FactSet at Bernstein Conference: Strategic Growth and AI Focus

On Thursday, 29 May 2025, FactSet Research Systems (NYSE:FDS) presented at the Bernstein 41st Annual Strategic Decisions Conference 2025. CEO Phil Snow outlined the company’s strategic evolution, emphasizing technological advancements and growth opportunities amidst market challenges. While FactSet’s focus on AI and data integration signals promising prospects, cost pressures and competitive landscapes present notable hurdles.

Key Takeaways

• FactSet is transitioning to an API-first platform, enhancing workflow solutions for the buy side.
• Growth opportunities are identified in wealth management, hedge funds, and private equity.
• The company is investing heavily in AI, with initiatives like FactSet Mercury and agentic workflows.
• FactSet aims to expand its front office capabilities through acquisitions and partnerships.
• The competitive landscape includes major players like Bloomberg and BlackRock Aladdin.

Financial Results

• FactSet’s wealth business generates over $300 million in Annual Recurring Revenue, accounting for 15% of total revenue.
• The company anticipates low double-digit growth in the wealth vertical over the medium term.
• GenAI is projected to contribute 30 to 50 basis points to ASV growth in fiscal year 2025.
• Sell-side ASV growth has slowed to mid to low single-digit figures.

Operational Updates

• Private market data coverage expanded significantly, now encompassing 8 to 9 million companies.
• FactSet serves 10 of the top 20 global wealth managers and 100,000 wealth advisors.
• Exchange data feeds cover 80-90% of 250 global venues directly.
• The company is advancing multi-asset class capabilities in its enterprise solutions.
• PitchCreator has been sold to key clients, with 50 ongoing trials and evaluations.

Future Outlook

• FactSet aims to capture more market share in the wealth space and expand into adjacent workflows.
• Continued investment in real-time data capabilities is a priority.
• The company is developing a robust AI strategy to enhance client technology stacks.
• Tuck-in acquisitions will focus on data and technology assets in wealth, private markets, and feeds.

Q&A Highlights

• The buy side is facing cost pressures and a shift towards trusted technology partners.
• Growth momentum is strongest in wealth, hedge funds, and private equity sectors.
• Clients seek vendor diversification but aim to reduce reliance on secondary vendors.
• Managed services are essential for enterprise solutions, operating at healthy margins.
• GenAI requires strategic planning, with change management posing significant challenges.

Readers are encouraged to refer to the full transcript for a detailed account of FactSet’s strategic insights and future plans.

Full transcript - Bernstein 41st Annual Strategic Decisions Conference 2025:

Kelsey Chew, Financial Information Services Analyst, Autonomous: Hi. Good morning, everyone. Thanks for joining us today. My name is Kelsey Chew. I’m the financial information services analyst at Autonomous.

And with me on stage today, we have mister Phil Snow, who is the CEO of FactSet. Thanks for joining us today, Phil.

Phil Snow, CEO, FactSet: Thanks for having us. Yeah.

Kelsey Chew, Financial Information Services Analyst, Autonomous: So, Phil, I believe you started your career at FactSet in 1996 as a consultant and was officially named CEO in 2015. So just wondering if you can talk us through kind of some of the material changes you’ve seen at over the last thirty years and particularly how has FactSet strategy changed in the last ten years since you became CEO?

Phil Snow, CEO, FactSet: Yes. Thanks, Kelsey. So there’s a lot in thirty years. I would say many of the elements that made FactSet successful early on are still true today. So just think of us as a very powerful combination of technology, data, sort of understanding our clients’ workflows as well as I think trust is an important piece of that because we’ve had a very hands on business model over the years where we’ve gained the gained the trust of our clients.

So, I’ll I’ll give a little bit of a history lesson. So we you know, FactSet was the first company in our industry. We’ve been at it almost fifty years now to get data from the cloud. We’ll call it a it was a mainframe at the time into a spreadsheet environment. So that was a massive efficiency gain for, who we were serving at the time.

And we also built some exceptional screening tools to sort of sift through all the data that was out there for the industry. And we did it on third party data. So our value proposition was technology, software, and service, but we’ve evolved greatly since then. So we I would say now we have one of the largest, if not the largest, sort of corpuses of data in the industry. So we collect data for we still collect a lot of data from third parties because we wanna give choice, but we collect a ton of data ourselves, and then clients trust us with their data.

So those are kind of the three stools of the data estate. And we also do a very good job of integrating that data, cleaning it up, getting to people on time, and tying it all together for analysis. And that’s that’s gold right now as we as we’re entering this AI war essentially. I’m So I’m very happy with that foundation.

And that really is, I think, the probably the most valuable thing that FactSet has as a company. On the technology side, I’m very proud of what we’ve done over the last, I would say, six or seven years. So we’ve really opened up our platform. We’ve become an API first platform, so people can integrate value from our our company in whatever they way they want. So thesis early on was, you know, there’s probably gonna be less humans in our industry or they’re gonna be doing more.

So we’ve gotta serve up value to the clients in the way that they wanna consume it. It could be through the fax at workstation, but it could be through an API. It could be through a partner. We’re really agnostic to that. We’re just gonna price for the value of the data and analytics that we’re serving up to our clients.

The moving to the cloud, becoming API first has made us put us in a very good position when it comes to AI. The other thing I’ll point to is workflow. So we’ve knocked off more and more of the workflows of our clients over the last thirty years. Early on in my tenure as CEO, I looked at the buy side. It’s certainly the part of our business that’s been under the most cost pressure because we’ve had that shift from active to passive management.

So solving more of the workflow for the buy side, as they try to become more efficient and consolidate, was a very high priority for us. So, I think we’re probably the gold standard in the middle office for the buy side. When it comes to official performance, attribution, risk, reporting, we’ve really nailed that, and we’ve developed that into more of an enterprise solution. We’ve always been excellent at fundamental and quant research, so we’ve continued to expand those. But we’ve built out a lot of portfolio management capabilities.

We acquired an EMS a while ago that’s doing really well under the Portware brand. And probably the last major missing piece was an order management system, which we acquired through LiquidityBook. I think it was earlier this calendar year. So we’ve just continued to build out more. And on the buy side in particular, our clients are looking to consolidate more, go with less partners, be more technology forward.

So that’s just one example I think of what how we’ve evolved from a workflow standpoint. The last thing I’ll point to is just continue to to invest in data. So over the last five or ten years, we’ve we’ve made a lot of effort to invest in private markets, private company data. We’ve got a very good asset there now. And deep sector data, if if everyone knows what that is.

So really being able to go deep in eight or nine different industries for the investment banks as part of their workflow.

Kelsey Chew, Financial Information Services Analyst, Autonomous: Got it. I do wanna circle back to the workflow conversation, AI investment, things like that.

Phil Snow, CEO, FactSet: Yep.

Kelsey Chew, Financial Information Services Analyst, Autonomous: But I also want to touch on some of the macro trends we’ve seen in the last two years.

Phil Snow, CEO, FactSet: Yep.

Kelsey Chew, Financial Information Services Analyst, Autonomous: I I think it’s fair to say both the buy side and the sell side have seen some headwinds over the last two years. And I was just wondering, you know, Phil, in your view, like, what’s the reason behind that slowdown in both of these markets, And what are you hearing from clients since the beginning of this year? Yeah. Kind of your expectation on when the current cycle would turn.

Phil Snow, CEO, FactSet: So maybe I’ll go a little deeper on the buy side. So, yeah, there’s been a lot of cost pressure on the buy side, not just in the last two years, but, you know, at least for the last decade. So there’s there’s been an ongoing effort from our buy side clients to upgrade their technology stacks, their data estates, you know, rely on less partners essentially, which is why we felt it was important to build out more workflow for them, as well as open up the platform. So I I don’t think those headwinds are going away, Kelsey. So I think the trick now, is just becoming that trusted partner for the buy side.

So I I still believe it’s there’s an opportunity for us to grow faster there. And we have the trust of our clients now. So we go into the buy side where it’s much more of a c suite top down, even a c CTO conversation. Let us come in, let us blueprint your entire workflow and technology and data stacks, and show how FactSet can overlay our product and our services, to help save you money essentially, be more efficient, and at the same time, have some tools that allow you to, you know, to to surface new ideas. The other big trend, obviously, for the buy side is just everyone needs to become multi asset class.

Right? So you’re either if you’re if you’re a large firm, you have to scale to do equity, fixed income, privates. If you’re a boutique shop and you’re very good at one thing, you you you probably have, you know, a a good opportunity to to have a successful business. I would say the stress is on the middle of the bell curve. So if you’re an average performing asset manager and you don’t have scale, you know, you’re gonna need some real help.

So FactSet can help, you know, each one of those segments, And but but I don’t expect those cost pressures to go away. What what what we’re really really focused on is coming in and talking to the firms as a technology company, helping them with that, and not just talking to firms around their market data budget, but talking about their technology budget, which is interesting because there’s been a lot of pressure on the market data budgets, you know, just how much people are paying for data. But there’s a great willingness from firms to spend on technology, especially right now, so pivoting into that has been a good one for us. On the sell side, you know, it’s if you followed us, it’s very cyclical. A lot of our sell side revenue is tied to headcount.

So we primarily junior bankers and also sell side equity research, but it’s mostly junior bankers. So, you know, we’re we’re the gold standard there as well. We almost have a cult like following with junior bankers who started their careers out of school, needed help. We were just talking. Like, you can literally pick up the phone and get a fax setter on the help desk in less than thirty seconds of the help desk.

That’s how I started my career at fax set. So that we still have that model. What we’ve been doing is just continuing to improve the offering for the junior banker to make them more efficient, but looking for new ways to get into the banks. It’s sort of different personas, different workflows, which we can talk about later. But we’re we’re a little bit at the mercy of the hiring of the banks, and and I think for the last two years, that’s been a bit slower for us.

I will just point out that, you know, our guidance that we have through the rest of the fiscal year, you know, we’re not relying on, like, some big resurgence in banking hiring. I think, you know, if if there’s going to be a lot more activity and more hiring, my guess is it’s gonna come later this year later this calendar year or potentially even next year.

Unidentified speaker: Got it. Super helpful. Yeah.

Kelsey Chew, Financial Information Services Analyst, Autonomous: So, Phil, when I look at the global market data fee pool for the last ten years and I look at FactSet’s performance in that ten years, I think it’s fair to summarize FactSet’s winning strategy for the last decade is being the right place at the right time. In terms of global market data people, I think the fastest growing client segments were investment management and retail wealth management. And FactSet is well positioned in those segments.

Phil Snow, CEO, FactSet: Yes. Yes. Yes.

Kelsey Chew, Financial Information Services Analyst, Autonomous: Kind of looking forward to the next five to ten years, where do you see the key growth pockets are within the global market data fee pool?

Phil Snow, CEO, FactSet: Yeah. So I I think I mean, I saw some some great work. I think it was late late last calendar year, but I think, you know, half of the revenues in our our end markets are gonna come from wealth, hedge funds, private equity, you know, private markets essentially. So that’s that those are the areas that I think have the most momentum in the spending. So that’s and and and that coincides honestly with sort of where we’re seeing the most growth within, you know, you know, within within the clients that we serve.

So wealth, we’ve done exceptionally well at over the last decade. We’ve taken a lot of market share. Out of the top 20 wealth managers by assets under management globally, we’ve knocked out 10 of them. So we we we’ve captured half of those, I’d say, in the last decade or so. We now have a hundred thousand wealth advisers, high net worth, ultra high net worth using, the FactSet, workstation and our, you know, our market data product and our adviser dashboard to sort of help them with their workflow.

But, frankly, we’re in a pretty narrow slice of wealth right now. So what I’m super excited about is the ability to go into natural adjacencies for facts that they’re in growth. So we see we see a lot of tailwinds in the wealth space. We’re beginning to see, I think, very healthy activity from the hedge funds, which are I think I’ve talked about this in the past. It’s, you know, it’s approximately 5% of FactSet’s business.

So it’s not a huge piece of our business today, but it’s one that sort of really consumes a lot of data and analytics. And we’re seeing some very healthy growth there based on the work we’ve done to to build out data and deliver it in new ways.

Kelsey Chew, Financial Information Services Analyst, Autonomous: Got it. You’ve mentioned private market data

Phil Snow, CEO, FactSet: Yep.

Kelsey Chew, Financial Information Services Analyst, Autonomous: A few times. So I I was just wondering if you can give us a quick update in terms of your investment there, your progress there, and how you’re thinking about your strategy to expand for those data assets.

Phil Snow, CEO, FactSet: So I there’s still a lot of opportunity there. The the main focus we’ve had, Kelsey, is to just improve dramatically the coverage and quality private company data on FactSet. So a few years ago, we covered about 3,000,000 private companies. I believe now we’re up to eight or 9,000,000. And and and the and the quality of the firmographics, the predicted financials, those are all markedly better.

So that that particular dataset is useful for lots of different types of users. So we can sell it to private private equity and venture capital funds. We can sell it to to banks. You know, asset managers and asset owners are increasingly interested in this stuff. So it’s it’s just a great dataset that we can, you know, monetize across most of our phone types, and we’ve we’ve become way more self reliant on on that.

Historically, we’d rely on a lot of third party data and just do a good job of integrating that, but we’ve stood a lot of it up by ourselves now to to be a higher quality.

Kelsey Chew, Financial Information Services Analyst, Autonomous: Got it.

Phil Snow, CEO, FactSet: Yeah. So there’s that. We also feed in a lot of very high quality private market data into our risk model. So I talked about risk for the buyer side. So if you have a multi asset class and you want a total portfolio view of risk, that’s one area where we’re monetizing it.

The last one is we acquired Cobalt. This was a few years ago. So that’s a very nice portfolio monitoring tool for gen for GPs, basically. So it’s a bit fragmented, honestly. I think there’s still a lot of opportunity there if we can bring that together as a more holistic strategy.

Kelsey Chew, Financial Information Services Analyst, Autonomous: Got it. Got it. Circling back to wealth as a vertical, obviously, FactSet has seen a lot of success in wealth. And over the last few years, I I would say that we’ve also seen accelerated market growth on top of that, FactSet’s market share gain surely. Yep.

So what would you attribute FactSet’s success to in this segment?

Phil Snow, CEO, FactSet: Yes. So I’ll talk a little bit about that product that’s on the wealth adviser’s desk. So if you’re let’s say you’re managing a hundred relationships, we do a very good job of integrating all of the relationships that you have as an adviser. Right? The families, the individuals.

But you can see that in real time the same way you could if you were an institutional buy side client. You can kinda see your portfolio and how it’s being affected by the market and all of the great flexibility we have for institutional clients, institutional buy side. You can group this however you want. Maybe it’s the custom groupings of of the firm you work for. You can put in whatever columns.

But it just gives you a very nice up to date flexible view of what’s happening with your clients today. All of the great market data facts it has about what’s happening in the markets or what’s happening with the individual securities that your firms hold, or you that your clients hold, news. So we’ve we’ve we’ve built something called adviser dashboard, which does a great job of organizing all of that for the adviser and giving them insights so that they can look like geniuses in front of their clients. So, like, Nvidia, I think, reported after the market yesterday. But if that’s one of the biggest holdings of your clients and they have questions about that, we’re gonna make that.

We’re gonna tee that up for the advisers so they’re not hunting and hacking through a bunch of stuff. So and and building in more AI capabilities. So that product is good. And, you know, the other thing that I think can be underestimated is it’s it’s very stable, and the fact that support has been good, and the speed of it is good. So when we went in and pitched this to the larger to, you know, to the to the to the wirehouses, in in some cases, they have thousands or tens of thousands of advisers that have used the same product for a long time.

So the decision to change the lives of that many people by the c suite was a big big decision, but we won hands down just in terms of speed, you you know, the stability of the platform, the service. It’s sort of nuts and bolts stuff, but it’s so important for clients. So that’s where we are today. And there’s like I said, there’s some so there’s a lot of natural adjacencies where we can cross sell into these clients that we already have and and capture more of them.

Kelsey Chew, Financial Information Services Analyst, Autonomous: You talked about introducing more AI features in the wealth vertical. Could you give us a little bit more detail on what kind of features or products that you’re thinking about?

Phil Snow, CEO, FactSet: Yeah. So maybe I’ll speak a bit more generally about our AI strategy. So, you know, there are there are many legs to the to the AI strategy. One is something we call Facts at Mercury, which will be the official version of that will be released soon. But, essentially, you can just come into the FactSet platform, whether you’re a wealth user or any type of user, and just ask in natural language, you know, what it is you want from FactSet.

So it could be, you know, like, give me a great summary of NVIDIA’s earnings call, you know, and and and and compare that to what they’ve said over the last few quarters, something like that. If you have a model that you’ve built out that has some custom codes in it, we can help you with that. 50% of the questions we get from clients around, like, how do I build a code in FactSet to do do this or that? So that’s foundational stuff. And I would say we’re also very focused on there there are kind of three legs to the foundation that any firm’s gonna need.

It’s how do I get something like, you know, high quality data from FactSet? Like, this has the good housekeeping seal of approval of FactSet. This data, I trust this data. How do I get the best of what’s out there on the web from firms like Perplexity, for example? And then for our own internal data, like, how do we query that, right, as a company?

So we’re very focused on those three legs, doing them within FactSet or doing them within the clients’ clients’ environment. So that’s foundational stuff. Next, we’re going deep on workflows for clients essentially. Right? So if you’re a wealth adviser, if you’re a performance analyst at a buy side shop, if you’re a junior banker, we know those workflows essentially well.

So we’re gonna build agents or capabilities that allow you to essentially take hours out of your week. So a good example for wealth could be, you know, there’s, you know, millions of portfolios that they have, and and every quarter or month, you wanna provide your your client a summary of how they’re doing essentially. So you can use automation and AI to to to do those types of things. So we’re excited about that. And I think the last thing is, you know, because of our open position in the marketplace, we’re very open to partnering.

There are lots of great startups that are out there that need data. They don’t have it. They’re they’re they’re not gonna be able to win, I think, unless they get access to high quality data from firms like FactSet. So working smartly with them where we can both create value in the marketplace and monetize monetize that is something we’re also focused on.

Unidentified speaker: Got it. Super helpful.

Kelsey Chew, Financial Information Services Analyst, Autonomous: And as we look to the medium term, I think in your most recent Investor Day, you’ve guided towards low double digit type of growth for the wealth vertical. So maybe just talk us through, you know, as you think about that low double digit type of growth, how much of that would be, like, market growth versus Gen AI product penetration versus continued market share gains?

Phil Snow, CEO, FactSet: Alright. So so the the continued market chain share gains are gonna be important. There’s still tons of large firms out there to go capture with the product we have today. So I imagine that’s gonna be a big part of the algorithm, then getting into these adjacencies. So, you know, I talked about us being the gold standard for performance, risk, attribution, and reporting for the institutional buy side, and we we can talk a little bit more about what that looks like.

But taking those capabilities now and applying those to the to the wealth vertical is is is really obvious to us and and something that, you know, we we can do. We know how to do it. It’s it’s a bit more of a scale thing because you’re going from, you know, hundreds or thousands of portfolios that an institutional firm might manage to millions, basically. Right? So so that that that’s the trickiest part of it.

But there’s a whole bunch of cross selling we could do to kinda help with that workflow, and we’ve begun to touch on that with some of these clients. The other is all the business development workflows that an adviser has. So, like, how do I find my next client? How do I prospect my next client? How do I how do I identify that client using AI probably?

Like, who’s gonna be the next one percenter, right, that I should be picking up the phone to? Or how can I create a proposal, you know, that really blows their socks off in terms of showing that we’re a differentiated phone? So we have we have partnerships in those areas and are working ourselves on some of these capabilities, but, you know, we’re so excited about that. And this is I mean, there is gonna be a generational shift in, like, you know, who the clients are here, basically. Right?

So think thinking about what, you know, a 20 or 25 year old today that might be coming into a bunch of money or earning a bunch of money will want, you know, as a product from from a wealth firm, that that could change dramatically. That could actually change, I think, faster than potentially what, you know, the lives of a portfolio manager or an investment banker looks like over the next five years. So we’re giving a lot of thought to that in terms of AI and and and and the mobile capabilities and the technology that firms will need to serve that next generation of of wealth clients.

Kelsey Chew, Financial Information Services Analyst, Autonomous: So it sounds like the key growth drivers in that low double digit growth is continued market share gains and expanding into adjacent workflows. Yeah. Absolutely. Got it. I guess in that context, maybe it’s helpful to talk through your thinking around total addressable market Mhmm.

In the wealth vertical and your current level of penetration rate in that vertical.

Phil Snow, CEO, FactSet: Yeah. So I think our, you know, I think our wealth business is now comfortably over 300,000,000 of ARR or, you know, 15% of FAXS. So, you know, I think there’s there’s continued doubles out there. I mean, I don’t know exactly how how how big the market is depending on how you define it, but it’s, you know, it’s gotta be billions of dollars essentially, right, of addressable market. And I think with the product we have today, we’re we’re we’re very well positioned to capture it.

So there’s more than enough out there for, I think, you know, many years and years of of of of capturing what’s out there today. It’s pretty fragmented, honestly, the the end markets for wealth and the and the solutions that that that people are using. And and a lot of the bigger firms have built a lot of things themselves over the years, understandably. So there is a great opportunity to go in and really partner with them. Mhmm.

Because you you’re seeing these these larger firms, they they wanna continue to build, but they don’t wanna do it all from scratch. Right?

Kelsey Chew, Financial Information Services Analyst, Autonomous: So Right.

Phil Snow, CEO, FactSet: The same way that we’ve become more modular where we try to create Lego blocks out of our own type products. So we can put them together. Partners can put them together. Clients can. You know, I I think there’s there’s certainly an acceptance now from these firms that, okay, particularly with cost pressures, we’ve gotta do what’s our core competency and what’s absolutely necessary.

But there’s a there’s a there’s a greater willingness, I think, to partner to help to build these custom ecosystems.

Kelsey Chew, Financial Information Services Analyst, Autonomous: I think that goes into the whole concept of total cost of ownership. Right? Yeah. Not just the cost to run, but it’s also the cost to build Yes. Some of these yeah.

So I think that’s a good, you know, kind of transition point into our next section where I want to dive into institutional buy side with you a little bit more. I think what will be really helpful is, for starters, if you can tell us a little bit more about FAXSA’s current market positioning within the institutional buy side from middle, back office Sure. Of their workflows.

Phil Snow, CEO, FactSet: Yeah. Yeah. So, again, in the middle office, the way we define it, right, I think we’re the gold standard for, you know, performance attribution risk and reporting. Years ago, we were a bit more of a desktop solution, and we had some batching capabilities. But one one trend I wanna kind of reinforce here for everyone is that we’ve become you know, positioning ourselves more as an enterprise provider essentially.

Right? So less solutions that you might just run off your desktop in batch or an individual users, but more of an enterprise solution that lets the entire phone can sort of run with some consistency while still providing that flexibility. So that’s been the stickiest and probably strongest part of our buy side offering for decades, honestly. And I’m not sure that many phones can touch us in that regard. So building that out to be more enterprise is important.

Adding on managed services. So what we’re seeing now is with these enterprise solutions is not just facts that coming in from a professional services standpoint and implementing the solution, but the client’s desire for us to kind of continue to work with them, to may maybe reduce some of their reliance on their internal head count with some of these processes. So and we and I can get into specific examples of that if you like. So that piece is very healthy. I’d say the focus there is just continuing to build out, you know, the multi asset class capabilities of that.

In the front office, FactSet has always had a very strong position with fundamental research and quant research. And I would say PMs that are a bit more quantitative themselves and wanna roll their own when it comes to looking at their own performance attribution and you know, what we’ve been very focused on for a number of years now is building more of a portfolio management system for the portfolio managers. We did a good job of that. So all the flexibility that FactSet offers for the middle office, put that on the front office where they’re gonna want consistency as a firm, and get the order and execution management capabilities in there for the PMs and the traders. So we had FortWare integrated.

The EMS are just doing great. And we partnered with LiquidityBook and some other firms for OMS. So we we we saw enough to give us the confidence that LiquidityBook, the great auto management system, doing very well in hedge funds, smaller asset managers, and in some cases, RIAs, and had a technology stack that we felt that we could scale over time that was multi asset class. We love the asset, the people, the success they were having, but and as importantly, the tech stack. So the if as we invest in this, we should be able to go upmarket, I think, and compete more for, you know, more front office market share.

And there’s there’s tons of it out there, I see it. Right? So very focused right now on the PM. The back office, we’ve been less focused on over the years, but what we what we are really investing in now is more of our own feed capabilities to kind of feed back office system than our own exchange data feeds as well. So that’s part of, you know, what we used to call CTS.

It’s now called data solutions, but that’s one of the faster growing pieces, not surprisingly, of FactSet, which is delivering data through APIs or to our clients to build their own systems. Traditionally, that was more end of day historical data for quant research, production, performance systems, but increasingly getting into pricing, corporate actions, reference data, and exchange data feeds gives us a great opportunity to feed more of these systems. And that’s what’s needed now. When you go in and pitch an integration to a client at the at the at the enterprise level, you gotta have both the on and off platform capabilities these days to to capture that.

Kelsey Chew, Financial Information Services Analyst, Autonomous: So as you talk through your positioning in front, middle, back office workflows, one one one question I was kind of thinking about is, you know, in your view, do clients want vendor diversification, or do they want sort of diversification, or do they want sort of a one stop shop type of solution?

Phil Snow, CEO, FactSet: They so many of the larger clients in particular, I think it’s smart of them. They they’re not gonna completely rely on one vendor. I think that’s too risky, frankly. I’m not sure any business we don’t do that. I mean, you know, any business needs backup, right, or or or choice some choice.

So I think what would go what we’re seeing is going from yeah. Maybe they were relying on three or four larger vendors and a long tail of 200 other data and technology firms. Like, let’s cut that in half. Let’s get to one or two of keystone primary vendors that we rely on and shorten that tail of other firms that we so we do sit side by side with some of our bigger competitors in these shops because, you know, we there are there are firms with very good capabilities. So I don’t I don’t think anyone can do everything.

And even if they did, I think it would be a bit of a risk, frankly. You just have too much leverage over the client, and the client could be, you know, from a disaster recovery standpoint, could be in hot water if they didn’t have backup.

Unidentified speaker: Got it. Super helpful.

Phil Snow, CEO, FactSet: So for us, you know, as we’re getting into some of these newer areas, we can easily pitch ourselves as the backup. You don’t have to come in and go, hey. We’re gonna replace this this thing that you’ve had for the last ten years, but you need backup. And if you believe in our strategy and where we’re going and you trust us, we can build into that over time for you.

Kelsey Chew, Financial Information Services Analyst, Autonomous: Got it. And who are your main competitors in the front, middle, back office workflows?

Phil Snow, CEO, FactSet: Well, I would say you know, the main competitors in our for the buy side, I I would say it’s primarily Bloomberg and and and BlackRock, Aladdin, right, which are both very good firms. But those are the two competitors that we see the most on the buy side. Yeah.

Kelsey Chew, Financial Information Services Analyst, Autonomous: Got it. Let’s talk about managed services. I was wondering, you know, who are really the target customers for managed services? Is it mostly smaller to medium sized asset managers who could benefit from, like, outsourcing a lot of these middle to back office staff costs, or how are you thinking about the the target audience?

Phil Snow, CEO, FactSet: I would say for now, it’s some of the bigger firms. So so where where we’re implementing these enterprise solutions for performance, you know, risk and reporting, where we’re essentially a lot of the asset services are talking to us, and we’ve had press releases on one of them where they’re outsourcing some of that to us for now, and I think there’s an opportunity to grow over time. But if we’re running, you know, this official performance for on behalf of their clients, they’re gonna wanna make sure, right, that we’re that we’re monitoring that very closely and and that we have a very, you know we have dedicated resources that are interacting with the client particularly during the reporting part. So at least that’s that’s one of the areas today that we’re seeing it, and then the other one is data as a service. I think as firms begin to look at their data estate, need to connect it better, need to clean it up, need to vectorize it for use with AI, that’s what we do for a living.

We can help clients with that, and many of them don’t have the capabilities. So we have a very important and good asset owner that that we’re working with with some of those capabilities. One we’ve had for a long time, which I should probably just remind everyone, is we do have a product called Portfolio Services that we’ve had for a long time, and that does address actually a pretty broad swath of clients. So we built that originally for if you had fixed income if you wanted to do fixed income attribution and performance and risk on faxes, that’s a lot hairier a problem to solve for a client than equity. And for equity, you need, like, a limited number of inputs to be able to do that analysis.

For fixed income, there’s so many different terms and conditions and things that you need to get right that if one or two of them are off, screw up your your analysis base. So what clients have been doing for a long time is sending us overnight their fixed income positions. We run it through a whole process, you know, with technology and people. We look for things that don’t look right for the client. We can suggest fixes, but they can come in in the morning then and run that process with a lot more confidence.

So that’s been a very successful business line for us and a and a great example of managed So all of this isn’t a huge part of FactSet. I do think when people hear managed services, people get nervous. They think low margin. For us, actually, it’s been sort of a p a sort of a required piece of an enterprise solution for our clients, And and I think we’re running that at a at a pretty healthy margin right now.

Kelsey Chew, Financial Information Services Analyst, Autonomous: Got it. But if if you’ve achieved great success in managed services Yeah. And are able to penetrate a large part of that total addressable market, with the profitability of this product changed then? Because maybe it means you need to hire a lot more incremental staff even if it’s in cheaper locations.

Phil Snow, CEO, FactSet: Yeah.

Kelsey Chew, Financial Information Services Analyst, Autonomous: Or how are you thinking about profitability of managed services?

Phil Snow, CEO, FactSet: Yes. So that’s I mean, our our client facing staff, Kelsey, has has sort of evolved greatly over time. We might have around 2,000 people that are facing off with clients, all the way from, you know, I’m picking up a help desk as a junior banker to, you know, like, someone’s running my official performance. So we’ve already solved that. So, know, we’re we’re a global company.

We have a lot of great employees here in The US, but we also have employees in other time zones, which is super helpful for these round the clock processes that the people are running. And we can, you know, we we can hire people, you know, with different talents in different places very easily. So we already have, I think, this solved for and and and have a way to to to find the talent that we need.

Kelsey Chew, Financial Information Services Analyst, Autonomous: Got it. Yep. And in terms of your thoughts around total addressable market for managed services?

Phil Snow, CEO, FactSet: Again, I think I don’t have a I have a number for you, but I but I think I think it just goes hand in hand with some of these enterprise solutions. So I would just sort of tie it to to the addressable market for those. So

Kelsey Chew, Financial Information Services Analyst, Autonomous: Got it. Got it. And in terms of just key growth drivers in your mind for institutional buy side overall over the next five to ten years, outside of managed services, are there other growth drivers you’d like to Yeah.

Phil Snow, CEO, FactSet: I mean, it’s a great So I I do think we need to capture more front office users. So how do we get more PMs and traders excited about using FactSet? I think we’ve got a great story there. We’re you know, I’m have a very competitive product.

The feeds that we spoke about Yeah. Is going to be very important. And then I I think I’d point to the technology. So everyone’s gonna need a winning AI strategy. Right?

Even if it’s gonna take longer than people think. You know, I I think firms understand that this is a megatrend, and they’re at, you know, serious risk of of of of not of not outperforming their competitors if they don’t have a strategy there. So I’m very confident that we’re, you know, in a good position here, probably ahead of most of our competitors. At least that’s what that’s the feedback I’m getting from from clients and and and analysts. You know?

So that keeping that lead and getting the trust of clients and working with them on their technology stack, whether they’re buy side or other firms, is gonna be important piece of our success. So

Kelsey Chew, Financial Information Services Analyst, Autonomous: as you think about the AI strategy of both buy side and sell side clients and for FactSet, do you think in the future this is sort of table stakes for everyone, or this is gonna be one of the main competitive advantages for FactSet?

Phil Snow, CEO, FactSet: Well, I I don’t think it’s table stakes. I I I do think everyone’s going to need a strategy, but I don’t think it’s a simple thing, right, that that that you can get right. So right now we’re very focused on we built the foundation on a lot of very good capabilities. We’re focused now on agentic workflows. Right?

So how can we begin to stitch these together for our clients and ourselves in a way that just really creates a lot of efficiency for clients? So that you know, I was at a conference an AI conference in the last few weeks, and I think with with a lot of financial services firms like yours, I I think everyone realizes the importance of this. I don’t I don’t think anyone has, like, a massive degree of confidence of where it’s going even in, like, eighteen months out, everyone just knows they gotta be working hard. They also know it’s a very it’s a it’s a massive change management problem. I think half of the problem is change management.

It’s getting people comfortable with the tools, using the tools, and working together and not feeling like they’re in a threat threat condition, basically, if they begin to use these things.

Kelsey Chew, Financial Information Services Analyst, Autonomous: Got it. And one of the main products you launched that utilize GenAI is Pitch Creator.

Phil Snow, CEO, FactSet: Yeah.

Kelsey Chew, Financial Information Services Analyst, Autonomous: So maybe tell us a little bit more about how you think about the positioning of that product. Yeah. How or, you know, you talked about enhancing efficiencies for, you know, investment banks. Like, maybe the right I’m not sure the right way to think about this is, like, how many junior bankers or, like, how many junior banker hours can Pitch Creator really replace and talk through the pricing strategy for that product as well.

Phil Snow, CEO, FactSet: I I I do think and everyone’s like, what’s the ROI on on AI? The easiest thing to do is just measure the hours. Like, how many hours is it taking out of somebody’s week? And that’s the way to think about it. I think we’re pretty far away, at least in our industry, from front office professionals getting replaced by it now.

Right? I think it’s going to be who’s my agent or set of agents that even if you’re an individual contributor, you’re a manager now. You’re managing these agents, basically. Think of them like employees that need training. They’re gonna make mistakes and work with them.

So PitchCreator is is really just designed to take hours out of a junior banker’s week. So whether or not the bank decides to give those hours back to the junior banker or just make them, like, do more stuff, yeah, I don’t know. That’s not our that’s not our that’s not our job to figure that out for them. So I think they’ll just probably be beyond that. They’re gonna be asking for more.

But we’ve created some great we already had a massively good product that was already automating a lot of stuff for them. This is just the next obvious leg of it. But automatically creating charts, tables, just all of that work that a junior banker has to do to bring together the information of the sources. Just make that easy for them and give them the confidence that they’re putting the right stuff in front of their bosses. Right?

Logo intern is this we we just acquired it’s a very small company, but the odd I don’t know if any of you have done this, but the arduous task of of placing 50 logos on a PowerPoint slide, I can’t do that. But that that was just a nightmare probably for a lot of people. So it it it’s little things like that, but when you put them all together into a workflow and it adds up, it’s good. So we have you know, we’ve already sold a few a couple of, I think, important clients with this, and I believe we have as many as 50 ongoing trials and evaluations of PitchCreator. So I would say it’s the most it has it’s the skew that has the most momentum right now in terms of the deep workflows that we spoke about.

But I think it just proves to me that we’ve, you know, that that that we’ve done a good job.

Kelsey Chew, Financial Information Services Analyst, Autonomous: And it’s an enterprise sales model. It’s not fee based?

Phil Snow, CEO, FactSet: Absolutely. Yes. So sorry. Didn’t address that part. Yeah.

It’s an enterprise model, so it’s it’s it’s an add on. Like, typically, if you’re a bank, you’re gonna subscribe to a certain number of seats over a multiyear period. In in most cases, I believe this is gonna be positioned as a value an additional value.

Kelsey Chew, Financial Information Services Analyst, Autonomous: Got it. And the pricing for Pitch Creator, or it’s kind of client by client?

Phil Snow, CEO, FactSet: I think I I I think the pricing of all of this stuff is fluid. I think

Kelsey Chew, Financial Information Services Analyst, Autonomous: Got it.

Phil Snow, CEO, FactSet: What a lot of clients want is some certainty around budget. So I think we’re probably just pitching, like, here’s a band of of usage or users that you can have for for this amount of money. I mean, I have heard from some clients that they wanna sort of try before they buy and a little bit more than a trial, but pay on a usage basis. Not not not the sell side, but sort of smaller buy side shops. So we’ve done a lot of work to sort of build the infrastructure to get to a place where we can begin to charge our clients if they want that, you know, on a with a usage based model, which I which actually I think is is a great idea.

Kelsey Chew, Financial Information Services Analyst, Autonomous: Got it. Well, speaking of the sell side and investment banks in general, where are we in the cap markets recovery cycle? I think we’ve certainly seen a lot of mixed signals

Phil Snow, CEO, FactSet: Yeah.

Kelsey Chew, Financial Information Services Analyst, Autonomous: Since the beginning of this year. So just curious to get your thoughts.

Phil Snow, CEO, FactSet: I think yeah. Your guess is as good as mine, but I think I think mixed signals is right. So I’m I’m not sure the banks have really changed sort of their hiring plans. So I I it feels to me that that’s sort of pretty stable. In terms of activity, like, you hear, like, hey.

It’s the slowest it’s ever been to, hey. We’re still doing great, and we haven’t slowed down at all. So I I don’t think there’s a, like, a a rising tide lifting all boats yet. Know what mean? So I think the great thing about FactSet is we have a very good portfolio of stuff.

Our, you know, our banking business is, you know that junior banking business is not the biggest piece of FactSet by any means. It’s Right. So, you know, it it does sort of move up and down with these cycles. But we’re, you know, we’re very consistent. We’re very sticky.

We’re not the type of product that I think can easily be sort of canceled. You know? So so so that’s good. You know, I’m optimistic that, you know, towards the end of this calendar year, maybe things pick up, but it it it feels like it’s sort of consistent with how it’s been for the last twelve months right now.

Kelsey Chew, Financial Information Services Analyst, Autonomous: Got it. And as we think through that sell side ASP growth reacceleration, I guess outside of a cap market’s upcycle, are there other key growth drivers? Yes. Yep. Maybe GenAI and Pitch Creator is one of them.

Yep. Talk us through the other key growth drivers that

Phil Snow, CEO, FactSet: you’re So I spoke about opening up the platform and creating five o blocks. So there are lots of other personas of the banks we can get into, like sales and trading, the senior bankers. So I think we’re very focused on capturing the mindshare of the senior bankers and sort of thinking about their workflow, AI can play, I think, a very good role in that. You know, we have great examples of where we’ve sold more feeds to the banks now to feed other systems, where we’ve taken components of FactSet and plugged it into their CRM environment. So if Salesforce or some other CRM is the main workflow tool for a user, we can put pieces of FactSet in there that are interesting.

So we’ve we’ve been very focused on that.

Kelsey Chew, Financial Information Services Analyst, Autonomous: I think SALSA ASV in general is more cyclical for FAXSA versus SALSA ASV. Yeah. So how should we think about a normalized medium term ASV That’s a

Phil Snow, CEO, FactSet: good question. I’d say if you look over the last ten years, I think we were probably high single digit, maybe a bit further back, and it’s probably mid single digit right now could even be low single digits. So I think we’re probably, you know, close to the bottom of where it’s been from a median or average standpoint. So if you believe in the past and and we do get, you know, some stronger capital markets, I think it it would make sense to me that it would go go back to the median or average of where it’s been historically.

Kelsey Chew, Financial Information Services Analyst, Autonomous: Got it. I know you have already sized kind of Gen AI, ASV growth contribution in fiscal year twenty five, which is 30 to 50 bps. Have you kind of thought about the medium term targets in terms of both ASV and margin impact from Gineai investments?

Phil Snow, CEO, FactSet: We’re going through that now. So this is you know we’re an August company, so this is typically when we refresh our three year plan. So I think we’ll take stock of where we landed this year versus where we thought, and and we’ll have we’ll have more to talk about there probably in the coming quarters.

Kelsey Chew, Financial Information Services Analyst, Autonomous: Got it. So circling back to our conversation around data assets for FactSet, I think we’ve talked a little bit about your investments into private markets. And in the past, you’ve also talked about more investment into real time and deep sectors. So just wondering if you can give us a quick update on progress made in those data assets and kind of your strategic thinking around which area or which categories are you most interested in investing in for

Phil Snow, CEO, FactSet: the future? I think real time is a great opportunity. So there’s billions of dollars of addressable market there that FactSet historically has not participated in. It’s growing really quickly. We’re we’re getting some important wins, I think, both some larger firms as well as, you know, a steady diet of smaller companies.

You know, I think there are approximately two fifty venues globally that we would get data from, and we have probably 80 or 90% of those that we’re getting direct ourselves now and not through third parties. So finishing up that work will be important essentially to to having the ability and the rights to to go out and monetize this more aggressively. We’ve got a crack team there, so we’ve hired some very good people that have done some of this historically. So I have a lot of confidence, sort of a no regret to invest and and get a high ROI real time. And that can be applied across so many of our clients.

Deep sector has been a bit more of, at least initially, very focused on how do we retain and expand our junior bankers because because there has been consolidation in that part of the industry, and we didn’t have a deep sector. So deep sector is imagine if you’re a big banker and you wanna look at The Americas, you’re thinking about a merger between two regional banks. We’ll now show you, like, all the different branches, all the data associated with the branches, and you can do a merger model that way. Like, we didn’t have that stuff historically, but same thing with MINDs. It doesn’t matter.

So it it’s a very, very granular data, and it’s probably been the the biggest data initiative we’ve ever had at FactSet to build that. We started in 02/2019. It’s not it’s not something you can knock out in a few years, but we’ve made significant headway. It’s helped us with renewals. It’s helped us capture some new clients, I believe.

So I you know, we might be halfway through that, but you don’t have to complete this essentially to monetize it. So there’s still a lot of work to to be done there. And I do think now that it’s reached a bit of a critical mass, we can begin to monetize that effectively with with hedge funds and with asset managers. We’ve not sort of focused on the buy side in terms of monetizing that because it was such a sell side focused product. So I think there’s and that’s the the way the world is going is you’re needing more and more granular data to to compete and come up with ideas, right, you know, within the industry.

Kelsey Chew, Financial Information Services Analyst, Autonomous: Definitely. And I would say data solutions or CTS is a key growth driver of many of your competitors as well. And I think, you know, some of the usual suspects like LSAC, S and P, they just have a much larger data solution type of business.

Phil Snow, CEO, FactSet: Yep.

Kelsey Chew, Financial Information Services Analyst, Autonomous: So maybe talk us through your strategy to gain share in that market.

Phil Snow, CEO, FactSet: Yeah. So first of all, it’s, yeah, it’s building a great product. It’s a bit of an advantage to doing it, you know, more recently because you can always use the latest tech. Right? You’re not relied reliant on a legacy tech stack.

A lot of what we’ve done for real time, we did we did cloud first essentially, which has helped with, I think, speed and reliability and so on. Some of it’s just, you know, you need it for the enterprise pitch. So I think it’s we’re we’re new into the space. We’re excited about it. I think we have the trust of our clients, and there’s a great appetite to to have some alternatives, which we’re excited about.

Kelsey Chew, Financial Information Services Analyst, Autonomous: Got it. And talking about the competitive landscape, I think recently, there’s been a lot of conversations around the ongoing developments for the competitive landscape between FactSet, LSAC, S and P. So maybe just talk us through some of the latest trends you’re seeing or hearing from customers. I think based on the market data that we can see from Burton Taylor, it seems that LSAG has been able to hold share in the last three years versus being a shared donor in the last ten years. So just talk us through what you’re seeing

Unidentified speaker: there.

Phil Snow, CEO, FactSet: Well so, I mean, we don’t compete with they they do lots of stuff that we don’t do. So I think I think the the piece of the business where we compete with them is primarily the wealth space, and I think our results speak for themselves there. So that’s that’s primarily where we see LSAG, at least today from a competitive standpoint. I mentioned the competitors we see on the buy side. And then typically in banking, you know, we see S and P market intelligence.

And then in private equity, venture capital, corporates, I think there’s a there’s a mixture of of firms in there. So I think we’re doing great from a competitive landscape and taking market share, you know, for for the pieces of the market that we address today. And I’m super confident in our product. I mean, the wealth product is is killing it. All the work we’ve done for the junior bankers, I think we still have that cult like following.

I think we’re still regarded as sort of the gold standard there as well. So I’m I’m not concerned about our competitive position. And on on the buy side, I do think like, to compete effectively on the buy side because of the consolidation, you’ve gotta have the portfolio analytics story. You can’t, like, have a a and now you can’t just have a piece of the business, which is the back office, the front office, or the middle office. So, you know, you don’t even I don’t think you can get in the door seriously as being one of those keystone, you know, firms that a client wants to work with unless you have capabilities in all three of those areas.

Kelsey Chew, Financial Information Services Analyst, Autonomous: Got it. Maybe let’s just end on a capital allocation question. Maybe talk us through your latest thinking on m and a’s, what are some of the key areas you’re interested in, and any financial criteria for these targets.

Phil Snow, CEO, FactSet: Yes. So our strategy hasn’t changed much there over the years. Right? So FactSet’s strategy is to to to tuck in acquisitions of data and technology. The the advantage of that is it’s helped us keep a cohesive ecosystem, right, and and not have a really fractured business that’s not well integrated.

So that’s served us well and I think will serve us exceptionally well now with AI. So we’re we continue to look at things in the wealth space, obviously. Private markets is interesting. Anything regarding the feeds business that we spoke about, those are some of the obvious areas. But if we see something that we think, you know, is good for FactSet, like QSIP, which was, you know, a bit bit bit a sort of an outlier, we’re ready to pounce and execute on it.

And we do have now the ability to do something, you know, more aspirational if the right asset emerges.

Unidentified speaker: Got it. Got it. Super helpful.

Kelsey Chew, Financial Information Services Analyst, Autonomous: Thanks so much for sharing with us today, and thanks everyone for joining us.

Phil Snow, CEO, FactSet: Great. Thanks, Kelsey.

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