FactSet Research Systems Inc. (NYSE:FDS) Q2 2026 Earnings Call Transcript

FactSet Research Systems Inc. (NYSE:FDS) Q2 2026 Earnings Call Transcript March 31, 2026

FactSet Research Systems Inc. misses on earnings expectations. Reported EPS is $3.6 EPS, expectations were $4.37.

Operator: Now, and then I will start at the top. Thank you. Great. Good day, and thank you for standing by. Welcome to the FactSet Research Systems Inc. second quarter earnings call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Kevin Toomey, Head of Investor Relations. Please go ahead.

Kevin Toomey: Thank you, and good morning, everyone. Welcome to FactSet Research Systems Inc.’s second quarter fiscal 2026 earnings call. Before we begin, the slides we reference during this presentation can be found through the webcast on the Investor Relations section of our website at factset.com. A replay of today’s call will be available on our website. After our prepared remarks, we will open the call to questions. The call is scheduled to last one hour. To be fair to everyone, please limit yourself to one question. You may reenter the queue for additional follow-up questions which we will take if time permits. Before we discuss our results, I encourage all listeners to review the legal notice on slide two. Discussions on this call may contain forward-looking statements.

Such statements are subject to risks and uncertainties that may cause actual results to differ materially from results anticipated in these forward-looking statements. Additional information concerning these risks and uncertainties can be found in our Forms 10-Ks and 10-Q. Our slide presentation and discussions on this call will include certain non-GAAP financial measures. For such measures, reconciliations to the most directly comparable GAAP measures are in the appendix to the presentation and in our earnings release issued earlier today, both of which can be found on our website at investors.factset.com. During this call, unless otherwise noted, relative performance metrics reflect changes as compared to the respective fiscal 2025 period.

Joining me today are Sanoke Viswanathan, Chief Executive Officer, Helen Shan, Chief Financial Officer, and Goran Skoko, Chief Revenue Officer. I will now turn the discussion over to Sanoke Viswanathan.

Sanoke Viswanathan: Thank you, Kevin, and good morning, everyone. Thank you for joining us. ASV growth accelerated in Q2 for the fourth consecutive quarter, 6.7%, to $2.45 billion. It accelerated across all geographies and has grown year over year in each of retention, expansion, and new business. Adjusted operating margin was 35% and reflects the investments we are making this year. Adjusted diluted EPS was $4.46, up 4% year over year. These results confirm that FactSet Research Systems Inc.’s foundational strengths are increasingly valuable in an AI-intensive environment: our connected data, embedded workflows, best-in-class service, and broad distribution. Customer wins from this quarter illustrate the breadth and depth of our data and product capabilities.

First, following the multiyear renewal of our relationship with a major global investment bank, we expanded into their international corporate bank. This was driven by the depth and differentiation of our deep sector content. Similarly, our private capital data assets were central to our new mandate with a leading Australian private equity fund. These wins show dealmakers continue to value our differentiated data. Second, one of our largest international wealth clients selected our proposal generation solution as an extension of their existing use of FactSet Research Systems Inc. for portfolio monitoring. A major Canadian wealth manager adopted our real-time exchange data feed product. These expansions showcase demand for our products that span the whole investment lifecycle, including portfolio construction, ongoing oversight, and end-client engagement.

Third, Capital Group expanded their use of our Portware trading platform, which also achieved several new wins with other large asset managers. In addition, our new order management solution, LiquidityBook, is gaining significant traction with hedge funds and other institutional buy-side clients. Based on our strong first half performance, we are raising our ASV, revenue, and EPS outlook ranges for fiscal 2026. This reflects sustained momentum across all client types and geographies. We are maintaining our guidance range for operating margin as we continue to balance investments and productivity improvements. Last quarter, I outlined three priorities: driving commercial excellence, delivering productivity improvements, and solidifying our long-term strategy for sustainable growth.

We have made strong progress on all three. We are bolstering the health of our client franchise, making our core operations more efficient, and redeploying our resources to fund strategic investments to drive further growth and structural investments to deliver better operating leverage in the medium term. First, on commercial excellence, we are rolling out new pricing and packaging, are infusing AI throughout the sales life cycle, and have realigned sales and customer success incentives. With disciplined pricing and packaging, our revenue base is becoming more durable. Our direct seat-based exposure now represents less than 20% because of appropriate minimums and bundling into enterprise agreements. In Q2, the majority of our renewed ASV was in the form of enterprise agreements or contracts that are more than three years duration.

On average, these renewals extended in length by more than 30%. Our focus on client health has led to a five-point Net Promoter Score improvement just this quarter amongst our investment banking users. This is helping drive ASV retention and expansion. Our overall ASV retention continued at over 95% in Q2. 86% of our top 200 clients use five or more of our solutions, up from 78% three years ago. In Q2, Data Solutions grew by double digits across all firm types, including the highest expansion we have seen since 2023. Today, 48 of our top 50 clients are using at least three of our AI solutions, with several more in trials. In Q2, new business growth accelerated. Our marketing leads increased 11% year over year. And with stronger lead scoring and more targeted outreach, win rates for these opportunities improved by 29% year over year.

Corporates and private capital wins were particularly strong, with double-digit growth in both. First half productivity initiatives have already captured more than half of the 100 basis points of productivity improvement we targeted for the year. We have made real changes in technology, data operations, and client support, our largest three operating cost centers. We have consolidated all FactSet Research Systems Inc. technology under our newly appointed CTO and are converging on standard tools and platforms to deliver efficiency. For example, our internal development platform that standardizes tooling and software deployment will allow engineers to spend more time on product development. AI coding assistance now author nearly one fifth of our successful code commits and free up a quarter of our engineers’ capacity in those teams.

This includes over 90% reduction in efforts spent on business-as-usual activities like software upgrades and patching. Some teams have radically reduced time to market for new product development by fully automating the delivery life cycle and collapsing a month-long cycle to one day. We see ample scope to scale this transformation. In data operations, we are seeing rapid transformation as we drive down unit cost and time to value and expand our content universe. Our Rubik’s private company classification project to deepen coverage from four to six levels is a great example. We have quadrupled classification capacity year over year while keeping costs flat, capturing scale economies in our business. This quarter, we have deployed four distinct AI tools across different parts of our data operations, generating 25%+ reduction in manual curation on average.

We are expanding this systematically across all our data, while maintaining high quality standards. The text-to-formula agent that we launched in October 2025 has fundamentally changed how we handle client inquiries. Our help desk experiences double-digit monthly growth in formula support requests. But the volumes handled by our client service representatives have now started to decline as the agent absorbs an increasingly large share of these inquiries each month. This allows our support colleagues to focus on higher-level activities, such as custom client implementations, advanced analytics support for fixed income and quant workflows, and outbound engagement to expand our reach. We are lowering the variable cost of serving each client while increasing our capacity to engage and retain our highest-value accounts.

Beyond these three areas, we are systematically identifying further cost savings across the business. These include streamlining procurement and lead-to-cash processes, consolidating legacy software contracts, and optimizing our third-party data agreements. These productivity gains will make us a structurally more efficient company, flattening the cost curve as we scale and freeing up resources for high-return opportunities. We have made substantial progress on developing our medium- to long-term strategy. I will share it in detail, along with the business plan, at an investor event after the end of this fiscal year. Let me reiterate that we are well positioned to be a winner in an AI-intensive world and to deliver attractive ongoing financial returns.

To give you some insights now, a key element of our strategy is to be a leading data and workflow infrastructure provider for AI-enabled institutional finance. What we are seeing so far is clear. As clients move AI into production, they are pulling FactSet Research Systems Inc. deeper into their operations, not replacing us. Our foundational strengths include connected data and embedded workflows, and these make us more valuable to clients as they implement AI in their environments. We are wired into our clients’ operations so the relationship deepens with every transaction. Five key factors make our data differentiated and trusted, and thereby integral to financial institution clients that have zero error tolerance. Data depth and coverage.

We collect and refine data sourced directly from over 300 stock exchanges, millions of public and private company websites, thousands of data partners, and clients themselves. For example, broker research. FactSet Research Systems Inc. holds the commercial and legal rights to access these proprietary datasets and licensed content. Data cohesiveness. We seamlessly integrate the data from one time period to another to provide holistic company time-series data from annual, quarterly, and preliminary reports going back over 40 years. Data comparability. We provide data that is comparable within and across industries with considerations to different accounting standards, market and company specific presentations, reporting practices, and regulatory requirements.

Data traceability. Clients can view the data source of each data point through document tracebacks. This creates data transparency, credibility, and reliability. Data quality. We apply quality checks to data, and apply in-tool checks at every step of our collection pipelines. We have automated logical validation rules augmented by audits conducted by humans. After all this, we conduct product checks by our experts to ensure our data products are fit for use in each of our end markets. Over the past three years, we have tripled our data assets while maintaining these high quality standards. But it is not just data alone. It is how deeply we integrate FactSet Research Systems Inc. data with client data and deliver value that is how we support the sophisticated decisions our clients make every day.

FactSet Research Systems Inc.’s Office add-ins are woven into clients’ daily research and reporting, and the custom models they have built on our data have grown by 17% just this quarter. Our buy-side analyst clients store over two million research notes in our database, and this has been growing at over 35% per year for the last three years. Investment committees use this research to make decisions. Compliance teams run regulatory checks against our outputs. And the longitudinal analyses stored and reported from our analytics book of record are essential to communicating the definitive source of portfolio performance and the characteristics of millions of funds managing trillions in assets. The number of institutional portfolios integrated into FactSet Research Systems Inc.

grew by 20% in the last year, to almost 8,000,000. Let me use a value-at-risk calculation for a multi-asset class portfolio to illustrate the mission-critical nature of our embedded workflows. When a portfolio manager looks at a value-at-risk number, they scrutinize the output of tens of thousands of simulations across hundreds of risk factors driven by millions of data points: position attributes, historical return series, yield curves, volatility surfaces, correlations, and many, many more. All of which must be correct, consistently sourced, and temporally aligned. If even a single data node is wrong, the entire risk calculation silently misstates the riskiness of a portfolio. This is not a theoretical concern. It is a daily operational reality for every institutional investor managing risk at scale.

The data checks we conduct across our multi-asset class portfolio analytics suite alone have grown by 29% in just the last year, underscoring the importance of our robust infrastructure. AI accelerates aggregation and finds patterns in the data, but it cannot substitute our trusted, reconciled, data production and modeling infrastructure that underpins these risk, valuation, and compliance workflows. Our AI strategy will leverage these foundational strengths and build more integrated solutions at all levels of the emerging AI stack. Partnerships for growth are an important component of our strategy. For example, partnerships with Snowflake and Databricks enable clients to seamlessly combine FactSet Research Systems Inc. data with their own sources and operate AI-driven workflows in the secure cloud environments they already use.

We are also actively partnering with Anthropic, OpenAI, and other leading frontier labs to ensure that FactSet Research Systems Inc. datasets are readily available in their marketplaces to facilitate rapid development of new AI solutions. And we are infusing agentic capabilities across our workstation so that users can operate more effectively inside our governed, trusted workflows. Our newly announced partnership with Finster will accelerate our agentic platform for banking, meeting the growing demands of our dealmaker clients. We have strong traction and are seeing rapid adoption and use of our solutions as AI workloads take root at our clients. One illustration: our MCP Server that is built on a robust ecosystem of content APIs was launched in December and already has over 120 clients actively engaged.

API call volume is steadily growing as well, with March volumes at three times the February level. We expect this success to be replicated across our AI solutions in all layers of the stack. As AI continues to reshape financial institutions, FactSet Research Systems Inc. is becoming more central to clients’ mission-critical workflows. We are in the early innings of sector-level technological change and are building on our current foundational strengths to continue creating value for our clients in the future. Let me close by thanking every FactSet Research Systems Inc. team member for their continued focus and commitment to delivering for our clients. We are winning competitive mandates and expanding relationships from a position of strength.

Now I will hand over to Helen Shan to discuss our Q2 performance and updated guidance in more detail.

Helen Shan: Thank you, Sanoke Viswanathan. Great to be here with everyone today. The second quarter, organic ASV accelerated to 6.7%, an increase of $38 million. Growth was balanced across all regions and fueled by three key drivers: strong client expansion, new business wins, and higher pricing capture from our annual price increase in The Americas. Let us walk through our performance by region. In The Americas, organic ASV grew 7%, up from 6% in Q1. Asset management continued to be a bright spot with growth driven by both trading and middle-office solutions. Dealmakers contributed with competitive displacements in banking and uplift from successful renewals in sell-side research. An increase in new business logos was powered by hedge funds and corporates.

A competitive managed services win in EMEA, organic ASV grew 4%, in line with Q1. Higher demand for Data Solutions in wealth, and a large banking renewal that included PitchCreator and our new MCP solution, drove the positive results. These wins helped offset softness with asset owners, partly due to pension reform in The Netherlands. In Asia Pacific, organic ASV accelerated to 10%, up from 8% last quarter. Improved demand from asset managers and hedge funds for middle-office and trading solutions, coupled with stronger banking retention, drove the region’s performance. Now turning to our results by firm type. On the institutional buy side, we delivered 5% organic ASV growth, up from 4% last quarter. This reacceleration was driven in part by higher trading volumes fueled by additional Portware installations, increased data demand by hedge funds, and continued strength in managed services linked to our performance solutions.

In wealth, organic ASV maintained a 10% growth rate, despite the challenging year-over-year comparison given our landmark UBS win a year ago. This performance was driven by higher demand for our wealth platform as we further integrate into clients’ daily work with our proposal generation and adviser dashboard solutions. In dealmakers, organic ASV grew 8%, up from 6% in Q1. Competitive displacements and successful enterprise renewals added momentum in banking. Our investments in deep sector, aftermarket research, and banker productivity solutions position FactSet Research Systems Inc. as the trusted enterprise partner. Both corporates and private capital accelerated to double-digit growth this quarter, with new business and competitive wins fueled by demand for our data.

The organic growth in market infrastructure accelerated to 8%, up from 7% in Q1, with robust sales in real-time data and higher retention. In addition, strong issuance activity supported the positive results for CUSIP. We continue to expand our client and user base. In Q2, we added 98 net new clients, bringing our total to 9,101, led by corporates and wealth. Our user base increased to over 241,000, with additions largely in wealth and dealmakers, reflecting a 10% annual growth rate. Lastly, we continue to have solid retention rates at 91% for clients and above 95% for ASV. These results reflect the mission-critical nature of our business as the world’s leading financial institutions continue to trust FactSet Research Systems Inc. Turning now to our financial results.

Second quarter revenues grew 7.1% year over year to $611 million, or 6.8% organically, excluding impact from foreign exchange and M&A. Adjusted earnings per share was $4.46, up 4% year over year, driven by higher revenue and a lower share count, partially offset by a higher tax rate. Adjusted operating margin came in at 35% for the quarter, as compared to 36.2% in Q1 and 37.3% a year ago. In line with our plan, this reflects the timing of strategic investments, driven by three main factors. First, higher people expense due to year-over-year compensation adjustments and full impact from merit increases. Second, accelerated technology spend on cloud infrastructure and AI tools, and third, higher professional fees from increased project work in the quarter.

The midpoint of our full-year margin guidance reflects expected investment pacing through the second half in technology infrastructure, professional services, and product development. AI is playing a dual role, enhancing client value through new capabilities while driving productivity gains. We remain committed to long-term growth, maintaining our track record of capital discipline. As highlighted last quarter, we are investing to differentiate our data, deepen client workflows, and modernize our platforms, with approximately two thirds directed towards growth initiatives and one third on enhancing our internal infrastructure. Funding will come from productivity improvements and disciplined cost management. With the first half now complete, let me connect our investments to the early outcomes we are seeing.

Our investments in data expansion are delivering. We now offer our core datasets through MCP Servers, giving clients flexibility to access our data in their preferred environments. Workstation users are benefiting from optimized real-time data delivery, driving both efficiency and cost effectiveness for clients. And we are meeting client demand by integrating premier research firms like JPMorgan, Barclays, and Kepler directly into our platform. These are expanding our addressable market and enhancing the value we deliver to clients. Our workflow investments are receiving market validation, expanded our long-standing Schroders relationship to provide a managed service to enable greater scale. As highlighted earlier, Capital Group selected us as their trading platform because of our hyperscalable platform and high-volume capabilities.

And the year post acquisition, demand for a LiquidityBook order management system and FactSet Research Systems Inc. Plus and cross-sell expansion. Erwin Investor Relations solution is driving meaningful new logo growth. These all showcase our ability to scale from point solutions to enterprise-wide partnerships. On the structural side, we are executing across four priorities. First, modernizing our tech stack and cybersecurity to strengthen platform resiliency as we integrate agentic capabilities into the workstation. Second, deploying AI to scale our content operations as mentioned by Sanoke Viswanathan earlier. Third, strengthening our brand with our Fluent in Finance campaign that is generating strong top-of-funnel growth. Lastly, freeing up engineering capacity with AI, enabling us to accelerate new projects with existing talent.

We expect these benefits to accelerate through next fiscal year and beyond. We are also on track to capture our intended in-year expense savings by automating manual processes through AI, optimizing cloud usage, and streamlining our portfolio through product life cycle rationalization. For example, we have been able to reduce the cost of vectorizing client data by 80% while delivering faster and more accurate results. Of our planned 100 basis points in savings, we have already secured more than half and remain on track to deliver the full benefit in H2. This improving operational efficiency combined with consistent free cash flow generation gives us flexibility to deploy our capital. Our framework prioritizes organic investments followed by strategic M&A, returning excess capital to shareholders.

Our balance sheet remains strong with gross debt leverage at 1.4x, providing capacity across all three priorities. At current valuation levels, we see our buyback program as a compelling use of capital. In Q2, we repurchased approximately 652,000 shares for $163 million and year to date deployed over $300 million to repurchase shares at attractive prices. To put this into context, in the past two quarters alone, our accelerated pace of buybacks has resulted in a 3% reduction in total shares outstanding. At quarter end, we had approximately $700 million remaining under our upsized $1 billion authorization. Based on our strong first half performance and improved visibility, we are raising our fiscal 2026 guidance. ASV growth is now expected at $130 million to $160 million, representing approximately 5.4% to 6.7% growth, an increase of $20 million at the midpoint.

We are targeting GAAP revenue at $2,150 million to $2,470 million, representing an increase of $25 million at the midpoint. We are maintaining our guidance ranges for GAAP operating margin and adjusted operating margin, accounting for the potential higher performance-based compensation given the strong commercial outlook. The effective tax rate remains unchanged. Our guidance range for GAAP EPS is now $14.85 to $15.35, an increase of $0.20 at the midpoint. For adjusted EPS, our range is now $17.25 to $17.75, representing an increase of $0.25 at the midpoint. This revised outlook reflects improved visibility in client demand, accelerating commercial momentum, and realized benefits from our productivity initiatives. Our priorities are clear: deliver innovation, deepen client relationships, and invest with discipline.

With that, I will turn it back to the operator for questions.

Q&A Session

Operator: Thank you. As a reminder, to ask a question, please press star 11. To withdraw your question, please press star 11 again. We ask that you please limit yourself to one question. Please standby while we compile the Q&A roster. We will now open for questions. Our first question comes from the line of Kelsey Xu with Autonomous Research. Your line is now open.

Kelsey Xu: Hi, good morning. Thanks for taking my question. If you transition all of your workstation ASV into Data Solutions ASV and apply usage-based pricing on top of that, what would that look like? Because I think end users are using FactSet Research Systems Inc. Workstation to get access to your data anyway, just curious how you think about the business model in the quote unquote, wholesale world. Especially as data consumption is expected to increase meaningfully. How important is it for FactSet Research Systems Inc. that it continues to own the user interface product, especially for research analysts? Thanks a lot.

Sanoke Viswanathan: Thank you, Kelsey. I appreciate the question, and it is an important question for not just us, for the whole industry. We, at the moment, are seeing strong growth across all our channels. So we are seeing continued growth in our workstation, which Helen already talked about. We are also seeing tremendous growth in our Data Solutions both through data feeds, APIs, and increasingly through our newest channel, which is the MCP Server, which allows for opening up of new TAMs inside our clients’. So we are seeing user persona shifting from just the traditional users who continue on the workstation to also include technology teams, data science teams, and the broad enterprise user across our clients, which happen to be very large financial institutions for the most part.

So we are seeing actually a real compounding of this at the moment. Your question is a speculative question about the future, where, you know, all these channels disappear and we are just in the data business. The way we are working through that, at early stages in this evolution of the market, is we are developing our strategy by working jointly with our customers to effectively look carefully at our pricing and packaging, and we are striking enterprise contracts with them that gives both them and us a lot of flexibility in how to continue to deliver value to them in the future. So what, and you have seen the results. We have had great success in this quarter alone in restructuring some of our contracts, and we are seeing a real extension of almost 30% or over 30% in our enterprise contracts.

And also, a significant share of our contracts are now enterprise agreements or, you know, agreements that are really long term in nature. So with that, we give ourselves and our clients flexibility to consume our data in any number of ways: through the workstation, through data feeds, through MCP, and frankly, any new channels that open up in the new context. We are very optimistic about the future of this multichannel mix business, if you will. Because remember, the core of all of this is our data, which is highly valuable in whatever context our clients consume it. And, you know, we have given you quite a lot of evidence of how important it is for us to deliver strong, high-quality, concorded data. And, Goran, do you want to add anything to that?

Goran Skoko: Yeah. Kelsey, you know, the concept of utilizing our content or components of FactSet Research Systems Inc. is not new to us. You know, over the past seven, eight years, we have been talking about open approach and servicing clients where they are, meeting them where they really need our solutions. So in terms of owning that interface or really enriching the interface so the clients can properly, you know, complete their workflow has been our approach for years. In terms of, as Sanoke Viswanathan touched on, enterprise level agreements, and as we, in which we are entering with more and more clients into, and consumption laid on top of that, which we think will more than compensate to any type of attrition on the workstation side going forward.

Helen Shan: Thank you.

Operator: Our next question comes from the line of Ashish Sabadra with RBC Capital Markets. Your line is now open.

Ashish Sabadra: Hi, thanks for taking my question. Really strong momentum in the business. My question was focused on the sales pipeline, demand environment as well as sales cycle, particularly in the context of these geopolitical, evolving geopolitical concerns. Any color that you can provide on that front? Thanks.

Sanoke Viswanathan: Sure, Ashish. We are seeing broad-based demand and a really strong pipeline through the rest of the year. We are seeing improved retention, continued expansion, and also really strong new business growth. So it is across the board. What is driving our sales cycle now is we are seeing asset managers consuming a lot of our Data Solutions. As you know, we have been making investments in real-time data, pricing and reference data, and private capital data. All of this is resonating and it is driving a significant interest in our buy side. Middle-office solutions are, again, resonating very well with the managed services overlay. That is particularly getting even more exciting in an AI-intensive world where we can add agentic workflows on top of that.

And our trading solutions are growing strongly as well. So broadly, I would say the sales cycle has not changed. The macro conditions are not affecting us. We see traction across all of our client groups. What I can say is when it comes to AI solutions, the sales cycle is considerably faster. Clients are eager and enthusiastic to try out new solutions. And you might have seen we even announced yesterday a new partnership with Finster on our banking agentic platform. Again, we are being very client-demand driven, and we see tremendous demand and enthusiasm from clients to try these solutions. And our MCP solution, which we launched just in December, again, to reiterate, has been our fastest-growing solution in the market.

Operator: Thank you. Our next question comes from the line of Manav Patnaik with Barclays Capital.

Manav Patnaik: Thank you. Good morning. I just wanted to focus on, I think you mentioned your middle office and trading solutions growing really strong as well. And I noticed in the prepared remarks, that came up a lot in terms of the accelerated growth. So I was just hoping you could double click on that, maybe just help us appreciate, you know, how big those two solutions are, and maybe what are the keys to the, you know, key sub solutions, I guess, within those that are selling really well nowadays?

Sanoke Viswanathan: Thank you, Manav. Yes. This is our, you know, one of the crown jewels in our business, which is we are deeply, deeply entrenched in providing some of the critical support to large buy-side clients. It starts with sort of the essential ingredients of what we do in portfolio analytics, which is performance analytics, attribution, and risk management. And these are mission-critical processes for our clients. And in, you know, as we said in our prepared remarks, millions of funds depend on the immutable data that is stored and distributed from our analytics book of record, which delivers these quality, high-grade analytics year after year after year over the last several decades. And so it is a very important part of the core investment operations of our client.

The parts of that that are particularly growing in, you know, especially in this quarter, and we see this trend continue, is clients continuing to shift into multi-asset class portfolios and starting to really demand a total portfolio view that mixes private and public positions, normalizes risk across these asset classes, and looks at what-if scenarios cutting across, you know, different types of risk analyses that you run on all of those portfolios. Events like the, you know, in recent markets around private credit and the like, only increase the relevance of these risk analyses and make our business even more sticky to our clients. We are seeing strong progress in our managed services that help clients operate these large platforms, transform their data, ensure that it is deeply integrated into our systems, and the output of it is reported downstream into multiple different sources, whether it is compliance teams that are doing regulatory checks, end clients that are demanding progress on performance, and also investment committees who are using all of that research and analytics to make asset allocation, both strategic and dynamic asset allocation, decisions.

Manav Patnaik: Thank you.

Operator: Our next question comes from the line of Shlomo Rosenbaum with Stifel. Your line is now open.

Shlomo Rosenbaum: Hi. Thank you very much for taking my question. Excuse me, Sanoke Viswanathan. Can you talk a little bit about what has changed so much in the last couple of quarters? We were seeing kind of the company’s organic growth slowing down, kind of meandering. You came in a few quarters ago. Usually, we do not see a real acceleration with the change that happens instituted by the top within just two quarters. And I was wondering if you can kind of point to a few critical parts about what seems to be clicking, what is there because, you know, maybe you have some incentives that really realign things? Or what are things that were going on beforehand that seemed to have hit their stride? So we can just kinda get in a sense as to, you know, the picture of the reacceleration of the revenue growth and what might be the runway for that going forward.

Sanoke Viswanathan: Thank you. It is a very important question, and something that we, you know, we spend a lot of time on. And we believe that we are just at the start of this inflection. There is a number of things that are landing well for us. I will start by saying that prior to my showing up, the company had started making very targeted and focused investments in the right areas that are areas where we see huge headroom for growth. I will start with data. Data is the foundational strength of the company. We have certainly had, you know, many decades of success in building our datasets and continuing to build the kind of client franchise that we have today. And yet there are, you know, big parts of the data environment that, you know, we are still early in the game.

And we have the smallest market share amongst our competitors, and we see huge headroom for growth. A great example is real-time data. So real-time data, we now have capabilities that are competitive and comparable to our larger competitors. An investment that has been made over the years and accelerated in the last couple of years. And that has allowed us to win very significant clients. For example, one of the largest global asset managers is a client of ours. They went live about a year ago. And we, you know, displaced hundreds of different internal solutions, and we developed and delivered a world-class market data solution, real time with delayed data distributed across the entire asset management estate of this client. So that is one example of something that is clicking.

That is a marquee win in the space. And just off the back of that, we are seeing huge traction across the buy side and the sell side. Real-time data. I will just rattle off a few other investments like that that we have been making that are all clicking now. So clearly, our AI investments are working. We are, you know, we are doing well across these various layers of the AI stack, AI-ready data, the MCP Server, our agentic platforms, and our AI solutions that are infused inside the workstation, that, like we said, 48 of our top 50 clients use at least three of our AI solutions, and I expect that number to be quite a bit higher in future quarters. Third, our investments in content beyond real time, which are really relevant for dealmakers and wealth managers—so pricing and reference data, as well as the data in private capital or private company-related data—and other datasets, obviously, our historical, you know, hallmark has been supply chain data, reviewer data, etcetera.

These are all coming together nicely and opening up lots of new opportunities for us. And when I look at the penetration of Data Solutions distributed beyond the workstation amongst our client base, we still have huge room to just continue to increase cross-sell within our existing client base. So, I mean, certainly, our efforts at commercial excellence, to your point, Shlomo, in the last couple of quarters are helping. We see a terrific energy in our sales and customer success teams. And that is, of course, adding value to our retention and expansion. But even more, it is all of these targeted investments that have been made over the last few quarters starting to click, and I see a lot of runway ahead of us. Helen, do you want to add any more?

Helen Shan: Yeah. Maybe one thing just to add, Shlomo, because you are absolutely right. Things take a little bit of time to get leverage. But I think back to what Sanoke Viswanathan was saying, the core of what we are is really important. Our open platform is perfect in this new environment as we are talking about AI, which is why AI is a tailwind for us. And that is why you are seeing double-digit growth in data across all the various firm types, whether it is banking or wealth or on the buy side. So I think that is a really important point that our investments we made have helped both retention and then why new business is growing as well.

Shlomo Rosenbaum: Thank you.

Operator: Our next question comes from the line of Jason Haas with Wells Fargo. Your line is now open.

Jason Haas: Hey, good morning and thanks for taking my question. I wanted to focus on the expense side of things. I am curious if there has been any change into how you are thinking about expenses through the year. I think previously you had said that the investment plans were more second half weighted. So I was curious if that is the case. And then maybe, like, more big picture, I appreciate you are making investments in the business, and it is clearly showing up in better ASV growth. Are you planning to, I guess, moderate some of the pace of investments or the expense growth so you can start leveraging expenses next fiscal year? Do you want to kinda keep pushing there and drive the ASV higher? Thank you.

Sanoke Viswanathan: Thanks, Jason. As you can tell, we are very pleased with the execution we have seen in the first half of the year. And the guidance range for what we have given on operating margin is a reflection of the fact that we see all of these opportunities to make high-ROI investments, both in growth as well as structurally to improve the company’s success going forward. And you are right. I mean, we do expect a heavier investment second half. At the same time, we are being very disciplined and, you know, we will moderate spend based on what we see in terms of ROI, the opportunities we see to invest. So we are keenly focused on our earnings. Our intent is to grow earnings going into next year and beyond. Right? So our investments are going to be very tailored to highest-ROI investment opportunities.

And we think we can achieve both because we are seeing all of these promising productivity improvement opportunities. We gave a flavor for those earlier in our presentation, and I believe we are still at the very, very early stages of capturing productivity gains. And as those accelerate, they will serve as a nice offset to these investments, and we will be able to deliver operating leverage as well.

Operator: Thank you. Our next question comes from the line of Andrew Nicholas with William Blair. Your line is now open.

Andrew Nicholas: Hi, good morning. Appreciate you taking my question. Appreciate all the color again this quarter on your strategic priorities and the foundational strengths, and I thought slide eight was particularly helpful in terms of the uniqueness and value of the data. But I am curious, just as you think about where FactSet Research Systems Inc. sits in the ecosystem relative to newer competitors or even the model providers, maybe address what you think are some of the disadvantages you have from being a legacy provider? And to what extent are those disadvantages addressable, whether it is the organic investment or partnerships or M&A? I just understand all the reasons why people will stick with you or clients are sticking with you or investing more in your product. Just curious what you are defensive to in investing in as a result. Thank you.

Sanoke Viswanathan: Sure. We have a number of advantages, and I think you have registered those. I think those are exciting, and we see lots of runway to grow with those advantages. What you will also see is that where we see complementarity, we have been actually one of the players that has been most forward-leaning in partnerships across the ecosystem. It starts first and foremost, again, with data. So we have always had really strong, in-depth, multiyear commercial and technical partnerships with a number of other content providers. They are increasingly looking to us, given our technology prowess, to aggregate more of their data and to deliver more of the data through new channels that we are able to open up for them. So that is number one.

We work with content providers across the stack, and that is an important part of our traditional strategy, and we will continue to accelerate that. Number two, to your point about new capabilities from AI natives and hyperscalers, as you would have noticed, we have a strong partnership with Anthropic. We are one of the prominent financial services connect on the cloud marketplace. And I must say it is our fastest-growing marketing channel. I think of it as a marketing channel because the business model is very synergistic. We make gains when clients connect through Claude into our datasets, consume more and more of our data, and our contracting is directly with our clients. And Anthropic does well when that happens because those agents that the clients may be deploying use more and more tokens, and that is good for Anthropic.

So I am just using that example to illustrate why our partnership model is a win-win here. To Helen’s point before, we have always been an open architecture company. And it is really coming into its own in this AI environment. So those are a couple of examples. I do not view these as disadvantages as much as market opportunities that are opening up that our business model is uniquely positioned to take advantage of.

Helen Shan: For broad solutions, many of the AI-native firms can be very good in their point solution. But for clients who want something that is integrated, and they do not want to have multiple solutions, we are really best positioned to be able to deliver that.

Andrew Nicholas: Thank you.

Operator: Our next question comes from the line of David Motemaden with Evercore ISI. Your line is now open.

David Motemaden: Hey, thanks. Good morning. Sanoke Viswanathan, you had mentioned a few areas of further cost savings across the business. Yeah. I think we are streamlining procurement, legacy software, optimizing third-party data agreements. Could you just talk about what sort of the runway is on those? And, you know, how we should think about that creating, you know, margin opportunities as we head into, you know, next year? It sounds like you guys are making good progress this year, but I am more thinking in the fiscal 2027. Thank you.

Sanoke Viswanathan: Sure. What we have indicated today is that we have already captured over 50% of the 100 basis points of productivity improvements that we targeted for this year. And while we gave you examples of the early impact that we are seeing from the application of AI in engineering, in data operations, and customer success, I must say those are early days, and in fact, I see tremendous scope for growth of the AI-based opportunities. What you see in the value capture to date is more along the lines of what you are describing, which is procurement, legacy software consolidation, data contract optimizations. Effectively, just looking across the company and making sure that we are, you know, leaving no rock unturned, ensuring that we are being efficient about our usage of third-party services, and just running a better company.

So we are getting all of that done, which can be done faster. And these AI programs are just taking root. We see a lot of opportunity to expand the scope going into next year. And as I said, our focus is going to be very much on improving earnings going into 2027 and beyond. And we will balance these productivity gains with the continued high-ROI investments we want to make in the future growth opportunities.

Operator: Thank you. Our next question comes from the line of George Tong with Goldman Sachs. Your line is now open.

George Tong: Hi, thanks. Good morning. You talked about introducing new pricing and product packaging initiatives. Can you elaborate on this a bit more? What year-over-year price performance was in the U.S.?

Sanoke Viswanathan: Sure. I will start with the conceptual effort, what we are doing across pricing and packaging. Helen is going to give a little bit more color on the specific progress of price improvements we have seen. I would start by saying we have a very strong shelf of really good products. Customers really love our products. We have gotten great feedback. Our NPS scores are very high. And despite that, we are continuing to invest in growing NPS across different segments. This gives us strong pricing power. So when we look across our estate and we look at how we are packaging and bundling our products, we are doing a thorough review. And where appropriate, we are making changes. We are rebundling. And we are restructuring these enterprise agreements with different client types.

And as I said earlier, to give them and us flexibility, so we can evolve into this new world where it will be a combination of seats. It will be a combination of data delivery and it will be a combination of consumption. Right? So it will be all of that, and we are ensuring that we are retaining the flexibility and clients are retaining the flexibility. With that, I am going to hand over to Helen to describe how that pricing power translated in this quarter.

Helen Shan: Yeah. No. Thank you, Sanoke Viswanathan. As we do every year, the annual price increase in The Americas actually contributed more this year than last year, so it is up slightly. Which reflects really that our pricing strategy is grounded in the value that we deliver. So clients are valuing the product. It is supported by the price realization that we are seeing, and it is, quite frankly, clients are accepting the increases due to the value and the workflow integration we are providing. Now that is driven in part through the fact that we have a larger ASV base. We have had improved retention increases as well. And as noted, the shift to enterprise also contains some contractual escalators. So we have been very pleased with how we have been able to continue to leverage and build on capturing price this year.

George Tong: Thank you.

Operator: Our next question comes from the line of Jeff Silber with BMO Capital Markets. Your line is now open.

Jeff Silber: In noticing some of the statistics that you released on client count and user count, it seems that users per client seem to be escalating at a greater rate. Is there something driving that? Is that a mix shift maybe towards wealth, or is there anything else going on there?

Sanoke Viswanathan: Yeah. I think the, I mean, I would caution us in, you know, I would say reading too much into our client count. As you know, we have 9,000+ clients. And there is always a long tail of clients in our sorts of businesses. So we had a very good quarter. We added a significant number of new clients. At the same time, we also significantly expanded our presence in our top clients, in our top 100, our top 200, which drive significant chunks of our business. So I would not draw too much into the client count itself. What I would say is it is important to understand that corporates, wealth managers, private equity, and these sort of client segments drive a lot of new client expansion. Because remember, we have a huge, huge penetration with the largest global banks, largest global asset managers, and the largest global wealth managers.

So the tail, by definition, is smaller firms around the world. And that is certainly what is driving our client count. With user count, wealth management is a significant driver because we have, as we win large wealth managers, we win a large number of advisers. And that adds to the user count as well. So I just want to caution you not to read too much into those numbers because they tend to be the long tail.

Operator: Thank you. As a reminder, to ask a question at—Our next question comes from the line of Scott Wurtzel with Wolfe Research. Your line is now open.

Scott Wurtzel: Hey. Good morning, and thank you for taking my question. I am just wondering if you guys can talk about the pace or degree of AI product adoption in the wealth channel. I am just trying to kind of understand, given that wealth is still, I think, ongoing this digitization journey, if, you know, this could be a potential longer tail opportunity? Thanks.

Sanoke Viswanathan: Yeah. I think you read that right, Scott. You know, wealth is, you know, a more heterogeneous environment for us amongst our end markets. We have large firms. We have midsized firms. We have RIAs. There is a whole range. International private banks and international wealth managers have their own dynamics. So we are seeing a gradual pickup in AI adoption in wealth. It is certainly behind what we have seen in the sell side, in the buy side, but we see it picking up, and I expect it to be an important growth driver as we go into the next few quarters. I do not know, Goran, if you want to add anything to that and—

Goran Skoko: You know, some of the AI solutions that we see adoption involve are around prospecting. So we have some of our largest clients adopting our intelligent prospecting and monitoring solution that is something that drives new business for our clients. We are rolling out some of our AI solutions with two of our largest clients currently. So the adoption is increasing, but I would agree with Sanoke Viswanathan. It is trailing investment banking and other areas of the business.

Operator: Thank you. Our next question comes from the line of Craig Huber with Huber Research Partners. Your line is now open.

Craig Huber: Thank you. Just wanted to just touch on here this AI concern out there. There is obviously a lot of concern as AI evolves here over time, that the white collar workforce takes pressure, fewer needs for human beings to run operations and stuff. When you drill down on that, if that does play out here, and say you have a 10% or 15% pullback in the number of white-collar workforce at the buy side, sell side, talk to us, if you would, please, about the vulnerability for your pricing, revenues you can gain here in that sort of environment. Obviously, you are trying to move more and more enterprise-wide pricing as you have been doing that for many, many years. But how vulnerable are you do you feel, you and your peers, if that does play out there? Thank you.

Sanoke Viswanathan: Yeah. Thanks, Craig. What I would start by saying is to imagine a scenario where you have that kind of headcount reduction in our end markets, we have to then appreciate that the agentic workflows have become such high grade and high quality that they are able to really displace the humans who do those jobs today. So that is an assumption that we would have to make. If that were to be right, I would say those agents are going to need very, very high-quality inputs in order to be able to execute the job that we expect those agents to do at that point. I shared the example of the value-at-risk calculation, and that is one of those ways in which we think our data, our connected data, and the embedding that we have in these workflows just becomes exponentially more valuable in a world where agents are becoming the primary call on that data.

So we believe that, you know, we are very well positioned to capture the upside in that kind of scenario. And it will all come down to the optimization of pricing between the seats that those humans may have adopted versus the data consumption that the agents will have in the future. And this is exactly the point I was making earlier, which is we are working very closely with our clients. And I can tell you there is huge appetite and conviction among our clients to partner with us on rewriting these contracts to create flexibility for themselves and for us, and we see us capturing an ability to continue to hold our pricing power and to capture the upside from that transition if and when it happens.

Operator: Thank you. I would now like to turn the call back over to Sanoke Viswanathan for closing remarks.

Sanoke Viswanathan: Thank you, operator. Thank you, everybody, for joining the call today. We continue to execute with discipline. Accelerating ASV growth, strengthening commercial performance, and measurable productivity gains position us well for 2026 and beyond. In May, we will welcome clients to FactSet Research Systems Inc. Focus, where they will experience firsthand the innovation we are delivering across our platform. Operator, this concludes today’s call.

Operator: This concludes today’s conference. Thank you for your participation. You may now disconnect.