FactSet Research Systems Inc (FDS) Q3 2025 Earnings Call Transcript

FactSet Research Systems Inc (NYSE: FDS) Q3 2025 Earnings Call dated Jun. 23, 2025

Corporate Participants:

Unidentified Speaker

Frederick Philip Snow — CEO & Director

Goran Skoko — Executive VP, Chief Revenue Officer and MD of EMEA & Asia Pacific

Helen L. Shan — Executive VP & CFO

Kevin J. Toomey — Head of Investor Relations

Analysts:

Unidentified Participant

Shlomo Rosenbaum — Analyst

Alexander Kramm — Analyst

Faiza Alwy — Analyst

Ashish Sabadra — Analyst

Owen Lau — Analyst

Andrew Owen Nicholas — Analyst

Surinder Singh Thind — Analyst

Craig Anthony Huber — Analyst

Toni Michele Kaplan — Analyst

Brendan J. Popson — Analyst

David Motemaden — Analyst

Scott Wurtzel — Analyst

Russell Quelch — Analyst

Keen Fai Tong — Analyst

Presentation:

Russell Quelch — Analyst

Good day and welcome to the FactSet third quarter earnings call. At this time all participants are in listen only mode. After the speaker’s presentation, there will be a question and answer session. Instructions will be given at that time. As a reminder, this call may be recorded. I would like to turn the call over to Kevin Toomey, Head of Investor Relations. Please go ahead.

Kevin J. Toomey — Head of Investor Relations

Thank you and good morning everyone. Welcome to FactSet’s third fiscal quarter 2025 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 and a replay of today’s call will be available on our website. After our prepared remarks, we will open the call to questions. 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. Discussions on this call may contain forward looking statements. Such statements are subject to risks and uncertainties that may cause actual results to differ materially from results anticipated in these forward looking statements. Additional information concerning these risks and uncertainties can be found in our forms 10K and 10Q. 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 and in our earnings release issued earlier today, both of which can be found on our website@investor.factset.com during this call, unless otherwise noted, relative performance metrics reflect changes as compared to the respective fiscal 2024 period, also consistent with the last quarter.

Please note that starting fiscal 2025, FactSet is reporting organic ASV rather than organic ASV plus professional services to focus on the recurring nature of our revenues. Joining me today are Phil Snow, Chief Executive Officer, Helen Shan, Chief Financial Officer and Goran Skoco, Chief Revenue Officer. I will now turn the discussion over to Phil Snow.

Frederick Philip Snow — CEO & Director

Thank you Kevin and good morning everyone. Thanks for joining us today. Before we discuss our Q3 results, I just want to take a moment to recognize an important milestone for FactSet and for me personally. Earlier this month we announced my decision to retire after 30 years with FactSet and the past decade as CEO. It’s been a privilege to spend my career here working alongside such a talented, collaborative and mission driven team. Together we’ve expanded our data and workflow capabilities, deepened client relationships and more than doubled our revenue over the past 10 years, positioning FactSet as a trusted global enterprise leader Empowering smarter data driven investment decisions.

It’s been an incredible journey and I’m proud of all we’ve accomplished together. Looking ahead, I’m even more confident in FactSet’s future. I’m also pleased to share that Sanok Viswanathan will become FactSet’s next CEO in early September. Sanok brings over 25 years of global leadership experience in financial services and technology, most recently at JPMorgan Chase, and he has a strong strategic mindset and a proven track record of delivering technology driven growth at scale. As FactSet prepares for its next chapter of leadership, I’m proud of the solid foundation we’ve established built on innovation, client trust and industry leading data and workflow solutions.

I’m confident Sanuk’s leadership will guide FactSet through its next phase of growth and look forward to working with him closely to ensure a smooth and thoughtful transition. With that, let’s turn to our third quarter results. In the third quarter we achieved organic ASV growth of 4.5% year over year, fueled by recent wins in wealth, dealmakers and partnerships. We also delivered an adjusted operating margin of 36.8% and adjusted diluted EPS of $4.27. As we previously indicated, we anticipated stronger growth in the second half of this fiscal year and we’re pleased with our Q3 performance. These results reflect the successful execution of our Enterprise Solutions strategy and underscore our commitment to helping clients lower their total cost of ownership.

We continue to see positive trends in ASV retention and I am pleased to report that both expansion within existing accounts and new business accelerated in the quarter. As you may recall, the fourth quarter is seasonally our highest ASV of the year and with a healthy pipeline and growing momentum, we are well positioned for a strong close to the fiscal year. Accordingly, we are reaffirming our FY25 guidance. Helen will cover our financial results and guidance in more detail later in her remarks. Turning to third quarter results, ASV retention remained strong at over 95% while client retention was at 91%.

Our client base grew to over 8,800, driven by strong demand from corporate wealth management and buy side clients, including those added through the Liquidity book acquisition. Our user count rose to over 220,000 primarily reflecting growth among wealth management users. Starting with our performance by region in the Americas, Organic ASV increased by 5%. The strength of this quarter was driven by higher banking and asset manager retention coupled with higher demand in wealth, hedge fund and corporates. In EMEA, organic ASV growth was 2%. We saw improved retention in banking and wealth, however this was offset by lower contributions from the annual price increase and buy side headwinds.

In Asia Pacific, organic ASV growth increased 7% primarily driven by higher retention in the banking sector. This growth was partially offset by the reduced pricing uplift and asset owner headwinds. Now turning to our results from a firm type perspective, Wealth Organic ASV maintained its double digit growth pace in Q3, marking a second consecutive quarter of acceleration. We continue to capture market share by displacing incumbent providers with new business sales nearly double the number of new logos versus a year ago. Our product portfolio demonstrated broad based strength among both new and existing clients, specifically a large seven figure renewal and twice as many six figure wins as a year ago.

Notably, we are growing FactSet’s presence in wealth by selling more data feeds and digital solutions to clients who already use our industry leading desktop solution across their organization. The attach rate for off platform products continues to rise and so far in FY25 we are capturing attach rates that are around 1.5x what we saw in FY24. Within dealmakers, this quarter’s banking gains were largely driven by the favorable comparison to last year’s third quarter which included the impact of the UBS Credit Suisse merger. Over the past three years our seat count has grown considerably as we continue to displace incumbent providers as clients increasingly choose our best in class banking solutions.

We’re also encouraged by meaningful improvements in retention highlighted by the signing of several multi year deals, including a favorable outcome on a large global banking renewal. These long term agreements reinforce FactSet’s position as a trusted enterprise partner and create new opportunities for future growth. While it’s still early to assess summer hiring trends, preliminary indications suggest they may be in line with last year’s levels. We’re optimistic about our ability to expand the footprint of FactSet services to drive add on sales beyond the workstation, we continue to execute on our robust Pitch Creator pipeline And within just six months of launch we now have 10 signed deals and over 45 opportunities with large banking clients in active trials and others in later stages of commercial negotiation.

In addition to Pitch Creator, our recently acquired Logo Intern solution is proving to be a valuable utility tool for clients and strengthens our position in banker automation. Together, these tools are creating greater workflow efficiencies driving adoption, client conversations and closes. Outside of banking, PEVC remains a bright spot with Q3 marking our fourth consecutive quarter of accelerating growth driven by the strength of our private markets offering and Cobalt corporates also contributed meaningfully, supported by strong tailwinds from our Owen business which drove increases in both ASV and seed count. Since the acquisition of Irwin earlier this year, nearly half of new corporates ASV has come from competitor displacements.

This success validates our land and expand strategy, using investor relations users as an entry point to deepen relationships within the office of the cfo. Within the institutional buy side, we had several positive developments this quarter. We secured strategic wins for our front and middle office solutions and improved retention with our asset management clients. One example is a new IRN 2.0 deal with a major US asset manager choosing us to replace their legacy research management system thanks to our advanced dashboard and Genai capabilities. Our managed services offering is also opening new growth channels as we replaced several incumbent vendors at a major asset manager who is now fully aligned with FactSet.

Hedge funds were another area of strength. With growth accelerating due to new fund launches, greater adoption of the workstation and data products and the positive impact of our recent street account price increases, we expect hedge fund demand to continue in fiscal 2025. At the same time, we face several headwinds. Reduced contribution from the annual price increase offset some of our gains. Additionally, as clients, especially asset owners, continue to optimize costs and streamline their vendor relationships, we are seeing more pressure in these areas. We are committed to leveraging our innovative solutions and client relationships to drive future growth for partnerships in cgs.

Growth continued in the third quarter driven by a significant real time win and strength in the new issuance markets for cgs. New business and expansion activity remains strong across multiple partner types. Looking ahead, we expect this positive trajectory to continue into the fourth quarter. In summary, I want to reiterate that our number one priority is to drive top line growth. The breadth and quality of our opportunities give us visibility and confidence as we look ahead. We are well positioned to deliver in Q4 and meet our full year fiscal 2025 guidance. The majority of the pipeline for the remainder of the year is is driven by the institutional buy side.

As noted earlier, the demand for middle office solutions in particular performance and managed services is high as clients look for longer term help as they upgrade their tech stack. Our innovation with using Genai in our buy side solutions is supporting strong client engagement and opportunities as well. Demand for our data solutions is expected to be a notable contributor to our Q4 results. The need for fundamental and estimates data remains high, in part driven by hedge funds and wealth. Engagement on real time and benchmarks has grown as clients look for modern technology, quality and stability and these solutions represent more than a third of the data opportunities.

Wealth remains our growth engine. Our success in displacing incumbents and expanding from the Advisor desktop into adjacent areas such as APIs, widgets and data feeds is resulting in meaningful client demand. Our wealth pipeline is strong, spanning desktops and real time data and a growing demand for more sophisticated PLC tools where FactSet has deep industry credibility, giving us greater confidence to extend our success both geographically and within the wealth home office. Our teams are capitalizing on FactSet’s first mover advantage in Genai, executing our go to Market strategy to deliver innovative solutions to that streamline workflows and help clients unlock greater efficiencies.

With the strong foundation we’ve built, we are well positioned to fulfill our mission of supercharging financial intelligence. I will now turn it over to Helen to take you through our third quarter performance and FY25 guidance in more detail.

Helen L. Shan — Executive VP & CFO

Thank you Phil and hello to everyone on the call. We anticipated a better performance in the second half and I’m pleased to report that the third quarter showed strength in both financial and operating results. As Phil mentioned, our pipeline is solid, positioning us well for continued ASV growth to finish out the year. Given this momentum, we are reaffirming our guidance for FY25. I’ll share more detail shortly, but let’s first review the quarterly results. Organic ASV grew by 22.6 million in the quarter, representing a 4.5% increase year over year. We successfully captured an additional 11 million in our annual price increase, primarily in the EMEA and Asia PAC regions.

This amount was lower than prior year and reflects the anticipated headwind of lower CPI in our pricing. GAAP revenues increased 5.9% year over year, reaching 586 million. When we look at organic revenues, which exclude foreign exchange movements and impact from acquisitions or dispositions, during the past 12 months we saw a 4.4% increase, reaching 577 million for our geographic segments. Organic revenue grew by 5% in the Americas, 2% in EMEA and 6% in Asia Pacific. Now turning to expense, GAAP operating expenses, which include one time non recurring items, increased 11.7% year over year to 391 million.

This was primarily driven by both higher employee and technology expenses. On an adjusted basis, operating expense grew 10.6%. Employee expense increased 12% compared to the same quarter last year. This reflects our return to a normal bonus accrual and excludes a one time payroll tax adjustment in the third quarter of the prior period. These two factors account for approximately two thirds of the year over year change. Our workforce has grown by 2.6% year over year, strengthened by our strategic acquisitions of Irwin and Liquidity book earlier this fiscal year. From Q2 to Q3, we have managed down our headcount in our core business as we continue our disciplined approach of self funding investment priorities through enhanced productivity and operational efficiency.

Technology related expenses increased 21% reflecting the higher amortization of internal use software and our ongoing investment in generative AI capabilities. As previously communicated, we are strategically focusing our growth spend on technology to drive market leadership through product innovation. These costs now represent approximately 11% of revenue this quarter up slightly from 10% from the same period a year ago. We have managed the two remaining large spend categories effectively. Third party content costs increased 1% year over year now representing under 5% of revenue, about 20 basis points lower than the prior year. Our real estate and related facilities expense remained steady year over year at just under 3% of revenue, also 20 basis points lower as compared to last year.

For a more detailed breakdown of our expense progression from revenue to adjusted operating income, I encourage you to reference the appendix in today’s earnings presentation. Moving to our margin performance, our GAAP operating margin was 33.2% lower by 350 basis points compared to a year ago. Adjusted operating margin was 36.8%, a decrease of 270 basis points year over year. These figures reflect the normalization of our bonus accruals this year. The one time favorable tax adjustment in the prior year and and increased technology expense. SGA as a percentage of revenue is approximately 20 basis points higher year over year on a GAAP basis primarily due to increased compensation expense and professional fees related to our acquisitions.

On an adjusted basis excluding one time items, our SGA improved by about 15 basis points demonstrating our ongoing commitment to operational efficiency. Our GAAP effective tax rate in the third quarter was 17.5%, an increase from 17% we saw in the same quarter last year, primarily reflecting lower excess tax benefits from our stock based compensation. Regarding earnings per share, our GAAP diluted EPS was $3.87, a decrease of $0.22 or 5.4% versus $4.09 in the same period last year. Adjusted eps decreased by 10 cents, or 2.3% to $4.27. These results reflect our continued investment in the business, which drives our revenue growth.

Our EBITDA was $236 million, a decrease of 1.7% compared to the prior year period, reflecting lower net income. Most notably, our free cash flow, which we define as cash generated from operations minus capital spending, grew to 229 million in the third quarter, up 5% over the same period last year. This improvement was driven by stronger operating cash flows, highlighting the underlying financial strength of our business and our ability to increase cash generation even as we invest for future growth. Turning now to the use of capital for shareholder return in the quarter, we repurchased approximately 184,000 shares for around $81 million at an average share price $438.45.

At the end of the fiscal quarter, we had $106 million remaining under the $300 million share repurchase authorization our Board approved last September. Additionally, on June 17, 2025, our Board of Directors approved a new share repurchase authorization of up to $400 million, which will become available on September 1, 2025. On June 18, 2025, we paid a quarterly dividend of $1.10 per share to holders of record as of May 30, 2025. This represents a 6% increase from the previous quarter’s dividend and marks the 26th consecutive year of dividend increases on a stock split adjusted basis. When we combine our dividends and share repurchases.

We have returned $415 million to our shareholders over the past 12 months, demonstrating our ongoing commitment to delivering shareholder value. During the quarter, we refinanced the credit facility that was established three years ago for the CGS acquisition. Our new credit facility includes a $500 million funded term loan and a billion dollar undrawn revolver, providing us with additional liquidity and balance sheet flexibility to support business growth. We continued our disciplined approach to debt management by repaying $62.5 million of term loan principal consistent with our previous pace and ended the quarter with a gross leverage ratio of 1.7 times.

Finally, the second half of fiscal 2025 is showing improved results with third quarter organic ASV growth accelerating as we successfully meet client demands. Our visibility into the pipeline gives us confidence in Q4 performance and we are reaffirming our previously issued guidance. We are making targeted investments in our strategic priorities, focusing on differentiated products and internal efficiency initiatives. We anticipate Q4 to be the highest quarter for expense this fiscal year, with investments concentrated on our Gen AI and infrastructure projects alongside go to market initiatives that are already strengthening pipeline volume and quality. In conclusion, we we remain committed to driving ASV growth, maintaining operational focus and allocating capital wisely to enable FactSet to deliver sustainable long term value to shareholders.

On behalf of the executive leadership team, I would also like to extend my sincere gratitude to Phil for his leadership and contributions. While many of us know Phil for his love of impossibly spicy foods and his deep knowledge of 80s rock bands, his unwavering focus has always been on two things, his family and factset. On a personal note, I’ve learned much from his open leadership style and truly valued our partnership through both challenges and successes. And we are enthusiastic about welcoming Sanuk in September as he leads FACTSET into its next chapter of success. Having been a FactSet client himself, he brings a unique perspective that will further help us enhance our client first approach.

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

Questions and Answers:

operator

Thank you. If you’d like to ask a question, please press star 11. If your question has been answered and you’d like to remove yourself from the queue, please press star 11. Again. Our first question comes from Shlomo Rosenbaum with Stifel. Your line is open.

Shlomo Rosenbaum

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

Frederick Philip Snow

It’s Phil, thanks for the question. Yeah, we honestly we’ve not seen that much difference, I would say. You know, this fiscal year, obviously we had in April, you know, the markets were dynamic, so we saw maybe a couple of weeks of clients probably waiting to kind of see how things played out. But I think the main takeaway, I would think for you, is that many of our clients are going through these multi year transformations in terms of the technology and data and FactSet is just in such a great place to support them with that. And that’s certainly what we’re seeing in the pipeline for the rest of the year.

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

Goran Skoko

Hi Shlomo. So I think we see a little bit more positivity in client reactions over the past, over the past quarter. So there is some momentum there. I would attribute most of the, you know, momentum changing in our favor is to our products resonating. You know, I think we’re, we’re focused more on our data solutions in general and I think we are, we’re seeing that pay dividends and we do expect, you know, significant boost from the, you know, from, from our buy side offerings in the, in the fourth quarter. Our gen solutions have also helped us generate momentum, particularly I would say pitch creator and our conversational API as well as our offerings on the buy side in that regard.

So I would attribute it mostly to execution and really the product line maturing in some of the areas that are really helping us.

Scott Wurtzel

Thank you.

operator

Thank you. Our next question comes from Alex Cram with ubs. Your line is open.

Alexander Kramm

Yes. Hey guys, not sure if this is just a follow on to the first question, but maybe a little bit more specific on the 4Q outlook. If I, if I look at the guidance range, which is obviously unchanged, I think to get to the low end you need to basically do what you did in the last two years in the fourth quarter, I think mid $50 million or so range. So I think the one thing that you said earlier in your prepared remark was banking was kind of in line with last year. So maybe you touched on this a little bit just now, but maybe relative to last year, can you just contrast where things are significantly better and where they’re maybe a little bit weaker to get a sense where they could actually be upside or downside to the low end?

Frederick Philip Snow

Yeah, thanks, Alex. I’ll start and I’m sure Goran will have additional comments. So we’re, you know, we’re definitely, we’re significantly ahead of where we were at this time for the last two years. The areas that, you know, look like they’re going to be driving growth are the Americas and emea. So, but both of those regions look strong. I would say our core business of the workstations, you know, relatively flat to last year. So the strength is really coming from our enterprise solutions. So that’s the portfolio life cycle for the buy side as well as our feeds business, which is really doing great.

So that’s showing a lot of Momentum going into Q4 and the buy side more specifically, I think, as Corin mentioned, looks really strong for Q4. So when you look at the top 15 deals we have out there for Q4, I think 10 of those are, approximately two thirds of those are coming from the institutional asset management part of our business.

Goran Skoko

So, you know, Alex, just to add to what Phil already said, you know, I think obviously the, you know, book TASV or, you know, commitments that we have is well ahead of last year. We see improved retention in the quarter. You know, I think we have good visibility into cancellation for the next cancellations for the next 90 days, and we see significant improvements in that number. So those are two very tangible factors that increase our confidence in reaching, you know, the numbers that we are projecting. Pipeline itself, we couldn’t be happier with diversity of it.

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

So we’re quite confident that we’ll be within the range that we have. We have guided towards.

Alexander Kramm

Excellent. Thanks for the additional color.

operator

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

Faiza Alwy

Yes, hi. Thank you. I know it’s a bit early, but I wanted to ask if you have any thoughts around how we should think about fiscal 26, because I know you’ve talked about you typically do have visibility over the next six months. And really, if I can just ask a direct question, do you expect to see further acceleration beyond Q4?

Helen L. Shan

Hey, Faiza, it’s Helen. Let me try to take that one. So right now we’re obviously focused on this quarter and executing against that. We feel very comfortable as what Goran and Phil both talked about. And you can imagine that the same trends that you’re hearing us talk through will continue. But we don’t talk about next year until we go into our September call. So that’s what we plan on doing that.

operator

Thank you. Our next question comes from Ashish Sabhadra with rbc. Your line is open.

Ashish Sabadra

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

Frederick Philip Snow

Yeah, I mean, but we’ve, we have a great business with asset owners and they utilize a lot of our core analytics product for the buy side. And our strategy has obviously been to be open, flexible and provide best in class point solutions for those firms. Many of them are essentially just looking how to further streamline their businesses. So it’s a competitive area. We’re partnered with many important firms in the space to provide solutions there. But it certainly, at least in this quarter was a bit of a headwind for us. Although looking at the pipeline for Q4, it looks like, you know, we’ll do better than we did in Q4 of last year or for the year.

So that’ll be a good, good tailwind. Goran, do you want to add anything there?

Goran Skoko

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

operator

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

Owen Lau

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

Helen L. Shan

Hey Owen, it’s Helen. Thank you for that question. And your numbers are correct. So as you know, as we start off the year, we talked about that we’re executing our investment plan across our, what we call our three pillars, which is expansion in data, embedding deeper in our client workflows and accelerating through our genai roadmap. So the pace of investments has picked up over the course of the year. And so for the rest of the year we pretty much remain on track to deliver the margin within our guidance range of 36 to 37 on the adjusted basis.

The spend that we see picking up will be on the expertise that We’ve brought in to work on new solutions like ingenai. The investments that we’re actually using to support the integration of the acquisitions. As you may recall, both of our acquisitions are slightly dilutive and then the technology costs, which are increasing, increasing as we expected. So at this point right now, we feel pretty comfortable that we will be in the range that we’ve discussed and we’ll continue on that path.

Owen Lau

All right, thanks a lot.

Helen L. Shan

You bet. Thank you.

operator

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

Andrew Owen Nicholas

Hi, good morning. Thanks for taking my question. Appreciate all the commentary on the monetization of Genai and seed success on the top line. I just wanted to ask about progress from a internal efficiency perspective. Helen, I think you mentioned briefly some internal efficiency initiatives. Just curious how much of that is Genai related and if we’re thinking about kind of the increased investment there, how much of that could potentially be offset and over what time frame from cost savings from the same technologies. Thank you.

Frederick Philip Snow

Great. Yeah, this is Phil. I’ll start and then I’m sure Helen has some additional comments. So, yeah, we’re certainly very focused now on using AI internally. Our initial strategy really was to focus on building the foundation, the capabilities, educating our workforce and delivering product to the marketplace. So we feel good about that, but we’re now in a very good place to apply that same strategy internally. So we’re looking at obviously developers giving them tools to produce code more efficiently. We’re looking at all of our client facing employees who spend a lot of time doing administrative tasks, getting ready for meetings and so on.

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

Helen L. Shan

Yeah, no, that’s. That’s exactly right. Phil touched on all that. The real high points. What’s interesting, and as you might guess, the question that I like to always ask when we’re investing is what’s the roi. The challenge when you’re right now as we’re investing in Genai is that direct result between investing and the reduction. But I think what we look at is the overall either increasing in output or being able to see more flat growth and expense going forward. And I think that’s really honestly the right way to go. So currently some of the examples that we’ve done is internally our Cost street events coverage which more than doubled from 7,000 to 15,000.

We’ve seen a 10% improvement on output from our engineering through the coding assistance. Our street account has expanded. And another just an example of AI generated fund descriptions. We’ve been able to get those projects done in a third of the time and that means that we’re just not only faster but higher quality. And those are just examples very hard to get an ROI on. But you can see how that ends up benefiting. Now the outcome that we look at, for example, if I look at headcount growth, if you take out the acquisitions, we are essentially flat to down in terms of headcount.

And so that is where, where I think we’ll see some of these benefits flow through very much on the things that Phil talked about in sales and engineering and in product. Looking at the day in the life, we have over 50 opportunities that we’ve prioritized. So we’ll see more of that come through going forward.

Andrew Owen Nicholas

Thank you.

operator

Thank you. Our next question comes from Surrender Zen with Jeffries. Your line is open.

Surinder Singh Thind

A big picture question here around the margins and kind of the trade off of growth versus margins here. We think over the next one, two, three years is the idea that kind of expenses we should see more operating leverage. I guess that we’re near peak investment, I guess near fiscal 4Q and then it kind of or below normal at that point in time.

Helen L. Shan

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

operator

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

Craig Anthony Huber

Good morning. Thank you for taking my question. On the cost side, Helen, it looked to us like your cost adjusted for one time items overall was up about 10 to 11% year over year. If you take out the acquisitions, was it up more like 300 basis points lower than that. So call it roughly 8% maybe. And while you’re answering that question, can you touch on please, the investments you guys are making in your sales force, is that up significantly all this year? Is it more like flattish? How should we think about that?

Helen L. Shan

Great, thank you for that. I think I caught most of that. But part of the increase of impacting our margin, as you know, was is bonus accrual, it’s compensation. Where last year we knew we were coming in at a different level and therefore we adjusted our bonus as a result of that. But if you. So that is the biggest piece of that Delta. And then I don’t know if you call that one time, but that makes a big difference. In terms of investments, our tech expenses continue to be higher. They are up 21%. Part of that is the amortization of internal use software and part of that’s just spend as it relates to, to the cloud.

I will say though, other expenses, which is like facilities, is lower 20 basis points as a, as a perspective of, relative to, relative to revenue, as is third party. So we’re really trying to manage our third party costs as we try to go through the additional need of investments on this. On the tech spend.

Craig Anthony Huber

What about the salesforce part of it?

Helen L. Shan

Oh yeah, sorry. No, I would say from a salesforce perspective, we’re relatively flat. There are areas that we are investing more in and on the more on the product specialty side. But overall I would say from a salesforce perspective, relatively flat.

Craig Anthony Huber

Great, thank you.

Helen L. Shan

Thank you.

operator

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

Toni Michele Kaplan

Thanks so much. And Phil, congrats on your retirement. Wanted to ask the offensive gen AI question you mentioned. You know, 10 signed deals and 45 opportunities on the signed deals. Are these customers you already had that want to adopt Pitch Creator or are these new banks that, that want to have sort of a full FactSet product and are adopting and Pitch Creator was like the driver for that. And you know what else is out in the marketplace like it at this point? I know you were sort of first, but has anything any other products come up to this point? Thanks.

Goran Skoko

Hi Tony, it’s Goran. So, you know, it’s a bit of a mix. You know, I would say most of the current deals are with existing clients. You know, where they have adapted Pitch Creator as part of the overall solutions. We do have deals in the pipeline. Don’t forget that Pitch Creator has been out there less than, you know, about four or five months. So we do have, you know, some selling activity which Pitch Creator is significant contributor in, in the sentiment of those deals that are currently in the pipeline. So we expected to contribute to winning new business in addition to, you know, cross selling and upselling of the, of the existing business.

I hope that that helps.

Toni Michele Kaplan

Thanks.

Russell Quelch

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

Unidentified Participant

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

Frederick Philip Snow

Yes, thank you. This is Phil. So as Gora mentioned, it’s a very broad portfolio of opportunities. We’re not really relying on any big swing deal, I think, or there’s nothing left in terms of a potential big negative out there. So it’s really just execution on a broad portfolio. We’re, you know, we’re well ahead again of where we were this time last year. There’s just a lot of deals to close. So, you know, I believe barring, you know, any really disruptive thing in the markets, it looks like we’re in a good position to execute there within the range.

But we, I think just, just wanted to leave it sort of the way it was just given the number of deals that we have to close in the next two and a half months.

Helen L. Shan

Yeah. Our guidance range is obviously designed to reflect the potential variability of outcomes. And so we really want to make sure that we’re doing that and that’s why we’re leaving it as is.

operator

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

Brendan J. Popson

Hi, this is Brendan on Fermana. I just want to ask on the. You guys are highlighting the just increased focus on data solutions and just wanted to see why does it feel like there’s more momentum there now and is there something about the product you’re offering or you go to market that’s changed, that’s giving you more confidence?

Frederick Philip Snow

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

And I think we also, organizationally, if you remember a year or two ago, we moved the CTS business, which was a vertical into the data part of our business. And the thinking there was we just want one factory for data and the feeds that we’re delivering to our clients, our partners and even our own engineers. We wanted to have more consistency there. So I do think there was a bit of a blip there just due to that big change internally. But I think we’re in a good shape now and a lot of that settled out.

Goran Skoko

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

So all of that is driving, you know, improvement in that, in that part of the business.

operator

Thank you. Our next question comes from David Modem with Evercore isi. Your line is open.

David Motemaden

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

Frederick Philip Snow

Thank you.

David Motemaden

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

Frederick Philip Snow

Yeah, we’re definitely tracking towards that. We talked a little bit earlier about Pitch Creator, but that’s just one of the SKUs we have. So I think we have multiple SKUs now that are sort of getting into seven figures. We’re monetizing these solutions across sort of six different beach fronts. I think the buy side has been a bit slower than the sell side to adopt some of this stuff. But, you know, we’re hoping that changes for our portfolio commentary product, which we’re very bullish about. We’ve just released the fixed income part of that. So we had equity to begin with and risk, but a lot of firms were waiting for us to have fixed income as well.

So now that that’s out, we’re optimistic that we’ll do more there next year. So I certainly do anticipate that, you know, this, the momentum will continue to build. And we’re, you know, we focus on a few workflows in this last fiscal year, but the team’s done a great job of identifying so sort of three or four other areas for us to start building out. And like everyone, we’re now focused on agentic workflows. So, you know, just going from the foundation and the capabilities to essentially creating agents that can, you know, interact with each other and with employees, that’s an exciting evolution that we’re in the middle of.

David Motemaden

Great. Thank you.

Frederick Philip Snow

Yep, thanks.

operator

Thank you. Our next question comes from Scott Wurtzel with Wolf Research. Your line is open.

Scott Wurtzel

Hey, good morning. Thank you for taking my question. Wondering if you can talk a little bit about the cuestip collaboration with Omni that you announced and just the opportunity there and the overall demand for identifiers among D.C. and PE backed companies.

Frederick Philip Snow

Yeah. So, you know, we’re excited about, you know, being, you know, the gold standard for private market identifiers. With qcip, we’re working very hard in the ecosystem to sort of identify partners that are interested in doing work with us. And JP Morgan, you know, is one of those firms. So I think Omni’s, you know, one of the things we’re excited about in of terms, terms of building out qcip. So we’ve also spent a lot of time working, you know, with different firms on private credit. I think that’s probably the one where we’re furthest ahead. So we feel like we’re building some good momentum here.

Thanks.

operator

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

Russell Quelch

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

Helen L. Shan

Thanks for that question, Russell. So correct. We have ample liquidity, which is one of the benefits of sitting in this seat and not worrying about as markets are really quite volatile where we’ll be. And as we noted that we slightly increased our share buyback from 3 to 400, which is well within, I think when you think about as a percentage of, of our market cap. So I think we will continue, as we’ve talked about in the past, our commitment on shareholder return and we’ll take advantage of any market dislocations as it relates to share buyback.

And of course we’ve done a fair amount of acquisitions this year and that will continue to be where our focus will be in terms of adding inorganic growth as well. But right now, as you might guess, we have lots of irons in the fire and we’ll continue on that path.

Russell Quelch

Thank you.

operator

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

Unidentified Participant

For Jason Haas. In a previous answer you mentioned that two areas driving growth are Americas and emea. But EMEA organic ASV has been decelerating. So what gives you confidence in this region given the buy side headwinds there?

Frederick Philip Snow

Thank you. Gora.

Goran Skoko

Hi, it’s, it’s Goran. So you know, I think we have, you know, we, our expectations for, for, for Q4 based on everything we see and the momentum in, in EMEA is that we will see re acceleration. Our retention is trending much better in, in EMEA year over year. And you know, just the stre pipeline and diversity of that pipeline in EMEA is, you know, gives us a lot of confidence in, in Q4. I mean, you’re right that this region has seen more challenges when it comes to buy side in general and more, more, more cost pressure. But at the same time just based on.

Frederick Philip Snow

Yeah, so hopefully I’m just looking here as well at the pipeline. So it looks very broad based as well. So across, you know, our seats, PLC offerings and our feed offerings, it looks like a good portfolio of stuff for EMEA in Q4.

Helen L. Shan

And just as we get Goran back on here, the other piece as we think about the acceleration, because you are right, it’s, it relates to Q3. Keep in mind our annual price increase was lower this year than, than last year in terms of what we’re contractually going out with. So that headwind sort of goes away when we get into Q4, when we start to compare apples to apples. Gordon, sorry we got, we lost you there for a moment.

Goran Skoko

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

operator

Thank you. As a reminder to ask a question, please press star 11. Our next question comes from George Tong with Goldman Sachs. Your line is open.

Keen Fai Tong

Good morning. I’d also like to extend my congrats to Phil on your retirement.

Frederick Philip Snow

Thanks Raj.

Keen Fai Tong

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

Helen L. Shan

Sure. Happy to talk about. Thanks George. So yeah, there are two ways for us to capture price pricing as you know. One is the annual price increase which is contractual and that is impacted by CPI as you noted. And then the other is captured at the product level. So increased rate cards or higher price realization versus the rate card can help us there. So what we’ve seen this year, I mean we adjust our prices. In fact we raised selectively rate cards in January and we see a of lot lot of that come through in renewals and new business.

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

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

Keen Fai Tong

Very helpful. Thank you.

Helen L. Shan

Thank you.

Frederick Philip Snow

Well I think that’s our last question so let’s wrap up. Thanks to everyone for being here today. As we head into the fourth quarter we’re seeing strong momentum, visibility into our pipeline and confidence in delivering on our full year targets. Our enterprise partner status is resonating and we’re focused on execution, solving our clients workflow challenges and driving long term growth. To finish. This will be my last earnings call as the CEO of FactSet. It has been an honor to serve in this role for over the past decade, and I’m proud of what we’ve achieved together over the past 30 years and feel confident in the company’s future prospects.

I look forward to welcoming Sonoica board in September and working closely with him to ensure a seamless transition. And to our clients, partners, shareholders, and all the factsetters around the world, thank you all for your trust and support. Operator, that ends today’s call.

operator

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