Factset Research Systems Inc (FDS) 2008 Q1 法說會逐字稿

Welcome to the FactSet Research Systems first quarter fiscal 2008 quarterly earnings conference call.

(OPERATORS INSTRUCTIONS) Now, I will turn the call over to Mr.

Peter Walsh, Chief Financial Officer.

Sir, you may begin.

Thank you, operator.

Welcome, everyone, to our earnings call for the first quarter of fiscal 2008.

Joining me are Phil Hadley, Chairman and CEO, Mike DiChristina, President and Chief Operating Officer, Mike Frankenfield, Director of the U.S.

Investment Management Business, Karen Kennedy, Head of Investment Banking, and Scott Beyer, Director of our non-U.S.

Business.

This conference call is being transcribed in realtime by FactSet's CallStreet service and is being broadcast live via the internet at factset.com.

A replay of this call will also be available on our website.

Our call will contain forward-looking statements reflecting management's current expectations based on currently available information.

Actual results may differ materially.

More information about factors that could affect FactSet's business and financial results are in FactSet's filings with the SEC.

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

We will organize our call today around three topics.

First, we'll review first quarter results.

Second, I'll move to guidance for the upcoming second quarter.

Third, we'll close with our management team addressing your questions.

Before we begin, I'd like to take a moment to highlight one item.

As you know, the U.S.

dollar weakened significantly during the first quarter, particularly against the Euro.

The decline in value had the following effects in Q1 when holding currencies constant from the recently completed fourth quarter of Fiscal 2007.

Foreign exchange increased revenues by $400,000 and operating expenses by $900,000.

The decreased income from operations by $500,000 in our operating margin by 50 basis points.

EPS declined $0.01 from foreign exchange.

To facilitate factoring currency into your understanding of historical and future results on an annual basis, FactSet currently has non-dollar expenses of $110 million partially offset by non-dollar revenues of 44 million.

This translates to a net exposure of $66 million per year or $17 million per quarter.

Now, let's move on to first quarter results.

Overall, FactSet turned in a very strong financial performance during the last three months.

We again delivered record revenues and earnings.

ASV increased 21 million on a constant currency basis during the first quarter, up 29% from the $16 million change in Q1 last year.

This increase is double the average increase for this period in the last three years.

On a year-over-year basis, our organic ASV growth rate increased sequentially from Q4 to 22.2%.

The catalyst behind our top line performance was healthy increases in new users and new clients and the sale of additional services to existing clients, especially to investment management professionals.

We achieved this growth despite an environment where many large banks are carefully managing expenses.

Earnings per share were $0.58 representing 23% growth from the year ago quarter.

Let's begin the highlights of the quarter with free cash flow.

Free cash flow captures all the balance sheet and P&L movement.

As a reminder 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 is generated during the first quarter were eight million down from $15 million a year ago.

The decrease was a result of a $24 million decline in working capital partially offset by higher levels of net income.

As I mentioned in our last call, please factor into your free cash flow analysis that FactSet pays variable employee compensation related to the previous fiscal year in the first quarter.

This cash outflow reduced working capital by $29 million.

In addition, please recall that FactSet also remits estimated tax payments for the first half of the year during the second quarter.

In December, we paid $14 million, representing our estimated tax payment for the just completed first quarter.

The timing of estimated tax payments is consistent with prior years.

Nevertheless, it distorts free cash flow in both the first and second quarters.

Accounts receivable increased $3.4 million during the quarter to $63 million.

Over the last 12 months, receivables have increased just 3% while subscriptions advanced 22% over the comparable period.

At November 30, our DSO stands at an impressive 45 days.

We do expect receivables to increase during Q2.

Like we did last year, FactSet invoices a small portion of its clients annually in advance.

When the annual invoices are circulated, accounts receivable and deferred revenues will increase by $11 million in Q2.

Our ending cash and marketable security balance was $171 million, a decrease of $15 million since August 31.

The source of the decrease was the previously mentioned variable compensation payments and share repurchases.

During Q1, we invested $30 million to repurchase common stock and paid a quarterly dividend of $5.8 million.

Currently, there is $28 million in remaining share repurchase authorization and shares outstanding at quarter end were 48.2 million.

Capital expenditures in the first quarter were $5.7 million net of landlord contributions for construction.

Expenditures for computer equipment were $5.6 million and the remainder covered office space expansion.

Major expenditures included adding eight HP Integrity mainframes to our data centers.

To recap where we stand on the technology transition, 12 Integrity mainframes have been deployed in the last five months and four additional machines will be purchased in early 2008.

The full and successful upgrade to HP Integrity mainframes is scheduled to be completed in the second quarter.

As a result, our system capacity will have expanded by 40% and system speed will be 20% faster.

The cost per Integrity mainframes is 35% less than an alpha mainframe and the power consumption has been reduced by a third.

Please also note that when we return--that we return to the normal useful life of three years when depreciating Integrity mainframes.

Now, moving to the P&L.

Revenue was $134.2 million up 23.2% versus a year ago.

Operating income advanced 20% to $42.5 million.

Excluding currency, revenues increased 22% and operating income rose 23% over the year ago quarter.

Net income rose 24% to $29.4 million in the first quarter.

The growth rate of net income was favorably impacted by other income in a lower tax rate.

Other income advanced 37% to $2 million.

Our effective tax rate declined 150 basis points from Q1 last year to 34%.

Now, let's take a look at the revenue drivers.

Subscriptions increased 24.3 million during the quarter and totaled 541.2 million at November 30.

Excluding FX, the subscription increase was 21.1 million.

On a constant currency basis, subscriptions have advanced 97.2 million over the last 12 months, up 22%.

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

Now, let's walk through our key operating metrics and trends we see happening at our client base.

We're especially pleased about our ability to expand FactSet's user base at new and existing clients.

We welcome 2800 new users on a net basis and exited the quarter with 37,800 users.

Client count was 1,993 at quarter end, a healthy net increase of 40 clients during the past three months.

Portfolio analytics continues to be a source of growth.

This suite is comprehensive and includes the applications for portfolio attribution, risk, and quantitative analysis.

Demand for our quantitative services was strong.

Clients have been receptive to our suite of advanced applications and a wealth of fully integrated data.

The portfolio analysis workstation is the largest revenue contributing member to the Portfolio Analytics product suite.

At November 30, there were 565 clients representing approximately 5,070 users who subscribe to this service.

As widely reported, many of the sell-side bracket banks are in the mode of carefully managing their expenses.

This mind set was very much present before the dislocation of the credit markets, although since then it has increased.

When calibrating expenses, it's important to recognize the five following facts: 1) 77% of FactSet's revenues relate to buy-side clients and only 23% to sell-side firms; 2) Our sell-side revenues are well diversified between equity research professionals and investment bankers; 3) Performance of most investment bank groups has been very strong; 4) Our products do not address the need of professionals involved in creating or trading credit related instruments.

As such, revenue exposure is very low in the area of the bank that is enduring the greatest level of turmoil; 5) There is a potential to see a liquidity shift out of the credit markets into the equity markets which plays to our core product strength.

Now, taking a look at geographic performance.

Our U.S.

business produced revenues of $93.9 million, up 22% excluding non-subscription revenues.

On the international front, revenues increased 24% to $40.3 million.

On a constant currency basis and excluding non-subscription revenues, the increase was 22%.

Quarterly revenues from Europe were $32.3 million, up 21%.

Looking beyond our two largest geographic markets, we were particularly pleased with ASD growth emanating from Asia Pacific.

Our business there experienced its best first quarter ever following money flows into that region.

Revenues from our Pacific Rim operations advanced 34% to $8 million.

Subscriptions by non-U.S.

based clients now are 167.5 million or 31% of the client wide total.

Client retention continued to remain above 95%, once again confirming the breadth and depth of a product suite that is deployed by a stellar client base.

Moving to expenses for the quarter.

Operating expenses were $91.7 million.

Q1's operating margin was a healthy 31.7%, albeit a decline from Q4 and towards the low end of our guidance.

On a normalized basis, operating margins in Q1 have declined sequentially from the previous fourth quarter in each of the last five years.

As we covered on last quarter's call, we did anticipate the key component to the change.

Quarterly revenues decreased sequentially from the sale of work stations to summer interns in Q4.

However, we did not factor into our guidance that operating margins would be reduced by 50 basis points from the sizeable change in foreign exchange rates over the last 90 days.

Excluding currency, our operating margin would have been 32.2%.

Cost of sales as a percentage of revenues was up 140 basis points over prior year.

Higher compensation and data costs were partially negated by lower amortization of intangible and computer related expenses.

Increased compensation was driven by more employees and data costs were up from higher levels of proprietary content collection.

Our computer related expenses declined from consulting fees incurred only in the prior period related to our transition to HP's new Integrity mainframe machine.

The decrease in amortization expense is caused by a decline in acquisition activity compared to previous years.

SG&A expense expressed as a percentage of revenues declined 55 basis points year-over-year.

This decrease was driven by lower compensation costs and marketing expenses partially offset by higher T&E.

Lower compensation was the effect of leveraging staff through enhanced internal information systems.

Marketing expenses declined by replacing a third party event company with in-house employees.

T&E was higher due to more employees traveling and a meaningful increase in the average cost per trip.

FactSet's total headcount reached 1,743, up 5% during the quarter and up 22% over the last 12 months.

Our effective tax rate for the quarter was 34%, a decline of 150 basis points over the prior year quarter.

This decline was driven by tax planning steps implemented over the last 12 months.

EPS advanced 23% year-over-year to $0.58 per share.

Sequentially, EPS rose $0.01 from Q4 after adjusting for the one-time tax benefit in Q4 and the seasonal benefit from intern workstations.

Let's now move to our outlook for the second quarter of fiscal 2008.

The projected revenue range for Q2 is $137 million to $141 million.

Operating margins are expected to range between 30.5% and 32.5%.

This operating margin guidance holds currencies constant from Q1 and assumes no change in the expected outcome of performance based stock options.

The effective tax rate should range between 34% and 35%.

Finally, as previously noted, other income was 2 million during the first quarter.

In November of 2007 we moved all our cash to securities backed by U.S.

government agencies.

The effect of this in Q2 should be reduced other income by approximately 300,000 as our yield will decline by 85 basis points if we maintain this position.

The guidance for capital expenditures net of landlord contributions in fiscal 2008 remains at $38 million to $44 million.

Overall, the first quarter was a great start to our fiscal year.

Revenues and earnings per share were up more than 20%.

While we continue to grow our business at a pace many companies would envy, we recognize our opportunities in front of us.

With a 10 billion growth opportunity, our mandate is clear: To invest for the future in the form of more people, content, and new products to win business from a blue chip institutional client base.

While we like our competitive position in the marketplace and we're pleased with our progress, we have an ambitious agenda and there's a lot of work ahead.

Thank you for your participation in today's call, and we're now ready for your questions.

Thank you.

(OPERATOR INSTRUCTIONS).

Our first question will be from Peter Appert.

Your line is open.

Please state your Company name.

Thanks, it's Peter Appert, Goldman.

So Peter, can you give us any additional color in terms of what you're seeing currently in the business trends, sales trends buy-side versus sell-side?

I'll pass that on.

Thank you, Peter, I'm going to pass it on to Phil.

Hi, Peter, good morning.

Good morning.

I think that if you take our business, obviously we're a very diverse business both U.S.

and non-U.S.

The buy-side business has historically always been very stable and rational in purchase decisions.

The sell-side business changed dramatically I would say three, four years ago in the last cycle and as they became very precise in how they manage products like ours and other players in the space.

I would say that the good part of our business is we're not in the part of those firms that are directly affected, for the most part, so our fixed income exposure and even the product line we have in fixed income is a sell-side product, and we're probably only affected to the extent that there's just generic earnings pressure in some firms.

Other firms like yours have done quite well through this cycle.

So, I guess as you look at it, and I look at our whole business we're fortunate to have a very diverse business of which I've never in my career ever had every single piece in every region of our business doing on fire, but I feel very comfortable that because of our diverse product line and relationship with the clients and the opportunities we have to help them with cost savings and greater functionality, that we're well positioned at this point and I'm very optimistic about our future.

How about, Phil, specifically, would the sell-side component of the business, I don't know what the metric we should look at is but subscribers or password count, is it running up on a year to year basis?

Yes.

In fact, we had a very strong password count in the sell-side in the first quarter.

Okay, great.

A big portion of the (inaudible) growth in the first quarter happened to be sell-side clients.

Okay.

The pace of buy back activity has been pretty aggressive.

What should we be anticipating over the course of the next 12 months in that regard?

Thanks, Peter.

It's Peter.

Yes, we purchased, we took about 105 million over the last 20 -- over the last 12 months to repurchase shares.

For a company that has 171 million cash, no debt, and is generating more than 100 million of free cash flow a year, unless we become more inquisitive, we'll deploy our cash either in the form of dividends or repurchases, in order to avoid a drag on return capital.

Okay.

And on that front, that actually reminds me of the next question which is you haven't been particularly active from an acquisition standpoint in the last year or so or having been fairly active in the prior year.

Should I read into that just lack of opportunity or returns not there in terms of things you'd like to buy or you're feeling comfortable with your internal development prospects?

I think internally we've always had a very organic approach to the marketplace.

We've been opportunistic, as opportunities presented themselves.

They kind of came in bunches and as you pointed out there haven't been any opportunities recently, not that we're, we wouldn't.

It's just that there haven't been any that have been interesting to us.

And still on that front, the fixed income product has been a particular focus to accelerate or jump start the growth of that offering, would acquisitions be part of the thought process?

I mean, I think we would look at anything that we think would be accretive to our business strategy in the long run, but I don't look at that particular product line with some greater need than other areas of opportunity that we have, so I'm very comfortable with the pieces we have to deliver the functionality to the marketplace we're currently approaching.

Okay.

Last question and I'll let someone else speak.

Again, you've been pretty aggressive in terms of headcount expansion in the last couple of years.

Does the headcount growth slow just in the context of sort of dicier macroeconomic conditions?

I think that the headcount growth is one where we're always deploying capital with headcount or with technology and in lots of areas of our firm and it reflects the level investment we have to to grow our business.

So you haven't scaled back at this point in the context of expectations that growth decelerates given the market environment?

Our headcount growth year-over-year first quarter was?

22%.

So it's roughly in line with revenue.

Great.

Thanks very much.

Thank you.

Our next question will come from Randy Hugen.

Your line is open.

Please state your company name.

Piper Jaffray.

Thanks.

How do you think the company will fare if we see another downturn in the equity market?

If you guys manage to grow revenues by 12 to 13% in 2003 through 2004, if we enter a similar market environment in 2008 how do you think the company will perform?

Just to answer the question in two parts.

One, I'd have a hard time believing that we would enter that kind of cycle that we would be that deep, just based on where we are and how the market is currently affected and, secondly, I think we would be in a stronger position this cycle than we were even last cycle based on the breadth of our product line.

Okay, and then how long does it typically take for a change in market demand to really flow through your model and have an impact on the business?

I think our business is a pretty realtime business in that we're a subscription model, so clients can adjust their subscriptions up or down based on their current needs.

So if you think the market has already been affected, then you need to factor that into our current performance and our current performance is still pretty strong.

Yes, okay.

And could you give us an update on the Thomson/Reuters merger, how it's impacting your business, how it's affecting your products and then also maybe some insights into if the company is forced to divest some businesses, is there anything out there that might be of interest to you?

So, the merger hasn't occurred yet.

Yes.

Obviously it's with the regulators at this point and I don't think it's really affected the marketplace yet either; so the market dynamics of the merged entity and how they play out their subscriptions with their clients is yet to come.

We certainly obviously pay attention to it.

It's material in our industry, but we couldn't comment and wouldn't comment on any M&A activity that we would have related to any of the assets that would be available with that merger or with any specific M&A activity in the marketplace.

All right, fair enough.

And then the current state of the credit market, does that change your outlook for growth in the fixed income product realizing that it's a very small component now and then also, does it change your outlook for your level of investments there?

No, no.

Our product line is, in fact we just released or did a road show in Europe on our fixed income PA product for the non-U.S.

marketplace and feel very bullish about where we think we can go with that product keeping in mind from a management perspective, that it is immaterial, coming off an immaterial base, so it would be years before it would be a true revenue driver, but the way our product line is set up is really, it's not in the part of the market that's affected.

All right, thanks.

Thank you.

Our next question is from Kevin Doherty.

Your line is open.

Please state your company name.

Banc of America Securities.

Good morning, guys.

I just had a follow-up question about the user growth, really the first time in a few years where it's been a bit above 20% and a couple questions there.

How sustainable is that pace of growth going forward, and you mentioned that you didn't receive mention back from Thomson/Reuters, but were there any large customer wins or migrations in the quarter?

So when you look at our revenue growth as a business, the full ASV is the most important number because obviously we can grow it through same-store sales of product through current clients which is really the biggest driver, plus incremental clients with 40 new clients, plus the user account changed, so as you point out, it is lumpy, so in this particular case it is large deployments at a couple firms is the material component of that number, so it is sustainable.

When you think about sustainability you always want to look at ASV as the driver in our business.

Okay, and then I guess as a follow-up, when I look at the revenue per subscriber numbers that had been tracking a little higher, looks like it's probably only up about 1% year-over-year, were there any customer or maybe product mix shifts in the quarter or any changes?

I think the way you have to look at our product is that new clients and new seats always come on at lower than the average, so if we're very successful at adding new clients in the quarter or new seats in the quarter it will put pressure on the average because they're not coming on at the average.

They're coming on below the average.

So, looking at those two metrics, you want to look at them as meaning share on clients, gaining share on users, and then step away from that and look at it at the macro level saying are they getting real revenue in the marketplace?

Okay, that's fair and maybe just to tie in, might have a profitability impact as well because I know you took down your margin range a bit and especially at the low end there.

Are there any unusual expenses that you expect to incur next quarter or maybe a profitability drag from all of the new users you've brought on this quarter?

Thanks, Kevin.

First off, when you look at our margins I think it's important to know that our operating margin has declined sequentially from Q4 to Q1 in each of the past five years, and I outlined some of the reasons for that decline during the call.

The reasons why our margin declined, our margin guidance declined by 50 basis points on both ends of the range was just related to currency because we think it's obviously most appropriate to use the current exchange rates when you're forecasting your immediate expenses.

There are no unusual items that we're forecasting to occur in Q2 relative to a year ago period or the immediate previous period.

Well, I guess that range would have excluded currency and I believe your range last quarter would have been the same, so is there anything incremental there?

Our range last quarter didn't include currency.

We didn't factor in the decline during our fiscal first quarter.

So that's just rolling through now?

I'm sorry?

So that's just rolling through now this quarter, got it, okay, yes, thank you.

Thank you.

Our next question is from John Neff.

Your line is open.

Please state your company.

Good morning, guys.

I was just wondering if you could give us any kind of an update on color in terms of hedge funds with clients, the percentage of overall wins or deployments?

I know in the past it's been a tail wind but not a real driver of your growth, if you could just give us an update or any color on what that represents as a percentage of clients or users?

I think, as we stated, consistently over the years it's not a material number in the aggregate of our client base, though if you took the hedge funds that our clients affect they tend to be the larger more diverse funds in their investment strategies, so nothing significantly has changed in this quarter versus any prior quarter.

Okay.

And then specifically on the gross margin line, you mentioned some of those factors there.

One of them I thought was interesting was more proprietary data.

Could you give us a little more color on those and how should we think about the sort of the trend or the outlook sort of the remainder of the year at the gross margin point?

Sure.

So we have a number of different sources of proprietary data collection and they span the gamut, particularly during when you compare the year-over-year periods we've been investing certainly more in our CallStreet products and we've been moving towards putting out every transcript through a very detailed QA process versus making available a raw transcript, and that's increased our costs related, our investment and cost related culture so it's obviously also increased the value in the eyes of the end-users.

We also continue to expand our filings operations that are reflected through our global filings product and we continue to expand our operations in our offshore facility with respect to a variety of content sets, particularly those that are desired by our investing banking clientele.

Okay.

And then also, could you give us a little bit of color on CapEx?

In years past, it seemed like it was pretty much every three years you'd have kind of a CapEx spike.

Now, between last year and this year, it seems to be sort of sustaining at a relatively elevated level compared to prior years.

Is that a temporary phenomenon?

Is that due to all of the real estate consolidation that's taken place?

Well, first off let me say that higher CapEx is a great sign of growth at FactSet because client usage of our products is the driver for expanding competing power, and revenue growth drives our headcount increase which translates to a need for more real estate.

Obviously when you take our CapEx and look at it in pieces, when you transition 100% of your mainframes from one version, the Alpha machine to the Integrity machine, it does have a temporary increase in CapEx.

So, over a, from a timeframe from August this year to some time early in calendar 2008, we'll have exchanged every mainframe.

That said, they cost less than the Alpha version, so, the cost per mainframe is down 35% and the cost for technology has been moving in our favor.

The real estate projects are definitely lumpy quarter to quarter and we had very little in this quarter.

We do have plans for several major real estate projects to accommodate our headcount growth over the remaining nine months of the year.

And then Asia Pacific, I was just curious, you mentioned the growth there following the money flows, but why the traction in terms of -- what's been happening in terms of the investment mandate, because what I'm trying to get a sense for is are you adding Asia Pacific regional content that would also be helping you gain that traction?

Trying to get a sense of the change in the product because it's not necessarily people with nothing in Asia Pacific companies as opposed to money moving in there and then investing back in the U.S.

Hi, John, it's Scott Beyer.

I'll take that question.

You're right.

I would put it down to probably three different factors.

The interest in the region and how a lot of the investments in investment focus move into the fund managers who are located in that region, as Peter described earlier.

The two other things are a little bit longer coming and that's just having the right people and being right size for the opportunity there.

We're certainly coming on stream in that respect, and then finally the thing that has the longest lead to it is the product.

In Asia, we've been investing for several years now and we're just starting to see the fruits of that.

All right, thank you.

Thank you.

Our next question will be from Jesone [Solati].

Your line is open.

Please state your company.

Hi, good afternoon.

It's Jesone [Solati] from Execution in London.

I've got three questions, please.

The first one is on pricing.

I imagine it is the time of the year where all of your clients are preparing their budgets for the following year.

What kind of environment are you finding to push through price increases for the whole of 2008?

This is Pete again.

I think at this point, FactSet's philosophy really has been to do nothing more than inflation.

Depending on what markets and where you are in the world, the timing could be different but nothing more than the inflation range, price increase.

Let me try and get some more color on that.

How does that compare to the last few years to what you saw at the end of year 2000?

I would have expected that for the last at least couple of years you could have pushed prices up a little bit more than inflation.

Is that a slow down in price increase or it's just in line with trend?

You may be correct in that we probably could have pushed price increases historically.

I think as a firm we're just kind of coming around to it being part of the product.

Historically, we really haven't pushed price increases even back to 2000.

So can we quantify your price increases in that 3% for 2008?

Is that fair?

In that range.

Okay, my next question is on your cost basis.

Could you help me understand how much of that would be a fixed cost basis moving into what could be a very volatile environment, in terms of revenues?

Thanks, Jesone.

Our primary operating costs are people, and 60% of our total costs relates to people.

The next biggest cost after that is depreciation related to our computer equipment and real estate costs followed by CD, so I think we have very great visibility on our business and we can adjust our investment in people to handle any up or downturn that may come.

And these are all staff, these are all employees or are these are working as a consultant?

The large majority of our investment in compensation, I mean the complete lion's share is staff.

Working staff.

Okay, and another question on Thomson/Reuters.

I don't know if you want to answer this, but what we hear in Europe in terms of the latest development on the regulatory approval of the merger is that Thomson/Reuters might have proposed to sell a copy of databases in analytics.

Without maybe asking you a comment on whether you think this is right or not, would the [facet] be interested at all in buying any of the databases from Thomson/Reuters?

I think I have to revert back to the way I answered the question the first time and that is that as the matter of policy, we don't comment on any opportunity we have in the marketplace on mergers or acquisitions.

Okay.

Let me then close with a final question.

How many of your users will have factored along side with any other sort of source of financial information, any other terminals from Bloomberg or Reuters, or other competitors.

How many multiple terminals terminal users do you have in your customer base?

So at the end of the quarter we had 35,000 end-users.

It's very difficult for us to know exactly what products (inaudible).

It varies dramatically by geography and client type, but I would guess that depending on how you define the products, everyone in the industry has multiple products at some level.

The product (inaudible) provider has multiple sources of financial analytics on every professional desktop.

Okay, thank you.

Thank you.

Our next question is from John Neff.

Your line is open.

Please state your company name.

Hi, John Neff, William Blair.

Phil, you mentioned something I want to get a little more color in response to a previous question about how FactSet would perform in another downturn.

I think you said something to the effect like you didn't expect a downturn to cut as deep into your customer base.

Just wondering if I heard you correctly if you could elaborate?

Thank you.

I guess I would take two factors into account there.

One, just in the tenure that I've been in the industry for the last couple decades that that was an unusual event that I thought was maybe a once in a lifetime event to that degree.

The second was the factors in the last market, it was a very equity driven ITO capital market driven environment with lots of M&A that got very frothy, so that was the site of the investment firms that got hammered.

This particular cycle has nothing to do with that side of the business and everything to do with the credit side of the business, so assuming that eventually the credit side of the business gets things figured out, which the markets always do, sometimes it takes them a little longer than one might expect, I would expect things to stabilize and wouldn't expect it to affect our side of the business nearly as much as it did last time.

Thank you.

I guess I'd throw one thing on the end of that.

It's important for everybody to realize that in our particular client base, that we're 77% buy-side and 23% sell-side, and even in the sell-side there's quite a bit of diversity in where that revenue comes from.

The lion's share of it or the bulk of it is from the corporate finance professionals, but we're also in many other segments of investment banker and commercial banker.

Thank you, operator.

I'm showing no further questions.

Great, thanks, operator.

We'll see you next quarter.

Happy holidays.

Thank you, that will conclude our conference call for today.

You may now disconnect.