What changed in this filing

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Item 1A. Risk Factors

2024-10-29 compared with 2023-10-27 · 62 added, 68 removed, 264 unchanged (33% of the section changed)

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Investors should carefully consider all risks, including those disclosed here, before making an investment decision.

Technology & Data Security Risks

Technology and Data Security Risks

Loss, corruption and misappropriation of data and information relating to clients and others

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Successful access to prohibited data and other cyber-attacks and the failure of cyber-security systems and procedures

In providing our digital-enabled services to clients, we rely on information technology infrastructure that is managed internally along with placing reliance on third-party service providers for critical functions.

In providing our digital-enabled products and services to clients, we rely on information technology infrastructure that is managed internally along with placing reliance on third-party service providers for critical functions.

We and these third-party service providers are subject to the risks of system failures and security breaches, including cyber-attacks (such as those sponsored by nation-states, terrorist organizations, or global corporations seeking to illicitly obtain technology or other intellectual property and those accomplished by phishing scams, hacking, viruses, denials of service attacks, tampering, intrusions, physical break-ins, ransomware and malware), as well as employee errors or malfeasance.

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In addition, to access our network, products and services, customers and other third parties may use personal mobile devices or computing devices that are outside of our network environment and are subject to their own security risk.

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We could suffer significant damage to our brand and reputation:

if a cyber-attack or other security incident were to allow unauthorized access to, or modification of, clients’ or suppliers’ data, other external data, internal data or information technology systems;

if the services provided to clients were disrupted;

or if products or services were perceived as having security vulnerabilities.

if the products and services provided to clients were disrupted;

or if products and services were perceived as having security vulnerabilities.

The costs we would incur to address and resolve these security incidents would increase our expenses.

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Our business is dependent on our ability to process substantial volumes of data and transactions rapidly and efficiently on our computer-based networks, database storage facilities, and other network infrastructure, which are located across multiple facilities globally.

If we experience significant growth of our customer base or increases in the number of products or services or in the speed at which we are required to provide products and services, it may strain our systems.

If we experience significant growth of our customer base, increases in the number of products or services, or increase in the speed at which we are required to provide products and services, it may strain our systems.

Additionally, our systems and networks may become strained due to aging or end-of-life technology that we have not yet updated or replaced.

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While we believe this provider to be reliable, we have limited control over its performance, and a disruption or loss of service from this provider could impair our system's operation and our ability to operate for a period of time.

We maintain back-up facilities and certain other redundancies for each of our major data centers to minimize the risk that any such event will disrupt those operations.

We maintain back-up facilities and certain other redundancies for each of our data centers to minimize the risk that any such event will disrupt those operations.

We are currently in the midst of a multi-year project to enhance our information technology disaster recovery processes with modernized tooling and automation to maximize resiliency and minimize recovery time in the event of a service disruption.

However, a loss of our services involving our significant facilities may materially disrupt our business and may induce our clients to seek alternative data suppliers.

Any such losses or damages we incur could have a material adverse effect on our business.

Although we seek to minimize these risks through security measures, controls, back-up data centers and emergency planning, there can be no assurance that such efforts will be successful or effective.

Although we seek to minimize these risks through security measures, controls, back-up data centers, emergency planning and disaster recovery processes, there can be no assurance that such efforts will be successful or effective.

Additionally, we may also face significant increases in our use of power and data storage and may experience a shortage of capacity and increased costs associated with such usage.

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The technology landscape is constantly evolving.

To remain competitive, we must adapt and migrate to new technologies, applications and processes.

To remain competitive, we must adapt and migrate to new technologies, applications and processes, including the evolving use of AI technology.

Use of more advanced technologies and infrastructure is critical to the development of our products and services, the scaling of our business for future growth, and the accurate maintenance of our data and operations.

The implementation of new technologies and infrastructure, such as migration to new cloud-based systems, is complex and can involve substantial expenditures as well as risks inherent in the conversion to any new system, including potential loss of information and disruption to operations.

The implementation of new technologies and infrastructure, such as migration to new cloud-based systems and increased utilization of AI internally and in our products and services, is complex and can involve substantial expenditures as well as risks inherent in the conversion to any new system, including potential loss of information and disruption to operations.

We may experience unanticipated interruption and delay in the performance and delivery of certain of our products and services.

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Failure by our providers to maintain appropriate security could result in unauthorized access to our systems or a network disruption that could further lead to improper disclosure of confidential information or data, regulatory penalties and remedial costs.

Any disruption to either the provider’s systems or the communication links between us and the provider could negatively affect our ability to operate our data systems and could impair our ability to provide services to our clients.

If the services to our clients are disrupted, or if there is unauthorized access to the confidential information of our clients or our vendors, we could suffer significant damage to our brand and reputation and lose clients.

Any disruption to either the

provider’s systems or the communication links between us and the provider could negatively affect our ability to operate our data systems and could impair our ability to provide products and services to our clients.

If the products and services to our clients are disrupted, or if there is unauthorized access to the confidential information of our clients or our vendors, we could suffer significant damage to our brand and reputation and lose clients.

We also may incur increased operating expenses to recover data, repair or remediate systems, equipment or facilities, and to protect ourselves from such disruptions.

As we increase our reliance on third-party

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systems, our exposure to damages from services disruptions may increase, and we may incur additional costs to remedy damages caused by these disruptions.

As we increase our reliance on third-party systems, our exposure to damages from services disruptions may increase, and we may incur additional costs to remedy damages caused by these disruptions.

Use of open source software could introduce security vulnerabilities, impose unanticipated restrictions on our ability to commercialize our products and services, and subject us to increased costs

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Our use of artificial intelligence technologies may not be successful and may present business, compliance, and reputational risks

We use, and will expand our use of, machine learning and artificial intelligence ("AI") technologies in some of our products and processes.

We use, and are expanding our use of, machine learning and artificial intelligence ("AI") technologies in our products and processes.

If we fail to keep pace with rapidly evolving AI technological developments, our competitive position and business results may be negatively impacted.

Our use of AI technologies will require resources to develop, test and maintain such products, which could be costly.

Third parties may be able to use AI to create technology that could reduce demand for our products.

In addition, the introduction of AI technologies, particularly generative AI, into new or existing offerings may result in new or expanded risks and liabilities, due to enhanced governmental or regulatory scrutiny, litigation, compliance issues, ethical concerns, confidentiality, data privacy or security risks, as well as other factors that could adversely affect our business, reputation, and financial results.

For example, use of AI technologies could lead to unintended consequences, such as accuracy issues, cybersecurity risks, unintended biases, and discriminatory outputs, could impact our ability to protect our data, intellectual property, and client information, or could expose us to intellectual property claims by third parties.

Strategy & Market Demand Risks

Our use of AI technologies requires resources to develop, test and maintain such products, which is costly.

Despite our investments in, and commitment of resources to, the development of AI products and technologies, we may not be successful in generating revenues from these efforts.

In addition, third parties may be able to use AI to create technology that could reduce demand for our products and services.

The introduction of AI technologies, particularly generative AI, into new or existing offerings may result in new or expanded risks and liabilities, due to enhanced governmental or regulatory scrutiny, litigation, compliance issues, ethical concerns, confidentiality, data privacy or security risks, as well as other factors that could adversely affect our business, reputation, and financial results.

If the content, analyses, or recommendations that AI applications assist in producing are, or are alleged to be, deficient, inaccurate, unreliable, misleading, biased, discriminatory or otherwise flawed, any of which may not be easily detectable, our business and reputation may be adversely affected.

Use of AI technologies, and the evolving legal, regulatory and compliance framework for AI, could impact our ability to protect our data and intellectual property, as well as vendor and client information, and could expose us to intellectual property or other claims by third parties.

Use of AI technologies may also increase risks related to cyberattacks or other security incidents or result in a failure to protect confidential information.

Because AI technology is highly complex and rapidly developing, it is not possible to predict all of the legal, operational or technological risks that may arise relating to our use of AI.

Strategy and Market Demand Risks

Competition in our industry may cause price reductions or loss of market share

We continue to experience intense competition across all markets for our products, with competitors ranging in size from smaller, highly specialized, single-product businesses to multi-billion-dollar companies.

We continue to experience intense competition across all markets for our products and services, with competitors ranging in size from smaller, highly specialized, single-product businesses to multi-billion-dollar companies.

While we believe the breadth and depth of our suite of products and applications offer benefits to our clients that are a competitive advantage, our competitors may offer price incentives to attract new business.

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Weak economic conditions may also result in clients seeking to utilize lower-cost information that is available from alternative sources.

The impact of cost-cutting pressures across the industries we serve could lower demand for our products.

Clients within the financial services industry that strive to reduce their operating costs may seek to reduce their spending on financial market data and related services, such as ours.

The impact of cost-cutting pressures across the industries we serve could lower demand for our products and services.

Clients within the financial services industry that strive to reduce their operating costs may seek to reduce their spending on financial market data and related services, such as

If our clients consolidate their spending with fewer suppliers, by selecting suppliers with lower-cost offerings or by self-sourcing their needs for financial market data, our business could be negatively affected.

The continued shift from active to passive investing could negatively impact user count growth and revenues

The predominant investment strategy today is still active investing, which attempts to outperform the market.

The predominant investment strategy today is no longer active investing, which attempts to outperform the market.

The main advantage of active management is the expectation that the investment managers will be able to outperform market indices.

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Passive investing requires little decision-making by investment managers and low operating costs which result in lower fees for the investor.

A continued shift to passive investing, resulting in an increased outflow to passively managed index funds, could reduce demand for the services of active investment managers and consequently, the demand of our clients for our services.

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A decline in equity and/or fixed income returns may impact the buying power of investment management clients

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Moreover, extended declines in the equity and fixed income markets may reduce new fund or client creation.

Each of these developments may result in lower demand from investment managers for our services and workstations, which could negatively affect our business.

Each of these developments may result in lower demand from investment managers for our products and services, which could negatively affect our business.

Uncertainty or downturns in the global economy and consolidation in the financial services industry may cause us to lose clients and users

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Volatility or downturns in the financial markets may delay the spending pattern of clients and reduce future ASV growth

The decision on the part of large institutional clients to purchase our services often requires management-level sponsorship and typically depends upon the size of the client, with larger clients having more complex and time-consuming purchasing processes.

The decision on the part of large institutional clients to purchase our products and services often requires management-level sponsorship and typically depends upon the size of the client, with larger clients having more complex and time-consuming purchasing processes.

The process is also influenced by market volatility and market downturns.

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Failure to develop and market new products and enhancements that maintain our technological and competitive position and failure to anticipate and respond to changes in the marketplace for our products and customer demands

The market for our products is characterized by rapid technological change, including methods and speed of delivery, changes in client demands, development of new investment instruments and evolving industry standards.

The market for our products is characterized by rapid technological change, including developing technologies such as AI, methods and speed of delivery, changes in client demands, development of new investment instruments and evolving industry standards.

The direction of these trends can render our existing products less competitive, obsolete or unmarketable.

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Further, any new products and enhancements may not adequately meet the requirements of the marketplace or achieve market acceptance.

We must make long-term investments and commit significant resources before knowing whether these investments will eventually result in products and services that satisfy our clients' needs and generate revenues required to provide the desired results.

We must make long-term investments and commit significant resources, for example, to developing and utilizing AI technology, before knowing whether these investments will eventually result in products and services that satisfy our clients' needs and generate

revenues required to provide the desired results.

Our failure or inability to anticipate and respond to changes in the marketplace, including competitor and supplier developments, may also adversely affect our business, operations and growth.

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Defects, errors, or delays in our products that are significant, or are perceived to be significant, could result in rejection or delay in market acceptance, damage to our reputation, loss of revenues, lower rate of license renewals or upgrades, diversion of development resources, product liability claims or regulatory actions, or increases in service and support costs.

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We have provisions in our client contracts to limit our exposure to potential liability claims brought by clients based on the use of our products or services or our delay or failure to provide services.

Contracts with customers also increasingly include service level requirements and audit rights to review our security.

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Our ability to attract and retain clients and employees is affected by external perceptions of our brand and reputation.

Reputational damage from negative perceptions or publicity, including without limitation market perception of our sustainability and corporate responsibility policies and practices, could affect our ability to attract and retain clients and employees and our ability to maintain our pricing for our products.

Although we monitor developments for areas of potential risk to our reputation and brand, negative perceptions or publicity could have a material adverse effect on our business and financial results.

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difficulties in staffing and managing personnel that are located outside the U.S.;

different regulatory, legal and compliance requirements, including in the areas of privacy and data protection, anti-bribery and anti-corruption, trade sanctions and restraints and currency controls, marketing and sales and other barriers to conducting business;

other barriers to conducting business;

social and cultural differences, such as language;

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If we are not able to adapt efficiently or manage the business effectively in markets outside the U.S., our business prospects and operating results could be materially and adversely affected.

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Failure to enter into, renew or comply with contracts supplying new and existing data sets or products on competitive terms

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We are not dependent on any one third-party data supplier to meet the needs of our clients, with only two data suppliers each representing more than 10% of our total data costs for fiscal 2024 .

Our failure to be able to maintain our supplier relationships, or the failure of our suppliers to deliver accurate data or in a timely manner, or the occurrence of a dispute with a vendor over use of their content, could increase our costs and reduce the type of content and products available to our clients, which could harm our reputation in the marketplace and adversely affect our business.

Increased accessibility to free or relatively inexpensive information sources may reduce demand for our products

Our failure to be able to maintain our supplier relationships, or the failure of our suppliers to deliver accurate data or in a timely manner, or the occurrence of a dispute with a vendor over use of their content, could increase our costs and reduce the type of content and products and services available to our clients, which could harm our reputation in the marketplace and adversely affect our business.

Increased accessibility to free or relatively inexpensive information sources may reduce demand for our products and services

Each year, an increasing amount of free or relatively inexpensive information becomes available, particularly through the internet, and this trend may continue.

The availability of free or relatively inexpensive information may reduce demand for our products.

While we believe our service offering is distinguished by such factors as customization, timeliness, accuracy, ease-of-use, completeness and other value-added factors, if users choose to obtain the information they need from public or other sources, our business, results of operations, and cash flows could be adversely affected.

The availability of free or relatively inexpensive information may reduce demand for our products and services.

While we believe our offerings are distinguished by such factors as customization, timeliness, accuracy, ease-of-use, completeness and other value-added factors, if users choose to obtain the information they need from public or other sources, our business, results of operations, and cash flows could be adversely affected.

Inability to hire and retain key qualified personnel

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Competition for talent, especially engineering personnel, is strong.

We need technical resources such as engineers to help develop new products and enhance existing services.

We need technical resources such as engineers to help develop new products and services and enhance existing products and services.

We rely upon sales personnel to sell our products and services and maintain healthy business relationships.

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Our business could be materially and adversely affected by the risk, or the public perception of risk, related to a pandemic or widespread health crisis, such as the COVID-19 pandemic.

A significant outbreak, epidemic or pandemic of contagious diseases in the human population could result in a widespread health crisis adversely affecting the broader economies, financial markets and overall demand for our products.

In addition, any preventative or protective actions that governments implement or that we take in respect of a global health crisis, such as travel restrictions, quarantines or site closures, may interfere with the ability of our employees, vendors, and data suppliers to perform their respective responsibilities and obligations relative to the conduct of our business, including our ability to gather content.

obligations relative to the conduct of our business, including our ability to gather content.

Such results could have a material adverse effect on our operations, business, financial condition, results of operations, or cash flows.

Legal & Regulatory Risks

Legal and Regulatory Risks

Legislative and regulatory changes in the environments in which we and our clients operate

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These laws, rules, and regulations, and their interpretations, may conflict or change in the future, and compliance with these changes may increase our costs or cause us to make changes in or otherwise limit our business practices.

In addition, the global nature and scope of our business operations make it more difficult to monitor areas that may be subject to regulatory and

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compliance risk.

In addition, the global nature and scope of our business operations make it more difficult to monitor areas that may be subject to regulatory and compliance risk.

If we fail to comply with any applicable law, rule, or regulation, we could be subject to claims and fines and suffer reputational damage.

Uncertainty caused by political change globally, and complex relationships across countries, including the U.S.

and nations in Europe and Asia, heightens the risk of regulatory uncertainty.

Uncertainty caused by political change globally and complex relationships across countries heightens the risk of regulatory uncertainty.

Many of our clients operate within a highly regulated environment and must comply with governmental legislation and regulations.

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Some recent legislative and regulatory changes that we believe might materially impact us and our clients include:

(a) in the European Union ("EU") and the United Kingdom ("UK"), the Markets in Financial Instruments Directive (recast) ("MiFID II"), which became effective in January 2018, may adversely affect demand for our services;

(b) in the UK, the uncertainty surrounding the UK and EU regulatory frameworks following the UK's departure from the EU in January 2020 ("Brexit"), including the Financial Services and Markets Bill, may negatively impact our revenues or growth;

and (c) evolving laws, rules and regulations in a variety of jurisdictions around such areas as climate, data privacy, cybersecurity, and data protection.

and (c) evolving laws, rules and regulations in a variety of jurisdictions around such areas as climate, data privacy, cybersecurity, AI and data protection.

Adverse resolution of litigation or governmental investigations

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The global and diverse nature of our business means that there could be additional examinations by governmental tax au thorities and the resolution of ongoing and other probable audits which could impose a future risk to the results of our business.

In August 2019, July 2021 and December 2022, we received Notices of Intent to Assess (the "Notices") additional sales/use taxes, interest and underpayment penalties from the Commonwealth of Massachusetts Department of Revenue relating to prior tax periods.

We requested pre-assessment conferences with the Department of Revenue's Office of Appeals to appeal the Notices and in May 2023 we received a Letter of Determination from the Commonwealth upholding the Notices, along with a Notice of Assessment for all the periods covered by the Notices.

On June 22, 2023 , we filed an Application for Abatement wi th the Commonwealth disputing all amounts assessed, which was subsequently denied.

We are filing petitions with the Appellate Tax Board to appeal all amounts assessed by the Commonwealth and believe that we will ultimately prevail;

however, if we do not prevail the amount of these assessments could have a material impact on our consolidated financial position, results of operations and cash flows.

As of August 31, 2023, we have concluded that some payment to the Commonwealth is probable.

We have recorded an accrual which is not material to our consolidated financial statements.

While we believe that the assumptions and estimates used to determine the accrual are reasonable, future developments could result in adjustments being made to this accrual.

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For example, as discussed in greater detail in Part II, Item 8.

Note 13, Commitments and Contingencies in the Notes to the Consolidated Financial Statements of this Annual Report on Form 10-K , during fiscal 2024, we took a charge of approximately

$54 million related to a sales tax dispute with the Commonwealth of Massachusetts, bringing our total charge with respect to that matter to $64 million.

While we do not anticipate taking additional material charges with respect to this matter, and we believe that the assumptions and estimates used to determine the charge are reasonable, future developments could result in further adjustments being made to this amount.

Changes in tax laws or the terms of tax treaties in a jurisdiction where we are subject to tax could have an impact on our taxes payable.

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in several currencies.

Our primary currency exposures include the Indian Rupee, Euro, British Pound Sterling and Philippine Peso.

Our primary currency exposures include the British Pound Sterling, Euro, Indian Rupee and Philippine Peso .

To the extent our international activities increase in the future, our exposure to fluctuations in currency exchange rates may increase as well.

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Economic, political and market forces beyond our control could adversely affect our business.

Our costs and the demand for our products may be impacted by domestic and international factors that are beyond our control.

Negative conditions in the general economy in either the United States or abroad, including conditions resulting from financial and credit market fluctuations, changes in economic policy, inflation rate fluctuations and trade uncertainty, including changes in tariffs, sanctions, international treaties and other trade restrictions, or other geopolitical events, such as the ongoing military conflicts between Russia and Ukraine and in the Middle East, could result in an increase in our costs and/or a reduction in demand for our products, which could have an adverse effect on our results of operations and financial condition.

Our costs and the demand for our products and services may be impacted by domestic and international factors that are beyond our control.

Negative conditions in the general economy in either the United States or abroad, including conditions resulting from financial and credit market fluctuations, changes in economic policy, inflation rate fluctuations and trade uncertainty, including changes in tariffs, sanctions, international treaties and other trade restrictions, or other geopolitical events, such as the ongoing military conflicts between Russia and Ukraine and in the Middle East, could result in an increase in our costs and/or a reduction in demand for our products and services, which could have an adverse effect on our results of operations and financial condition.

Risks Relating to Our Debt

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This includes our obligations under the Senior Notes and the 2022 Credit Facilities.

Under the 2022 Revolving Facility, we have $250.0 million of unused commitments and an option to increase the size of the facility by an additional $750.0 million.

Refer to Note 12, Debt in the Notes to the Consolidated Financial Statements included in Part II, Item 8.

of this Annual Report on Form 10-K for definitions of these terms and more information on the Senior Notes, 2022 Credit Facilities and 2019 Revolving Credit Facility.

In addition, under the 2022 Revolving Facility, we have $250.0 million of unused commitments and an option to increase the size of the facility by an additional $750.0 million.

Refer to Part II, Item 8.

Note 12, Debt in the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K for definitions of these terms and more information on our debt.

Our indebtedness could have important consequences to investors, including:

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making us more vulnerable to adverse changes in general economic, industry and government regulations and in our business by limiting our flexibility in planning for, and making it more difficult for us to react quickly to, changing conditions;

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placing us at a competitive disadvantage compared with those of our competitors that have less debt;

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To mitigate this exposure, on March 1, 2022 , we entered into an interest rate swap agreement to hedge the variable interest rate obligation on a portion of our outstanding balance under the 2022 Credit Facilities .

The 2022 Swap Agreement matured on February 28, 2024, and on March 1, 2024, we entered into the 2024 Swap Agreement to hedge a portion of our outstanding floating SOFR debt.

However, as the interest rate swap agreement covers only a portion of our outstanding balance under the 2022 Credit Facilities , a substantial portion of our outstanding balance under the 2022 Credit Facilities continues to be exposed to interest rate volatility.

An increase in the applicable rates would increase our interest payment obligations under the 2022 Credit Facilities and could have a negative effect on our cash flow and financial condition.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors