Do you want me to close this, Manav? Yeah, they're gonna close it. They're just waiting for people to come in. All right, good morning again, t hank you for being here. For those of you who just walked in, again, I'm Manav Patnaik. I'm Barclays' Business and Information Services analyst, and we are pleased to have back with us, again, Linda Huber, representing FactSet. So Linda, thank you for being here. I know you've been doing this conference under many different roles for many years, so thank you for your support. Linda, maybe just to start off, you know, when, when people hear FactSet, I mean, you know, the first simple thing they say is, "Oh, the, the, the desktop company," right? But you guys are obviously, much more than that. It's been a process of, diversification over the years. Maybe if you can just set the stage for the audience in terms of, you know, the different buckets, the mix of your business, I guess, the way you would describe it today. Yeah, and thank you very much for having us back from FactSet. If you awarded frequent flyer miles for this conference, Manav, I think I would get some. Yes. So, thank you. Yeah, FactSet is much more than a desktop information provider right now. We work with a variety of clients in the financial services and other spaces. 50% of our business is actually on the buy side right now, and about 20%, in the deal makers' or sell side part of the business. Wealth is a little bit smaller than that, but not too much, and then we have a business called Partners, which are the companies that both provide information to us and who are also our customers. So the investment thesis for FactSet right now is, we are really the best-positioned data and analytics provider for the financial services industry. Now, why do we say that? We sit on top of 40 years of connected, well-organized, and concorded data, which other companies do not have, and in fact, many of them depend on us to supply that data for them as a service. So that data is ready to go right now for AI. So if you believe that data is the new oil and AI is the wave of the future, FactSet is really the best-situated company to take advantage of that situation right now. So we're pretty excited about the future. Last week we had our FactSet Focus conference in Miami with hundreds of clients, and we demoed a few new things, and I'll talk about those in a minute. But Manav's asking the questions, so back to you. Yeah. Well, maybe just one other, mix breakout. You gave us the mix by your end markets- Mm-hmm ... but how about by your products? You know, I'm referring to CTS and data and those kinds of things. Yeah, so we're reorganizing toward firm type, as we had said. Yeah. So the CTS business is now really a horizontal in terms of data solutions. And in there we have the CUSIP business, which we bought back in 2021, financed that in 2022, got our investment-grade ratings back at that time. And just by way of note, we don't break out CUSIP anymore, but its revenue growth and its margins, both of them have well exceeded our expectations. So that's an acquisition that I think could be characterized as a home run, and we love having the CUSIP team with FactSet, so it's been great. Got it. Okay, I want to touch on the customer type, I guess, breakout you gave. But first maybe, you know, to your point on 40 years of concorded, well-organized data, et cetera, and the hot topic of the year around GenAI, basically, how do you at FactSet think about the opportunity GenAI provides, both from a cost side, 'cause you're in charge of that, and then revenue as well? Sure. So we're going to the revenue side first. I don't think it's a big shock that, for the entire industry, this has been a bit of a tough year, and the revenue line has not been what we would have hoped. I think you may have seen prints from our competitors recently that have pointed that out. So in the near term, we're focusing on generating annual subscription volume, ASV, from AI, and we're looking to do what's useful to our clients. So we've been in development with a number of our closest clients in the development of what's called FactSet Mercury, which is our overall AI tool. That has gone great, and as we said, we demoed some of the things that we have last week. So first job is to be outward-facing and to drive ASV in a way that works for our clients. We're not sitting around in a Skunk Works, trying to develop it on our own. We're doing what makes sense for the clients. In terms of efficiencies, those may start showing up in 2025. We've got really three things that we're looking at. The first would be with some of the new products, our engineers can be more efficient in their coding. Even some of our most difficult-to-persuade engineers have said that they've seen pretty good productivity enhancements from having the next line of code suggested by AI. Of course, your goal is to write better code, not just more code, but it does seem to be helpful, and it's relatively new. So we'll say more when we do FY 25 guidance in September about that. The second thing would be on our help desk, a lot of the inquiries are about FactSet codes. If we can automate that, we can release some of those people from help desk work and have them do other things, which would be great. And then we also have the assist tools, which are helpful to our own teams in terms of enhancing their efficiency. So we see some good opportunities there, just now looking at what those cost savings might be in terms of productivity. So we'll have more to say about that in September. Got it. And so obviously, the cost savings, the way you described it, could be significant, but how should we think about, you know, the... not numbers, 'cause you said you'll tell us more later, but just the philosophy around whether you let that drop through... or how much you choose to reinvest? Yeah, I think we've made great progress on our margin line. This has kind of been our quest over the last few years. So we've guided to 36.5% adjusted operating margin at the midpoint this year. Depending on what happens with the technology budget spend and the uptake from our clients on usage of cloud because of Gen AI, we may come in at those heavier numbers, or we may do a bit better. We'll have to see. I think we'd like the incremental improvement in our margin, and we had talked about 50 to 75 basis points of improvement. With AI, we may pace that a little bit as we get to where we need to go with AI. We have set out medium-term targets to get to a margin which we've gotten to a year early, earlier than expected, so we're very pleased with the progress. Right now, you know, we want to get back to that strong top-line growth. That's job one right now. Got it. And, you know, just considering that you know, you mentioned it was a challenging environment, the top-line growth's a little bit muted, what tools are in your belt in terms of, you know, keeping that margin where it is or even expanding it like you are every, you know, year so far? Well, we think about the four major cost buckets, so in terms of the sizes in descending order, the people costs are the highest, for FactSet, and I think we've done a pretty good job. We're 68% offshore right now, which feels pretty good, about right. We are shifting some higher-value work over to some other offshore locations, which will help us. We're looking to keep headcount a little bit flatter, and the comp line will go up as we provide salary increases and, you know, in response to inflationary pressures for our employees. But we want to keep that headcount number under pretty close control. Real estate, we've reduced our real estate footprint from 1.7 million sq ft to 1.1 million sq ft, so we've reduced it by about a third, which has been really good. I think we were early movers on that, and I think we've about optimized that at this point. And then lastly, third-party data. We've held our costs there to about $100,000,000. It's pretty amazing in an inflationary environment, but we have some pretty good negotiators who've done a really good job for us there. So that takes us to the tech budget, which is the second, actually, it's the second-biggest expenditure bucket. I said those out of order. Sorry about that. So that one has been growing, you know, in the high teens, and a lot of that is preparation for AI. We've got three fast-growing components there. One is amortization, as we've automated time tracking, so we're tracking that, I think, quite effectively, but the amortization line has grown. Second is the cloud budget, and if you're looking to host more for AI, the cloud budget will go up, and this is something that success will add to increased costs in our cloud budget. But we have tools to manage cloud usage, so I think we're doing pretty well there. And the last one is third-party software, and we have to be a little bit more cautious about how much third-party software we let the company, the employees of the company buy. So those are the three big drivers of the tech budget, and we're working on it very closely with Kate Stepp, who's our head of technology. But again, focus is to make the best use of AI right now. Outward focus comes first. Internal efficiencies will follow that. Got it. And, you know, the 68% that's offshore that you talked about, like, is that the area that you could reduce if GenAI works in your favor from a cost side, or not necessarily? One thing that I forgot to mention, we have about half of our employees collecting content. It's a very expensive thing to do. As we move forward, if we could further automate that content collection, I think we could see some further margin improvement there. Now, that's gonna be a multiyear journey of exploration as to what we can do in terms of that function, and of course, many of those people are quite highly trained and could do other things for us. So, I think as we look to automate content collection, that's a big potential lift for us, but not quite sure what the extent of that will be quite yet. Got it. And you know, I think we've heard this from other companies, but your point on success means higher costs in the cloud. Mm-hmm. So is that just... is that purely because of the cost of running GenAI on the cloud, or is it a broader comment? I think it's a broader comment. We have six million portfolios on our system, most of them in the cloud, and we want that. It creates great stickiness with our clients, and it allows them to do many things with in terms of analytics on those portfolios. So, it's an important component of our client retention, which is very high, around 95%. So we want to keep that, but we have to balance that with the cloud costs, and I think everyone's aware the cloud providers are doing pretty well right now. The chip providers are doing pretty well. So, we have to be thoughtful about how we're managing those costs. Got it. Well, that's a good segue into, you mentioned, you know, you're focusing on revenue-enhancing products using Gen AI. You've had a few releases or PR at least out there. I don't know if you want to refer to a couple of them and just help us appreciate, in the context of this usage-based cost going up, how do you price these new products? Yeah. So that's something we're working on right now, but we have some directional ideas. So, maybe the coolest new thing we demonstrated last week at Focus was the Portfolio Commentary Summary product. So if you have a portfolio, and you have that up on FactSet, if you want to write a summation of how that portfolio has done over a quarter or a year, generally, it might take a well-trained PM, or at least one of our colleagues, who is pretty smart and went to Stanford as an undergrad, so I've got to think he does a good job at this, 25 minutes to write a piece of commentary. Now, if you have your portfolio on FactSet, you apply our AI tools, one minute. So there were audible gasps from the audience last week in terms of what this product is able to do. It's really pretty cool, pretty gee whiz. So the idea is real tools that will help real people doing their jobs now, reducing the work that takes more time, but could be done, or could be assisted, by a machine. So the way that's working now is you can do this for five of your portfolios in a day. If you want to do more than that, you're gonna see the helpful button that will allow you to subscribe to this service. So we're gonna price for that. The pricing amount is not fully aligned and determined yet, but it's a great product for everybody to take a look at, and I think it has that wow factor, which will really be great for everyone to see. The second one we have is Transcript Summary. You may have seen this already. It's out there. So say, for example, you're looking at UBS had a print this morning, strong print, so good for them. If you want to make better use of your time and rather than listen to the whole Q&A, the Transcript Summary has an AI feature, which will consolidate the top five points from the management Q&A and put it right up there for you. So rather than wade through the whole transcript, you know, you can just look at those top five points and see what they are. The other thing you can do is with natural language, not a drop-down prompt, natural language. If you want to say, "operating expense comments" and just type that in, the assist will come back to you with everything that UBS said this morning on its operating expense metrics, and it'll just put that right up there for you. And again, natural language query, it's not a drop-down menu, and you can see that instantly. Now, that we think is gonna be a feature of, what we already provide to our FactSet users. So you should be able-- if you subscribe to FactSet, you should be able to see that right now. Then the last one, particularly popular with my family of junior bankers, the Junior Banker Workflow Tool. That allows for quick preparation of charts. So you can either type in natural language what you want in terms of a chart. We're working toward being able to query the machine verbally about what kind of a chart would you like, and it will create the chart for you. Now, we've heard from junior bankers, saves five to 10 hours a week. Not sure if that's absolutely the correct metric, but this is a really game changer for junior bankers who need those charts. Also, this tool can assist in pitch book preparation. Now, that will be a premium add-on for what we're charging, but the three of these are pretty cool tools that are available right now. This is not vaporware. We have this right now, and if anybody would like to see demos of these things, we can, we can arrange that. So pretty good response from our clients last week on each of these things, and again, looking to help clients with their workflows where they are. We haven't just developed these as gee whiz tools ourselves. So, encourage everyone to take a look at those products. Got it. And just from your standpoint, like, do you see the competition doing the same things? How differentiated do you feel like, you know, these offerings are? 'Cause it sounds like the... for example, the transcript summaries, there's a few different areas that you can get the same thing. You know, the portfolio one sounds a little bit unique, but I'm not sure where the commentary is coming from. So just how do you think about that? I think the portfolio commentary is unique from what we've seen so far. But again, you have to sit on top of 40 years of FactSet data to be able to bring in, you know, trends- Yeah -and things like that. So we think we have a unique advantage there. Transcript Summary is available through other providers, but those are drop-down menus. The ability to query in natural language and to ask it about, you know, any specific question that you want is really pretty helpful. For example, when we're trying to track our competitors' performance in the analytics business space, for example, we can just ask the Transcript Assist, Talk about what they said about the analytics business, and you can do that comparison. Ali does it herself. And that is really helpful if you're looking for a specific area of comparison across transcripts. So- And then maybe just a broader question around competition. You know, the industry is challenged. Everyone's, you know, all the reports are showing they're feeling the pain. Have you seen competitors change their behavior at all? Any dynamics or any particular competitors you would call out? I think everybody is on the same path toward trying to maximize use of AI, but they don't have our 40 years of data to serve as a foundation for that effort. So I think as a technology company, I think we really have the ringside seat there. I think we really, we really are in the best position for that. Maybe you'd call it the pole position. We see other competitors buying some things, but we're very thoughtful about what we're buying right now in terms of acquisitions, because some niche-y business models can be replaced by AI in a couple of years, so we're being really thoughtful. We like this CUSIP business that we purchased because it's a global standards business, and we can look to step out in CUSIP identifiers to go to private equity and syndicated loans, which are areas that we're looking at. An interesting fun fact is, with interest rates as high as they are, if you buy a certificate of deposit in the US, and lots of people have been doing that, you have a specific CUSIP identifier for each CD. So the explosion in people investing in CDs has been very helpful to the CUSIP business. Kind of a funny indicator, but it's, it's been one that you might not immediately think of, a nd that business is 85% subscription, as we've talked about before, 15% new issuance. But you might think, fewer IPOs, fewer bond deals, but offset by a lot of CD issuance, which is helpful to us. Got it. You know, the topic of vendor consolidation always pops up more when the industry is challenged. You mentioned a few deals here and there, but that makes sense, but it never seems to happen at a pace fast enough that you would think it should, given the long list of vendors. Why do you think that is the case? And do you have a pipeline? Like, are you trying to go after this vendor consolidation theme? Yeah, we have spaces where we're looking in terms of acquisition opportunities, and we're very fussy. We have a financial model that financial attributes that we have to hit, and all of us on the executive leadership team have to agree on those attributes. Also, financing's about twice as expensive as it was in FY 2022, so something else to keep an eye on. But we're looking in the front office space, we're looking in private markets, we're looking in wealth, and then we always also look at specific data sets that we would like to own rather than rent. So those are some of the things that we're doing. Recently, we bought Idaciti, which is a very cool accounting sort of policy and implementation firm that allows us to ingest much more data much more quickly with tagging that is very helpful in terms of moving data more quickly. So that's been a good acquisition for us as well. So yeah, it takes a while. I think the tail continues with smaller vendors because people come up with very niche applications that work for specific focuses. I think they're often adopted more quickly by the hedge funds, but those guys are looking for the latest alpha tool all the time, and sometimes the longevity of those products might be more limited. And that we're looking more for more generalized buy-side business applications. So a little bit of a different focus. Got it. Just to touch on the market environment a little bit. So firstly, just a broader question. You know, in the last quarter, you guided us down to the lower end of your range. What was that change from the prior quarter to this quarter that had you, you know, go there? Sure. It's just the slowness of the pipeline moving. So we have a very good pipeline. We're happy with it. The question is: when will firms pick up the pen and sign these bigger enterprise deals, which can be seven and eight figure. The thesis is they're waiting to see the market turn. So I was very encouraged yesterday by the Wall Street Journal article about the overuse of the phrase green shoots. So every time somebody, you know, from a bank says, green shoots, we're very positive about that. Perhaps with the Fed, you know, having had a the response to the weaker jobs print in the US last week might be helpful. But we had heard from one global bank that fee pools in FY 2024 were half what they were in 2023. So you see a hesitance to enter into big data and analytics deals. Some of the other things that might take precedence would be, you know, cybersecurity or regulatory or ensuring stability in the employee base. So it's just taking longer to get around to do those big transformational data and analytics deals. They're there, but we've just got to get them to move. Got it. And so if you, if you go by the vertical, so, you know, you mentioned the global banks, so let's touch on the sell side a bit, 20%. I think I can appreciate the, the tough environment we're in, but, maybe, maybe a more specific question. But, you know, a couple of your competitors have reported, and the impact from the UBS, CS merger seems to be in a lot more than what they had even anticipated, and some have quantified it. So just whatever color you can give us in terms of what you've assumed from that impact and perhaps how it's tracking. Yeah, we've taken a conservative view, and in our planning, we've incorporated that view of that potential cancel. However, UBS is in the process of doing its integration. We, like other vendors, have a relationship with UBS, and we'll see where that goes. You know, you would note that we haven't announced—while we've planned for it, we haven't announced that cancellation. So we'll see what happens over time. I was encouraged by the strength of the print today, and we'll see where UBS decides to go. But their focus on wealth is one that you know is one that where we can serve well, and we'll see how all of that goes. But the various banks maybe are starting to see... In terms of hiring, I think things have been a bit flat for this year, but we're starting to hear of this concept of top-up analysts. So if business conditions improve, there's a group of well-trained investment banking analysts sort of in the on-deck circle, to use an investment- to use a baseball analogy, and they may look to sort of top up various groups if business heats up quickly in the short term. So we'll see what happens with that. Got it. But you're right, tough environment. When one of the global banks today let go seven investment bankers in Asia, and that was a headline in the FT, which seems a bit dramatic, but anyway. So, you know, just one more question on the sell side. So one of your competitors, LSE, that owns Refinitiv now, they've signed a bunch of big or they've made at least a PR about, you know, big contracts with large, mainly European banks, I guess, so far. Have you seen any impact from that kind of activity from players like LSE? I think LSE has focused here in Europe. I think the question would be: What is the price realization on those deals, and is that a sustainable path forward for them? You know, given the CEO's history there with a big investment bank, he's well known to those C-suite executives in the European banks. But I think one should look carefully at the price realization of those deals. Also, if you're looking at this space, you want to look at what's on the screen right now, as opposed to. You know, it's pretty easy to make marketing statements, but you want to look at what the various competitors offer on the screens right now. So I think that would be our response there. Got it. Maybe switching gears to the buy side, you said about 50%. Maybe just help us, I mean, I think we can appreciate the performance as being a challenge for the buy side as well. Maybe that's why budgets have been set low, but what are some of the points you would call out on the buy Side that you're seeing in your discussions, and why they're being, I guess, slow as well? Sure. So with these volatile markets, it should be the moment for long-only managers, and we're seeing that those companies are being pretty cautious about what they're doing with their budgets. I think there's real interest in what is AI really going to bring to the table, and they're being thoughtful about that. Last year, you know, the size of passive eclipsed the actively managed side, so those cost pressures are going to continue. So we've pivoted those conversations to total cost of ownership. So if you actually look at everything you have to do in terms of generating alpha and then reporting performance and analyzing what you're doing, we can help with all those steps. So we're talking to companies about reducing their expenses in those areas and perhaps doing more work with FactSet. So it's actually a pretty good way to get in and speak to companies, and our competitors have been more aggressive than we have been on price. So a chief investment officer might say, Hmm, you know, double-digit price increase doesn't feel really great. Let's look at who else might provide better tools at a lower cost or a more moderate cost, and that has driven trial for FactSet. Got it. Just one question was on within the buy side, how big is your hedge fund exposure? Hedge fund exposure is. I don't have the figure handy, but it's much more limited. Okay, fair enough. And then we might as well just touch on wealth as well. Are you seeing similar challenges and pain in that broader segment? And then maybe if you could just, you know, I think it was last quarter, you called out, you know, one of the wealth cancellations, but it was. You also said it was, like, an exceptional exception. So if you could just help clarify that. Yeah, sure. That had nothing to do with a product. That was basically a firm decided that they could handle, you know, the training responsibilities themselves rather than having us do it, which was the case at startup. So absolutely, you know, nothing to do with anything with the product. It's just a change in how- Yeah they were managing their business. The wealth space is super hot. Everybody is looking to expand in the wealth space right now. We're incredibly well-suited to do that. Whether you have a global firm or a mom-and-pop shop, we have different offerings for all those different price points. Usually, the decision is made by trials of the juniors in the wealth division, and they compare us versus others, and then make a recommendation as to what they prefer. FactSet shows really well. We generally win those, and then we have a discussion on price. We may not be the one to win the race to the bottom. We don't want to do that. We want to try to hold our price because we believe our product, really is better and can create much better productivity for the wealth advisors for these firms. Got it. You know, just, you know, we get, we get this question a lot, which is, you know, obviously your, your pricing, you know, has come down a little bit relative to what it was in, in the COVID years or after that, that the industry's challenged. So how do we think about that medium-term, you know, 8% to 9% target you had laid out? Yeah. I think we'll talk more about it when we do guidance for FY 2025, which, with our somewhat unusual fiscal year-end calendar, is August 31st, so we'll be reporting third week in September. We haven't announced that date yet- Okay but we'll, we'll talk a bit more about that at that time. And, we're also thinking about, an investor day in the fall, so we would discuss that a bit further- Okay there. Eight to nine percent was something that we were able to achieve and even beat coming out of COVID with the pent-up demand. I think with tougher market conditions, that's proven to be a little bit more elusive. But in the wealth space, for example, we still see high single-digit opportunities there. So it kind of depends on the product and the end user. And again, you know, with the interest rate situation, we've been fighting this sort of, you know, a little bit slower market now for- Yeah for more than a year. Got it. Let's end with capital allocation. Sure. You briefly referred to, you know, M&A and doing bolt-ons and stuff, but, you know, when you first joined, CUSIP walked right into your hands, and that was a good, I would say, larger deal. So just talk about your appetite for larger deals, and then absent, you know, you can't time those well, but absent that, how do you pace, you know, buybacks and the dividend? Sure. So we just announced we increased our dividend 6%. We've guided to $250,000,000 of buybacks this year, but we have authorization up to $300,000,000. We've spoken about that. So we'll talk a little bit more about that, I think, in the Q3 as to what we're planning to do. We're aware the stock has a more attractive entry point right now than it had had previously, something we're keenly aware of. So for M&A, CUSIP was almost $2 billion. We have our investment-grade ratings. We de-levered our leverage. Gross leverage now is below 2x. 2x to 5x is what's typical for investment-grade ratings, for our type of company. So we could lever up again, and we could pay that leverage down if we chose to, but we'd have to find the right acquisition candidate, and that would be one that would hopefully help us on the top line and have a margin profile more similar to ours, or one that we could see getting to where we are now, because we work very hard to improve the margin in the next two years or so. Looking at some of the other deals that have been done by competitors, if you have dilution for a long period of time, the market doesn't love it, and that can have a bad response. So we're very thoughtful about what our shareholders want. They would trade some increased top-line growth for a little bit of reduced margin if we can get back to where we started in a year or two with synergies. So that's how we're thinking about it, and we'll see if we see anything that fits the bill. But, you know, we see everything that comes along, and we're fussy, which is, I think, for our shareholders, the right thing. Yeah. Maybe just to wrap up on that point, on being fussy, can you just remind us on your criteria of, you know, what you're looking in these acquisitions? 'Cause, you know, to your point on some of the competitors doing something that it sounds like you chose not to do, I mean, you know, I think conceptually, some of us thought that could have been a good fit for FactSet. Just help us walk through that process. Yeah. So we're looking for long-lived acquisition that's gonna create value for a long time, not sort of be a niche application that can be replaced by AI in a short period of time. That's not great. Also, you know, I think we're looking for that sustainable growth profile and the margin profile that's closer to ours. In other words, you know, something that's gonna require us crowding out the rest of the firm to deal with a fixer-upper is probably not what we want. We think the investors are paying us for our leadership position in AI, because we sit on top of the most valuable database that there is. So we're gonna push toward AI and in those three areas that we mentioned, and if we find something, that's great. If we don't, we're pretty happy with our capital allocation. I think we've got that right, invest in the businesses, dividends, buybacks, and then if we see something opportunistically, you know, my job is to be prepared if Phil sees something that he thinks we should add to the franchise. Got it. That's where we are. Got it. Fair enough. All right, we'll end it right there. Thank you, Linda, for being here, and thanks everyone- Thank you as well. Thank you. Thank you very much!