate, you know, the dynamics of those two. Sure, Manav. Hi, it's Helen.

Speaker Change: Our next question comes from the line of many of Panic of Barclays. Your line is now open.

Phil Snow: Good morning. I guess I just had a little bit of a run date question and kind of a two-part one on the top line. Is the UBSCS impact now fully in the run rate of you anticipate more impact and then just specific to expenses as well, you know, all the head count efforts and stuff is made thus far. Is that, is there more to flow through, just trying to appreciate, you know, the dynamics on those two. Sure, I'm on a high talent.

Speaker Change: Thank you good morning I.

Speaker Change: I guess I just had a little bit of a run rate question in kind of a two part one on the top line is the <unk> impact now fully in the run rate or do you anticipate more impact and then just specific to expenses.

Speaker Change: Well all of the head count ethics and stuff you've made thus far is that is there more to flow through just trying to appreciate the dynamics on those too.

Helen L. Shan: I'll take the first part. So, I would say the majority of the impact from that transaction is reflected in this quarter. There's a little bit left in Q4, but it's much smaller. Yeah, and Manav, looking at the margin improvement, I want to try to go through the details of this so everyone understands what's one time and what continues. So the total good guys on the margin improvement side, and this is adjusted operating margin, were about 540 basis points, and then the negatives were about 200 basis points. So let me go through them one by one.

Linda Hubert: I'll take the first part. So I would say the majority of the impact from from some that transaction is reflected in this quarter. There's a little bit left in Q4, but it's much smaller. Yeah, and I'm looking at the margin improvement. I want to try to go through the detail of this so everyone understands what's one time and what continues. So the total good guys on the margin improvement side, and this is adjusted operating margin, we're about 540 basis points, and then the negatives were about 200 basis points. So let me go through these. The lower bonus accrual of $8 million to get our annual bonus accrual in line contributed about 160 basis points to the good for third quarter.

Sure Hi, it's Alan I'll take the first part so I would say the majority of the impact from.

Speaker Change: From that transaction is reflected in this quarter there is a little bit left in Q4, but it's much smaller.

Linda S. Huber: The lower bonus accrual of $8 million to get our annual bonus accrual in line contributed about 160 basis points to the good for the third quarter, and that will not be repeated. In other words, we had to do that adjustment. Lower salaries added about 130 basis points, and that will continue. Lower payroll taxes added about 120, and that's a one-time thing. It's based on the CARES Act.

Speaker Change: Yes, manav looking at the margin improvement I want to try to go through the detail of that so everyone understands what's one time and what continues.

Linda S. Huber: It's a refundable tax credit for keeping people on payroll during COVID. Lower facilities expenses added 60 basis points, which will continue. Higher capitalization added 40, which will also continue, and lower stock-based comp amortization added 20. That one is caught up and will not continue.

Speaker Change: So the total good guys on the margin improvement side. This is adjusted operating margin were about 540 basis points and then the negatives were about 200 basis points. So let me go through these.

Linda S. Huber: So out of the 540 basis points, about 280 are one-timers, and then on the negative side, we had higher technology costs for 170 basis points and higher third-party data and other expenses for 30 basis points. So 340 basis points overall improvement, and on the good guy side, about half of that will continue as we move through the year. Hope that helps.

Speaker Change: The lower bonus accrual of $8 million to get our annual bonus accrual in line.

Speaker Change: Contributed about 160 basis points to the good for.

Linda Hubert: And that will not be repeated. In other words, we had to do that adjustment. Lower salaries added about 130 basis points, and that will continue. Lower payroll taxes added about 120, and that's a one-time thing that's based on the CARES Act. It's a refundable tax credit for keeping people on payroll during COVID. Lower facilities expenses added 60 basis points that will continue. Higher capitalization added 40, which will also continue, and lower stock based compensation added 20. That one is caught up and will not continue. So out of the 540 basis points, about 280 are one-timers.

Speaker Change: For third quarter and that will not be repeated in other words, we had to do that adjustment.

Speaker Change: Lower salaries added about 130 basis points and that will continue a lower payroll taxes added about 120 and Thats a one time thing that's based on the cares Act.

Speaker Change: It's a refundable tax credit for keeping people on payroll during COVID-19.

Lower facilities expenses added 60 basis points that will continue higher capitalization added 40, which will also continue and lower stock based comp amortization added 20 that one has caught up and will not continue so out of the 540 basis points about 280, or one timers and then on the next.

Linda Hubert: And then on the negative side, we had higher technology costs for 170 basis points and higher third party data and other expenses for 30 basis points. So 340 basis points overall improvement. and on the good guy's side, about half of that will continue as we move through the year. Hope that helps.

Speaker Change: <unk> side, we had higher technology costs for 170 basis points and higher third party data another expenses for 30 basis points.

Speaker Change: So 340 basis points overall improvement.

Speaker Change: And on the good guys side about half of that will continue as we move through the year I hope that helps.

Unknown Executive: Yes, thank you.

Speaker Change: Yes. Thank you.

Faiza Alwy: Thank you. One moment for our next question. Our next question comes from a line of Faiza, our wave of Deutsche Bank. Your line is now open. Yes, I think you. Good morning. So I wanted to ask about the competitive. Environment, and I'm curious what you're seeing from competitors. It seems that over the last couple of years, you've seen competitors invest as well relative to what had been the case previously, and I know you talked about, you know, price competition for new business. Just give us a sense of how you would assess the competitive dynamics at this point.

Speaker Change: Yes.

Speaker Change: Thank you one moment for our next question.

Manav Shiv Patnaik: Yep, thank you. Thank you. One moment for our next question. Our next question comes from the line of Faiza Alwy of Deutsche Bank. Your line is now open. Yes, hi. Thank you. Good morning.

Speaker Change: Our next question comes from the line of Faiza wafer.

Speaker Change: <unk> with Deutsche Bank. Your line is now open.

Faiza Alwy: So I wanted to ask about the competitive environment, and I'm curious what you're seeing from competitors. It seems that over the last couple of years, you've seen competitors invest as well, relative to what had been the case previously. And I know you talked about, you know, price competition for new business. So just give us a sense of how you would assess the competitive dynamics at this point. Yeah, thanks, Faiza. So on the institutional buy side, I would say, you know, we have two key competitors there, and the name of the game is really total cost of ownership.

Speaker Change: Yes, hi, Thank you good morning.

Faiza Alwy: I wanted to ask about the competitive environment and I'm curious, what you're seeing from competitors. It seems that over the last couple of years, you've seen competitors in the vas as well relative to what had been the case previously.

Faiza Alwy: I know you talked about price competition for new business. So just give us a sense of how you would assess the competitive dynamics at this point, yes. Thanks Faiza. So on the institutional buy side I would say we have two key competitors there and the name of the game is really total cost of ownership. So we feel very well.

Phil Snow: Yeah, thanks, Faiza. So, on the institutional buy side, I would say, you know, we have two key competitors there. And the name of the game is really Total Cost of Ownership. So we feel very well positioned with the portfolio analytics that we have on Fancza, but even better positioned now that we have invested in our front office tools. So we, I mentioned that we launched PM Hub, which really connects very nicely the middle office solutions that we have with the front office. So I feel really good about our competitive position on the buy side, and those firms really have, I think, feeling the most cost pressure and the ones taking costs out.

Frederick Philip Snow: So we feel very well positioned with the portfolio analytics that we have on FactSet, but an even better position now that we have invested in our front office tools. So I mentioned that we launched PM Hub, which really connects very nicely the middle office solutions that we have with the front office. So I feel really good about our competitive position on the buy side. And those firms are really, I think, feeling the most cost pressure and are the ones taking costs out.

Faiza Alwy: Positioned with the portfolio analytics that we have on Factset.

Faiza Alwy: But even better position now that we have.

Faiza Alwy: <unk> invested in our front office tools. So we I mentioned that we launched PM hub, which really connect very nicely the middle office solutions that we have.

Faiza Alwy: With the front office, so I feel really good about our competitive position on the buy side and those firms really I think feeling the most cost pressure on the ones taking cost out. So I think the the firms that have portfolio analytics solutions are the ones that have the right to compete on the buyer side and I think we're in good shape, there and <unk>.

Phil Snow: So I think the firms that have portfolio analytics solutions are the ones that have the right to compete on the buy side. And I think we're in good shape there in wealth. Similarly, we have, you know, the portfolios on the system. We've done an amazing job with our wealth advisor product and advise a dashboard. And you heard me talk about another workflow today, which is sort of, you know, the CRM workflow. So we're really focused very heavily now on building out additional workflows for the wealth space, but we couldn't feel better positioned in the wealth space.

Frederick Philip Snow: So I think the firms that have portfolio analytics solutions are the ones that have the right to compete on the buy side, and I think we're in good shape there. In wealth, similarly, we have portfolios on the system.

Speaker Change: Well <unk>.

Similarly, we have the portfolios on the system, we've done an amazing job with our wealth advisor product and advise the dashboard.

Frederick Philip Snow: We've done an amazing job with our wealth advisor product and advisor dashboard. And you heard me talk about another workflow today, which is sort of the CRM workflow. So we're really focused very heavily now on building out additional workflows for the wealth space. But we couldn't feel better positioned in the wealth space.

Speaker Change: You heard me talk about another workflow today, which is sort of the.

Speaker Change: So we're really focused very heavily now on building out additional workflows for the wealth space, but we couldnt feel better positioned in the wealth space.

Phil Snow: I think within banking, private equity, corporates, the hedge funds that space admittedly is getting a bit more crowded. So there's lots of us in there with fundamental analyst products. I think the work we've done with deep sector with private markets, the tools that we're building with generative AI, all of those I think give us a very nice position there on the competitive front. And I'll just comment on your point around pricing. As we've mentioned before, there is some on price pressure on new logos, but they're not widespread. Really, when it happens is when we're displacing competitors, where we may need to reduce price to help match budgets, for example.

Frederick Philip Snow: I think within banking, private equity, corporates, and hedge funds, that space, admittedly, is getting a bit more crowded. So there's lots of us in there with fundamental analysis products. I think the work we've done with deep sector, with private markets, the tools that we're building with generative AI, all of those, I think, give us a very nice position there in the competitive. I'll comment on your point around pricing. As we've mentioned before, there is some price pressure on new logos, but they're not widespread.

Speaker Change: I think within banking private equity corporates, the hedge funds that space admittedly is getting a bit more crowded.

Speaker Change: So theres lots of us in there with fundamental analysts products I think the work we've done with deep sector with private markets. The tools that we're building with generative AI all of those I think gives us a very nice position there on the competitive front.

Frederick Philip Snow: Really, when it happens is when we're displacing competitors, where we may need to reduce the price to help match budgets, for example. But the good thing is that we are almost always in multi-year contracts, so we recapture the price and improve our price realization as the contract matures. Thank you. Please allow one moment for our next question. Our next question comes from the line of Surinder Thind of Jeffrey's. Your line is now open. Thank you. A question about AI and just the integration of the tools and the feature set.

Speaker Change: And I'll just comment on your point around pricing.

Speaker Change: We've mentioned before there is some price pressure on new logos, but theyre not widespread really when it happens is when were displacing competitors, where we may need to reduce price to help match budgets for example, but.

Phil Snow: But the good thing is that we are almost always in multi-year contracts. So we recapture the price and improve our price realization as the contract matures. Thank you.

Speaker Change: The good thing is that we are almost always in multiyear contracts. So we recapture the price and improve our price realization.

Speaker Change: As the contract matures.

Speaker Change: Thank you.

Many Panick: Thank you. One moment for next question. Our next question comes in the line of the rendered end of Jeffries. Your line is now open.

Speaker Change: Thank you gentlemen for next question.

Speaker Change: Okay.

Speaker Change: Our next question comes from the line of Surinder <unk> of Jefferies. Your line is now open.

Unknown Executive: Thank you. The question about Gen AI and just the integration of the tools and the feature sets. As clients begin to adopt more and use more, how does that impact the technology costs for you guys? Any color there would be helpful? It's a great question. Thank you. It's a bit unknown at this point. As Linda has spoken about, you know, our technology expenses are going up, and that's for good reason, because we're investing here. But yeah, as clients use more of these tools, it's going to cost in terms of compute. So, of course, we're thinking carefully about that.

Speaker Change: Thank you.

Surinder Singh Thind: A question about.

Speaker Change: Jenny and just the integration of the tools and the feature set.

Surinder Singh Thind: As clients begin to adopt more and use more, how does that impact the technology costs for you guys? Any color there would be helpful.

Speaker Change: As clients begin to adopt more amused more.

Speaker Change: Does that impact the technology cost for you guys.

Speaker Change: Any color there would be helpful.

Frederick Philip Snow: It's a great question. Thank you. It's a bit unknown at this point, but as Linda has spoken about, you know, our technology expenses are going up. And that's for good reason, because we're investing here. But yeah, as clients use more of these tools, it's going to cost in terms of compute. So of course, we're thinking carefully about that. We have fantastic engineers at FactSet that are sort of monitoring this, and that will be baked into, you know, how we end up charging for these products. So it's, you know, it's an equation that will have to be figured out over time.

Speaker Change: It's a great question. Thank you.

Speaker Change: Bit unknown at this point.

Speaker Change: Linda has spoken about our technology expenses are going up and Thats been good reason, because we're investing here.

Speaker Change: But yes as clients use more of these tools, it's going to cost in terms of compute so of course, we're thinking carefully about that we have fantastic engineers at Factset.

Phil Snow: We have fantastic engineers at FactSet that are sort of monitoring this, and that will be baked into, you know, how we end up charging for these products. So it's, you know, it's an equation that will have to be figured out over time. But if we're delivering enough value in terms of saving clients time, which is really what we're focused on, it should outweigh the added expense that we all they would be incurring from the compute.

Speaker Change: Sort of monitoring this and that will be baked into.

Speaker Change: We ended up charging for these products.

It's an equation that will have to be figured out over time, but if we are delivering enough value in terms of saving clients' time, which is really what we're focused on.

Frederick Philip Snow: But if we're delivering enough value in terms of saving clients time, which is really what we're focused on, it should outweigh the added expense that we or they would be incurring from the compute. Thank you. Yep. Thank you. One moment for our next question. Our next question comes from the line of Ashish Sabadra of RBC. Your line is now open. Thanks for taking my question. I just wanted to clarify on the CSUBS headwind.

Speaker Change: Mitch should outweigh the added expense that we are they would be incurring from the compute.

Unknown Executive: Thank you.

Unknown Executive: Yeah. Thank you.

Speaker Change: Thank you.

Speaker Change: Yes.

Ashish Sabadra: One for next question. Our next question comes on the line of Ashish Sabadra of RBC. The line is now open. Thanks for taking my question. I just wanted to clarify on the CSUBS headwind. Was that just the net impact, or how do we think about like any potential cross-cell opportunity? Was there any cross-cell opportunity which lowered that impact? And then maybe just a quick clarifying question on revenue versus ASV growth into fourth quarter. If my math is right, I get at the point of the revenue guidance. Less than two percent revenue growth in the second in the fourth quarter, which is almost a three point lower than the ASV growth at the midpoint.

Speaker Change: Thank you Ron for next question.

Speaker Change: Yes.

Speaker Change: Our next question comes from the line of Ashish <unk> of RBC. Your line is now open.

Ashish Sabadra: Was that just the net impact, or how do we think about any potential cross-sell opportunity? Was there any cross-sell opportunity which would have lowered that impact? And then maybe just a quick clarifying question on revenue versus ASV growth in the fourth quarter. If my math is right, I get, at the midpoint of the revenue guidance, less than 2% revenue growth in the fourth quarter, which is almost a 3 point lower than the ASV growth at the midpoint. What's causing that delta, and how do we think about the exit revenue turn rate going into next year? Hi, this is Helen.

ashish: Thanks for taking my question I, just wanted to clarify on the <unk> headwind was stacked.

Speaker Change: The negative impact are.

Speaker Change: How do we think about any potential cross sell opportunity was there any cross sell opportunity, which lowered that impact and then maybe just a quick clarifying question on revenue wishes.

Speaker Change: <unk> growth in the fourth quarter, if my math is right I get at the midpoint of the revenue guidance.

Speaker Change: Let's take 2% revenue growth in the second and the fourth quarter, which is almost a three point lower than the ESP growth at the midpoint.

Helen Shan: What's causing that delta, and how do we think about the exit revenue trend rate and going into next year. Thanks.

Speaker Change: What's causing that Delta and how do we think about the exit revenue run rate in <unk>.

Speaker Change: Going into next year. Thanks.

Helen Shan: Sure. Hi. This is Helen.

Helen L. Shan: Let me address the first part and then I'll turn this to Linda. As it relates to the Credit Suisse and UBS merger, what we are talking about is on a net basis. So we were able to capture some of the cancellation back in selling to UBS. So that's a positive from our perspective. Yeah, and Ashish, you're right. It's Linda.

Helen Shan: Let me address the first part, and then I'll turn this to Linda as it relates to the credit suite in UBS merger. What we are talking about is, on a net basis. So we were able to capture some of the cancellation back in selling to UBS. So that's a positive from our perspective. Yeah. And as Shisha wrote, it's Linda generally revenue lags ASV. We had an unusual one-time acceleration of QCIP revenues in the third quarter of last year. That increased the revenue attributed to Q3 of 23, and by comparison, because that's a tough lap, the Q3 24 looks lower.

Speaker Change: Sure Hi, This is Alan let me address the first part and then I'll turn this to Linda as it relates to the credit Suisse and UBS merger, what where you are talking about is on a net basis. So we were able to capture some of the cancellation back in selling to two UBS. So that's a positive from our perspective.

Speaker Change: Dave.

Speaker Change: And Ashish you're right, it's Linda Gen.

Linda S. Huber: Generally, revenue lags ASV. We had an unusual one-time acceleration of QSIP revenues in the third quarter of last year. That increased the revenue attributed to Q3 of 23. And by comparison, because that's a tough lap, the Q3 24 looks lower.

Linda S. Huber: Generally our revenue lags ASB, we had an unusual onetime acceleration of CUSIP revenues in the third quarter of last year.

Speaker Change: That increase the revenue attributed to Q3 of 'twenty three and by comparison, because that's a tough lap.

Helen Shan: So some of it is timing. And I think it is fair to note that in the third quarter, while we don't break out QCIP because it is core to our business, we had very strong performance from QCIP both in terms of growth and margins. So we're very pleased with how that business is doing. But it's your correct, but it is a lapping effect that's causing that. Thank you very much for that.

Linda: The Q3 24 looks lower so some of it is timing and I think it is fair to note that in the third quarter, while we don't break out CUSIP because it is core to our business. We had very strong performance from CUSIP. Both in terms of growth and margin. So we're very pleased with how that business is doing but it's yours.

Linda S. Huber: So some of it is timing. And I think it is fair to note that in the third quarter, while we don't break out QSIP, because it is core to our business, we had a very strong performance from QSIP, both in terms of growth and margin. So we're very pleased with how that business is doing. But you're correct, but it is a lapping effect that's causing that.

Speaker Change: Correct, but it is a lapping effect, that's causing that.

Linda S. Huber: Thank you. We'll wait for the next one. Thank you. Sorry, I was wondering if you could comment on the fourth quarter as well. That was helpful color on the third quarter.

Speaker Change: Thank you Paul maybe for Nick.

Unknown Executive: Sorry, I was wondering if you could comment on the fourth quarter as well. That was helpful color on the third quarter. Thank you.

Speaker Change: Sorry, I was just wondering if you could comment on the fourth quarter as well that was helpful color on the third quarter.

Linda S. Huber: Thank you. And the run rate exit in the fourth quarter, Ashish, we are not going to give guidance on that. So we'll see what it looks like when we get there.

Unknown Executive: And the run rate exit at the fourth quarter, Ashish, we are not going to give guidance on that. So we'll see what it looks like when we get there to speak to you about it in September.

Speaker Change: Thank you and the run rate exit at the fourth quarter.

Speaker Change: Yes.

Speaker Change: We are not going to give guidance on that so we'll see what it looks like when we get there speak to you about it in September.

Speaker Change: Okay.

George Tong: Thank you. One moment for our next question. Our next question comes from the line of George Tong of Coleman Sachs. Your line is now open. Hi, thanks. Good morning.

Linda S. Huber: I will speak to you about it in September. Thank you one moment for our next question. Our next question comes from the line of George Tong of Coleman Sachs. Your line is now open. Hi, thanks. Good morning.

Speaker Change: Thank you Bob for next question.

Speaker Change: Okay.

Our next question comes from the line of George Tong of Goldman Sachs. Your line is now open.

Keen Fai Tong: I wanted to get some additional clarity around the assumptions behind the updated ASC guide. Are you basically assuming that the sales cycles are elongating? So it's basically a matter of timing when the deals get closed? Or does it reflect increased client events where the business is essentially structurally lost? And then, secondly, can you talk a little bit about international pricing?

Keen Fai Tong: Hi, Thanks, Good morning wanted to get some additional clarity around the assumptions behind the updated <unk> guide.

Keen Fai Tong: Are you basically assuming that the <unk>.

Speaker Change: Sales cycles are long gaiting, so it's basically a matter of timing when the deals get.

Phil Snow: What is the matter of timing when the deals get closed? Or does it reflect increased client events where the business is essentially structurally lost?

<unk> closed or does it reflect.

Increased client events, where the business is essentially structurally lost and then secondly can you talk a little bit about international pricing and believe fiscal <unk> typically when you push through your pricing actions.

Helen Shan: And then secondly, can you talk a little bit about international pricing and believe physical 3-2 is typically when you push through your pricing actions, and how does that pricing compare to the prior year? Sure, hey, George is telling. Let me try to answer. I'll do the pricing one first. So the international pricing increase, you're right. We do it every year in Q3. It was 16 versus 16, eight last year. So you can see that we were able to capture pretty much as the same as last year. And that reflects an increase in the number of clients that we were able to capture.

Keen Fai Tong: I believe fiscal 3Q is typically when you push through your pricing actions, and how does that pricing compare to the prior year? Sure. Hey, Georgia Talon. Let me try to answer.

Speaker Change: That pricing compared to the prior year.

Helen L. Shan: I'll do the pricing one first. So the international pricing increase, you're right; we do it every year in Q3. It was 16 versus 16.8 last year.

Speaker Change: Sure, Hey, Georgia Talon, let me try to answer all I'll do the pricing one first so the international pricing increase you are right. We do it every year in Q3. It was <unk> 16 versus <unk> eight last year. So you can see that we were able to capture pretty much the same as last year and that reflects.

Helen L. Shan: So you can see that we were able to capture pretty much the same amount as last year, and that reflects an increase in the number of clients that we were able to attract. So we feel very good about that, and it's in line with our expectations. So we believe our pricing realization and the value that we're giving clients remain the same. When we think about Q4, the reason that we moved some of this as we think about the pipeline is that we are seeing deals continue to move, especially on the analytics side, the buy side in particular. So they're not falling out is a term that we use. So they're not lost.

Speaker Change: <unk>.

Speaker Change: Sure.

Speaker Change: Increase in the number of clients that we were able to capture so we feel very good about that and it's in line with our expectations, we believe our pricing realization and and value that we're giving clients remain the same when we think about the Q4.

Helen Shan: So we feel very good about that. And it's in line with our expectations. So we believe our pricing realization and value that we're given clients remain the same.

Helen Shan: When we think about the Q4, you know, the reason that we moved some of this as we think about the pipeline is that we are seeing deals continue to move, especially on the analytics, the buy side in particular. So they're not falling out as a term that we use, so they're not lost. But since they've moved a number of quarters because the larger the deals, until clients have greater certainty about the end markets. And sometimes their own bandwidth, quite frankly, is more constrained. We're seeing that continue to move. So that's part of the reason. And I do want to make one point again, which I made earlier.

Speaker Change: The reason that we moved some of this as we think about the pipeline is that we have.

Speaker Change: We're seeing deals continue to move, especially on the analytics the buy side in particular, so they're not falling out that there's a term that we use so they are not lost but since they've moved a number of quarters because the larger the deals until clients have greater certainty about the end markets and sometimes their own ban.

Speaker Change: With quite frankly is more constrained we're seeing that continue to move so that's part of the reason and I do want to make one point again, which I made earlier, if we look at what we expect for the year the underlying demand for our products remained steady on a gross basis. We are in line with last year. So we're still.

Helen L. Shan: But since they've moved a number of quarters, because the larger the deals, until clients have greater certainty about the end markets, and sometimes their own bandwidth, quite frankly, is more constrained, we're seeing that continue to move. So that's part of the reason. And I do want to make one point again, which I made earlier. If we look at what we expect for the year, the underlying demand for our products remains steady. On a gross basis, we are in line with last year. So we're selling as much as we were last year. So it's not a supply problem.

Phil Snow: If we look at what we expect for the year, the underlying demand for our products remains steady on a growth basis. We are in line with last year. So we're selling as much as we were last year. So it's not a not a demand problem.

Knowing as much as we were last year, so it's not a not a demand problem.

Unknown Executive: But that being said, we have had a number of one time. So we've talked about the impact has been on higher erosion, which we believe is in part obviously driven by market. Very helpful. Thank you.

Helen L. Shan: But that being said, we have had a number of one-time cancels that we've talked about. So the impact has been on higher erosion, which we believe is, in part, obviously driven by markets. Very helpful.

Speaker Change: But that being said we have had a number of one time Tam.

Speaker Change: Insoles that we've talked about.

So the impact has been on higher erosion, which.

Speaker Change: We believe is in part obviously driven by market.

Speaker Change: Very helpful. Thank you.

Keen Fai Tong: Thank you. Thank you, one moment, for the next question. Our next question comes from the line of Andrew Nicholas from William Blair. Your line is now open. Hi, good morning.

Andrew Nicholas: We'll move for next question. Our next question comes from a line of Andrew Nicholas of William Blair. Your line is now open.

Speaker Change: Thank you Juan for next question.

Speaker Change: Yes.

Speaker Change: Yeah.

Our next question comes from the line of Andrew Nicholas of William Blair. Your line is now open.

Andrew Nicholas: Hi, good morning. Thanks for taking my question. So I think you mentioned that you believe AI will drive incremental as to be in 2025. I appreciate all the color there. But I'm just curious on kind of the other side of the coin, maybe in terms of internal cost savings. Is that something that you would also expect to materialize at leap at some point in 2025, or should we still be thinking about this primarily being kind of a break-even cost effort on the expense? Thank you.

Andrew Owen Nicholas: Thanks for taking my question. So, I think you mentioned that AI will drive incremental ASV in 2025. I appreciate all the color there, but I'm just curious on the other side of the coin, maybe in terms of internal cost savings.

Andrew Owen Nicholas: Hi, good morning, Thanks for taking my question.

Andrew Owen Nicholas: So I think you mentioned that you believe AI will drive incremental <unk> in 2025 I appreciate all the color there, but I'm just curious on kind of the other side of the coin maybe in terms of internal cost savings is that something that you would also expect to materialize.

Frederick Philip Snow: Is that something that you would also expect to materialize at least at some point in 2025? Or should we still be thinking about this primarily being kind of a breakeven cost effort on the expense front? Thank you.

At some point in 2025 or should we still be thinking about this.

Speaker Change: This is primarily being kind of a breakeven.

Speaker Change: Cost effort on the expense front. Thank you.

Frederick Philip Snow: So, you know, as you would expect, like many firms, we've been looking at this, and I think there are good opportunities for efficiency and client service, quality assurance, content collection, even just editing code writing. So we're evaluating that closely. I think we will get efficiencies. The real question is, do we reinvest those savings in products? Sort of going back to Alex's earlier question. So there certainly will be efficiencies that we'll get. We're seeing that. It's just a question of what we choose to do with it.

Phil Snow: Yeah, thanks, Andrew. Great question. So, as you could expect, like many firms who've been looking at this, and you know, I think there are good opportunities for efficiency and client service quality assurance. Content collection, even just editing code writing. So we're evaluating that closely. I think we will get efficiencies. The real question is, do we reinvest those in product, sort of going back to Alex's earlier question. So, certainly, we'll be efficiencies that we'll get. We're seeing that. It's just a question of what we choose to do with that in the end.

Andrew: Yeah. Thanks, Andrew Great question so.

Speaker Change: You could expect like many firms who have been looking at this and I think there are good opportunities for efficiency and client service quality assurance.

Speaker Change: Content collection.

Speaker Change: Just engineered just other thing code writing.

Speaker Change: So we're evaluating that closely.

Speaker Change: I think we will get efficiencies. The real question is do we reinvest those in products sort of going back to Alex's earlier question. So that certainly will be efficiencies that we'll get we're seeing that it's.

Speaker Change: Just a question of what we choose to do.

Speaker Change: Is that in the end.

Shlomo Rosenbaum: Thank you. One moment for our next question. Our next question, concerned line of Shlomo Rosenbaum of Steve Oil, your line is now open. Hi, thank you for taking my question here.

Andrew Owen Nicholas: Thank you one moment for our next question. Our next question concerns the line of Shlomo Rosenbaum from Steve Hall. Your line is now open.

Speaker Change: Thank you Bob for next question.

Speaker Change: Our next question comes from the line of Shlomo Rosenbaum of Stifel. Your line is now open.

Shlomo H. Rosenbaum: Hi, thank you for taking my question here. I want to ask a little bit just to clarify the questions that were asked before in terms of CS and UBS. The fourth quarter guidance implies a down quarter in revenue, which is notable. I don't think we've seen this in about five years on a sequential basis. And once you know, if you were to exclude what's going on with UBS CS, you know, licenses going away, would you show growth sequentially in revenue if we were to kind of normalize for that? I'm trying to understand if that's, you know, an environment thing or you're being overly burdened by that.

Shlomo H. Rosenbaum: Hi, Thank you for taking my question here.

Phil Snow: I want to ask a little bit just to clarify first on the questions that we're going to ask before in terms of like CS and UBS. The fourth quarter guidance implies a down quarter in revenue, which is notable. I don't think we've seen this in about five years on a sequential basis. And once you know if you were to exclude what's going on with the UBS CS, you know, the license is going away. Would you show growth sequentially in revenue if we're to kind of normalize for that? I'm trying to understand if that's, you know, there's an environment thing, or you're being overly burdened by that.

Shlomo H. Rosenbaum: I wanted to ask a little bit just to clarify first.

Speaker Change: The questions that were asked before in terms of like <unk> UBS.

Shlomo H. Rosenbaum: The fourth quarter guidance implies a down quarter in revenue, which is notable I don't think we've seen this in about five years on a sequential basis and want to know if you were to exclude what's going on with the USPS.

Shlomo H. Rosenbaum: Licenses going away would you show growth sequentially in revenue four to kind of normalize for that I'm trying to understand if that's if there is an environment thing or you're being overly burdened by that and then just in general there's been a slowdown in revenue growth and winter I've asked you this before but you've pulled the water levers in terms of <unk>.

Phil Snow: And then just in general, there's been a slowdown in revenue growth. In the way I've asked you this before, but you've pulled a lot of levers in terms of expenses, and we're continuing to see the environment kind of meander around. And what's left on the board for you in terms of if we don't see kind of a pick up, we're kind of hoping to see a little bit more. I think from some green shoots, we're noted last quarter, but those don't materialize soon. What other levers would you pull?

Shlomo H. Rosenbaum: And then just in general, there's been a slowdown in revenue growth. And Linda, I've asked you this before, but you've pulled a lot of levers in terms of expenses, and we're continuing to see the environment kind of meander around. And, you know, what's left on the board for you in terms of if we don't see a kind of pickup, we're kind of hoping to see a little bit more, I think from some green shoots that were noted last quarter, but those don't materialize soon. What other levers would you pull?

Shlomo H. Rosenbaum: <unk> and we're continuing to see the environment kind of meander around in.

Speaker Change: Whats Whats left on the board for you in terms of if we don't see kind of a pick up we were kind of hoping to see a little bit more I think from some green shoots we noted last quarter, but so those don't materialize soon what other levers would you pull.

Phil Snow: Let me take a little bit of that first. And then I'll turn this over to Linda. As it relates to CS, let me talk through, in particular, we mentioned it in our script around the impact. If we take that out as a one time impact, that would be about, around, you know, 30 plus basis points. Now that's not going to impact revenue right away. That's over the period of time. If I take a look at some of the other one-time items that we've talked about in the past, I think it was back last quarter that that one large candle that's helping to explain that delta.

Shlomo H. Rosenbaum: Let me take a little bit of that first, and then I'll turn this over to Linda. As it relates to CS, let me talk through, in particular, what we mentioned in our script around the impact. If we take that out as a one-time impact, that would be around 30-plus basis points.

Speaker Change: Sure, let me take a little bit of that first and then I'll turn this over to Linda as it relates to <unk>, Let me talk through in particular, we mentioned in our script around the impact if we take that out as a onetime.

Speaker Change: Impact that would be around 30, plus basis points now thats not going to impact revenue right away. That's over the period of time, if I take a look at some of the other one time items that we've talked about in the past I think it was back last quarter that that that one large cancel that that's helping too.

Helen L. Shan: Now, that's not going to impact revenue right away. That's over a period of time. If we take a look at some of the other one-time items that we've talked about in the past, I think it was back last quarter, that one large cancel, that's helping to explain that delta. But yes, in my view, again, let me go back, is in line with how we've seen it in the past. There are some one-time items that are impacting the erosion, and so I do not view this as an issue with our underlying business but rather more of a market, or again, some things that are a bit out of our control.

Phil Snow: But yes, it is in my view again. Let me go back. What we're selling is in line with how we've seen it in the past. There are some one-time items that are impacting the erosion. And so I do not view this as an issue with our underlying business, but rather more market or, again, you know, some things that are a bit out of our control, Shlomo. So, Shlomo, thank you for recognizing that despite the meandering market, which is a good adjective for it, we like that. We have been focused. Thank you. One second operator, I don't believe Linda was done yet. One second.

Speaker Change: To explain that delta, but but yes. It is in my view again, let me go back what we're selling.

It's in line with how we've seen it in the past there are some one time items that are impacting the erosion and so I do not view this as an issue with our underlying business.

Speaker Change: But rather more market or again, some things that are bit out of our control Shlomo.

Helen L. Shan: So Shlomo, thank you for recognizing that despite the meandering market, which is a good adjective for it, we like that. We have been focused. Hey, Linda, we're... Can't hear you here. Thank you, one moment for our next question. One second, operator.

Speaker Change: So shlomo.

Shlomo H. Rosenbaum: Thank you for recognizing that despite the man during market, which is a good agitate for it we like that.

We have been focused.

Speaker Change: Hey window.

I can't hear you here.

Ron: Thank you Ron for next question.

Speaker Change: One second operator believe window.

Speaker Change: Was done yet.

Speaker Change: Okay.

Linda Hubert: The cost basis, and so our people cost are down 10% year over year in the third quarter, and our real estate cost down 14%. That offsets an increase of 26% in our technology costs, and third-party data up a little bit unusually in the third quarter. We feel like we've got all our lines pretty well under control. The thing that was flattering to the margin in the third quarter was the reduction of our bonus accrual, and of course that bonus accrual will match our performance with our ASV completion. We've got a few more things that we can do.

Speaker Change: Our cost basis, and so our people costs are down 10% year over year in the third quarter and our real estate costs down 14%.

That offset an increase of 26% and our technology costs.

Speaker Change: Third party data up a little bit unusually in the third quarter. So we feel like we've got all our lines pretty well under control.

Speaker Change: The.

Speaker Change: I think that was flattering to the margin in the third quarter was the reduction of our bonus accrual and of course that bonus accrual will match our performance with our ASD completion. So we've we've got a few more things that we can do I think we've managed very very carefully but I.

Linda Hubert: I think we've managed very, very carefully, but I don't think we see any major cost-cutting actions coming along. We're pretty happy with where we are, and we plan this all through to match what Helen's seeing for the revenue line for the fourth quarter. So we think we're in a pretty good place, and as you saw, our guidance for adjusted operating margins has gone up 70 to 80 basis points for the rest of the year. So we feel pretty good about our actions, and sorry about the audio issues here.

Speaker Change: Think we see any major cost cutting actions coming along we're pretty happy with where we are and we plan to sell through to match, what Helen seeing for the revenue line for the fourth quarter. So we think we're in a pretty good place and as you saw.

Linda S. Huber: I don't believe it was done yet. One second. So, we think we're in a pretty good place, and as you saw, our guidance for adjusted operating margins has gone up 70 to 80 basis points for the rest of the year. So, we feel pretty good about our actions, and sorry about the audio issues. Thank you. Our next question comes from the line of Craig Huber of Huber Research Partners. Your line is now open.

Speaker Change: Our guidance for adjusted operating margin has gone up 70 to 80 basis points for the rest of the year. So we feel pretty good about our actions and sorry about the audio issues here.

Craig Huber: Thank you. Our next question comes online from Craig Hubert of Hubert Research Partners. Your line is now open. Thank you. Back into a broad question here. How would, again, your thoughts here on the sell side and buy side customers that you have out there, the marketplaces, do you sort of feel like you're just sort of bouncing along at the bottom here that the worst is behind you? How would you describe what you're going to right now? I mean, in other words, are you feeling like you have the very bottom here, and it's just not our time before things start re-accelerating?

Speaker Change: Thank you. Our next question comes from the line of Craig Huber of Huber Research Partners. Your line is now open.

Craig Anthony Huber: Thank you. Back to this broad question here, how would you describe your thoughts here on the sell-side and buy-side customers that you have out there, the marketplaces? Do you sort of feel like you're just sort of bouncing along at the bottom here, that the worst is behind you? Just broadly, how would you describe what you're going through?

Speaker Change #100: Thank you.

Speaker Change #101: Just a broad question here again.

Craig Anthony Huber: Your thoughts here on the sell side buy side customers that you have out there the market places do you sort of feel like you are just sort of bouncing along the bottom here that the worst is behind you.

Speaker Change #103: Just broadly again, how would you describe what you're going through right now I mean in other words are you feeling like you are at the very bottom here and it's just matter of time before things start re accelerating its hard to predict that Craig I'll start it and I think Helen may have some comments here I think for a lot of companies 2024 with.

Frederick Philip Snow: In other words, are you feeling like you're at the very bottom here? It's a matter of time before things start reaccelerating. It's hard to predict that, Craig. I'll start, and I think Helen may have some comments here.

Phil Snow: It's hard to predict that.

Phil Snow: Craig, I'll start on. I think Helen made some comments here. So I think for a lot of companies, 2024 was sort of positioned as the year of Costco. So I think a lot of budgets were kind of set late last year, and a lot of firms and a lot of industries, including ours, you know, people were taking out costs. It does feel that, you know, things are getting more constructive with the clients in my conversations with salespeople and clients. It feels like those projects that were paused are beginning to come back to life, but I'm not sure I would bank on that, you know, any sort of real sort of tailwinds from the end markets until potentially next calendar.

Frederick Philip Snow: I think for a lot of companies, 2024 was sort of positioned as the year of cost cuts. So I think a lot of budgets were kind of set late last year, and a lot of firms and a lot of industries, including ours, were taking out costs. It does feel that things are getting more constructive with the clients. In my conversations with salespeople and clients, it feels like those projects that were paused are beginning to come back to life.

Speaker Change #104: Sort of positioned as the year of cost cuts. So I think a lot of budgets were kind of set late last year and the water firms and a lot of industries, including ours.

Speaker Change #105: People were taking out costs. It does feel that things are getting more constructive with the clients in my conversations with salespeople and clients. It feels like those projects that were poor as they're beginning to come back to life.

Frederick Philip Snow: But I'm not sure I would bank on that, you know, any sort of real sort of tailwinds from the end markets until potentially next calendar year. I think what we're observing now, I kind of would handicap continuing through the end of the calendar year. Helen?

Speaker Change #106: Im not sure I would bank on that.

Speaker Change #106: Any sort of.

Speaker Change #106: Real sort of tailwind from the end markets until potentially next calendar year I think what we're observing now.

Helen Shan: I think what we're observing now, I kind of would handicap continuing through the end of the calendar. Yeah, no, I would agree. It's hard to predict, obviously, market conditions, but I think the softness in banking and the high erosion due to cost consolidations from clients. And then, of course, the delay in some of the larger projects. Right now we're assuming that that's going to remain through the rest of the year, as Phil just said. I will say, as I said before, this is the first quarter that we've actually seen net seasonal hiring banking be higher than the previous year.

Speaker Change #106: I kind of would handicap continuing through the end of the calendar year.

Helen L. Shan: Yeah, no, I would agree. It's hard to predict, obviously, market conditions. But I think the softness in banking and the high erosion due to cost consolidations from clients, and then, of course, the delay in some of the larger projects. Right now, we're assuming that it's going to remain through the rest of the year, as Phil just said. I will say, as I said before, this is the first quarter that we've actually seen net seasonal hiring and banking be higher than the previous year. But I'm not sure we look at that and call it, you know, make it a call at the bottom. Linda, could you just quickly give us a housekeeping question I have for you here?

Speaker Change #107: No I would agree with you it's hard to predict obviously market conditions.

Speaker Change #108: But I think the softness in banking and high erosion due to cost consolidations from clients and then a question the delay in some of the larger projects right.

Right now, we're assuming that that's going to remain.

Frederick Philip Snow: Through through the rest of the U S. Phil just said I will say as I said before this is the first quarter that we've actually seen net seasonal hiring banking be higher than the previous year, but I'm not sure we look at that and call. It make it a call at the bottom.

Linda Hubert: But I'm not sure we look at that and call it, you know, make it a call at the bottom.

Linda Hubert: Linda, could you just quickly give us a housekeeping question? I have for you here, just your bonus accruals. What was it each of the first three quarters of this year? I think it was 24 to 25 million quarterly last year. What was it the first three quarters of this year? Sorry for the housekeeping question. Thank you. That's okay, Craig. And I've just said my microphone replaced. I feel like Taylor Swift. So hopefully it works. Our first quarter bonus accrual was $30 million. That included a $3 million top up to sort of catch up a bit from 2023.

Speaker Change #109: Linda could you just quickly give us a housekeeping question I have for you here.

Craig Anthony Huber: Just your bonus accruals. What was it each of the first three quarters of this year? I think it was 24 to 25.

Linda: Your bonus accruals what was at each of the first three quarters of this year I think it was 24% to $25 million quarterly last year was at the first three quarters. This year sorry for housekeeping question. Thank you that's okay, Craig and I've just had my microphone replaced I feel like Taylor Swift So hopefully it works.

Linda S. Huber: Recording last year. What was it? Sorry for the housekeeping question, thank you. That's okay, Craig. And I've just had my microphone replaced. I feel like Taylor Swift.

Linda S. Huber: So hopefully, it works. Our first quarter bonus accrual was $30 million. That included a $3 million top-up to sort of catch up a bit from 2023. Second quarter, Craig, was $20 million. Third quarter is 18.

Speaker Change #110: Our first quarter bonus accrual was $30 million that included a $3 million top up to sort of catch up a bit from 2023 second quarter, Craig was $20 million third quarter is 18, and the fourth quarter, we're thinking it should be in the range of 15 and 16, depending on how we finished with ASB.

Linda Hubert: Second quarter, Craig was $20 million. Third quarter is 18. And the fourth quarter, you know, we're thinking should be in the range of 15, 16, depending on how we finish with ASB. So roughly $83 million for bonus for the whole year. Last year, we were running sort of $105 million for bonus for the full year. So the unfortunate trend here is that we have to adjust bonus based on ASB achievement, which is about two-thirds of our bonus calculation, and margin is the other third. So hope that gives you the detail you're looking for, Craig. Yeah, that's great.

Linda S. Huber: And the fourth quarter, you know, we're thinking should be in the range of 15, 16, depending on how we finish with ASV. So roughly $83 million for bonuses for the whole year. Last year, we were running sort of $105 million for bonus for the full year. So the unfortunate trend here is that we have to adjust bonuses based on ASV achievement, which is about two-thirds of our bonus calculation, and margin is the other third.

Speaker Change #110: So roughly $83 million for bonus for the whole year last year, we were running sort of a $105 million for bonus for the full year.

Speaker Change #110: So the unfortunate trend here is that we have to adjust bonus based on.

Speaker Change #111: ASB achievement, which is about two thirds of our bonus calculation and margin is the other third so hope that gives you the detail Youre looking for correct. Yes, that's great. Thank you guys sure.

Unknown Executive: Thank you, guys.

Unknown Executive: Sure.

Unknown Executive: Thank you. One moment for our next question.

Speaker Change #112: Thank you one moment for our next question.

Russell Quelch: Our next question, because online of Russell Welch, a red burn, your line is now open. Yeah, I feel and tell you that. I just wanted to drill down into the private market space a little bit. A lot of your competitors are also targeting this area for growth.

Linda S. Huber: So, I hope that gives you the detail you're looking for, Craig. Yeah, that's great. Thank you, guys. One moment for our next question. Our next question comes from Russell Quelch of Redburn. Your line is now open. Yeah, hi, Phil and Taylor.

Speaker Change #113: Our next question comes from the line of Russell quote of Redburn. Your line is now open.

Russell Quelch: Just wanted to drill down into the private market space a little bit. A lot of your competitors are also targeting this area for growth. So could you do us a favor and just detail your product ambitions here, how you're going to win against these other guys who are targeting growth? And the other angle to this question is that it was recently rumored that one of the big incumbents in the space is for sale. So is this something you might look at to accelerate your pace of growth in the area? Yeah, thanks, Russell.

Speaker Change #114: Yeah, Hi, just wanted to drill down into the private market space a little bit.

Speaker Change #115: Of your competitors are also targeting this area for growth.

Phil Snow: So you can do us a favor and just detail your product ambitions here, how you're going to win against these other guys who are targeting growth. And the other angle to this question, it was recently rumored that one of the big incumbents in the space is for sale. So is this something you might look at to accelerate your position of growth in the area.

Speaker Change #116: Could you just a favor and just detail your product ambition, how you're going to win again.

Speaker Change #117: Guys, who talk to the growth in the other.

Speaker Change #118: The angle to this question is it was recently reported that one of the big incumbents. In this space is for sale. So is this something you might look at to celebrate your positioning your growth in the area.

Phil Snow: Yeah, thanks, Russell. So yeah, we've not been shy about talking about this, and we have been investing steadily since 2019. In private markets, we've built out, I believe, our coverage from around four to eight or nine million. So we've doubled that. The quality is getting higher. You know, we acquired cobalt, which you'll remember. And we're just continuing to work with a lot of partners in the ecosystem. So I think this is an important area. Private credit, obviously, is important and something that we're taking a look at. And obviously we can't comment on any transactions that may or may not be out there right now.

Frederick Philip Snow: So yeah, we've not been shy about talking about this, and we have been investing steadily since 2019. In private markets, we've built out, I believe, our coverage from around four to eight or nine million. So we've doubled that. The quality is getting higher. You know, we acquired Cobalt, which you'll remember.

Yes, Thanks, Russell so yes, we've not been shy about talking about this and we have we have been investing steadily since 2019 in private markets. We built out I believe our coverage from around four to eight or $9 million. So we've doubled that the <unk>.

Frederick Philip Snow: And we're just continuing to work with a lot of partners in the ecosystem. So I think this is an important area. Private credit, obviously, is important and something that we're taking a look at.

Speaker Change #119: <unk> is getting higher.

Speaker Change #119: We acquired cobalt, which youll remember.

Speaker Change #119: And we're just continuing to work with a lot of partners in the ecosystem.

Speaker Change #119: I think this is an important area of private credit obviously is important and something that we're taking a look at.

Frederick Philip Snow: And obviously, we can't comment on any transactions that may or may not be out there right now. Okay, thank you. You're welcome. Thank you. One moment for our next question. Our next question comes from the line of Heather Balsky of Bank of America. Your line is now open. Hi, thank you so much.

Speaker Change #119: And obviously, we can't comment on any transactions that may or may not be out there right now.

Unknown Executive: Okay, thank you.

Unknown Executive: You're welcome.

Speaker Change #120: Okay. Thank you Youre welcome.

Unknown Executive: Thank you. One more for next question.

Speaker Change #119: Yeah.

Speaker Change #121: Thank you for next question.

Heather Balsky: Our next question, because on the line of Heather Balsky of Bank of America, your line is now open. Hi, thank you so much. I wanted to first ask with regards to a secret that you could provide some color in terms of what you're seeing with regards to price versus volume right now. And how that tracks versus I guess what you expected in the year. And then the other questions bigger picture. And I realized you just talked about kind of that potentially the malaise we're seeing persist till the end of the year. I know it's been a really tough environment to kind of get disability.

Speaker Change #122: Our next question comes from the line of Heather <unk> of Bank of America. Your line is now open.

Heather Nicole Balsky: I wanted to first ask with regard to ASD growth if you could provide some color in terms of what you're seeing with regard to price versus volume right now and how that tracks versus, I guess, what you expected into the year. And then the other question, the bigger picture, and I realize you just talked about kind of that potentially the malaise we're seeing persists until the end of the year. I know this has been a really tough environment to kind of get visibility, but when you think about the recovery, based on what you've been seeing, how do you think things will recover? Do you think we could have a U or V-shaped recovery?

Heather Nicole Balsky: Hi, Thank you so much.

I wanted to first ask with regards to HD, Chris If you could provide some color in terms of what youre seeing with regards to price versus volume right now and how that tracks versus I guess, what you expected in the year and then the other question bigger picture and I realized you just talked about.

Heather Nicole Balsky: Potentially the malaise, we're seeing for persist til the end of the year I know this has been a really tough environment to kind of get visibility, but when you think about the recovery.

Helen Shan: But when you think about the recovery. You know, based on what you've been seeing, how do you think things recovery or do you think we could have a new or the shape recovery. Do you think you get the center of clients are going to move very gradually, just given all the answer into your pad, just any any insight you have.

Heather Nicole Balsky: Based on what you've been seeing how do you.

Heather Nicole Balsky: How do you think thanks recovery or do you think we could have your V shaped recovery do you think you get a sense for your clients are going to move very gradually just given all the uncertainty and pad just any any insight you have.

Helen L. Shan: Do you get the sense your clients are going to move very gradually just given all the uncertainty you've had? Just any insight you have. Sure, I'll start with that one. Heather. Thanks. This is Helen.

Helen Shan: Sure, I'll start with that one, Heather. Thanks, this is Helen. Thanks for the question. So overall, part of the reason that we see some of the deals that get delays because of their size. So when I think about volume and pricing, actually, interestingly, our volume, meaning number of transactions, is considerably higher this year than last year. And I would say in the low to mid figures is where we're seeing the biggest pickup, probably highest 20% higher. If we, as we think about the end of the year, so, but that would mean on average, the volume is down in terms of the size of the transaction.

Helen L. Shan: Thanks for the question. Overall, part of the reason that we see some of the deals that get delayed is because of their size. So when I think about volume and pricing, actually, interestingly, our volume, meaning the number of transactions, is considerably higher this year than last year. And I would say in the low to mid figures is where we're seeing the biggest pickup, probably as high as 20% higher if we, as we think about the end of the year. So, but that would mean, on average, the volume is down in terms of the size of the transaction.

Alan: Sure I'll start with that one Heather. Thanks. This is Alan thanks for the question.

Alan: So overall the part of the reason that we see some of the.

Alan: Deals that get delayed because of their size. So when I think about volume and pricing actually interestingly, our volume, meaning number of transactions is.

Alan: Considerably higher this year than last year, and I would say in the low to mid figures is where we're seeing the biggest pickup probably as high as 20% higher.

Alan: As we think about the end of the year, so but that would mean on average the volume is down in terms of the size of the transaction.

Helen Shan: So, as you might guess, in order to grow, that you need larger deals. So at these larger transactions, which we have a very high number of opportunities. But if they don't sort of convert them in that quarter, that's where we're seeing that right now. So I think that all ties together higher volume at an average price. That's lower right now in terms of just opportunity size. As it relates to, you know, a little bit of where do we end up in the bottom? It's very hard, hard to say. I think it varies by firm types.

Helen L. Shan: So, as you might guess, in order to grow that, you need larger deals. So these larger transactions, which we have a very high number of opportunities for, but if they don't sort of convert them into that in that quarter, that's where we're seeing that right now. So I think that all ties together higher volume at an average price that's lower right now in terms of just opportunity. As it relates to, you know, a little bit of where we end up in the bottom, it's very hard to say. I think it varies by firm type.

Alan: As you might guess in order to grow that it is larger deals. So are these larger transactions, but we have very high number of opportunities, but if they don't sort of convert them and that in that quarter, that's where we're seeing that right. Now so I think that all ties together higher volume at an app.

Alan: Average price that's lower right now in terms of just opportunity size.

Alan: As it relates to a little bit of where do we end up in the bottom. It's very hard hard to say I think it varies by firm type typically we've seen banking being the quickest to respond I think we had thought that that would be better in the second half of this year, we're not seeing that so we'll have to see how that goes.

Helen L. Shan: Typically, we've seen banking being the quickest to respond. I think we had thought that it would be better in the second half of this year. We're not seeing that, so we'll have to see how that goes.

Phil Snow: Typically, we've seen banking being the quickest to respond. I think we had thought that that would be better in the second half of this year. We're not seeing that. So we'll have to see how that goes. As mentioned by so before of capital markets picks up, where we end up in that. But technology is very much the driver right now. And so, as clients are looking to upgrade. And as we saw post-COVID, once they're ready to spend, the decisions tend to move more quickly. So I think it's going to be very much dependent on the market conditions.

Helen L. Shan: As mentioned by Phil before, if capital markets pick up, where we end up will depend on that. But technology is very much the driver right now. Clients are looking to upgrade, and as we saw post-COVID, once they're ready to spend, the decisions tend to move more quickly. So I think it's going to be very much dependent on market conditions.

And as as mentioned by Phil before his capital markets picks up where where we end up in that but technology is very much. The driver right now so as clients are looking to upgrade and as we saw post COVID-19. Once they are ready to spend the decisions tend to to move more quickly. So I think it's going to be very much dependent on the market condition.

Phil Snow: I do want to kind of add on and point out that, you know, we're tough to us to make our own tailwinds here. Regardless of the end markets, you know, we have a $28 billion total addressable market the way it's been defined historically. Eight of that is beginning to open up to us now with the feed products that we're creating. And then to build on what Helen just said, I think as firms look to outsource more from a technology and even manage services standpoint, I think that addressable market grows. So there's no shortage, honestly, of addressable market.

Frederick Philip Snow: I do want to kind of add on and point out that it's up to us to make our own tailwinds here. So regardless of the end markets, we have a $28 billion total addressable market, the way it's been defined historically. Eight of that is beginning to open up to us now with the feed products that we're creating. And then, to build on what Helen just said, I think as firms look to outsource more from a technology and even managed services standpoint, I think that addressable market grows. So there's no shortage, honestly, of addressable market. And I think the companies that are positioned well moving into this can create some of their own, some of their own tailwinds, despite what the markets,

<unk>.

Speaker Change #125: I do want to kind of add on and point out.

Speaker Change #125: It's up to us to make our own tailwind regardless of the end markets.

Speaker Change #125: We have a $28 billion total addressable market the way it's been defined historically.

Speaker Change #125: Out of that is beginning to open up to US now with the feed products that were trading.

Speaker Change #125: And then to build on what Helen just said I think as farmers look to outsource more from a technology and even managed services standpoint, I think that addressable market grows so theres no shortage honestly of addressable market.

Unknown Executive: And I think the companies that are positioned well moving into this can create some of their own, some of their own tailwinds despite what the markets giving us. Thank you. You're welcome.

Speaker Change #125: I think the companies that are positioned well moving into this can create some of their own some of their own tailwind despite what the market's giving us.

Speaker Change #126: Okay. Thank you Youre welcome.

Guru: Thank you moment for next question. Our next question, customer line of course the doors of Openheimer align is now open. Hi, this is Guru on for all, and thank you. Thank you so much for taking my question. You know, I wanted to ask about the deep sector offering. I think the last major update was back in to one when it helped this place of competitor and banking. So any update here because this really seems like it could be a solid right behind AI. So any updates are in touch over here. You're a little bit guru.

Speaker Change #127: Thank you one moment for our next question.

Frederick Philip Snow: Thank you. You're welcome. Thank you. One moment for our next question. Our next question comes from the line of Guru Siddhartha of Oppenheimer. Your line is now open. Hi, this is Siddhartha on for Owen.

Speaker Change #128: Our next question comes from the line of Kurt <unk> of Oppenheimer. Your line is now open.

Guru Siddhartha: And thank you. Thank you so much for taking my question. You know, I wanted to ask about the deep sector offering. I think the last major update was back in Q1 when it helped displace a competitor in banking. So any updates here? Because this really seems like it could be a solid rivalry behind AI.

Speaker Change #129: Hi. This is grew on for O&M. Thank you. Thank you so much for taking my question.

Speaker Change #130: I wanted to ask about the beef sector offering I think the last major update was back in Q1 related to displace a competitor in banking.

Speaker Change #131: Any updates here because this really seems like it could be a solid driver behind AI.

Speaker Change #132: So any update or insights on the year.

Frederick Philip Snow: So any updates or insights over here? A little bit of guru, thanks for the question. So yeah, we're certainly chipping away here. I believe we now have, you know, eight sectors with some good coverage and over 80 reports within, you know, within the workstation. And I believe we're also building out some feed deals. So there's an active pipeline. And it is an important aspect of what most banks want to see now when, you know, when things come up for renewal.

Phil Snow: Thanks for the question. So yeah, we're certainly chipping away here. I believe we now have, you know, eight sectors with some good coverage and over 80 reports within, you know, within the workstation. And I believe we're also building out some feed deals. So there's an active pipeline, and it is an important aspect of what most banks want to see now when, you know, when things come up for renewal. So I think there's just one or two of us in the market, honestly, that have us in banks. Thanks a lot. Welcome.

Speaker Change #133: You're a little bit Gary Thanks for the question. So yeah, we're certainly.

Speaker Change #134: Chipping away here I believe we now have eight sectors with some good coverage in over 80 reports within within their workstation and I believe we're also building out some some feed deals. So there is an active pipeline.

Speaker Change #134: This is an important ASP.

Speaker Change #134: Aspects of what most banks want to see now win.

Speaker Change #134: When things come up for renewal. So I think there's just one or two of us in the market honestly that have thus in banking.

Frederick Philip Snow: So I think there's just one or two of us in the market that have this impact. Got it. Thanks a lot. Welcome. Thank you. One moment for our next question. Our next question comes from Lina Scott-Wurza of Wolf Research.

Speaker Change #135: Got it thanks, a lot and welcome.

Scott Wurtzel: Thank you. One moment for our next question. Our next question comes in line with Scott Wurtzel of Wolf Research. Your line is not open.

Thank you one moment for our next question.

Speaker Change #135: Yeah.

Speaker Change #136: Our next question comes from the line of Scott <unk> of Wolfe Research. Your line is now open.

Lina Scott-Wurza: Your line is now open. Hey, good morning, guys. And thanks for squeezing me in here. Just wanted to go back to the wealth segment and wondered if you could maybe sort of characterize the overall demand on the wealth side relative to what you're seeing on the institutional buy side and sell side. You know, I know you talked about modest growth this quarter, but I would love to just kind of hear a characterization of overall demand and compare it to some of the other end markets you operate in. Thanks. I think it's the healthiest choice for us, honestly, Scott.

Phil Snow: Hey, good morning, guys, and thanks for squeezing me in here. Just wanted to go back to the Wealth segment and wondering if we could, you can maybe sort of characterize the overall demand on the Wealth side relative to what you're seeing on institutional buy side and sell side. You know, you talked about modest growth this quarter, but we'd love to just kind of hear characterization of the overall demand and compare to some of the other end markets you operate. Thanks.

Scott <unk>: Hey, good morning, guys and thanks for squeezing me in here.

Wanted to go back to the wealth segment I'm wondering if we could you can maybe sort of characterize the overall demand on the wealth side relative to what youre seeing on institutional buy side and sell side.

Scott <unk>: I know you talked about modest growth this quarter, but I would love to just kind of your characterization of the overall demand in compare to some of the other end markets you operate in.

Phil Snow: I think it's the healthiest one for us, honestly. Scott, thanks for the questions. So we have a very active pipeline there of deals of various sizes. And we're beginning to build out some interesting workflows beyond sort of what we've been providing over the last few years. And with the introduction of some of these AI tools, I think we're in very good shape. So I'm very optimistic about wealth and our ability to accelerate from here.

Scott <unk>: Is the healthiest one for us honestly Scott Thanks for the questions. So we have a very active pipeline there are deals of various sizes and we're beginning to build out some interesting.

Frederick Philip Snow: Thanks for the question. So we have a very active pipeline of, you know, deals of various sizes, and we're beginning to build out some interesting workflows beyond sort of what we've been providing over the last few years. And with the introduction of some of these AI tools, I think we're in very good shape.

Scott <unk>: Workflows beyond sort of what we've been providing over the last few years.

Scott <unk>: And with the introduction of some of these AI tools.

Frederick Philip Snow: So I'm very optimistic about wealth and our ability to accelerate from here. In summary, we believe we are well-positioned in terms of both our strategy and product portfolio to capitalize on the ongoing megatrends in our industry and for when the end markets become more constructive. Thank you all for your great questions today. We'll see you all in September. Operator, this ends today's call. Thank you for your participation in today's conference. This will conclude the program. You may now disconnect. Thank you for watching!

Scott <unk>: I think we're in very good shape so.

Scott <unk>: I'm very optimistic about wealth and our ability to accelerate from here.

Phil Snow: Great. Thank you.

Speaker Change #138: Great. Thank you.

Phil Snow: Summary, you know, we believe we are well positioned in terms of both our strategy and product portfolio to capitalize on the ongoing mega trends in our industry. And for when the end markets become more constructive, thank you all for your great questions today.

Speaker Change #138: Summary, we believe we are well positioned in terms of both our strategy and product portfolio to capitalize on the ongoing mega trends in our industry.

Speaker Change #138: And for when the end markets become more constructive thank.

Speaker Change #139: Thank you all for your great questions today.

Unknown Executive: We'll see, we'll see you all in September, operator; the sense of this call. Thank you for your participation in today's conference.

Speaker Change #140: So you will see you all in September operator, this ends today's call.

Speaker Change #141: Thank you for your participation in today's conference. This concludes the program you may now disconnect.

Unknown Executive: This will conclude the program.

Unknown Executive: You may now disconnect. Thank you.

Speaker Change #141: Okay.

Speaker Change #141: [music].

Okay.

Speaker Change #141: Okay.

Speaker Change #141: [music].