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Good morning, and welcome to FactSet Q4 2024 Conference Call. [Operator Instructions] I would now like to hand the conference over to [Kate Kirby]. You may begin.

Thank you, and good morning, everyone. Welcome to FactSet's fourth 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 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. 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. 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. During this call, unless otherwise noted, relative performance matrix, reflect changes as compared to respective 2023 period. Joining me today on the call 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.

Thank you, Kate, and good morning, everyone. I'm pleased to share our fourth quarter and full year fiscal 2024 results. We ended fiscal 2024 with organic ASV plus Professional Services growth of $104 million or 4.8%, which is just above the midpoint of our guidance range provided in June. Annual revenue increased to $2.2 billion, adjusted operating margin to 37.8% and adjusted EPS to $16.45 or 12.3% growth, all above the high end of our most recent guidance. Amidst the ongoing backdrop of macro uncertainty, we continue to see evidence of the green shoots we observed last quarter. These positive trends paired with our solid execution resulted in sales momentum on large deals as we closed out the year. While we remain cautious, I'm encouraged by the reacceleration of our new business and growth to end the fiscal year. Turning now to our financial results. In the fourth quarter, we added $54 million of ASV, which was in line with what we delivered in Q4 last year. This was driven by several large multiyear renewals and seven-figure competitive displacements across multiple firm types. For our organic ASV performance by region, in the Americas, we had 6% growth strength from strategic wins in wealth and momentum from long-term renewals on the sell-side were offset by softness on the buy-side. In the EMEA region, growth decelerated to 2%. Gains from wealth were offset by headwinds to retention on the buy-side across the region, as market conditions continue to constrain the budgets of our mid to large-sized asset manager clients. In particular, one-third of the deceleration in the quarter was the result of a cancellation by one large buy-side client. In the Asia Pacific region, we delivered growth of 7%. Wins across wealth with our analytics product suite and data solutions were offset by higher erosion from banking and asset management clients. Now looking at trends by firm types. Wealth management was the largest contributor to our ASV growth in fiscal 2024. Even with one-time loss earlier in the year of a client in-sourcing one of our services. In the fourth quarter, we experienced strong demand, and organic ASV growth accelerated to 12% for the year led by multiple large enterprise deals in the long-term renewal. These large wins in the fourth quarter build on our competitive displacement of an incumbent at a marquee wirehouse client in the first quarter. In the fourth quarter, we secured a win against the same competitor in the Canadian market, where we now hold significant share with three of the region's top five wealth managers. Another notable advisor desktop win in Q4 was a significant displacement of a competitor where we are replacing a high number of high-end terminals at a leading private bank. In total, we added over 23,000 advisor desktops in fiscal 2024, representing over 30% growth in seat count to bring our total wealth users to north of 100,000. Our wealth workstation has proven to be a differentiator with clients seeking firm-wide enterprise deployments that improve productivity of their advisors. And we believe that FactSet is well positioned to continue our momentum in competitive displacements. As we broaden our offering for wealth managers, we are seeing early success in adjacent workflows. In the fourth quarter, we captured our first enterprise deal in the wealth middle office for performance and managed services. We also achieved a significant milestone in the first sale of our conversational API. This large deal powers a leading private wealth client through programmatic access to FactSet Mercury, our GenAI-powered knowledge agent. In dealmakers, organic ASV growth was 4%. While headwinds impacted this segment earlier in the year, we observed a reacceleration in Q4. This growth was driven by gains from a seven-figure competitive win in banking to displace our main competitor in this space and several multi-year contract renewals and a modest uptick in seasonal hiring. Conversations with our clients indicate a cautious optimism for more normalized hiring in banking in the months to come. On the institutional buy-side, we faced a backdrop of tighter budgets and vendor consolidation that led to an organic ASV growth rate of 3%. These headwinds persisted throughout the year and were most pronounced for asset managers where higher erosion and the large asset manager cancellation put pressure on retention. While ongoing fee compression continues to be a challenge for the industry, FactSet is among the few players that clients can choose to partner with to help consolidate spend and lower total cost of operations. For partnerships and CGS, organic ASV growth was 6%. Softness from partnerships was offset by continued strong performance from CGS. In the fourth quarter, new business and renewal expansions added to growth while a lack of large deals and a significant cancellation were headwinds. As we transition to fiscal 2025, we continue to execute against the strategic multiyear investment plan we outlined last quarter. There are three main pillars driving our focus. First, the continued data expansion to finish what we started. Over the past several years, we have executed the largest content expansion in FactSet's history, including deep sector, private markets and real-time. These initiatives have added to the growing universe of proprietary connected data on our platform, which increasingly differentiates FactSet from our competition. Additionally, these data investments are not only helping us win on renewals, but also driving our success in many of our competitive displacements. The focus of our targeted investments in the upcoming year will be on bringing these offerings to maturity. Secondly, embed FactSet deeper into client workflows. Across each of the firm types we serve, there is continued runway for us to streamline and simplify our clients' workflows. For the institutional buy side, we are prioritizing investment in the front office where there is substantial opportunity to leverage our strongholds in portfolio performance, analytics and risk to deliver differentiated value. With over 5.5 million institutional portfolios representing nearly $30 trillion of AUM flowing through our middle-office systems each night, FactSet is in a privileged position to connect this holdings data with the portfolio workflows of front-office users. In wealth management, we aim to capture further market share by building on FactSet's growing presence on adviser desktops to expand into adjacent workflows such as prospecting and digital reporting. And finally, for dealmakers, we continue to accelerate engagement with our banking clients to bring next-generation automation their research, financial modeling and pitch creation workflows. In addition to optimizing workflows boost productivity for junior bankers among whom FactSet has a strong and loyal following, we are also investing to expand on our technology-driven differentiation for senior professionals. The third pillar is accelerating innovation through generative AI. A fundamental element of our strategy is executing on our AI road map. Since announcing FactSet Mercury and our AI Blueprint late last year, we have focused on integrating generative AI directly into our clients' workflows and enhancing their overall FactSet experience. There are early signs that FactSet's differentiated open ecosystem approach to GenAI is resonating, and our investments in this area are already paying off. Earlier this year, we launched multiple new GenAI-powered solutions, including portfolio commentary, transcript assistance and conversational API powered by Mercury. And we are seeing meaningful usage of each by clients, which is starting to drive incremental ASV and improve retention. I look forward to sharing more on our GenAI progress at our recently announced Investor Day on November 14, including a number of exciting new AI products available in beta release through FactSet Explorer, our product preview program, which has now expanded to over 50 clients across banking, buy side and wealth. In addition to our own efforts, we are enabling third-party developers and technologists to build their own proprietary workflows on top of FactSet's data and technology. Through our AI partner program and GenAI data packages, we are providing programmatic access to our curated content and incubating an ecosystem of fintech firms who need data to fuel their solutions. In summary, I'm pleased with how our team closed out the year in a challenging market environment. In the face of industry headwinds, FactSet continues to be a trusted partner that clients can depend on to reduce their total cost of ownership. With our open platform, flexible approach and history of innovation, we see tremendous opportunity in helping clients modernize away from incumbent processes to get out of legacy technology and data debt. We are well placed to meet this demand with our broad enterprise offering across data, workflow solutions and services. We are guiding to organic ASV growth of 5% at the midpoint for the upcoming fiscal year, balancing a more muted outlook in the first half of the year with improvement in the second half. We're encouraged by the nascent market recovery and our solid execution this past quarter. This is positive momentum to build on, and I'm excited about our opportunity ahead. Over our 40-plus year history, FactSet has delivered a consistent track record of sustainable long-term growth. We remain committed to expense discipline and deploying capital responsibly to balance the trade-off between reinvesting to accelerate growth and expanding margins. I will now turn it over to Helen to discuss our fourth quarter and full year performance in more detail and take you through our fiscal 2025 guidance.

Thank you, Phil and hello to everyone. As highlighted in this morning's press release, the fourth quarter proved to be our highest in terms of ASV growth. In the fourth quarter, we added $53.5 million of organic ASV, in line with last year's results, bringing our annual total to $104.4 million, slightly above our June guidance midpoint. This result is a 4.8% year-over-year increase in organic ASV plus professional services. In fiscal 2024, we grew revenue 5.7% on an organic basis, extending our record to 44 consecutive years of top line growth and showcasing our resilience during periods of market volatility. We improved adjusted margins and EPS, exceeding the top end of our most recent guidance, though GAAP margins and EPS was affected by a one-time item, which I will address later. First, our quarterly results. As we noted at the beginning of the call, reconciliation of our of our adjusted metrics to comparable GAAP figures is at the end of our press release. GAAP revenues increased 5% to $562 million, driven by sales in wealth, banking, asset managers, and asset owners. Organic revenues, excluding foreign exchange movements and any acquisitions and dispositions over the past 12 months, increased 5% to $563 million. For our geographic segments, organic revenues grew by 6% in the Americas, 3% in EMEA and 6% in Asia-Pacific. For the fourth quarter, GAAP operating expenses increased 3% year-over-year to $434 million with lower compensation expenses primarily offset by a one-time $54 million charge related to a Massachusetts sales tax dispute, which we have disclosed in previous filings. We do not anticipate taking additional material charges with respect to this matter. On an adjusted basis, operating expenses grew 1%. Looking at each of our four major cost categories in turn, technology costs, our main expense driver, increased 20% year-over-year in the fourth quarter, mainly due to higher amortization of internal use software and increased investment in generative AI. For the year, technology cost was about 9% of revenue. Conversely, employee expense decreased by 7% year-over-year in the fourth quarter, driven by lower compensation expenses due to earlier cost reduction efforts and a lower bonus accrual. For the year, our people expense was 39% of revenue, down 300 basis points from the prior year. We ended the year with a bonus pool of $86 million, 13% lower than last year. And as a reminder, 69% of our employees are located in our centers of excellence. Third-party content costs rose by 15% year-over-year in the quarter due to changes in the timing of variable fees and remained at 5% of revenues. Real estate and related expenses decreased 9% year-over-year in the quarter due to office space optimization. For the year, these expenses declined to 3% of revenues, 50 basis points lower than the prior year. Our deliberate expense management is positioning FactSet for future growth by allowing us to self-fund additional investments in technology and strategic initiatives in fiscal year 2025. As compared to the previous year, Q4 GAAP operating margin increased by approximately 110 basis points to 22.7% from reduced employee compensation costs and revenue growth, offset partly by a Massachusetts sales tax charge. Adjusted operating margin improved by 240 basis points to 35.8% from lower bonus accrual and salaries, partially offset by higher technology costs. A detailed expense walk from revenue to adjusted operating income is in the appendix of today's earnings presentation. Cost of services, as a percentage of revenue, declined 330 basis points year-over-year on a GAAP basis, primarily due to lower compensation expense, partially offset by increased intangible amortization. Adjusted cost of services was lower by approximately 40 basis points. And in the fourth quarter, SG&A as a percentage of revenue was 620 basis points higher year-over-year on a GAAP basis, primarily due to a $54 million Massachusetts sales tax charge. Adjusted SG&A was approximately 200 basis points lower, primarily due to lower compensation expense. Turning to taxes. Our effective tax rate for the fourth quarter was 23.6%, down from approximately 39% in the fourth quarter of fiscal 2023. This decrease was primarily due to the inclusion of a prior year tax adjustment. Our GAAP EPS increased 38.1% to $2.32 this quarter versus $1.68 in the prior year period. This was due to a decrease in employee compensation costs and an increase in revenues, partially offset by charges related to a Massachusetts sales tax dispute. Adjusted EPS rose by 23.8% to $3.74 from revenue growth, margin expansion and a lower tax rate. Free cash flow, which we define as cash generated from operations less capital spending, was $137 million for the quarter, a decrease of 12% over the same period last year. The drivers are lower net cash from operating activities and increased capital expenditures. Fiscal 2024 free cash flow was $615 million, an increase of 5% over the prior year. Demand for our solutions remained steady with a fourth quarter ASV retention rate of over 95% and a client retention at 90%. Through the fiscal year, we expanded our client base to over 8,200, adding 296 new logos. Concurrently, our user count increased 14%, adding over 26,000 to our total, driven primarily by wealth and dealmakers. On capital return for the quarter, we repurchased 153,650 shares for approximately $63 million at an average share price of $412.09. For fiscal 2024, we bought back a total of 537,800 shares for approximately $235 million at an average price of $437.40. On September 17, 2024, the Board of Directors of FactSet approved a new share repurchase authorization for up to $300 million. We paid a quarterly dividend of $1.04 per share today, to holders of record as of August 30, 2024. As a reminder, we increased our dividend by 6% in the third quarter, marking the 25th consecutive year of dividend increases. We remain committed to returning long-term value to our shareholders. Over the last 12 months, we have returned $386 million to our shareholders. In the fourth quarter, we paid down $62.5 million of our term loan, reducing our gross leverage to 1.6 times. This is consistent with our plan to repay the term loan in full by the second quarter of fiscal 2025. And finally, turning to our guidance for fiscal 2025. As Phil mentioned earlier, we anticipate growth accelerating as the year progresses, the next six months aligning with current conditions and the balance of the fiscal year improving from more favorable financial markets, execution on several long-standing large opportunities and new demand for our GenAI products and enterprise solutions. Our views are supported by a first half sales pipeline that is comparable to last year. We foresee sustained momentum in wealth, subdued activity in banking and modest improvement on the buy side. While we anticipate continued pressure on client budgets, we believe the overall pace of erosion will begin to moderate. Given these expectations, we are guiding incremental organic ASV growth of $90 million to $140 million, reflecting a 5% growth rate at the midpoint of our range. We expect adjusted operating margin of 36% to 37%. This range includes higher technology and content costs, the reset of the bonus pool and targeted investments in banking and buy-side workflows, offset by lower controllable costs such as professional services. We are committed to maintaining expense discipline while also investing strategically to increase revenue and ensure earnings growth. Finally, adjusted EPS is expected be in the range of $16.80 to $17.40. With respect to additional modeling assumptions for fiscal 2025, we expect interest expense to be between $44 million to $48 million. And we expect capital expenditures to be in the range of $95 million to $105 million. We remain positive about growth opportunities, particularly in wealth and buy-side solutions. By executing our generative AI road map, expanding connected content and integrating FactSet further into our clients' workflows, we aim to increase market share and enhance client retention. We are committed to supporting our teams with the tools and knowledge they need to ensure we remain the partner of choice. We are now ready for your questions. Operator?

Thank you. [Operator Instructions] Our first question comes from the line of Alex Kramm with UBS. Your line is open. Look like Alex's line disconnected. We'll move on to the next question. [Operator Instructions] Our next question comes from the line of Toni Kaplan with Morgan Stanley. Your line is open.

Thank you so much. I think this question is for both maybe Phil and Helen. You've had a very significant period of margin expansion since 2021 when we look forward, just given the balancing act that you mentioned of investment versus margin, should we view 2025 as representative of a normal year or how should we be thinking about margins over the long term? Thank you so much.

Toni, I'll start and I think well Helen will have quite a bit to unpack there. I say this is probably a bit of a reset year. We've obviously expanded margins significantly. As you mentioned, I think the CUSIP acquisition obviously was a tailwind for us there. But we have ended up I believe beyond we've set out at the previous Investor Day, which was a little over two years ago. So we do believe we're investing well. We've had some long-standing programs that are fully funded and through our own efforts of sort of being more efficient and self-funding, we feel we're in a great position to continue to invest. But Helen, why don't you provide a little bit more detail. Please.

Yes. No, happy to do that. Thanks, Toni. So we took expense actions in 2024 to really help expand margin in what was a challenging top-line environment. And quite frankly as Phil said, we are higher than what we had originally aimed for in a medium term outlook, which is 35% to 36%. We've also worked to reduce spend in absolute terms in targeted areas like real estate, and we've managed down variable expenses when needed, like our incentive compensation. So I think when you think about the difference of margin between the midpoint of 25% and where we ended 2024, about half of that is attributable to resetting the bonus level because it's meant to be reset for our new -- for the New Year. And the balance is really to help cover technology costs. And so I would look at this as a more normalized level. Now we are doing a fair amount of investing as well. And all of that as I mentioned in the script is very much self-funded. So that's already in the rate that we're giving in our guidance.

Thanks so much.

You're welcome.

Thank you. Please stand by for our next question. Our next question comes from the line of Ashish Sabadra with RBC. Your line is open.

Thanks for taking my question. I wanted to follow up on the prepared remarks about improvement in the second half or the growth accelerating as the year progresses. Despite that second half 2025 progress, the 2025 ASV guide implies no improvement compared to like 2024, despite potentially better macro with Fed cutting rates. So I just wanted to understand what's your macro and pricing assumptions baked into the guidance? Thanks.

Well, I'll start. Thanks. Ashish. Appreciate the question. We do see out for the next few months, the continuation of some of the headwinds we've experienced frankly for the last two years. But we are beginning to see some green shoots. So I think we saw a modest uptick in banking hiring in Q4. And obviously, we had a lot of really great significant wins in Q4 which the team did a great job of closing. And it was very encouraging that our largest clients were really working very quickly through -- with us through that period, which I think is a great indicator of how much they want to work with us moving forward. And as you know FactSet traditionally has been a tale of two halves, we typically have a much larger second half than first half. So I think we're -- we think that's sort of the best balance. We do think that once we get through the end of the calendar year, clients will have had a chance to reset their budgets. And I would think most of the uncertainty that's been out there in the market will be behind us. So that's quite a bit of our thinking and I don't know, Goran or Helen, if you wanted to add on to that.

The only thing I would add to what Phil said is that I think we have a good product pipeline. And I think we had recent product launches that will contribute to our acceleration in the second half. We had some sales of those products in the fourth quarter, which further proved that point. But really are hoping to build the pipeline in the first half and realize sales in the second half. So we do expect by the second half in 2025 as we usually have.

Thank you. Please stand-by for our next question. Next question comes from the line of Alex Kramm with UBS. Your line is open.

All right. It seems like I pressed the right button this time. Hello. I guess just very quickly on the buy side, maybe you can flush out your comments a little bit more. One, you mentioned a large asset management cancel this quarter. Can you maybe give a little bit more background? It seems like in asset management, you usually have a very sticky offering and not a lot of competitive threats. So just wondering what's going on there. And then overall, the asset management environment looks like headcount reductions or hiring is stabilizing. So are you seeing some of that already? Or is it still too early to kind of get more positive on that end market? Thank you.

Thanks, Alex. So yes, let me address the first part, which was that cancel. Yes, every now and then, obviously, we're going to face a large cancel. And I think this one was probably just due to a firm needing to consolidate and being under cost pressure. But maybe what I'll do is just give you a little bit more data than we have in the past on our top 10 versus bottom 10 wins for the year. So if I look at our top 10 largest ASV wins for the entire fiscal year, nine of those were against competitors. And seven of them were against our top 4 competitors, which I think are well understood. And four of those displacements had over 700 seats added for FactSet. In the bottom 10 deals, six were lost to competitors, but only three of them were to our major competitors. And four of the bottom 10 deals were the result of M&A or firm closure. So I think there is a consolidation and cost pressure in the industries. On the buy side, in particular, when they look to really stitch together the front, middle and back office, we're going to win some, lose some on that. And this was a case where we lost. But in our top 10 deals, there was one which was the opposite, where we won against the same competitor. The second part of your question, anecdotally, I would say it is becoming more constructive on the buy side. When meet with the C-suite on the buy side, it feels like there's an appetite to continue to do the transformation. But the cost pressures are there, honestly, and it's really up to us to execute against that.

Yes. And I might add a little bit to that. As we think about the buy side, one of the areas that we're seeing continued demand is on the managed services, which is really not -- it's more of an enterprise, not a seat-based type of solution we provide. So, it had some strength in '23, and we continue to see that grow again in '24. So, we would probably look to that as one of the drivers of buy side going forward.

Excellent. Thanks, guys.

Thank you.

[Operator Instructions] Our next question comes from the line of Manav Patnaik with Barclays. Your line is open.

Thank you. Good morning. I just wanted to follow-up on the strong performance in CGS that you called out in your prepared remarks, Phil, I guess how fast has CUSIP been growing? I imagine with all the headlines in CDs, it's a pretty big number. So, just curious if you could give us the update on how fast it grew this year, I guess, what percentage of the business it is and what you've assumed for 2025?

Yes. Thanks, Manav. So yes, we don't break that out, but it is a significant portion of the partners business line, which we broke out, I think, earlier in the slide. So that compared with FactSet's traditional partners business grew in aggregate at 6%. CUSIP really drove the growth. We did have a couple of partnerships that have been significant in the past, where we lost some ASV there. So I think you can probably triangulate what happened there. The CUSIP team did a great job this year executing. And I'm really encouraged by the pace of new development there in terms of their thinking. So, I guess, maybe we can talk a bit more about that later, but that's about all we can talk about right now.

Thank you. Please standby for our next question. Our next question comes from the line of Faiza Alwy with Deutsche Bank. Your line is open.

Yes. Hi. Good morning. Thank you. So I wanted to ask about the ASV guide for 2025. You're not baking in sort of any type of acceleration, which seems prudent. But I'm curious how you would characterize that? Is it more conservatism on your end? Are you seeing sort of anything in the marketplace that's leading you to believe that things won't change? And then I know you have your Investor Day coming up. So maybe give us a preview of how we should think about a more normalized ASV growth for the company.

Yes. Thanks, Faiza. So yes, so as I already mentioned, we're seeing a bit of a headwind here as we sort of finish out the year, but we're much more optimistic about the second half. So we provided a range. I do think there's an opportunity to do better for sure. I'm really encouraged by what we're seeing on the generative AI front. So that's a bit of a wildcard that we're beginning to monetize that, and we have a great pipeline. So if that begins to come in or accumulate at a faster rate, I do think that, that would be encouraging. Someone mentioned hiring. Historically, we have been very highly correlated to hiring on the buy-side and the sell-side. I think if sell-side hiring goes up faster than we have anticipated, and we have been pretty conservative there on the sell-side, I think that could certainly be a tailwind for us in this year. But do remember that particularly for some of these larger deals, it's a pretty long sales cycle as we go at the enterprise level now. And I think at Investor Day, we'll be sharing more. We can't say too much now. But what I do want to stress is the team is most focused on the top line, right? So that's what we want to do. We're not happy growing at 5%. We want to grow faster, and that's going to be our main focus and what we'll talk more about at Investor Day.

Thank you.

Thank you. Please standby for our next question. Our next question comes from the line of Kelsey

Hi. Good morning. Thanks for taking my question. So you've previously talked about GenAI kind of expected to start delivering incremental ASV in FY 2025. I'm assuming that's already included in the 4% to 6% ASV growth guidance. But just curious, have you sized the impact of GenAI investments for both ASV and expense outlook for the next few years?

Sure. Why don't I take a shot at that one? Thanks, Kelsey. So when we think about the impact that GenAI I may have, that's why as Phil mentioned, we're looking more at the back half of the year. So that's when a lot of our new solutions that are powered by GenAI will come out in the first half. So that we'll be able to have a better perspective of that. It is baked in our guidance range, and that's why we're talking about it being the first half more in current conditions and the second half boosted by what we hope will be stronger capital markets activity and demand for the new products as well as enterprise. And ideally, as we talked about some of the green shoots of reduced erosion. So, when I think about how much that's baked in there, we'll see somewhere between maybe 30 to 50 basis points is where we might see that come through. As it relates to the expense side, I think right now, when I look at the total amount of investments that we're making, I would call it about 50-plus basis points also attributed to GenAI, both what we've been investing in, what we're going to continue invest into the 2025.

Thanks a lot.

You're welcome.

Thank you. Please stand by for our next question. Our next question comes from the line of Surinder Thind with Jefferies. Your line is open.

Thank you. With respect to the ASV guide, how should we think about the current pricing environment and what's built into the guide? And then related to pricing, how does something like FactSet Mercury or your AI offering, how do you price that?

Sure. I'm sorry, what was the second part of your question?

I'll take the second part, it's a pricing for AI.

Okay. I'm sorry. Sure. I can do that -- you can do that. So our standard pricing, what's baked in here, as you know, in our contracts, we have either the higher of CPI or RPI or 3%. So we do see some headwind going into 2025 as it relates to our annual price increase. But I want to make a separation between the annual price increase and then what we are able to do as we sell throughout the year. Our rate cards have been adjusted depending on the experience and activity. And so we've been raising the prices on our packages. And the price realization against that on average has been above 80%. So we feel good on what we're able to capture as we sell into this market. I would expect the same for this year as last year, meaning we have a larger book, and we have net new clients. So we will capture incremental dollars and the price realization, as I mentioned, against our rate cards. So in total, we do expect the total contribution from pricing year-over-year to be down modestly, but overall, still a good contributor to our overall growth rate.

And in terms of pricing for AI, we're arriving at a model for this. Of course, we'll iterate on it. Some stuff will just get baked into FactSet out of the box. And we've already got some great product in there called Transcript Intelligence and Search Intelligence. You can go and look across a lot of different documents to get an idea of a trend of what's happening, get questions answered. Secondly, we're going to release deep workflow solutions. So we've released Portfolio Commentary. And we'll be charging for that on a usage basis. So it really will be driven by how many portfolios and how many commentaries you want to create. We did get a lot of demand for customization there after we announced this at Focus back in May. But we've done a lot of that work now. So we're a great position to go out to the market. We've literally got hundreds of clients interested, and we'll be able to essentially customize this to some extent for them out of the box. So that's an approach we'll take with many of these things. We'll take a bundled approach in some cases where you can get a bundle of capabilities and get price for that. But most of this is going to be usage or consumption-based, I would imagine, and it might depend on the product. So a lot of it will be incremental ASV. We did have a great sale in Q4, which was our conversational API. So really, the search experience that you would have on a FactSet, a client wanted to use that within their own ecosystem. And a lot of the larger firms are going to want to do this. So we've taken a federated approach, which I think is a real winning approach. I'm going to pass the baton here to Goran because he had a lot to do with that sale. And do you want to add on to that and sort of your level of enthusiasm for this fiscal year?

Yes. So it's certainly a sale, we believe, is repeatable. We are already building a pipeline and interest across multiple clients. And as mentioned in terms of new product launches, expect the results to show up in the second half of the year. But I think what is really significant is that this approach -- a federated approach to our conversational API really helps clients to accelerate their internal development and is really -- it's really a huge benefit to their overall cost structure when it comes to GenAI development that they do in-house. So quite excited about it, equally excited about Portfolio Commentary and some upcoming releases that we'll be talking about at the Investor Day.

Thank you. That’s very helpful.

Thank you. Please standby for our next question. Our next question comes from the line of George Tong with Goldman Sachs. Your line is open.

Hi. Thanks. Good morning. Your fiscal 2025 revenue growth guide of just over 4% is a deceleration from about 5.5% growth in fiscal 2024, even though ASV growth in fiscal 4Q benefited from several large wins that should ramp into next year. Can you help bridge the gap and discuss what may be dampening revenue performance next year compared to fiscal 2024?

Hi, George, I'll take that one. So as you know, the nature of our business, it is a recurring revenue business. So when the ASV goes in is how you get to recognize it. So a stronger Q4 is certainly helpful, but then you are carrying the last three quarters, which were as know lower. So revenue is a lag to ASV growth. And you'll see that over the period of time, if you look back at the last, whatever, 10 years. That's the way that it works. So that's the delta between the two. It also matters how the ASV gets converted in year. So as we mentioned already that the first half will be likely more where we are today and the second half being stronger. And so then that, again, will reflect more of the first half in revenue and then hopefully help us more into 2026.

Got it. Thank you.

You're welcome.

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

Hi, good morning. Thank you for taking my question. I wanted to ask maybe a bigger picture one on the investment dollars. It sounds like the year-over-year decline in operating margin is at least in part or it sounds like half is tied to the reset of the bonus pool, but there's obviously incremental dollars here tied to investment. And I just wanted to ask a little bit more about the thought process, how you think about kind of balancing that investment spend with kind of your priorities of driving top line growth? And then kind of relatedly, if embedded in your guidance is some flexibility to potentially ramp up investment spend as we move through the year, if you're hitting higher ends of your revenue guidance because it does look like a little bit of an inverse relationship between revenue growth and operating income guidance based on the table on the release. Thank you.

Sure. I'll take that. It's a very good question. So, as we mentioned before, we were able to take some expense actions in 2024 and reduce spend, which gives us some room for investment. So, overall, what I would think about the additional investment that we're putting into 2025, that is included in our margin and I'll call it self-funded, is roughly around 150 basis points, of which half is investments in GenAI, which we'll see that come through as Phil was speaking to likely on the front office as well as in banking and wealth. We're also investing in content, which comes through the form of real-time and fixed income and then also in our buy-side workflows. I mentioned earlier the increase in demand on managed services as well as investments we're going to be making in trading. And then lastly, a bit into infrastructure because to do some of the consumption tracking and billing to support the GenAI and other types of solutions that we have that are based more on usage, that's a bit built into our total of 150 basis points of spend. So, it's being funded in two ways; the productivity gains that we've taken as well as selected reduction in discretionary spend such as in professional services. So, we believe this is the right way to balance the need to invest for top line growth, which, as we said, is our primary focus, but also with the aim of maintaining the strong margins that we've already achieved.

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

Hi, good morning. Thank you for taking my question. I do have a follow-up with the investment, Helen, you just mentioned. So, as you start to monetize GenAI, do you need to continue to invest to maintain the growth rate or you can scale back some of your maybe early investments or current investments at some point? Thanks.

Sure. And I realized I didn't answer the second half of the other question, so I'll try to combine those two. So, first, I think we're early -- in the early stages of this. So, I won't make a view of whether or not we can pull back. I do think that if we're able to realize some of the ASV earlier and if that's stronger that we'd be able to invest more as needed. So, right now, I think what we're looking really is to continue as long as we can get the returns higher than our cost, we will look to continue to invest, Owen. And as I said, it won't just be in GenAI. They'll continue to also be in content as well as into the workflows themselves.

All right. Thanks a lot.

Thank you.

Please standby for our next question. Our next question comes from the line of Jeff Silber with BMO Capital Markets. Your line is open.

Thanks so much. Earlier, you referred to some of the wins you had in your top 10 customers. I think you said there were nine that you took share from your competitors. I know this may be a generalized question, but was there anything specific that drove that share change? I know each contract might be different, but I'm wondering if there are any commonalities in those deals. Thanks.

Yes. Thank you for the question. So I mean, one trend that I would like to highlight is, we're just doing a lot more at the enterprise level with our clients now. And I think Goran has led a lot of these key wins by selling into the C-suite and driving home some new solutions that are repeatable. So, we had that amazing win in Q4 at a client where we're doing sort of middle-office performance for wealth. Goran's driven a lot of our success himself and with a great team for wealth over the previous years. And you can see how well we did in that space this year. And a lot of these key wins were in the wealth space. So, I would say wealth is a common theme. Enterprise level is a common theme. The fact that I think our clients are sort of excited about consuming value in lots of different ways from us is a theme. And then we've just got an amazing desktop product. I mean we continue to grow that. We had a great win in banking, and we just go from strength to strength in banking. And a lot of that's been driven by the investment in deep sector and private markets, but just the work the team continues to do around the efficiency for bankers and that's -- I think we're going to see a step change in that once we release some of these GenAI products.

And just to add to what Phil said, in addition to in that top down selling, I think our ability to compete for that higher-end terminal, especially in the wealth management has really improved this year as we have added fixed income content and other capabilities. So, we're encouraged that that will drive future growth. One of the most encouraging signs about the wins that we have had is that we're expanding into additional workflows and diversifying our sources of ASV. Phil already mentioned, expansion into performance reporting at a large client, but we have also seen a very significant win, again, in wealth management on -- in terms of expanding into portfolio-related workflows. So that is something we will be building on in 2025 and going forward. So these wins Phil's highlighting are really important to us.

Thank you. Please standby for our next question. Our next question comes from the line of Jason Haas with Wells Fargo. Your line is open.

Hi, good morning and thank you for taking my question. I'm curious if you could comment a little bit more on what you're seeing in regards to the competitive environment. It sounds like you're winning your fair share out there. But I'm curious if -- given it's still a tough backdrop if you're seeing any level of aggressive pricing from some your competitors? Thanks.

Hi Jason, thanks for the question. I wouldn't say any different than what we have experienced in the past. I think we always face competition and different level of aggressiveness when it comes to pricing. So we are always keeping an eye out on the competition and exactly how we perform in terms of wins and losses. I do not think that much has changed competitively. There is certainly increased focus by some of the competitors on some of the segments that we do really well in, but we do not see that anything has significantly changed.

I'll add a little bit to that. It is a, as Goran said, a competitive environment. So we're being smart about this. So for example, in new business, we will, at times, given that they're switching costs, but to get the competitive displacement, we'll go in and be as competitive as possible. Now that being said, we've selectively used that pricing to also lock into longer term contracts as well. And Goran said, we've seen some good success there in wealth and banking and incorporates. So I think we're just being smart how we're using price to be able win market share.

Thank you. Please standby for our next question. Our next question comes from the line of Craig Huber with Huber Research Partners. Your line is open.

Yes, hi. Thank you. Question here. Over the year, how are your hedge fund clients doing in that market and also, when you sell into corporates? How is that going for you right now? Is it getting better or worse or about the same?

So I'll take a shot at that that one. I would say it is about the same. It depends. We see a fair amount of churn on the hedge fund side, Craig. So we'll see ones that go down, and then they'll come pick back up. So our goal there is if they reconstitute themselves and come back as a new hedge fund that we catch them on the new business front, which we've seen a fair amount of. Interestingly, we've had good activity from the hedge fund community in Asia, in particular in the Singapore arena. So we're seeing what is relatively new growth out there, but hedge funds have done well. Corporates, we have a great partnership with a company called Irwin that we also do a lot of business with, and we've seen that uptick this year as well. There's a lot of churn. And our new logos, which we talked about in our call does come a lot from corporates.

Great. Thank you.

Thank you. Please standby for our next question. Our next question comes from the line of Russell Quelch with Redburn Atlantic. Your line is open.

Yes. When you think about your strategy to stimulate top line growth back above 5%, I wonder do you feel you may need to be more aggressive in exploring inorganic actions? Or perhaps alternatively, would you consider partnership opportunities to accelerate growth in areas such as wealth, where you think there's a big TAM opportunity? Just curious as what you're thinking there is ahead of the Investor Day. Thanks.

Yes. Thanks, Russell. Yes, maybe we can talk more about that then. But yes, we're -- do think it's a good time to be exploring partnerships more aggressively. I think certainly with the work we've done to open the platform and be more interoperable, there's an opportunity there to team up with certain firms for different sort of market segments. And on the M&A front, we're in a much better position than we have been for the last couple of years to do some targeted M&A just because we were -- obviously, we did a large acquisition with CUSIP, and had to get to this place. So we're seeing the M&A markets become more constructive. There's more things coming up that are of interest to us. And we're going to maintain our discipline, but we do see that, that's a lever that we can certainly use to drive top line growth.

Great. Thank you.

Thank you. Please standby for our next question. Our next question comes from the line of Shlomo Rosenbaum with Stifel. Your line is open.

Hi. Thanks for squeezing me in. Phil, I want to ask you a little bit just holistically, over the last few years, we've seen the company expand the margins. Growth hasn't been as much as what we've historically seen. And FactSet has usually been more of a growth company. It seems like now, the guidance right now is for margins to be down a little bit sequentially, but a lot more talk about the new products or anything. Is there any change philosophically that is going on recently within the company where you have pivoted a little more to margin and now are pivoting more to growth? And I just wanted ask you to talk about that. And then just a little bit about the 2H improvement this year versus what you were talking about last year because the outlook at this time year was almost exactly the same way in terms of a muted first half and then expectations in the second half. If you could point out the differences internally where you have line of sight to things, I would say, beyond just kind of the Fed rate cut, but things that you're actually seeing in front of you that give you more confidence this year versus last year, that would be helpful.

Yes, sure. Thanks, Shlomo. Yes. So philosophically, there's really been -- I don't -- there hasn't been a big change. We have always focused on growth, and we've also focused on delivering cash flow and out to the market. You've been covering us for a long time. So we take a lot of pride in that balance. It's been a while since we consistently grew in double digits, I mean at least a decade, but we do aspire to get back to high single-digits. I think that's something we would like to do. And this is -- like in my tenure at the company, this is sort of the third sort of two- or three-year period where it's been a really tough market. And I think -- so a lot of what we've experienced in the last two years has just been market pressure on us, I think, executing against that. So I think part of what you saw there in terms of our focus on margin was just really to continue to deliver good earnings growth to the market. So no huge change there. I think we were a bit more optimistic last year that the headwinds would dissipate more quickly. They didn't. But I do think now that I think we feel more confident that the market is going to be more constructive. And we've done such a lot to evolve the platform. I think we're very well positioned to help clients at a much larger level than we did historically. So the name of game now for us has got to be seven and eight figure deals. That's what's going to move the margin -- move the top line, sorry. I think we're in a great position to do that. On the flip side, we're very focused on efficiency as well. I do think there's a good opportunity for FactSet to be more efficient and whether or not we choose to invest that in more product and other's the question. And generative AI certainly is going to play a part for us as it does when we think about building products for our clients.

Shlomo, just maybe to follow up on the second part of your question. I think what gives us increased confidence, I already mentioned it, but I think the level of innovation and new products that we have delivered this year. And we really believe that, that's going to contribute to the second half projections that are more optimistic than the first half. So we are not counting on the market necessarily turning. But I think just that product pipeline and what we think we can deliver based on that.

Thank you.

[Operator Instructions] Our next question comes from the line of Scott Wurtzel with Wolfe Research. Your line is open.

Thanks for squeezing me in here. Just wanted to go back to some of the commentary on the data expansion side of your sort of strategic investment plan with deep sector, private markets and real time. Just wanted to maybe get a little bit more color on sort of how that's coming up and maybe impacting your conversations with clients, specifically on the renewal side. And then I know we'll probably hear more about this at Investor Day, but if you can kind of give us a sense of maybe sort of the road map on the product side with those three initiatives would be great. Thank you.

Yes, sure, Scott. Why don't we start with real time? I'm going to ask Goran here because he has a lot of experience with this, and I think we're at a good inflection point.

Yes. So I think we continue to make excellent products in that area. We had a very large win on the real time a couple of years ago. I think the client has gone live with all of their deliverables, and we're quite proud of the progress there, all of the -- in terms of the content coverage and adding all the over-the-counter type content all over this flowing through the product. We're excited in terms of the opportunity there. I'll add on the deep sector a little bit as well. So we continue to make excellent product progress there. We have multiple clients engaged with us in terms of delivering really desk by desk in terms of the sector coverage and are really encouraged by the level of client engagement and product progress in that area.

In private markets, we continue to invest there. Obviously, that's -- a lot of different firms are interested in that for different reasons. We've really -- I think the biggest highlight for us is we've doubled our coverage to, I believe, around 9 million companies or securities and just increasingly better data. So that's a great underpinning for our efforts in banking, in private equity, venture capital. Asset owners are looking at that. There's just a lot of ways that we're able to monetize that investment.

Great. Thanks, guys.

Welcome.

Thank you. Ladies and gentlemen, I'm showing no further questions in queue. I would now like to turn the call back to Phil for closing remarks.

Thank you. So I just first want to really thank Helen and the entire sales team for really closing out the year in such a great way. I think that's encouraging for the upcoming year. And I want to thank all of you on the call and all FactSeters for the hard work they did this year. And we look forward to seeing you all at Investor Day on November 14. I think it's going to be well worth your time. We're going to show some really innovative products and talk about the future and what you can expect from FactSet. Thank you.