Factset Research Systems Inc (FDS) 2005 Q2 法說會逐字稿

Welcome to FactSet Research Systems' second quarter fiscal 2005 quarterly earnings conference call.

At this time, all participants are in a listen-only mode.

After the presentation, we will conduct a question-and-answer session.

To ask a question at that time, please press star then 1.

Today's conference is being recorded, if you have any objections you may disconnect at this time.

Now I would like to turn the meeting over to Mr. Peter Walsh, Chief Financial Officer.

Mr. Walsh, you may begin.

Thank you.

Good morning, everyone, and thanks to all of you for joining us today.

Welcome to FactSet's second quarter earnings conference call.

On the call today are members of our executive team, Phil Hadley, Chairman and CEO;

Mike Frankenfield Director of our U.S.

Investment Management business; and Scott Beyer, Director of International Operations.

Before we begin, I would like to remind you that throughout this conference call, there will be certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

These statements are based on management's current expectations and beliefs and are not guarantees of future performance, and involve certain risks, uncertainties and assumptions which are difficult to predict.

Therefore, actual results may differ materially from what is expressed or forecasted in such forward-looking statements due to changes in economic, business, and/or competitive factors.

More information about these and other potential factors that could affect FactSet's business and financial results are in FactSet's annual report on Form 10-K, for the year ended August 31, 2004, and quarterly reports on Form 10-Q for each of the quarters ended February 28, 2004, May 31, 2004, and November 30, 2004, all of which are on file with the Securities and Exchange Commission.

FactSet undertakes no obligation to publicly update any forward-looking statements as a result of new information, future events, or otherwise.

I have prepared remarks that will address our operating and financial performance during the second quarter of fiscal-year 2005.

My remarks will be followed by a Q&A session.

Before we view the highlights of the quarter, please allow me to begin with two housekeeping items.

First, we've previously announced that effective February 4, FactSet's common stock split 3 for 2, increasing shares outstanding by 50 percent.

Second, diluted EPS for the second quarter was $0.34, up 17.2 percent over the year-ago quarter.

Please be reminded that during the second quarter of fiscal 2004, an income tax benefit relating to the settlement of prior-year tax returns for certain state credits was recognized, amounting to a $0.02 increase of quarterly earnings per share a year ago.

Now, turning to our performance.

We are pleased to report that we have met again the key financial guidance previously shared with you.

First, quarterly revenues reached 76.5 million.

Second, operating margins exceeded 35 percent.

And third, our effective tax rate was 37 percent.

The real magic behind the achievement is a combination of delivering world class service to a loyal client base, while developing products and services that make clients more efficient.

Our aspiration is to generate superior returns over the long term, not just a few quarters or years.

This would not be possible if our strength were a single product or if we were relying on a low quality client base.

Let's now talk about the highlights from the quarter starting with free cash flow.

Free cash flow captures all the balance sheet and P&L movements that we believe are important to creating value.

Maximizing free cash flow per share is therefore a key financial objective.

We define free cash flow as cash generated from operations, which includes the cash cost for taxes, and changes in working capital, less capital spending.

Free cash flow generated during the quarter was $11.1 million.

Please note that each fiscal year during the second quarter, FactSet is required to make two of its four estimated tax payments to the U.S. government.

The extra payment this quarter reduced free cash flow by 7.8 million, an impact comparisons of free cash flow on sequential quarterly basis.

Now, let's look at what we did with cash and what happened to our balance sheet.

Our ending cash and marketable securities was 63.4 million, down 4.5 million since last quarter.

A change in cash was attributable to five primary factors.

Our cash generated from operations of 6.1 million, the generation of 2.9 million from the exercise of employee stock options, offset by cash used for an acquisition of 5.9 million, capital expenditures of 5.1 million, and dividends paid of 2.1 million.

It is important to note that our accounts receivable balance increased to 67.2 million, up 14.1 million during the quarter.

Our switch to Goldman Sachs as our sole clearing broker effective January 1, 2005, additional time necessary to implement a new subscription order entry system, and JCS practice to invoice clients in advance of services provided were the causes of this increase.

Now, allow me to provide color behind each of those events.

As you may know, buy side clients can pay for subscriptions to FactSet services via commissions on security transactions.

FactSet Data Systems, our broker dealer subsidiary has employed Goldman to clear our client's trades as of January 1.

The change to Goldman has been a great success as evidenced by the number of clients that have chosen to participate in this program.

Nevertheless, the levels of trading activity is below historical norms as some are still opening new accounts and establishing new trading relationship contacts within Goldman.

Clients payments through Goldman were $4 million below our historical average for a two-month period ending February 28.

While we are pleased that payments through Goldman in February, 2005 were 50 percent higher than January, and believe it is the beginning of a trend, FactSet has no relevant history to rely on with changing clearing brokers.

The last time FactSet Data Systems changed clearing brokers was approximately 20 years ago.

Gaging from the positive client reaction to our partnership with Goldman, we believe this anomaly should be cured over the remaining months of calendar 2005.

During the second quarter, a new subscription order entry system was put into service.

Additional time was required to verify subscription orders were properly recorded.

This important QA step delayed mailing of client invoices dated January 31 by 14 days.

For purposes of your background, we chose to replace our 10-year-old order entry system as part of the plan for Sarbanes-Oxley 404 compliance.

As previously reported, FactSet acquired JCF on September 1, 2004.

JCF bills its clients annually in advance, and at the time of invoicing a receivable is recorded. 42 percent of JCF's clients were invoiced in advance during the second quarter.

We expect receivables from JCF clients to decline as this peak of advanced billings is cycled through the normal payment process.

We compared our accounts receivable aging at November 30, 2004, to February 28, 2005.

It is significant to note that 30 percent of the AR increase during the quarter is less than 30 days old, and 77 percent is less than 60 days.

We continue to be privileged to service a very high quality client base and our actual experience of bad debt write-offs has and continues to be extremely low.

Now, moving to the P&L.

The overall summary aligns with our historical record of delivering outstanding products and services to support a growing revenue base, without a commensurate increase in expenses.

Including the second quarter, FactSet has delivered sequential revenue growth for 33 quarters.

We share this distinction with only five other U.S. companies.

During the second quarter, we produced revenues of 76.5 million, up 25 percent from a year ago.

Excluding acquisitions, our top line grew a healthy 14 percent on an organic basis.

More subscriptions to databases and value-added applications, such as our suite of portfolio analytic products, were important contributors.

We exited the quarter with approximately 23,200 users from 1,437 clients, a net increase of 27 clients over the past 3 months.

Let me share with you now a couple of anecdotes that illustrate some of the key client trends we're seeing.

Demand for our portfolio analytics applications continued to increase.

At February 28, there were 405 clients representing approximately 3,100 users who subscribe to these services.

This compares favorably to a total of 360 clients and 2,700 users a year ago.

Subscriptions to FactSet on content are up and we're experiencing benefits from the acquisition of JCF.

While 2 quarters is not a valid sample size, JCF's performance has exceeded internal expectations.

Client retention continued to remain above 95 percent.

Once again conforming the importance of FactSet applications and services to our blue chip client base.

Client subscriptions totalled 307.6 million at quarter end, up from 249.2 million a year ago, and 299 million at the end of November.

As a reminder, we define subscriptions as the forward-looking revenues for the next 12 months from all services currently being supplied to our clients.

Breaking revenue growth down geographically, our U.S. business produced revenues of 55.9 million, a 14 percent increase over the past 12 months.

Revenues from non-U.S. sources grew 65 percent to 20.6 million.

Organically, year-over-year, revenue increase was 19 percent for our international business.

By region, quarterly revenues from our European and Pacific Rim operations rose 76 percent and 31 percent, to 16.9 million, and 37 -- and 3.7 million respectively.

Subscriptions by non-U.S.-based clients now total 82.8 million, representing 27 percent of our total subscriptions.

Moving to the expense side of our P&L, operating expenses increased 24 percent to 49.4 million for the second quarter, and our operating margin was a strong 35.3 percent.

Cost of sales as a percentage of revenues decreased by 180 basis points compared to the second quarter of fiscal 2004.

The drivers of this decline were lower communication costs, and computer maintenance expenses, and a decrease in depreciation on computer-related equipment.

These declines as a percentage of revenues were partially offset by increases in data cost, amortization of intangible assets and a shift in employees performing activities considered SG&A.

Lower computer-related and communication costs were primarily the result of favorable pricing trends from industry suppliers.

The rise in data expenses was largely due to new costs from acquisitions, included for the first time in the second quarter P&L, an incremental content cost associated with additional database subscription by clients.

The increase in amortization expense is a result of our recent acquisitions, principally JCF.

Selling, general, and administrative expenses as a percentage of revenues increased by 150 basis points from a year ago.

This rise was largely the result of higher expenses and compensation, T&E, and noncash charges from furnitures and fixtures and leasehold improvements.

The increases were partially offset by a decline in miscellaneous expenses, which included the reduction of certain non-income tax accruals after formal discussions with various state tax authorities during the second quarter.

Higher compensation is primarily the result of more employees classified as SG&A.

T&E rose from new costs from JCF and our Company's global sales conference was also held during the second quarter.

Increases in noncash charges related to the buildout of the Company's new headquarters.

With respect to capital spending, CapEx on a fiscal year-to-date basis totaled $9 million.

Approximately 25 percent of the total was used to purchase computer-related equipment while the remainder was spent on furniture and leasehold improvements.

Our guidance for capital spending for fiscal year 2005 remains at 22 million.

Thank you for listening in to my review of our operating and financial performance.

We would now be happy to entertain any questions you may have.

Thank you. [ OPERATOR INSTRUCTIONS ] Our first question is from Brett Manderfeld of Piper Jaffray.

Your line is open.

You may ask your question.

Hi, I have two questions.

First, can you give us a sense for the revenues, annual revenues coming from the TrueCourse acquisition?

If not revenue, maybe just the contribution to subscriptions in the quarter?

And second, hoping you can comment on the pricing environment, I think you've mentioned previously that the price change/increase was completed at the end of, I believe, the calendar year, and are we looking at more stable pricing now or are prices still moving up?

Thank you.

Hi, Brett, how you doing?

It is Phil Hadley.

The TrueCourse acquisition was something a little more than $1 million in subscription value, I think, added to the subscription.

As far as the pricing environment, we haven't changed our prices for a long time, though as you point out, there has been some effect through the client base.

So there's not anything material going on as far as the clients would be concerned.

But what -- I guess what I was kind of getting at was just the increase to the $6,000 desktop.

I think you said that that was now fully in the system.

Is that true?

Yes.

It is.

Okay.

All right.

So in terms of going forward, are those -- would the idea be that we kind of keep them at that level or would there be a change at any specific time throughout the year, maybe at the turn of the calendar year?

At this point, we don't have any plans to change price on any of our products that I'm aware of.

I mean we're constantly reviewing our value price point in the marketplace and certainly can reserve the right to change configurations, but the general price that we sell for our product is set and feel very comfortable with the value point.

And in terms of where the growth came, is that -- is it still primarily coming from the sell side with headcount, or is it pretty evenly spread out between the buy and sell side, Phil?

Well, I think our mix of business is -- remains relatively constant.

So if you take roughly three quarters of our business in the United States, roughly three quarters is buy side versus a quarter sell side, I think that mix has stayed relatively constant.

Each of those different segments go through their cycles as to their level of contribution.

For example, the U.S. buy side is far more cyclical for the summer hires.

As Peter illustrated, the international business right now is pretty strong.

And the U.S.

IM business is kind of steady as she goes and trends up slightly, trends down slightly, but is a very constant flow of clients and products.

Okay.

Great.

And just -- I was just thinking about that you mentioned $1 million in subscriptions from TrueCourse, so you paid almost eight times trailing revenue for TrueCourse?

Am I doing the math correctly?

I said 1 million something.

1 million something?

Around it, yes, it was somewhere in that neighborhood.

Okay.

Great.

Thanks.

Thank you.

Our next question is from Lisa Monaco of Morgan Stanley.

You may ask your question.

Hi, yes.

Phil, could you just give us an update on any changes, I know it is tough given the switch over to Goldman, but if you could just give us some color on any client changes from soft dollar to cash pay.

That's my first question.

I don't -- is it material this quarter?

I don't think we even -- single digits?

I don't think it has been any more or less, two or three, which is kind of what it's been been doing for 10 years, so I don't think it is a material number.

Okay.

The switch to Goldman was driven by a couple of things.

One, we've always had a very, very competitive commission price for our product at a ratio of 1.1 to 1 for our clients for the U.S. domestic business and the switch to Goldman was necessary for us to maintain that ratio for our clients.

And then as we polled our clients about changing the relationship, they felt very favorable about Goldman being our partner when it came to clearing so we're very excited about that relationship.

Okay.

And if you could just give us some color on your guidance.

What do you need to see happen to hit the high end of your revenue expectation?

And that would represent a modest acceleration in year-over-year revenue growth.

Well, coming into a quarter, we've never had a business that gives us great visibility to see exactly the way a quarter is going to come out.

The financial market certainly influence it, certainly a large clients sometimes can influence it, and the decision process our clients go through sometimes is short and sometimes it becomes very long.

So that's why there is quite a bit of variability as to what the number can be.

You know from watching us over the years that the subscription number quarter to quarter can be pretty choppy.

And as we come into the summer, if you noticed last summer, the final two quarters of the year, the subscription growth was pretty strong.

So, if that is what happens this year, then obviously you end up at the high end of the range.

If that doesn't happen, for the financial markets or other reasons, then you would end up at the low end of the range.

Okay.

Great.

Thanks.

Thank you.

Our next question is from John Neff of William Blair & Company.

You may ask your question.

Hi, guys.

A lot of my questions have been asked.

I appreciated the additional color on the accounts receivable increase.

I think you quantified, I just couldn't write fast enough, what the impact from the -- some of the things, the drivers there that you mentioned, so could you -- if you did quantify the impact of the contribution to accounts receivable, could you just repeat that information?

The dollar amounts?

John, it's Peter Walsh, the total increase for the quarter was 14.1 million and the only thing we quantified was related to Goldman, which was 4 million of that increase.

Okay.

Great.

We did give you the 42 percent of JCF subscriptions were billed in the quarter.

So you can kind of get a rough idea of the materiality of that with some math, based on their subscription count.

Okay.

The majority of it ultimately ended up as the delay in billing from the new subscription system, which is just one of those things as a company you have to go through, and we chose to get our invoices out right as opposed to send them out wrong and correct them later, which, obviously impacts receivables.

Okay.

Great.

And the only other relevant number I thought, John, was on the A's [ph] accounts receivable, 77 percent, when we compared the November 30 balance 2004 to the end of the second quarter balance, was less than 60 days.

Okay.

In the change.

Okay.

Great.

And then the shift in some expense from the gross cost of sales line to SG&A, you expect that to be permanent?

In other words, is the gross margin you achieved here in the second quarter kind of a sustainable base rate?

Or do you expect it to sort of go back and forth somewhat?

We've provided guidance regarding some -- regarding margins for the ensuing third quarter.

The shift in margins has several components.

Some of it relates to where we're classifying employees, and other of it relates to lower costs through several channels of our business.

And then, obviously, the first time that we've included costs from certain acquisitions.

So there is a lot of different components that relates to the shift between margins on cost of services and SG&A.

To give you a little bit of additional color, our business is difficult to draw the line between what the cost of goods sold and what is a selling expense, especially when it comes to employees.

Obviously, some are very clear.

They're producing product that as you start to service the client, is that a cost of the business, or is it a selling function.

So it causes us on occasion to, as we review our employees and where they're being tracked to sometimes move them around a bit, but overall, you want to look at the total margin is the most important factor.

Okay.

Great.

Thank you.

Thank you.

Our next question is from Steve Riccio of Landmark Capital.

You may ask your question.

Yes, hi, guys.

Just more or less a housekeeping question.

As non-U.S. business becomes a larger portion of your sales, should we be modeling for a lower tax rate going forward?

Our effective tax rate right now incorporates our activities outside of the United States.

And I don't think there's any necessary reason to model for a materially lower tax rate than what we provided guidance on.

Okay.

Great.

Thanks guys.

Thank you.

Our next question is from Carla Cooper of Robert W. Baird.

Your line is open.

Good morning.

I wonder if you could talk a little bit more about international and the growth there and whether you think that the presence of JCF as part of your product portfolio is driving that?

Just a little more color there.

Hi, Carla.

It is Scott Beyer.

Actually, I would like to make it a little bit more exciting, but for me it is a very comforting thing to say that our performance over the quarter, and in fact, the fiscal year to date has been a very broad-based growth.

A very healthy one in that respect. 75 percent of the business internationally also is on the investment management side.

So to have that segment moving along in a nice steady growth rate is something that gives me a lot of comfort.

I guess if I'm going to add a little bit of color out there to make it somewhat interesting, I would say on the PMW side, the portfolio analytics suite, there has been significant investment in that product over -- well, a little bit longer than that, but specifically for our needs over the last year, so we're starting to see some -- definitely some pay back on that that actually began last fiscal year.

Also, I guess I would point out that the banking business is doing a little bit better internationally.

Head count there is helping us along with some of the proprietary content sales.

And then finally, Asia is probably having a better time than they've had by some metrics ever, but certainly in our case it is performing very nicely.

We feel very comfortable about our competitive product position there.

With respect to JCF specifically, I think Peter alluded to earlier that it has met, in terms of your internal estimates, met or exceeded every goal that we set for it.

And it has helped us, I believe, in a competitive way, particularly in Europe, because we kind of control a lot of the content now that is needed to secure new client agreements.

So we control much more of the sales process, and now, with the combined sales force that we have, and being able to control the sales process better, I think we're starting to see some of the benefits of that.

And that's certainly a lasting thing for us.

And then maybe just a comment on the JCF business in the United States, if there is -- you're seeing traction there in terms of more U.S. buyers of those estimates?

This is Mike Frankenfield, Carla.

We're still pretty early in the process with respect to JCF in the United States.

That product has a well-established base outside of the United States, specifically in continental Europe, and we're very much in the early stages of building that business in the U.S.

Great.

Thank you.

Thank you.

Our next question again is from Lisa Monaco of Morgan Stanley.

You may ask your question.

Hi, just a couple of follow-ups.

Phil, if you could just elaborate on if you have any color as to who or how many of your clients are actually using Marquee and if that's -- if you're seeing that steadily increase?

And also if you've seen clients that are using the premium-based work station, how that has helped to convert into portfolio analytics sales?

And also just to clarify on the rollout of the premium price based structure, is that fully rolled out overseas?

I understand it was fully rolled out in the U.S.

Just given that Marquee did not have some of the international news feeds available.

And then lastly, if you could just give us an update on your headcount.

Thanks.

The last one was Europe headcount?

Your head count.

Total head count.

All right.

The first one was the Marquee question.

We've had Marquee in the marketplace now for 2.5 years and it continues to make great progress as far as functionality for our clients.

And it's within our client base of 20,000-plus users, it continues to expand quite rapidly.

We're very pleased with how it's doing.

It is also now just getting international quotes or non-U.S. quotes, which expands its opportunity for us.

So it is very much a part of the premium product.

To answer your next question, I think it was about premium work stations, and that is done with the U.S. client base.

Europe and Asia is slightly different in how work stations are priced, but the concept is the same depending on the client profile, and the way it is used within the client.

And the last one was our headcount, is --

Our headcount at the end of the quarter is 1,060 employees, up 35 over the past three months.

It is 1,060.

1,060.

Okay.

So is this -- the premium priced model is rolled out internationally?

I know it is slightly different than the U.S.

No, I would answer that no.

Okay.

Work station pricing in the way the product is sold and used internationally is very different than the way it is in the states at this point, both because of investment styles and the mix of product that we typically sell internationally versus domestically.

Okay.

Thanks.

Thank you.

Our next question is from Macon Rudeso of Team Capital Management.

Your line is open.

Thanks.

I actually had two questions.

From the payment system, the shift over to Goldman, was that a complete change in the way you people were paying for the product in general, or are you moving from a one soft dollar relationship to another soft dollar relationship?

It was the latter.

We had two clearing brokers that we had relationships with for a long period of time.

And they were given the opportunity to compete for that business, and were not able to retain it, and for a variety of factors we chose Goldman as our partner going forward.

Okay.

And on the second side is, your data provider, I guess one thing in the marketplace, there's been some competitive issues out there that seem to be coming up from Capital IQ, which is somewhat of a competitor in the lower end of the market and on some of the hedge fund M&A and smaller fund management side of the business.

They are owned, if I understand it correctly, by S&P Corporation.

Correct.

Which is also an entity with Compustat.

Correct.

Which Compustat is a data provider to FactSet in some instances; is that correct?

That is correct.

Crazy industry, isn't it?

Well, how conceptually should we think about that?

Is that -- what is the -- what is their strategy there?

What risk does that propose to the business model?

I mean, what are your thoughts there?

I mean, I can't speak as to what their strategy is, but I -- it is not as unusual as it might seem.

We're both a supplier of data to Reuters, and a receiver of data from Reuters.

Who at some levels are competitors to us, certainly in the market data space.

We supply data to Thomson and at some levels compete with Thomson in the marketplace.

We supply data -- or we receive data from Compustat for S&P and also compete with them, obviously as you illustrated, at some level of the marketplace.

So it is pretty normal in the marketplace as to S&P, in particular, we've had a long relationship on the Compustat side of the business and I think have many of their major clients use their product through our system, and we have absolutely no plans to discontinue support of it, and support it as -- to the best of your ability.

It is a great product.

And we see no reason not to.

As to Capital IQ, that is really a different interface and kind of a different market they're going after.

How they're going to mix those two together is really up to their future business model.

So it doesn't seem like S&P is trying to compete more heavily against you by buying an interface system?

I mean, I guess I would have to answer the question to say, yes, in some way they certainly are.

But I don't think it is any more unusual than them just wanting some distribution for a company that has a great deal of content.

Both Compustat and a lot of fixed income and other information.

Okay.

All right.

But I guess it does give other people a little bit of a pricing advantage if you're having to pass on you paying for the data to the customer, right?

That's true.

But what has to happen, or what does happen in a system like that is our clients have many choices of, for example, Compustat is a U.S. fundamental database, they have several choices of what they can choose, and in our particular case, they can choose Compustat, they can choose Reuters product and even Thomson's domestic world scope product at some point would be an offering.

So they need to compete on the quality of their content for the value that it is delivering.

So it works out in really the clients favor, in that they get great value for the product they're trying to achieve.

Got you.

Thank you.

Thank you.

Our next question is from Louie Toma of John A. Levin.

Your line is open now.

Hi.

I'm sorry to harp on this, but just trying to understand the DSOs.

Now you said that 4 million of the 14 million increase was related to switching to Goldman, is that correct?

That is correct.

Okay.

And so if you take the 4 million out, the DSOs go from 80 to 75.5, which is still a decent amount above what you're historically -- the historical level, so I guess what is driving the rest of the increase?

What is your targeted range for DSOs going forward?

So when we were speaking about the increase in receivables or about Goldman, we were talking about the increase over the quarter of 14.1 million.

Yes.

So the other two components I think that we've laid out were related to a new subscription order system, and also our practice by JCF to bill in advance.

Those are really the components that are driving the increase in receivables, and if you're calculating DSOs, those are the same factors.

Okay.

And so if you break those two down, what is the impact from those individually?

So as Phil previously mentioned, the increase in -- or the change in our subscription order system was a meaningful component to our change in receivable for the quarter.

It is difficult to break it down into exact dollar amounts between those two events.

Okay.

And so going forward, what's a reasonable level to expect for the DSOs?

Well, I think there are several factors that Peter pointed out.

Obviously, we switched clearing brokers.

Our client, the commission side of our business, the 50 or 60 million that will go through Goldman over the next 12 months, don't look at the way they pay their bill on a monthly basis like sending somebody an invoice.

It is an annual commitment that they need to accomplish by the end of the year.

So for them not getting started in the month of January or the month of February is not particularly a big deal, though we like to see an even flow throughout the year because it makes everybody feel comfortable, it typically is not the way that the mix of business comes through, so that is certainly a factor.

We would expect to see improvement as the year progresses, as people meet their commitments of what they've committed to pay in commission dollars.

Okay.

You're saying you expect it to migrate back towards the 60-day range?

Is that fair?

Yes, I don't see any reason for our receivables in the long run to go back to where they were.

I think Peter did a great job of describing all the factors.

As a business person on my radar screen, as something I am concerned about, it doesn't even register.

I mean these are the factors.

We try to make sure that everybody understood what they were because it certainly is a material change from quarter to quarter, but as a course of business, it is not something that is -- if the quality of my receivables was a concern, then I would be very concerned, but that I'm very comfortable with, and the rest of it I think is just anomaly.

All right.

That makes sense.

Thank you very much.

Thank you.

Our next question is from John Christiano of UBS.

Your line is open now.

Hi, just a couple of questions.

IBCentral I guess was rolled out in January.

If you can just discuss that as far as pricing goes, if it's anything different or is it just a different looking FactSet and any other plans to create, I guess, other verticals specific to job function?

Next question will be just updating your acquisition strategies, still going after content, and how do you see the pipeline at this point?

Thanks.

Your first one, yes, we did release IBCentral, which is certainly an exciting product for us and specifically targeted to investment bankers workflow.

It is early in the clients yet.

Many clients haven't seen it.

But I think it will be a very strong product for us on the banking side.

And certainly addresses the need of that particular special workflow as opposed to our traditional view of investment management comes first, and investment banking side of the business just kind of gets what is left over and forces it to fit into their workflow.

It is specifically targeted toward competition we see in the marketplace and we're very excited about how we think it will position as the year progresses.

It will go through enhancements on a monthly basis, and I think the product, the future pipeline looks very attractive for it.

I think the reaction we've gotten in the marketplace is one where if people are considering or interested in other things, they look at that, and say FactSet is on the right track, it is a waste of time for us to consider other things.

They've been a long business partner and we need to stay with the FactSet.

On the acquisition strategy, I think we don't have any particular strategy other than we are opportunistic in putting businesses that fit into what we feel is a long-term need.

Our focus as a business is always on the financial professionals, so if somehow we can find either content or software that fits into that workflow, we consider it.

If it doesn't meet that criteria, it is not something that would fall on our radar screen.

Okay.

On IBCentral, I mean, so you mentioned there were competitive issues.

I mean, was this a -- I knew you guys had been working on this for a while, but was this rollout accelerated say for defensive purposes?

I would certainly say that if you look at our marketplace, the U.S. investment bank, the investment banking market is a more competitive market than it has been historically.

But when you really get down to the available sources of content that we have in the system, and the broad range of functionality that we deliver, there are players who can do niches of what we can do, but no one can deliver the broad solution to the major investment banking firms worldwide.

Okay.

Then just lastly, can you just update me on -- I don't know if you have a set share repurchase program, but maybe what your capacity is, are there any plans to repurchase plans, at least to cover let's say dilution from employees this year?

We have a share repurchase program for 1 million shares, currently we've purchased back 772,000 shares at an average price of $26.64.

All those purchases were completed before the start of our second fiscal quarter.

And you need to multiply those by 1.5 -- multiply the share number by 1.5 and divide the price by 1.5 to bring it to the current ratio.

Okay.

Okay.

So you still have a little bit left?

Yes.

Okay.

That's fine.

Thank you very much.

Thank you.

Our next question is from Ross Nelson of CD Capital.

You may ask your question.

Hi, can you talk a little bit about the growth, I think you stated the international growth was 19 percent, how much of that was foreign exchange and how much of that was real growth?

Thanks.

In the last quarter it was 0 foreign exchange rate, pretty neutral.

Yes.

First quarter that there was some foreign exchange on the JCF business.

JCF bills in or what was the JCF business bills in euros and pounds, but the traditional FactSet business in Europe is billed all in dollars.

Okay.

Thanks.

Thank you.

Our next question is from Jamie DeYoung of Gruber McBain Capital Management.

You may ask your question.

Thanks, guys.

Can you break out the linearity of the quarter on the subscriptions?

Can you be more specific?

Just with respect to closing some of the deals, did you see any change compared to previous quarters as to when some of your new business may have closed during the course of the quarter?

No, I don't think there was any change in pattern, for us it kind of happens on a -- since it is an annual subscription and it is just a run rate, it happens throughout the quarter, and it is not a contractual thing where there is necessarily a big December 31 push.

It is something we pushed all year long, and all throughout the year.

The flow of it really is -- has a lot to do with clients and their budget process, and commission budgets and how they're doing with their commission budgets, and then obviously in the banking side, it is the flow of deals, and the health of the business.

Okay.

Great.

Thank you.

[ OPERATOR INSTRUCTIONS ] Our next question is from Brett Manderfeld of Piper Jaffray.

Your line is open.

Hi, I just wanted to follow-up on the IBCentral, Phil, I was hoping you could comment on what is new on that product at a high level, where it is targeted, whether it is the senior or junior banker?

And then in terms of pricing, how you're pricing that relative to the core workstation?

Thanks.

It is targeted to the banker period, both senior and junior.

The price of our product in a sell side client is typically been full service to the analyst and associate and then above that, it is really a firm by firm, how do they want to deploy the product.

But the goal certainly is to create a product that is interesting from -- all the way to the analyst to the managing director.

So it is the same pricing as the core product?

Yes.

And what is new with the product?

Is there new functionality?

Or --

The first button you click on is enterprise value to EBITDA, and how that is broken down and where it is derived, so it is a complete change from our investment manager type applications where everything might be centered around PE and valuation and metrics, the investment manager would find interesting first.

So the interface and the way the geared is just more towards the banker.

Completely different interface, yes.

And has that been rolled out to all of your high banking clients yet?

It is just starting.

It takes -- there is a lot of constraints inside of large firms, they have to have the right version of the software, they have to kind of put it through testing, so we have to kind of go through a process.

But we have many clients using it today and I expect that number to expand dramatically in the next several months.

Okay.

Thanks.

Gentlemen, I have no further questions at this time.

Thank you, everyone, and we will see you next quarter.

Thank you for participating in today's conference call.

You may disconnect at this time.