FactSet Research Systems Q3 2025 Earnings Call Transcript

Quartr
Provided by Quartr
June 23, 2025

Key Takeaways

  • Organic ASV growth of 4.5% in Q3, an adjusted operating margin of 36.8% and adjusted EPS of $4.27, with FY2025 guidance reaffirmed.
  • Long-time CEO Phil Snow announced his retirement after 30 years with FactSet, and Sanoq Viswanathan will become the next CEO in early September.
  • The wealth management segment sustained double-digit growth in organic ASV, with new logos nearly doubling year-over-year and attach rates for off-platform products rising about 1.5× from FY24.
  • Within six months of launch, GenAI solutions like PitchCreator have secured 10 signed deals and over 45 opportunities, fueling new workflow automation and client engagements.
  • Price increases were lower in EMEA and Asia-Pacific due to reduced CPI, and cost-optimization among asset owners created headwinds, partially offsetting some gains.
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Earnings Conference Call
FactSet Research Systems Q3 2025
00:00 / 00:00

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Operator

Good day, and welcome to the FactSet Third Quarter Earnings Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Instructions will be given at that time. As a reminder, this call may be recorded.

Operator

I would now like to turn the call over to Kevin Toomey, Head of Investor Relations. Please go ahead.

Kevin Toomey
Kevin Toomey
Head - IR at FactSet

Thank you, and good morning, everyone. Welcome to FactSet's third fiscal quarter twenty twenty five 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 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.

Kevin Toomey
Kevin Toomey
Head - IR at FactSet

The call is scheduled to last for one hour. To be fair to everyone, please limit yourself to one question. You may reenter 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 two. Discussions on this call may contain forward looking statements.

Kevin Toomey
Kevin Toomey
Head - IR at FactSet

Such statements are subject to risks and uncertainties that may cause actual results to differ materially from results anticipated in these forward looking statements. Additional information concerning these risks and uncertainties can be found in our Forms 10 ks and 10 Q. 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, both of which can be found on our website at investor.factset.com. During this call, unless otherwise noted, relative performance metrics reflect changes as compared to the respective fiscal twenty twenty four period.

Kevin Toomey
Kevin Toomey
Head - IR at FactSet

Also, with the last quarter, please note that starting fiscal twenty twenty five, FactSet is reporting organic ASV rather than organic ASV plus professional services to focus on the recurring nature of our revenues. Joining me today are Phil Snow, Chief Executive Officer Helen Shan, Chief Financial Officer and Goran Skoko, Chief Revenue Officer. I will now turn the discussion over to Phil Snow.

Philip Snow
Philip Snow
CEO at FactSet

Thank you, Kevin, and good morning, everyone. Thanks for joining us today. Before we discuss our Q3 results, just want to take a moment to recognize an important milestone for FactSet and for me personally. Earlier this month, we announced my decision to retire after thirty years with FactSet and the past decade as CEO. It's been a privilege to spend my career here working alongside such a talented, collaborative, and mission driven team.

Philip Snow
Philip Snow
CEO at FactSet

Together, we've expanded our data and workflow capabilities, deepened client relationships, and more than doubled our revenue over the past ten years, positioning FactSet as a trusted global enterprise leader empowering smarter data driven investment decisions. It's been an incredible journey and I'm proud of all we've accomplished together. Looking ahead, I'm even more confident in FactSet's future. I'm also pleased to share that Sanoq Viswanathan will become FactSet's next CEO in early September. Sanoq brings over twenty five years of global leadership experience in financial services and technology, most recently at JPMorgan Chase, He has a strong strategic mindset and a proven track record of delivering technology driven growth at scale.

Philip Snow
Philip Snow
CEO at FactSet

As FactSet prepares for its next chapter of leadership, I'm proud of the solid foundation we've established built on innovation, client trust and industry leading data and workflow solutions. I'm confident SunOak's leadership will guide FactSet through its next phase of growth and look forward to working with them closely to ensure a smooth and thoughtful transition. With that, let's turn to our third quarter results. In the third quarter, we achieved organic ASV growth of 4.5% year over year, fueled by recent wins in wealth, dealmakers and partnerships. We also delivered an adjusted operating margin of 36.8% and adjusted diluted EPS of $4.27 As we previously indicated, we anticipated stronger growth in the second half of this fiscal year and we're pleased with our Q3 performance.

Philip Snow
Philip Snow
CEO at FactSet

These results reflect the successful execution of our enterprise solutions strategy and underscore our commitment to helping clients lower their total cost of ownership. We continue to see positive trends in ASV retention, and I am pleased to report that both expansion within existing accounts and new business accelerated in the quarter. As you may recall, the fourth quarter is seasonally our highest ASV of the year. And with a healthy pipeline and growing momentum, we are well positioned for a strong close to the fiscal year. Accordingly, we are reaffirming our FY 2025 guidance.

Philip Snow
Philip Snow
CEO at FactSet

Helen will cover our financial results and guidance in more detail later in her remarks. Turning to third quarter results. ASV retention remained strong at over 95%, while client retention was at 91%. Our client base grew to over 8,800, driven by strong demand from corporate wealth management and buy side clients, including those added through the LiquidityBook acquisition. Our user count rose to over 220,000, primarily reflecting growth among wealth management users.

Philip Snow
Philip Snow
CEO at FactSet

Starting with our performance by region. In The Americas, organic ASV increased by 5%. The strength of this quarter was driven by higher banking and asset manager retention coupled with higher demand in wealth, hedge fund and corporates. In EMEA, organic ASV growth was 2%. We saw improved retention in banking and wealth.

Philip Snow
Philip Snow
CEO at FactSet

However, this was offset by lower contributions from the annual price increase and buy side headwinds. In Asia Pacific, organic ASV growth increased 7% primarily driven by higher retention in the banking sector. This growth was partially offset by the reduced pricing uplift and asset owner headwinds. Now turning to our results from a firm type perspective. Wealth organic ASV maintained its double digit growth pace in Q3, marking a second consecutive quarter of acceleration.

Philip Snow
Philip Snow
CEO at FactSet

We continue to capture market share by displacing incumbent providers with new business sales nearly double the number of new logos versus a year ago. Our product portfolio demonstrated broad based strength among both new and existing clients, specifically a large 7 figure renewal and twice as many 6 figure wins as a year ago. Notably, we are growing FactSet's presence in wealth by selling more data feeds and digital solutions to clients who already use our industry leading desktop solution across their organization. The attach rate for off platform products continues to rise. And so far in FY 2025, we are capturing attach rates that are around 1.5x what we saw in FY 2024.

Philip Snow
Philip Snow
CEO at FactSet

Within dealmakers, this quarter's banking gains were largely driven by the favorable comparison to last year's third quarter, which included the impact of the UBS Credit Suisse merger. Over the past three years, our seat count has grown considerably as we continue to displace incumbent providers as clients increasingly choose our best in class banking solutions. We're also encouraged by meaningful improvements in retention highlighted by the signing of several multiyear deals, including a favorable outcome on a large global banking renewal. These long term agreements reinforce FactSet's position as a trusted enterprise partner and create new opportunities for future growth. While it's still early to assess summer hiring trends, preliminary indications suggest they may be in line with last year's levels.

Philip Snow
Philip Snow
CEO at FactSet

We're optimistic about our ability to expand the footprint of FactSet services to drive add on sales beyond the workstation. We continue to execute on our robust Pitch Creator pipeline. And within just six months of launch, we now have 10 signed deals in over 45 opportunities with large banking clients in active trials and others in later stages of commercial negotiation. In addition to PitchCreator, our recently acquired LogoIntern solution is proving to be a valuable utility tool for clients and strengthens our position in banker automation. Together, these tools are creating greater workflow efficiencies, driving adoption, client conversations and closes.

Philip Snow
Philip Snow
CEO at FactSet

Outside of banking, PEVC remains a bright spot with Q3 marking our fourth consecutive quarter of accelerating growth driven by the strength of our private markets offering and Cobalt. Corporates also contributed meaningfully supported by strong tailwinds from our Owen business, which drove increases in both ASV and seat count. Since the acquisition of Owen earlier this year, nearly half of new corporate's ASV has come from competitor displacements. This success validates our land and expand strategy using investor relations users as an entry point to deepen relationships within the office of the CFO. Within the institutional buy side, we had several positive developments this quarter.

Philip Snow
Philip Snow
CEO at FactSet

We secured strategic wins for our front and middle office solutions and improved retention with our asset management clients. One example is a new IRN two point zero deal with a major U. S. Asset manager choosing us to replace their legacy research management system, thanks to our advanced dashboard and GenAI capabilities. Our managed services offering is also opening new growth channels as we replaced several incumbent vendors at a major asset manager who is now fully aligned with FactSet.

Philip Snow
Philip Snow
CEO at FactSet

Hedge funds were another area of strength with growth accelerating due to new fund launches, greater adoption of the workstation and data products and the positive impact of our recent street account price increases. We expect hedge fund demand to continue in fiscal twenty twenty five. At the same time, we face several headwinds. Reduced contribution from the annual price increase offset some of our gains. Additionally, as clients, especially asset owners, continue to optimize costs and streamline their vendor relationships, we are seeing more pressure in these areas.

Philip Snow
Philip Snow
CEO at FactSet

We are committed to leveraging our innovative solutions and client relationships to drive future growth. For partnerships in CGS, growth continued in the third quarter driven by a significant real time win and strength in the new issuance markets for CGS. New business and expansion activity remains strong across multiple partner types. Looking ahead, we expect this positive trajectory to continue into the fourth quarter. In summary, I want to reiterate that our number one priority is to drive top line growth.

Philip Snow
Philip Snow
CEO at FactSet

The breadth and quality of our opportunities give us visibility and confidence as we look ahead. We are well positioned to deliver in Q4 and meet our full year fiscal twenty twenty five guidance. The majority of the pipeline for the remainder of the year is driven by the institutional buy side. As noted earlier, the demand for middle office solutions, in particular, performance and managed services is high as clients look for longer term help as they upgrade their tech stack. Our innovation with using GenAI in our buy side solutions is supporting strong client engagement and opportunities as well.

Philip Snow
Philip Snow
CEO at FactSet

Demand for our data solutions is expected to be a notable contributor to our Q4 results. The need for fundamental and estimates data remains high, in part driven by hedge funds and wealth. Engagement on real time and benchmarks has grown as clients look for modern technology quality and stability, and these solutions represent more than a third of the data opportunities. Wealth remains our growth engine. Our success in displacing incumbents and expanding from the adviser desktop into adjacent areas such as APIs, widgets and data feeds is resulting in meaningful client demand.

Philip Snow
Philip Snow
CEO at FactSet

Our wealth pipeline is strong, spanning desktops and real time data and a growing demand for more sophisticated PLC tools where FactSet has deep industry credibility, giving us greater confidence to extend our success both geographically and within the wealth home office. Our teams are capitalizing on FactSet's first mover advantage in GenAI, executing our go to market strategy to deliver innovative solutions that streamline workflows and help clients unlock greater efficiencies. With the strong foundation we've built, we are well positioned to fulfill our mission of supercharging financial intelligence. I will now turn it over to Helen to take you through our third quarter performance and FY twenty twenty five guidance in more detail.

Helen Shan
Helen Shan
EVP & CFO at FactSet

Thank you, Phil, and hello to everyone on the call. We anticipated a better performance in the second half, and I'm pleased to report that the third quarter showed strength in both financial and operating results. As Phil mentioned, our pipeline is solid, positioning us well for continued ASV growth to finish out the year. Given this momentum, we are reaffirming our guidance for FY 2025. I'll share more details shortly, but let's first review the quarterly results.

Helen Shan
Helen Shan
EVP & CFO at FactSet

Organic ASV grew by $22,600,000 in the quarter, representing a 4.5% increase year over year. We successfully captured an additional $11,000,000 in our annual price increase, primarily in the EMEA and Asia Pac regions. This amount was lower than prior year and reflects the anticipated headwind of lower CPI in our pricing. GAAP revenues increased 5.9% year over year, reaching $586,000,000 When we look at organic revenues, which exclude foreign exchange movements and impact from acquisitions or dispositions during the past twelve months, we saw a 4.4% increase, reaching $577,000,000 For our geographic segments, organic revenue grew by 5% in The Americas, 2% in EMEA, and 6% in Asia Pacific. Now turning to expense.

Helen Shan
Helen Shan
EVP & CFO at FactSet

GAAP operating expenses, which include onetime nonrecurring items, increased 11.7% year over year to $91,000,000 This was primarily driven by both higher employee and technology expenses. On an adjusted basis, operating expense grew 10.6%. Employee expense increased 12% compared to the same quarter last year. This reflects our return to a normal bonus accrual and excludes a onetime payroll tax adjustment in the third quarter of the prior period. These two factors account for approximately two thirds of the year over year change.

Helen Shan
Helen Shan
EVP & CFO at FactSet

Our workforce has grown by 2.6% year over year, strengthened by our strategic acquisitions of Erwin and LiquidityBook earlier this fiscal year. From Q2 to Q3, we have managed down our headcount in our core business as we continue our disciplined approach of self funding investment priorities through enhanced productivity and operational efficiency. Technology related expenses increased 21%, reflecting the higher amortization of internal use software and our ongoing investment in generative AI capabilities. As previously communicated, we are strategically focusing our growth spend on technology to drive market leadership through product innovation. These costs now represent approximately 11% of revenue this quarter, up slightly from 10% from the same period a year ago.

Helen Shan
Helen Shan
EVP & CFO at FactSet

We have managed the two remaining large spend categories effectively. Third party content cost increased 1% year over year, now representing under 5% of revenue, about 20 basis points lower than the prior year. Our real estate and related facilities expense remained steady year over year at just under 3% of revenue, also 20 basis points lower as compared to last year. For a more detailed breakdown of our expense progression from revenue to adjusted operating income, I encourage you to reference the appendix in today's earnings presentation. Moving to our margin performance.

Helen Shan
Helen Shan
EVP & CFO at FactSet

Our GAAP operating margin was 33.2%, lower by three fifty basis points compared to a year ago. Adjusted operating margin was 36.8, a decrease of two seventy basis points year over year. These figures reflect the normalization of our bonus accruals this year, the onetime favorable tax adjustment in the prior year and increased technology expense. SG and A as a percentage of revenue was approximately 20 basis points higher year over year on a GAAP basis, primarily due to increased compensation expense and professional fees related to our acquisitions. On an adjusted basis, excluding onetime items, our SG and A improved by about 15 basis points, demonstrating our ongoing commitment to operational efficiency.

Helen Shan
Helen Shan
EVP & CFO at FactSet

Our GAAP effective tax rate in the third quarter was 17.5%, an increase from 17% we saw in the same quarter last year, primarily reflecting lower excess tax benefits from our stock based compensation. Regarding earnings per share, our GAAP diluted EPS was $3.87 a decrease of $0.22 or 5.4% versus $4.9 in the same period last year. Adjusted EPS decreased by $0.10 or 2.3% to $4.27 These results reflect our continued investment in the business, which drives our revenue growth. Our EBITDA was $236,000,000 a decrease of 1.7% compared to the prior year period, reflecting lower net income. Most notably, our free cash flow, which we define as cash generated from operations minus capital spending, grew to $229,000,000 in the third quarter, up 5% over the same period last year.

Helen Shan
Helen Shan
EVP & CFO at FactSet

This improvement was driven by stronger operating cash flows, highlighting the underlying financial strength of our business and our ability to increase cash generation even as we invest for future growth. Turning now to the use of capital for shareholder return. In the quarter, we repurchased approximately 184,000 shares for around $81,000,000 at an average share price of $438.45 At the end of the fiscal quarter, we had 106,000,000 remaining under the $300,000,000 share repurchase authorization our board approved last September. Additionally, on 06/17/2025, our board of directors approved a new share repurchase authorization of up to $400,000,000 which will become available on 09/01/2025. On 06/18/2025, we paid a quarterly dividend of a dollar 10 per share to holders of record as of 05/30/2025.

Helen Shan
Helen Shan
EVP & CFO at FactSet

This represents a 6% increase from the previous quarter's dividend and marks the twenty sixth consecutive year of dividend increases on a stock split adjusted basis. When we combine our dividends and share repurchases, we have returned $415,000,000 to our shareholders over the past twelve months, demonstrating our ongoing commitment to delivering shareholder value. During the quarter, we refinanced the credit facility that was established three years ago for the CGS acquisition. Our new credit facility includes a $500,000,000 funded term loan and a billion dollar undrawn revolver, providing us with additional liquidity and balance sheet flexibility to support business growth. We continued our disciplined approach to debt management by repaying 62,500,000 of term loan principal, consistent with our previous pace, and ended the quarter with a gross leverage ratio of 1.7 times.

Helen Shan
Helen Shan
EVP & CFO at FactSet

Finally, the second half of fiscal twenty twenty five is showing improved results with third quarter organic ASV growth accelerating as we successfully meet client demands. Our visibility into the pipeline gives us confidence in Q4 performance, and we are reaffirming our previously issued guidance. We are making targeted investments in our strategic priorities, focusing on differentiated products and internal efficiency initiatives. We anticipate Q4 to be the highest quarter for expense this fiscal year with investments concentrated on our Gen AI and infrastructure projects alongside go to market initiatives that are already strengthening pipeline volume and quality. In conclusion, we remain committed to driving ASV growth, maintaining operational focus and allocating capital wisely to enable FactSet to deliver sustainable long term value to shareholders.

Helen Shan
Helen Shan
EVP & CFO at FactSet

On behalf of the executive leadership team, I would also like to extend my sincere gratitude to Phil for his leadership and contributions. While many of us know Phil for his love of impossibly spicy foods and his deep knowledge of eighties rock bands, his unwavering focus has always been on two things, his family and FactSet. On a personal note, I've learned much from his open leadership style and truly valued our partnership through both challenges and successes. And we are enthusiastic about welcoming Sanoque in September as he leads FactSet into its next chapter of success. Having been a FactSet client himself, he brings a unique perspective that will further help us enhance our client first approach.

Helen Shan
Helen Shan
EVP & CFO at FactSet

On behalf of all FactSetters, we wish Phil only the best and look forward to having Sanoque on board. And with that, we are now ready for your questions. Operator? Thank

Operator

Our first question comes from Slomo Rosenbaum with Stifel. Your line is open.

Shlomo Rosenbaum
Managing Director at Stifel Institutional

Hi, thank you very much. I wanted to ask if there's any change in the macro environment. You're seeing a little bit of a turn up in the ASP growth, which is certainly positive after over a year of sequential declines. I'm wondering, is it all better execution and products getting traction? Or are you seeing anything in the end markets that are giving you any tailwind whatsoever?

Philip Snow
Philip Snow
CEO at FactSet

Hello, Moe. It's Phil. Thanks for the question. Yeah. We honestly, we've not seen that much difference, I would say, you know, this fiscal year.

Philip Snow
Philip Snow
CEO at FactSet

Obviously, we had in April, you know, the markets were dynamic. So we saw maybe a couple of weeks of clients probably waiting to kinda see how things played out. But I think the the the main takeaway, I I would think, for you is that many of our clients are going through these multiyear transformations in terms of the technology and data. In fact, that's just in such such a great place to to support them with that. And that's certainly what we're seeing, you know, in the pipeline for the rest of the year.

Philip Snow
Philip Snow
CEO at FactSet

And maybe I'll ask Goran here just to add a few other comments.

Goran Skoko
Goran Skoko
EVP & Chief Revenue Officer at FactSet

Hi, Shlomo. So I think we see a little bit more positivity in client reactions over the over the past over the past quarters, so there is some momentum there. I would attribute most of the, you know, momentum changing in our favor is to our products resonating. You know, I think we're we're focused more on our data solutions in general, and I think we are we're seeing that pay dividends. And we do expect, you know, significant boost from the you know, from from our buy side offerings in the in in the fourth quarter.

Goran Skoko
Goran Skoko
EVP & Chief Revenue Officer at FactSet

Our Gen AI solutions have also, you know, helped us generate momentum, you know, particularly, I would say, you know, pitch creator and our conversational API and as well as our offerings on the buy side in that regard. So I would attribute it mostly to, you know, execution and, you know, really the product line maturing in some of the areas that are really helping us.

Shlomo Rosenbaum
Managing Director at Stifel Institutional

Thank you.

Operator

Thank you. Our next question comes from Alex Kramm with UBS. Your line is open.

Alex Kramm
Alex Kramm
MD & Senior Equity Research Analyst at UBS Group

Yes. Hey, guys. I'm not sure if this is just a follow on to the first question, but maybe a little bit more specific on the 4Q outlook. If I look at the guidance range, which is obviously unchanged, I think to get to the low end, you need to basically do what you did in the last three years in the fourth quarter, I think, mid-fifty million of the range. So I think the one thing that you said early on your prepared remark was banking was kind of in line with, with last year.

Alex Kramm
Alex Kramm
MD & Senior Equity Research Analyst at UBS Group

So maybe, and you touched on this a little bit just now, but like maybe relative to last year, can you just like con, contrast where things are significantly better and where they're maybe a little bit weaker to to kinda get a sense where where they could actually be upside or downside to the low end.

Philip Snow
Philip Snow
CEO at FactSet

Yeah. Thanks, Alex. I'll I'll start, and I'm sure Gurren will have additional comments. So we're, you know, we're definitely we're significantly ahead of where we were at this time for the last two years. The areas that, you know, look like they're going to be driving growth are The Americas and EMEA.

Philip Snow
Philip Snow
CEO at FactSet

So both of those regions look strong. I would say our core business, the workstation is, you know, relatively flat to last year. So the strength is really coming from our enterprise solutions. So, you know, that's the portfolio life cycle for the buy side as well as our feeds business, which is really doing great. So that's showing a lot of momentum going into q four.

Philip Snow
Philip Snow
CEO at FactSet

And the buy side, more specifically, I think, as Goran mentioned, looks really strong for q four. So when you look at kind of the top 15 deals we have out there for q four, I think 10 of those or approximately two thirds of those are coming from the institutional asset management part of our business.

Goran Skoko
Goran Skoko
EVP & Chief Revenue Officer at FactSet

So, you know, Alex, just to add to what Phil already said, you know, I think, obviously, the, you know, book TSV or, you know, commitments that we have is well ahead of last year. We see improved retention in the quarter. You know, I think we have good visibility into cancellation for the next cancellations for the next ninety days, and we see significant improvements in in that number. So those are two very tangible factors that increase our confidence in reaching, you know, the numbers that that we are projecting. Pipeline itself, we couldn't be happier with diversity of it.

Goran Skoko
Goran Skoko
EVP & Chief Revenue Officer at FactSet

So we see pipeline is very diverse across the deal sizes as well as firm types and solutions. So, you know, we we're not dependent on any large deal to really get us over the finish line in in the fourth quarter, and, you know, that gives us additional confidence. Personally, I'm really happy about what we see as an uptick on the buy side that's still already mentioned. And, you know, and I think that what further, I think, reinforces our confidence is that we do have some, you know, quick, fast developing deals in the fourth quarter that can help us offset any fallouts that can potentially happen. So we're quite confident that we'll be within the range that we have, we have guided towards.

Alex Kramm
Alex Kramm
MD & Senior Equity Research Analyst at UBS Group

Excellent. Thanks for the additional color.

Operator

Thank you. Our next question comes from Faiza Alwy with Deutsche Bank. Your line is open.

Faiza Alwy
Faiza Alwy
MD - US Company Research at Deutsche Bank

Yes. Hi. Thank you. I know it's a bit early, but I wanted to ask if you have any thoughts around how we should think about fiscal twenty six because I know you've talked about you typically do have visibility over the next six months. And really, if I can just ask a direct question, do you expect to see further acceleration a little beyond q four?

Helen Shan
Helen Shan
EVP & CFO at FactSet

Hey, Faiza. It's Helen. Let me try to take that one. So right now, we're obviously focused on this quarter and executing against that. We feel very comfortable as what Goren and and Phil both talked about.

Helen Shan
Helen Shan
EVP & CFO at FactSet

And you can imagine that the same trends that you're hearing us talk through will continue, but we don't talk about next year until we go into our September call. So that that's where we plan on doing that.

Operator

Thank you. Our next question comes from Ashish Sabadra with RBC. Your line is open.

Ashish Sabadra
Ashish Sabadra
Analyst at RBC Capital Markets

Thanks for taking my question. Phil, congrats on your retirement. Just on, the in the prepared remarks, was a comment around asset owners continuing continuing to optimize cost and streamline their vendor relationship. I was just wondering if you could provide some color on the headwinds there, but also how do we think about inflecting the group for that particular group? Thanks.

Philip Snow
Philip Snow
CEO at FactSet

Yeah. Amit, but we we we have a great business with asset owners, and we and they utilize a lot of our, you know, core analytics product for the buy side. And our strategy has obviously been to be open, flexible, and provide best in class point solutions for those firms. Many of them are essentially just looking how to further streamline their businesses. So it's a competitive area.

Philip Snow
Philip Snow
CEO at FactSet

You know, we're partnered with many important firms in the space to provide solutions there, but it certainly, at least in this quarter, was a bit of a headwind for us. Although looking at the pipeline for q four, it looks like, you know, we'll, you know, we'll do better than we did in '4 last year or for the year, so that'll be a good good tailwind. Goran, do you wanna add anything there? Yeah.

Goran Skoko
Goran Skoko
EVP & Chief Revenue Officer at FactSet

I think the quarter is a little bit of an outlier from that perspective. You know, obviously, as Phil said, it is a competitive space. But, you know, looking ahead, you know, we do not see a similar quarter in in in in our future. You know, we are, you know, investing in in liquidity book will certainly help us close the OMS and post trade compliance gap. And we are building the, you know, total portfolio solutions have made, you know, significant, you know, progress there as well.

Goran Skoko
Goran Skoko
EVP & Chief Revenue Officer at FactSet

So we do expect, you know, that this will remain a competitive areas for us, but expect improvement in the future.

Operator

Thank you. Our next question comes from Owen Lau with Oppenheimer. Your line is open.

Owen Lau
Executive Director & Senior Analyst at Oppenheimer & Co. Inc.

Good morning, and thank you for taking my question. So the adjusted operating margin for the first three quarter, it's about 37.2% based on my math. It implies that the fiscal 4Q margin has to go down to around 34.6% to hit the midpoint of your full year guidance. So is there any expense or investment we should be aware of for your fourth quarter? Or it will follow historical pattern and they were more likely to land at the high end of your full year margin guidance? Thanks a lot.

Helen Shan
Helen Shan
EVP & CFO at FactSet

Hey, Owen. It's Helen. Thank you for that question, and your numbers are, correct. So as you know, as we started off the year, we we talked about that we're executing our investment plan across our what we call our three pillars, which is expansion in data, embedding deeper in our client workflows, and accelerating through our Gen AI roadmap. So the pace of investments has picked up over the course of the year.

Helen Shan
Helen Shan
EVP & CFO at FactSet

And so for the rest of the year, we pretty much remain on track to deliver the margin within our guidance range of 36 to 37 on the adjusted basis. The spend that we see picking up will be on the expertise that we brought in to work on new solutions like in GenAI, the investments that we're actually using to support the integration of the acquisitions. As you may recall, both of our acquisitions are slightly dilutive. And and then the technology costs, which are increasing as we expected. So at this point right now, we feel pretty comfortable that we will be in the in the range that we've, discussed, and, we'll continue on that path.

Owen Lau
Executive Director & Senior Analyst at Oppenheimer & Co. Inc.

Alright. Thanks a lot.

Helen Shan
Helen Shan
EVP & CFO at FactSet

You bet. Thank you.

Operator

Thank you. Our next question comes from Andrew Nicholas with William Blair. Your line is open.

Andrew Nicholas
Equity Research Analyst at William Blair

Hi. Good morning. Thanks for taking my question. Appreciate all the commentary on the monetization of GenAI and seeing success on the top line. I just wanted to ask about progress from a internal efficiency perspective.

Andrew Nicholas
Equity Research Analyst at William Blair

Helen, I think you you mentioned, briefly some internal efficiency initiatives. Just curious how much of that is is GenAI related. And if we're thinking about kind of the increased investment there, how much of that could potentially be offset and over what time frame, from cost savings from the same set of technologies? Thank you.

Philip Snow
Philip Snow
CEO at FactSet

Great. Yeah. This is Phil. I'll start, and then I'm sure Helen has some additional comments. So, yeah, we're certainly very focused now on using AI internally.

Philip Snow
Philip Snow
CEO at FactSet

Our initial strategy really was to focus on building the foundation, the capabilities, educating our workforce, and delivering product to the marketplace. So we feel good about that. But we're now in a very good place to apply that same strategy internally. So we're looking at, you know, obviously, developers giving them tools to, you know, produce code more efficiently. We're looking at, you know, all of our client facing employees who spend a lot of time doing administrative tasks, getting ready for meetings, and so on.

Philip Snow
Philip Snow
CEO at FactSet

So there's lots of things we can do to help them be more productive and spend more more of their time really on sort of the prospecting and selling and the the fun part of the job. And then there's obviously efficiencies that we can go on through collecting data. We've been masters of that for decades of just further automating the collection of data, so this certainly helps with that. So those are those are some of the areas that we're focused on. And I think just sort of getting organized around that internally and thinking about how that affects the algorithm for the next three years is gonna be an important piece of, I think, how we think about the company and how you should think about it.

Helen Shan
Helen Shan
EVP & CFO at FactSet

Yeah. No. That's that's exactly right. Phil touched on all the the real high points. What's interesting, and as you might guess, the question that I like to always ask when we're investing is what's the ROI?

Helen Shan
Helen Shan
EVP & CFO at FactSet

The challenge when you're right now as we're investing in Gen AI is that direct direct result between investing and the reduction. But I think what we look at is the overall, either increasing an output or being able to see more flat growth in expense going forward. And I think that's really honestly the right way to go. So currently, some of the examples that we've done is internally our call street events coverage, which more than doubled from 7,000 to 15,000. We've seen a 10% improvement on output from our engineering through through the coding assistance.

Helen Shan
Helen Shan
EVP & CFO at FactSet

Our street account has expanded. And another just an example of AI generated fund descriptions, we've been able to get those projects done in a third of the time. And that means that we're just not only faster, but higher quality. And those are just examples. It's very hard to get an ROI on, but you can see how that ends up benefiting.

Helen Shan
Helen Shan
EVP & CFO at FactSet

Now the outcome that we look at, for example, if I look at headcount growth, if you take out the acquisitions, we are essentially flat to down in terms of headcount. And so that is where I think we'll see some of these benefits flow through very much on the things that Phil already talked about in sales and engineering and in product, looking at the day in the life. We have over 50 opportunities that we've prioritized. So we'll see more of that come through going forward.

Andrew Nicholas
Equity Research Analyst at William Blair

Thank you.

Operator

Thank you. Our next question comes from Surinder Thind with Jefferies. Your line is open.

Surinder Thind
Surinder Thind
Equity Research Analyst at Jefferies Financial Group

Thank you. Just a big picture question here around the margins and kind of the the trade off of growth versus margins here. When we think over the next one, two, three years, is the idea that kind of expenses, we should see more operating leverage, I guess, that or near peak investment, I guess, near fiscal four q and then it kind of deals normally or below normal at that point in time?

Helen Shan
Helen Shan
EVP & CFO at FactSet

Sure. Thanks for for that question. Now as we said, based on our current outlook, we anticipate that our margin is gonna land comfortably within this guidance range. And as noted that we did have some dilution from our recent acquisitions, but we've essentially as we talked about on Investor Day, part of this will be self funding our investments through lower hiring is one piece, and we'll continue on the efficiency front as well. Now so we're not looking at this point to talk more around what we've talked about already in terms of our longer term outlook, but I can say that just as I answered before, some of the points that you're we're starting to see in '25, we would expect that to continue going into the next couple of years.

Operator

Thank you. Our next question comes from Craig Huber with Huber Research Partners. Your line is open.

Craig Huber
Equity Research Analyst at Huber Research Partners

Good morning. Thank you for taking my question. On the cost side, Helen, it looked to us like your cost adjusted for onetime items overall was up about 10% to 11% year over year. If you take out the acquisitions, was it up more like 300 basis points lower than that, so call it roughly 8% maybe? And while you're answering that question, can you touch on please the investments you guys are making in your sales force?

Craig Huber
Equity Research Analyst at Huber Research Partners

Is that up significantly all this year? Is it more like flattish? How should we think about that?

Helen Shan
Helen Shan
EVP & CFO at FactSet

Great. Thank thank thank you for that. I think I caught most of that, but part of the increase of impacting our margin, as you know, was is bonus accruals compensation, where last year we knew we were coming in at a different level and therefore we adjusted our bonus as a result of that. But if you so that is the biggest piece of of that delta. And then I I don't know if you call that one time, but that makes a big difference.

Helen Shan
Helen Shan
EVP & CFO at FactSet

In terms of investments, our tech expenses continue to be higher. They are up 21%. Part of that is the amortization of internal use software, and part of that's just spend as it relates to to to the cloud. I will say though other expenses, is like facilities, is lower 20 basis points as a as a perspective of a relative to mark relative to revenue as is third party. So really trying to manage our third party costs, as we, try to go through the additional need of investments on this on the tech spend.

Craig Huber
Equity Research Analyst at Huber Research Partners

I'm sorry. What about the Salesforce part

Helen Shan
Helen Shan
EVP & CFO at FactSet

of it? Oh, yes. Sorry. No. I would say, from a Salesforce perspective, we're relatively flat. There are areas that we are investing more in enough on the on the, more on the product specialty side.

Helen Shan
Helen Shan
EVP & CFO at FactSet

But overall, I would say from a Salesforce perspective, relatively flat.

Craig Huber
Equity Research Analyst at Huber Research Partners

Great. Thank you.

Helen Shan
Helen Shan
EVP & CFO at FactSet

Thank you.

Operator

Thank you. Our next question comes from Toni Kaplan with Morgan Stanley. Your line is open.

Toni Kaplan
Toni Kaplan
Executive Director & Equity Research Lead Analyst at Morgan Stanley

Thanks so much. And Phil, congrats on your retirement. I wanted to ask offensive Gen AI question. You mentioned you know, 10 signed deals and 45 opportunities. On the signed deals, are these, customers you already had that want to adopt Pitch Creator?

Toni Kaplan
Toni Kaplan
Executive Director & Equity Research Lead Analyst at Morgan Stanley

Or are these new banks that that want to have sort of a full fax set product and and are are adopting and Pitch Creator was, like, the driver for that? And, you know, what else does out in the marketplace like it at this point? I know you were sort of first, but it has anything any other products come up to this point? Thanks.

Goran Skoko
Goran Skoko
EVP & Chief Revenue Officer at FactSet

Hi. Hi, Tony. It's Goren. So, you know, it's a bit of a mix. You know, I would say most of the current deals are with existing clients, you know, where they have adapted PitchCreator as part of the overall solutions.

Goran Skoko
Goran Skoko
EVP & Chief Revenue Officer at FactSet

We do have deals in the pipeline. Don't forget that PitchCreator has been out there less than, you know, about four or five months. So we do have, you know, some selling activity, which per pitch creator is significant contributor in in the sentiment of of those deals that are currently in the pipeline. So we expect it to contribute to winning new business in addition to, cross selling and up selling of the existing business. I hope that, that helps.

Toni Kaplan
Toni Kaplan
Executive Director & Equity Research Lead Analyst at Morgan Stanley

Thanks.

Operator

Thank you. Our next question comes from Jeff Silber with BMO Capital Markets. Your line is open.

Ryan Griffin
Ryan Griffin
Senior Equity Research Associate at BMO Capital Markets

Hey, this is Ryan on for Jeff. Just going back to your guidance, it implies a pretty broad range of outcomes in the final quarter of the year. Just wondering how you can help us understand some of the swing factors or the macro impact that might be driving that. I think you mentioned a lot of that is pipeline from institutional buy side. Thank you.

Philip Snow
Philip Snow
CEO at FactSet

Yes. Thank you. This is Phil. So as as Goran mentioned, it's a very broad portfolio of opportunities. We're not really relying on any big swing deal, I I I think, or or there's nothing left in terms of a potential big negative out there.

Philip Snow
Philip Snow
CEO at FactSet

So it's really just execution on a broad portfolio. We're at well, you know, we're well ahead again of where we were this time last year. There's just a lot there's a lot of deals to close. So, you know, I I believe barring, you know, any really disruptive thing in the markets, it looks like we're in a good position to execute there within the range. But we, I think, just just wanted to leave it sort of the way it was just just given the the number of deals that we have to close in the next two and a half months.

Helen Shan
Helen Shan
EVP & CFO at FactSet

Yeah. Our guidance range is obviously, you know, designed to reflect the the potential variability of outcomes, and so we really wanna make sure that we're we're doing that, and that's why we're leaving it, as is.

Operator

Thank you. Our next question comes from Manav Patnaik with Barclays. Your line is open.

Brendan Popson
Vice President - Business, Information & Professional Services Equity Research at Barclays Investment Bank

Hi. This is Brendan on for Manav. Just wanna ask on the, you guys are highlighting the just increased focus on data solutions. And just wanna see, you know, why why is it why is it feel like there's more momentum there now? And is there something about your you know, the the product you're offering or your go to market that's that's changed, that's that's giving you more confidence?

Philip Snow
Philip Snow
CEO at FactSet

Yeah. So it's it's it looks like it's returning to, you know, historical levels or at least at least it's on that path, which is fantastic as a growth driver for the company. We've certainly broadened that suite of offerings, so we've added some, you know, very good real time pricing corporate actions and reference data capabilities. So FactSet is delivering data now to more workflows we might have historically. Historically, we were really focused on quant workflows going into a lot of other performance systems.

Philip Snow
Philip Snow
CEO at FactSet

But I think that that, you know, the the the broader suite of stuff we're doing now for clients, including some of these new data areas, is really helping. And I think we also organizationally, if you remember a year or two ago, we we moved the CTS business, which was a vertical into the data part of our business. And the thinking there was, you know, the you know, we just want one factory for data, and the feeds that we're delivering to our clients, our partners, and even our own engineers, we wanted to to have more consistency there. So I do think there was a bit of a blip there just due to that big change internally, but I think we're in a good shape now and a lot of that settled out.

Goran Skoko
Goran Skoko
EVP & Chief Revenue Officer at FactSet

And just just to add to what Phil said, you know, I think, additionally, I think we're refocused the team on data sales within the sales organization, and I think that's paying dividends. Phil already mentioned improvements or some, you know, products to be really, you know, are investing in and have high hopes for in terms of our real time exchange data feed business as well as, you know, price reference data. Those are starting to contribute, and, you know, we expect, you know, significant contribution contribution from them. And also in the current environment, I think there is more and more demand for for for data in general. So all of that is driving an improvement in that in that part of the business.

Operator

Thank you. Our next question comes from David Motemaden with Evercore ISI. Your line is open.

David Motemaden
Managing Director & Sr. Equity Research Analyst - Insurance & Business Services at Evercore ISI

Thanks. Good morning. And Phil, congrats on your retirement.

Philip Snow
Philip Snow
CEO at FactSet

Thank you.

David Motemaden
Managing Director & Sr. Equity Research Analyst - Insurance & Business Services at Evercore ISI

Just I just wanted to just level set for where we are in terms of the 30 to 50 basis points ASV contribution from Gen AI this year? Are we tracking in line with that? And as in terms of the traction you're getting there, do you think that's something that we should see accelerate and add more to ASP from that 30 to 50 basis points in the next year or two?

Philip Snow
Philip Snow
CEO at FactSet

Yeah. We're definitely tracking towards that. We talked a little bit earlier about pitch created, but that's just one of the SKUs we have. So I think we have multiple skews now that are sort of getting into 7 figures. We're monetizing, you know, these solutions across sort of six different beach fronts.

Philip Snow
Philip Snow
CEO at FactSet

I think the buy side has been a bit slower than the sell side to adopt some of this stuff, but, you know, we're hoping that changes. For our portfolio commentary product, which we're very bullish about, we've just released the fixed income part of that. So we had equity to begin within risk, but a lot of firms are waiting for us to have fixed income as well. So now that that that's out, we're optimistic that we'll do more there next year. So I certainly do anticipate that, you know, this the momentum will continue to build, and we're you know, we focus on a few workflows in this last fiscal year.

Philip Snow
Philip Snow
CEO at FactSet

But the team's done a great job of identifying sort of three or four other areas for us to start building out. And like everyone, we're now focused on agentic workflows. So, you know, just going from the foundation and the capabilities to essentially creating agents that can, you know, interact with each other and with employees. That's an exciting evolution that we're in the middle of.

David Motemaden
Managing Director & Sr. Equity Research Analyst - Insurance & Business Services at Evercore ISI

Great. Thank you.

Philip Snow
Philip Snow
CEO at FactSet

Yep. Thanks.

Operator

Thank you. Our next question comes from Scott Wirtzl with Wolfe Research. Your line is open.

Scott Wurtzel
SVP - Equity Research at Wolfe Research, LLC

Hey, good morning. Thank you for taking my question. I'm wondering if you can talk a little bit about CUSIP collaboration with Omni that you announced and just the opportunity there and the overall demand for identifiers among VC and PE backed companies. Thank you.

Philip Snow
Philip Snow
CEO at FactSet

Yeah. So, you know, we're excited about, you know, being, you know, the the the gold standard for private market identifiers with QSIP. We're working very hard in the ecosystem to sort of identify partners that are interested in doing work with us, and JP Morgan, you know, is one of those firms. So I think Omni is, you know, one of the things we're excited about in terms of building out QSIP. So we've also spent a lot of time working, you know, with different firms on private credit.

Philip Snow
Philip Snow
CEO at FactSet

I think that's probably the one where we're furthest ahead. So we feel like we're building some good momentum here. Thanks.

Operator

Thank you. Our next question comes from Russell Quelch with Rothschild and Redburn. Your line is open.

Russell Quelch
Managing Director at Rothschild & Co Redburn

Alan, I think in your opening remarks, Alan, you mentioned the new liquidity you have to support growth. Will that be deployed organic or inorganically? And what are the main areas, that you think you might deploy that additional capital to drive improving returns from next year?

Helen Shan
Helen Shan
EVP & CFO at FactSet

Thanks for that question, Russell. So yeah. Correct. We, we have ample liquidity, which is one of the benefits of sitting in the seat, and not worrying about as markets are really quite volatile where we'll be. And as we noted that we, slightly increased our share buyback from 3 to 400, which is well within, I think, when you think about as a percentage of our market cap.

Helen Shan
Helen Shan
EVP & CFO at FactSet

So I think we will continue as we've talked about in the past, our commitment on shareholder return, and we'll take advantage of any market dislocations as it relates to share buyback. And, and of course, we've done a fair amount of acquisitions this year and that will continue to be where our focus, will be, in terms of adding inorganic growth as well. But, right now, as as you might guess, we have lots of, irons in the fire, and we'll, we'll continue on that path.

Craig Huber
Equity Research Analyst at Huber Research Partners

Thank you.

Operator

Thank you. Our next question comes from Jason Haas with Wells Fargo. Your line is open.

Analyst

Is Jimmy on for Jason Paz. In a previous answer, you mentioned that two areas driving growth are Americas and EMEA, but EMEA organic ASP has been decelerating. So what gives you confidence in this region given the buy side headwinds there? Thank you.

Philip Snow
Philip Snow
CEO at FactSet

It's Goran.

Goran Skoko
Goran Skoko
EVP & Chief Revenue Officer at FactSet

Hi. It's it's Goran. So, you know, I think we have, you know, we our expectations for for for q four based on everything we see and the momentum in in EMEA is that we will see a reacceleration. Our retention is trending much better in in EMEA year over year. And, you know, just the strength of the pipeline and diversity of that pipeline in EMEA is you know, gives us a lot of confidence in in q four.

Goran Skoko
Goran Skoko
EVP & Chief Revenue Officer at FactSet

I mean, you're right that this region has seen more challenges when it comes to buy side in general and more more more cost pressure. But at the same time, just based

Philip Snow
Philip Snow
CEO at FactSet

It's going. Yeah. So, hopefully I'm just looking here as well at the pipeline. So it looks very broad based as well. So across, you know, our seats, our PLC offerings, and and and our feed offerings, it looks like a good portfolio stuff for EMEA in q four.

Helen Shan
Helen Shan
EVP & CFO at FactSet

And just as we get going back on here, the other piece as we think about the acceleration, because you are right, as it relates to q three, keep in mind, our annual price increase was, lower this year than than last year in terms of what we're contractually going out with. So that headwind sort of goes away, when we get into q four when we start to compare apples to apples. Gordon, sorry. We got we lost you there for a moment.

Goran Skoko
Goran Skoko
EVP & Chief Revenue Officer at FactSet

Yeah. So I'm not I'm not sure what what you're able to, you know, to hear, but, basically, yeah, I think reinforcing what Phil said is the breadth of the pipeline and diversity is what gives us confidence, and we see improvement in Q4 and EMEA.

Operator

Thank you. Our next question comes from George Tong with Goldman Sachs. Your line is open.

George Tong
George Tong
Sr. Research Analyst - Equity Research at Goldman Sachs

Hey, thanks. Good morning. I'd also like to extend my congrats to Phil on your retirement.

Alex Kramm
Alex Kramm
MD & Senior Equity Research Analyst at UBS Group

Thanks, George.

George Tong
George Tong
Sr. Research Analyst - Equity Research at Goldman Sachs

Yes. So earlier, Helen, you you talked about EMEA and APAC pricing contributions decelerating a little bit because of lower CPI increases. Can you elaborate on the pricing environment more broadly in the international regions? And if you're seeing any competitive changes that might also be affecting your pricing there?

Helen Shan
Helen Shan
EVP & CFO at FactSet

Sure. Happy to, to talk about. Thanks thanks, George. So, yeah, there are two ways for us to capture pricing as you know. One is the annual price increase, which is contractual, and and that is impacted by CPI as you noted.

Helen Shan
Helen Shan
EVP & CFO at FactSet

And then the other is captured at the product level. So increased rate cards or higher price realization versus the rate card can help us there. So what we've seen this year, I mean, we we adjust our prices. In fact, we raised selectively rate cards in January, and we see a lot of that come through in renewals and new business. But the solid increases this thus far have been in more corporate and hedge funds.

Helen Shan
Helen Shan
EVP & CFO at FactSet

We did raise our price, for example, on street account, which has been received well in terms of the value that clients see from it. I have mentioned in the past, as you may recall, that new business price realization was under pressure, and so we we we we took greater discounts in favor of volume, and so that sort of worked out for us. We I have to say that we've stabilized that. So right now, we don't see that continuing in terms of total discounts. We're seeing improvement on wealth and in asset management in terms of our price realization.

Helen Shan
Helen Shan
EVP & CFO at FactSet

We're we're flat on banking. And as noted, as you might guess, we've seen some pressure on asset, and asset owners. So the the guidance range we have does did incorporate the lower inflation rate, but right now, I would say there's not a huge difference across in outside of The Americas globally. They were kind of following the same piece, so we we tend to look much more along on a firm type basis.

George Tong
George Tong
Sr. Research Analyst - Equity Research at Goldman Sachs

That's very helpful. Thank you.

Helen Shan
Helen Shan
EVP & CFO at FactSet

Thank you.

Philip Snow
Philip Snow
CEO at FactSet

Well, I think that's our last question, so, let's wrap up. Thanks to everyone for being here today. As we head into the fourth quarter, we are seeing strong momentum, visibility into our pipeline, and confidence in delivering on our full year targets. Our enterprise partner status is resonating, and we're focused on execution, solving our clients' workflow challenges and driving long term growth. To finish, this will be my last earnings call as the CEO of FactSet.

Philip Snow
Philip Snow
CEO at FactSet

It has been an honor to serve in this role for over the past decade And I'm proud of what we've achieved together over the past thirty years and feel confident in the company's future prospects. I look forward to welcoming Sonoka Board in September and working closely with him to ensure a seamless transition. To our clients, partners, shareholders, and all the fact setters around the world, thank you all for your trust and support. Operator, that ends today's call.

Operator

Thank you for your participation. This does conclude the program. You may now disconnect. Everyone, have a great day.

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