Factset Research Systems Inc (FDS) 2010 Q2 法說會逐字稿

Welcome and thank you for standing by.

At this time all participants are in a listen-only mode until the question-and-answer session of today's conference.

(Operator Instructions).

I would also like to remind parties this call is being recorded.

If you have have any objections you may disconnect at this time.

I would now like to turn the call over to Ms.

Rachel Stern.

You may begin.

Thank you, operator.

Good morning and thanks to all of you for participating today.

Welcome to FactSet's second quarter earnings conference call.

Joining me today are Phil Hadley, Chairman and CEO, Peter Walsh, Chief Operating Officer, and Mike Frankenfield, Global Director of Sales.

This conference call is being transcribed in real-time by FactSet's Call Street service and is being broadcast live 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 can be found in FactSet's filings with the SEC.

In an effort to provide additional information, our comments may include non-GAAP measures such as free cash flow.

Any non-GAAP measures discussed today have been reconciled to the related GAAP measures in our earnings press release and our SEC filings.

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

I would like to turn discussion over now to Peter Walsh, Chief Operating Officer.

Thank you, Rachel, and good morning, everyone.

Today we will divide our time among three areas.

First, I will review Q2 results.

Second, I'll cover guidance for the upcoming third quarter.

Finally, we'll close by addressing your questions.

Moving on to the review of the second quarter.

Q2 was a solid quarter for FactSet as our clients continued to stabilize.

Annual subscription value is or what we call ASV, grew by $14 million during the quarter to $635 million.

Excluding foreign currency effects, organic ASV grew $15 million during the quarter.

Half of the $15 million organic ASV growth was derived from sales to new and existing clients and the other half from our annual price increase for US investment management clients.

Revenues advanced to $157 million in the quarter, an increase of 50 basis points compared to the prior year.

We believe that even modest growth in the current quarter's environment, though hard one is encouraging.

Our sales staff continue to sell our broad range of product with success across all global regions.

They've been focusing on promoting our new work station which we call the new FactSet and upgrading existing clients to this more intuitive, easier to use platform.

We believe the results of their efforts are beginning to take root.

For example, our user count increased by 1,400, the best quarterly growth in two years.

Let's begin the highlighted of the quarter by discussion free cash flow.

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

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.

During the last 12 months free cash flows rose 37% to $185 million.

Excluding working capital changes the increase was 13%.

Free cash flows generated during the second quarter were $43 million compared to $18 million in Q1.

Please recall that during the second quarter, we typically issue invoices for services to be provided over the next 12 months.

This year, those invoices aggregated to $11 million and our account receivable rose as expected in the same pattern over the last five years.

DSOs at quarter end were 39 days versus 48 days a year ago, a decrease of 19%.

Further on cash flows, remember that FactSet remits two estimated tax payments for the first half of the fiscal year during the second quarter.

This additional payment reduced free cash flows in the quarter.

Estimated tax payments during Q2 were $20 million, down from $29 million in the year-ago quarter.

Another driver of free cash flows during Q2 was a decline in capital expenditures.

Capex was $2 million net of landlord contributions during the quarter.

The bulk of our investment paid for the build-out of office space in Hong Kong and Hyderabad, India.

We continue to expand aggressively to house and grow our proprietary content operations and other function these can be run efficiently in the remote office locations.

We've been delighted to have an increasing number of FactSetters around the globe who contribute color and imagination to our daily work flow.

Our ending cash and marketable security balance was $205 million.

During Q2 we bought back $55 million worth of FactSet stock.

We still have $95 million authorized remaining under our share repurchase program, which was expanded in December 2009.

We paid a quarterly dividend of $9 million in Q2.

Now moving to the P&L.

Revenue was $157.3 million, up 50 basis points versus a year ago.

US revenues were $107 million, flat from the year-ago quarter, and international revenues rose 1.3% to $51 million.

Operating income increased 5% to $54.5 million.

Net income rose 5% to $36 million in Q2.

Diluted EPS rose 6% to $0.75 per share.

Let's take a deeper look at it the revenue drivers.

First, it's important to note our key metrics were up across the board.

Users, clients, subscriptions to advanced analytics and content all increased during Q2.

ASV increased $15 million after excluding currency effects.

The split of ASV among buy side and sell side clients has remained consistent with 82% of ASV being derived from buy side clients and the rest from sell side, M&A advisory and equity research firms.

This quarter's ASV growth came from all geographic regions and product sectors.

Our IM clients are making purchases now, although in a slow and cautious manner compared to the years preceding the downturn.

We continue to focus our selling efforts, and we believe we're beginning to see the results of some sales opportunities that developed during the recent downturn.

Our global banking and brokerage or sell side clients also contribute to growth in A S V with a nice bump in user count.

Our global banking and brokerage client base, like the investment management client base expanded its user count and bought products after many months of expense elimination and contraction.

Total user count across all product areas increased by 1,400 users.

This is the largest increase in user count since November 2008, more than two years ago.

Total clients rose to 2,052, a net increase of eight clients.

We are pleased to see that our net client count is positive and hope to continue to move in that direction as the calendar year continues despite relatively poor industry fundamentals.

We see that there is little firm creation and firm failures and consolidation are ongoing.

Against this backdrop, our client retention rate remained above 95% in ASV terms and 88% of clients.

The split of ASV between domestic and international operations was consistent with prior quarters with $430 million for US operations and $204 million relating to international clients or about 32% from overseas.

Our US business produced revenues of $107 million in the second quarter.

Revenues increased 1.3% to $51 million on the international side.

By region, quarterly revenues from our European and Pacific Rim operations were $40 million and $11 million respectively.

The improvement in ASV this quarter, resulted not only in the increase that I mentioned at the beginning of the call but also from a few other areas.

Let's talk specifically some of the drivers of sales.

First, we introduced the new FactSet last quarter and been proudly getting our clients and prospects acquainted with it.

New FactSet is impressive.

Its easier to use and there's very positive feedback on the new user interface.

FactSet's broad range of content and functionality is readily available through the new user interface.

The number of users of realtime quotes has increased 28% during the last six months.

We believe this metric can be seen as a proxy for our clients increasing engagement with the new FactSet.

Second, we have seen upticks in our sales of portfolio analytics.

We are pleased that the number of users increased by 124 and the new PA clients rose by eight.

We now have 655 PA clients with a total of nearly 5,800 users.

The PA suite of products is comprehensive and includes for portfolio attribution, risk quantitative analysis, portfolio publishing and returns based style analysis.

Fixed income in PA also continues to grow.

Finally, FactSet's proprietary content collection has also been selling well.

FactSet fundamentals and FactSet estimates in particular have demonstrated their value to our clients and are in demand in our work stations.

During the quarter, we released a major addition to our non-US private company data set.

We believe that the breadth of our global coverage of private companies is a leader in the market place.

Traditionally, FactSet has been known for its breadth of functionality and outstanding customer support.

Now, we are seeing the benefits of coupling these strengths with proprietary content that we control and improve to win in order to differ our offering from the competitors databases.

FactSet has completed its journey from a pure software company to a software and content company.

Since 2001, we have developed a full set of content, including fundamentals, earnings estimates, research reports, earnings call transcripts and global economic data all which compliment the data we receive from our valuable vendor partners.

We have also created private equity venture capital, private company and M & A content for our investment banking working work flow.

FactSet is now a complete robust, with our proprietary content, seamlessly integrated into our industry-leading software.

At the same time, we have not forgotten our roots.

We continue to play to our strengths and make an A list data available from our partners like Dow Jones, MSCI, Russell, S&P and Thomson Reuters.

Moving on to expenses for the quarter, operating expenses were $103 million, down 2% from the same period a year ago.

Operating margins were 140 basis points higher year over year at 34.6% in Q2, compared to 33.2% a year ago.

Operating margins were 34.8% in Q1.

Cost of services as a percentage of sales decreased 120 basis points.

Lower data costs were partially offset by higher compensation expense.

Data costs were lower because of the transition service agreement with Thomson Reuters expired.

We paid lower royalties related to clients, decreased use of fundamental data from third party, in favor of FactSet fundamentals and we ended our BPO relationship in Q3 last year.

Compensation is higher because of increased content in our offshore operations.

SG&A expense expressed as a percentage of sales declined 20 basis points year over here.

Lower compensation expense due to currency effects is mostly offset by slightly higher SG&A expense and higher rent expense.

We had more employees driving overseas traveling to Manila and Hyderabad as they have rapidly expanded over the past few quarters.

Rent expenses increased as we continued to build out space in those oversea operations and in the Far East.

Our total headcount rose to over 3,400 employees at the end of the quarter, with an increase of approximately 150 employees almost exclusively in India and the Philippines.

Year-to-date, employee count has risen 16%.

Our annual effective tax rate for the quarter was 33.9%.

This rate includes the effect of the expiration of the US Federal R&D tax credit on December 31st, 2009.

The fiscal 2010 rate appropriately reflects the R&D credit only for the first four months of our 2010 fiscal year.

The expiration of the R&D credit, costs FactSet's fiscal 2010 effective tax rate to raise by 100 basis points.

Should Congress reinstate the R&D credit, annual EPS would increase by $0.04 per share or $0.01 per quarter.

Let's turn to our guidance for the third quarter of fiscal 2010.

Revenues are expected to range between $157 million and $161 million.

This revenue guidance takes into consideration some continuing client consolidations and rationalizations.

EPS is expected to range between $0.75 and $0.77.

These estimates assume that the R&D tax credit is not reenacted and includes a 1% reduction at each end of the range.

Capital expenditures for the full fiscal year of 2010, net of landlord contributions should range between $20 million and $26 million, reflecting no change from the guidance from the end of last quarter.

To conclude, the sales environment over the last few quarters has been challenging for us as our clients and needs changes to stabilize themselves.

We have used the downturn to invest in our business to position ourselves for future growth.

We focus on our clients, our content, and our applications.

We have green our head count significantly overseas.

We have developed and enhanced FactSet fundamentals and estimates in addition to other databases and we successfully rolled out the new FactSet.

Although we still have a long way to go, we were encouraged by this quarter's results.

After a trough, we have seen client and user counts begin to rise, along with metrics that suggest increasing client engagement with new FactSet.

The opportunity for us is enormous relative to our size, and our investments are allowing us to capture a piece of it.

Thank you for your participation in today's call.

We are now ready for your questions.

Thank you.

We will now begin the question-and-answer session.

(Operator Instructions).

One moment, please, as we wait for the first question.

Kevin Dougherty, your line is now open.

Great.

Thank you.

I guess first off, could you just talk a little more about the drivers of the strong user group you saw in the quarter, and I guess I'm just curious, did you have any large customer wins and if you could maybe just break out how much of that growth would have been from existing customers versus some of those newer customers.

Thank you.

Kevin, how are you?

This is Phil.

Hi, Phil.

Good thanks.

Good.

The -- I think you can characterize the quarter, you can look at all the metrics, ASV, and clients is all modestly positive.

It was certainly a standout, relative to our history.

It came from a few larger installations as well as a mix all the way through the client base.

Okay.

And it sounds like the new tax at least played some role in the growth there.

Could you talk about how important pricing is to customers in this environment, or is the decision to really make a switch from another vendor more about functionality?

I would characterize the market as stabilizing.

If you look back over the last year and a half, price is absolutely the number one component in almost every purchase decision, and every client discussion.

Over the last six months, it's transitioned from price to more of a feature based approach from the clients as they look to improve their work flows.

Some new facts at the work station definitely plays an impact in providing a substantial new set of features for the client and is a driver in the growth.

Okay.

And is there any -- are there any metrics you could provide around the adoption rate of the new fact set, maybe what percent of your existing users have already made that switch?

I think the best metrics that you can use is the Peter's comment in the call and the percent of clients using the realtime products continues to increase at a pretty substantial pace is the guidance that we are using as a metric inside of FactSet.

Okay.

And then maybe just switching gears, how should we think about the revenue per user trends going forward?

I guess looking at the guidance, it kind of implies that you should be down somewhat year over year, which makes sense, given the user rebound, but maybe what is the right way to think about that going forward if the user trends continue to improve from here?

It's definitely a metric that we don't follow internally.

We looked at total clients and total ASV.

It really on a quarter-to-quarter or year-to-year basis has a lot to do with the mix of clients coming on.

There are lots of scenarios where it could -- the revenue per client or even revenue per seat would potentially be declining and could be very positive for the business.

So it's not something we follow and I wouldn't use it as a guide as to the health of our business.

Okay.

And then just the last one, I'm not sure if I missed some of this, but could you just break out, I guess the 140 basis points of margin expansion, how much of that would have been driven by the lower vendor payments versus FX this quarter?

I -- if I was going to look at that, our annual expenses have been reduced by approximately $10 million in terms -- and the combination of that is lower vendor payments related to fundamental data and also a replacement of the -- a BPO relationship in May of 2009.

From a currency point of view, if you are using the -- if you are comparing the rates in the second quarter this year to the rates of the second quarter a year ago, we had a -- the currency favorability reduced operating census by $1.5 million in the second quarter.

Okay.

And then just to make sure that I'm just clear on the annual expense reduction of $10 million, did that number include the full TSA or are those just lower -- is that separate?

Yes, the number does not include the TSA.

Okay.

And is there a good run rate to think about going forward?

I mean, I mentioned some of this would have been -- the transition is being made and you are ramping up the fundamentals platform, but just maybe more broadly, how should we think about the contribution as proprietary content becomes more important?

I think the best way to think about it is that as we -- as we turn the year of these -- of our expense reduction work last year, and these are really non-employee expenses, it -- we are really capturing it in the full year of our P&L.

So Q3 of last year was a big item.

We based some events from the second half of last year with the sale of our fundamental data.

So there's a -- on a year-over-year basis, there isn't much left as it relates to that.

We continue to invest aggressively in our head count and obviously have been -- are consistent with our historical philosophy to fun FactSet with flat margins.

Okay.

Thanks for taking my questions.

Our next question come from Shlomo Rosenbaum.

Your line is now open.

Thank you very much for taking my questions.

Phil and Peter, are you getting a sense that the seats within the industry are starting to grow or would you characterize the growth as really, or is it shrinking and you guys are taking a lot more market share?

Can you talk about that a little bit?

Hi, Shlomo.

I would say -- and it's really instinctual because the data is not absolute.

I would say there's a slight turn in the industry and I would say we are taking share.

So I could tell from the seats that we win that for the most part, there's a competitor that lost in that particular case so there's share gain but there's also some hiring taking place in the industry on a very modest level.

Okay.

And then when you -- when you look at your work stations, where you are roughly 2,000 plus in the work stations and you always talk about 6,000 potential clients, can you talk about of the potential market that's out there, the 6,000 clients, how many of them are equity, where the PA work station really can target them very well with what you've got now?

So we have 650 PA clients, which is less than half of our IM client base.

There's certainly a lot of potential within in our current client base.

If you think how many investment management terms are out there in the 6,000, think we always thought there would be 2500 in the US, and 2500 outside the United States, so a huge pond out there where we are still a small fish in that pond.

Any way to figure out how much is equity that you guys can go after?

I believe internationally it's a lot more fixed income.

True.

I think at least the way we think of the fixed income market and you bring up a good point, the 6,000 as we used to think about it really was focused on equity, and clearly PA has a huge opportunity on the fixed income side as well.

I think from what we can tell, at least 1500 fixed income shops out there, which might be slightly skewed towards the non-US market place and obviously some of those overlap where you're both fixed income and equity.

Can you just give us a little bit more, detail and the upgrade into the new FactSet platform.

I know the previous line of questioning has to do with that, but are you really seeing deals that you are winning because you are bringing this new platform in?

I mean, is this really making a difference for you guys in terms of new sales?

Hi, Sloan, it's Mike Frankenfield.

The new FactSet represents new functionality for our clients, especially exciting in the realtime space as evidenced by the figures Peter quoted about in realtime.

And the FactSet gives our users an improved interface that makes FactSet much easier to use and exposes a lot of functionality that wasn't there before.

As a result of that, it really creates three opportunities for us.

It creates a better experience for our existing users and will encourage them to use our product more and purchase additional products on our system.

It allows to us expand our existing footprint within our existing clients to attract new users in our existing clients.

And there is an opportunity to inspect new clients that we don't currently have.

Hopefully the product is having a big impact on our existing markets and new opportunities.

Do you - - are getting a sense that there's a tangible impact on your sales because you came out with this new product?

We do.

It's really beginning to change the perception of what our capabilities are within our clients and within our perspective clients and they are considering using new FactSet to solve all kinds of work flow problems that they previously could not consider doing in-house.

Okay.

I will jump on the questions and get back in the queue.

Our next question comes from Glen Greene.

Your line is now open.

Thank you.

Good morning.

And congratulations on the results.

I guess first question, I just want to contrast domestic versus international and it looks like the domestic ASV is improving at somewhat a faster pace than international but I'm really looking for some color contrasting the geographies.

Glen, it's Mike again.

There may be a little noise in the numbers but we don't see any material differences in the relative performance or out performance of international or US.

They both are experiencing modest improvement and we're encouraged by the results but we need to see a couple more quarters before we get really excited.

And then regarding -- I guess this is probably for Peter.

The price increase that went into effect.

Did that go into effect early in the quarter, late in the quarter?

I know you are not too focused on revenue per user, but a lot of investors are and it looked like revenue per user did decline a little bit, which I was trying to reconcile with the price increase, but I know it was probably mixed.

I wonder if you could help me there.

The price increase for the US investment manager was effective January 1.

Okay.

About $8 million.

And so the revenue per user slight decline this quarter was probably more mix issue than anything else.

Maybe I could help you out again with the revenue for user and how it's affecting our client base.

If you take our product and how we sell our product in the market place, we have a base use for the first two users.

We sell our content on top of that and we tell applications and we sell seats.

The list price -- the market price is$ 6,000 per user.

So every time we are adding new seats for the most part it's actually bringing down the average revenue per user.

When we add new clients, it actually brings down the average revenue per client because they have a higher revenue than the newer clients do.

The fact that we added many seats this quarter is a positive sign but it results in a decline in revenue per user but as we are able to sell product to those new users, both applications and content as those users improve as their revenue goes up.

Makes sense.

Thank you.

Peter, can you just update on where you are hedging the benefits going forward?

Sure.

Thanks, Glen.

To calibrate the impact of currency movements, let's start with our net exposures.

Overall, we are long expenses in $150 million in annual terms.

So 1% change in the US dollar increases or decreases EPS by more than a penny in annual terms.

Our exposure is heavily weighted to the Pound and Euro.

In aggregate, they represent 70% of the total exposure.

In early March, we hedged our Euro and Pound exposure for the next three quarters.

We executed the hedge to take advantage of the recent strength in the US dollar, compared to the just completed quarter, it locks in a reduction of $750,000 of operating expenses related just to the Euro and the Pound.

The other 30% remains unhedged.

Okay so essentially 70% hedged if I heard that right?

Right.

Consistent with our operating philosophy, this benefit will be reinvested in our future business because we plan to keep the operating margins consistent with product orders.

Got it, great.

Thank you.

Yes.

Our next question comes from [John Mieda].

Your line is now open.

Thanks very much.

Just a strategic question for you guys given some of the consolidation in the space amongst different technology vendors and service providers we have seen metrics in MSCI and potentially IDC.

Just kind of your thoughts around M & A historically has been an organic model.

I think you indicated you have plenty of wood to shop and plenty of opportunity where you sit but maybe if you can comment around the opportunity for smaller tuck-ins and the potential for tuck-ins to augment functionality of the margins.

Thanks.

We are certainly always aware of all the opportunities that exist in the market place.

We live in a reasonable small industry so almost everyone gets a look at what comes along.

As you point out, in fact, it's historically focused on tuck-in acquisitions and that's been our philosophy and one that we continue to still execute against.

Internally, when we talk about our growth plan and where we're headed in the marketplace, we feel comfortable that we have the pieces in place to be very successful and many of you heard me speak in an IR sense, I know we are talking about our next double in business and that's to look at the content and the applications and the mark the opportunity whether it be client or seats and feel very comfortable without any acquisitions via the organic opportunities to double business.

But as part of our capital allocation process, if we feel there's something that comes along that has the right value associated with it, that can advance our cause we certainly take advantage of that, but we are opportunistic about it.

It's not a systemic process where we are constantly sourcing and trying to create deals that aren't available in the market place.

Hello?

Our next question comes from Edward Atorino.

Your line is now open.

Hi.

I want to go back to the ASV.

I'm sort of new to your company so may be asking a question that's sort of been asked but a little bit different way.

The 14 million revenue is up 1 million.

Does that reflect the mix of new users who are sort of coming in at the low end of the revenue scale, that are sort of in the ASV but sort of not delivering it yet.

Does that make any sense?

Hi, Ed, this is Peter.

ASV is a forward-looking metric.

Right.

And it represents the revenues, all of our existing clients as of the end of February for the next 12 months of no services will be added or deleted from their subscription level -- subscription basis.

It's just a different calculation that what revenues are during that period.

So -- okay.

So the new guys are in there and the revenues for the quarter some of those people were not in the revenues?

Maybe another way to think about it is that ASV is the run rate of the business and we really get 1/12th of that revenue on a monthly basis.

So since we released the metric at the end of the quarter, you are seeing the snapshot at the end of the quarter.

It would give you a strong indication if you took 1/12th of that metric, that would tell you what revenue for March would be.

Got you.

Thank you.

Dave Lewis, your line is now open.

Thank you, guys.

I just have two quick questions.

The first is I think we have seen equity flows turn positive in the past couple of weeks and perhaps since the start of some new fund creations.

Have you heard anything from your clients in the past two or three weeks that's more favorable than what you have seen this most recent quarter?

I would characterize the environment largely as very, very cautious optimism and I don't think a couple of weeks of positive fund flow is going to materially alter market data budget but we are seeing the stabilization of market data budgets in our clients.

We are beginning to see clients try and explore new products to improve their work flow and I think we'll see that before we continue to slowly improve over the work flows.

Thanks, Mike.

And the second one is, I think we are a year and a half building on the access fundamentals platform.

Now it's supported by a new product.

Can you just talk about the momentum of proprietary content and the feedback that you are hearing from your clients and in the cases where you are not winning business, what might be some of the reason that you are hearing most frequently?

So if you go back to what I believe the drivers of business are, we have client seats, application and content.

Content for us is definitely a newer area and as Peter highlighted in the call, as a business, we were 100% integrator of third party content in 2000, and here in 2010, we feel strongly that we have a strong proprietary content.

At the same time, we are also in the business of supporting third-party content on the system, and are a firm believer that the right answer for the client is what's best for them, even though we may have a slight bias towards selling our content, versus a competitor content on the system.

In the end, it's most important that the client get the best solution.

We don't have all scenarios and our content would not be the right solution in all.

With that said, it is absolutely a driver in our business at this point and we feel very excited about it.

As you can see from our investment in head count, major component of that is proprietary content that we believe the opportunity is pretty substantial in front of it, as we transition from being a software company to being a software and content company.

Great.

Thanks, guys.

And our last question comes from George Tall.

Your line is now open.

Good morning and thank you for taking our questions.

Phil, I know you touched on this earlier, but any specific demographic or vertical where the growth has come from this quarter and how do you think about the sustainability of that growth going forward?

As I mentioned before, the faster growth was really across all of our segments or business, and we segment our business in a pretty granular way internally, but at the macro level is IM and IBU or the global banking business and so user count is really positive in all areas.

Hard to predict exactly what happens quarter to quarter.

I think internally, though, it's one of the pieces in the drivers of business.

We tend to focus on ASV being an important component, whether it comes from any of the drivers that I mentioned is a good thing.

But I think to -- one quarter does not make a trend but it's certainly a positive data point.

Okay.

And just to follow-up on the earlier questions on the revenues per password, given the revenues per password on average decline as you add new seats per contract, do you believe the effect from an increased in spend or increase in pricing would offset this to produce positive growth in the metric?

Ideally I would like to see the metric go down because it means we are expanding our seat count.

If I look at the market opportunities for the fact that our market opportunity is hundreds of thousands of seats and for us to ultimately reach that, all of our current clients have to be much larger than they are on a seat basis, so I would be excited to be able to expand and have 100,000 seats and have the driver be seat growth and have that metric come down.

At the same time, if you are part of our business that are selling applications or content to those clients, they would prefer to see the revenue come from those components of business.

It's a healthy opportunity for us to be able to pursue both, growth in user population, as well as growth in applications and content for our current plan.

Okay.

And sort of a tangential question, on the pricing front, do you think the price increases that you have seen with FactSet fundamentals will help contribute to boosting revenues for password?

Access on the fundamentals, for some, it's probably a cost savings.

So there's not a price component to that.

I think what it does is create competition in the marketplace which is always healthy for the client.

Historically we were not a producer of that product, we had to basically sell the product of Reuters, and product from Thomson, they were able to determine the market price for that and we had very little ability to control the total cost of ownership for our client.

Providing our own proprietary content where we have control over the total cost, but one is a better solution for them, based on their particular need than they are able to still source that content from any of those other suppliers.

Got it.

Thank you.

Yep.

We do have a couple more questions that have come through.

The next question is from Robert Riggs.

Your line is open.

Hi, good morning.

Just one quick housekeeping question.

Last quarter, you guys broke out the non-subscription revenue included in the ASV.

What was that number for this quarter?

Yes.

Hi, Robert.

It's Peter.

Hi, Peter.

We're no longer breaking out that term.

It's immaterial any way you look at it.

It's included in our ASV number.

So it's -- it's not -- it's not a figure we will be providing.

And the reason is it's not worth it to focus anyone's time or attention on.

Okay.

Thanks.

And the next question comes from Sloan Rosenbaum.

Your line is now open.

Thanks for squeezing me back in.

I wanted to ask about the head count growth.

Last year the primary head count growth was because of acquisition of data and growth in India.

Are you guys currently or do you expect this year to increase your head count in terms of your sales?

Do you expect any material change in the sales people that you've got?

Hi, Sloan.

It's Mike.

Yes, we will continue to invest in sales people.

To give you one example, we created a team of dedicated sales professionals to focus on selling and monetizing our content opportunities.

That's one area where we will invest in people.

We will also invest in salespeople in other growth areas, such as fixed income space, fixes income of PA, et cetera.

I would augment that by saying if I was looking across our business, and if you break our business down, you are going to have sales, sales consulting and content creation and software creation and product development area.

We are hiring into all three of those major areas at this point.

Do you have any breakdown?

I mean, have you switched from being primarily data to aggregating-type sales to -- excuse me head count growth, to sales head count growth.

Can you give me any color of where you are going with that?

The historic career track for our sales force is via our consulting group.

So the head count population comes into the consulting and there are several new classes starting as we speak.

Okay.

Is there a pickup from last year?

I'm trying to gauge you guys' sort of future view over the next six to 12 months.

If I was looking forward into our head count plans, I would -- I think one of the percentages to -- I think to be comfortable with is, review how we grew last year, because I think we are going to grow in a similar manner.

So just to remind everybody, our head count overall is up 28% last year.

It's up 16% in the first half of this year.

Looking into the second half of this year, we are expecting to continue to grow head count both in the third and the fourth quarter.

It is definitely going to be heavily weighted in the fourth quarter because that's when our college hires who start in consulting and engineering come on, and those would be onshore hires.

I think if you were calibrating in terms of overall percentage increase, in those groups, I think we are certainly growing those groups faster than our overall net income growth rate on a year-over-year basis.

And are you growing those groups faster than you did last year?

The consulting area aspect of it?

Those groups -- if you were comparing them year over year, we would be growing in a consistent manner.

Okay.

Thanks.

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Thank you, everybody.

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