Factset Research Systems Inc (FDS) 2010 Q4 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 period.

(Operator Instructions)

Today's conference is being recorded.

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

Now I would like to turn over the meeting to Rachel Stern.

You may begin.

Thank you, operator.

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

Welcome to FactSet's fourth-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 is being transcribed in real time 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 can be found in FactSet's filings with the SEC.

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

These 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 the 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 Q4 results.

Second, I will give guidance for the upcoming first quarter of 2011.

Finally, we will close by addressing your questions.

I am pleased to say that Q4 was a solid quarter for FactSet.

We saw improvements in our position across a range of product areas and geographic regions.

Both client and user growth showed the highest quarterly change in the last two years.

By quarter-end our annual subscription value, or ASV, grew $20.9 million organically to $684 million.

Broad-based growth has been the catalyst for accelerating our organic growth rate to 7% over the last 12 months.

This growth has translated into a record level of free cash flows and the flexibility to invest aggressively for the future.

If you include ASV from our Market Metrics acquisition completed this June and foreign exchange effects, the ASV increase was $38 million during the quarter.

Remember that ASV represents a snapshot of the forward-looking revenues for the 12 months of services we provide to clients.

As we have noted before, free cash flow is an important metric to us because we really it captures all the balance sheet and P&L movements.

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 rose 5% to $63.2 million during the quarter for a total of $190 million, or a 4% increase, over the last 12 months.

Drivers of free cash flow during the fourth quarter were higher levels of net income and positive working capital changes, partially offset by higher CapEx.

One very interesting relationship in the comparison of earnings to our free cash flow is that the fourth-quarter free cash flow exceeded net income by 61%.

Free cash flow for fiscal 2010 was 27% higher than net income.

We believe that this metric illustrates the high quality of our earnings.

The efficiency of our collection team allowed us to achieve a record low DSO of 31 days, down 16% over the last year.

During the quarter capital expenditures were $7.1 million.

We spent $3.7 million on computer equipment and the remainder on office expansions.

We have expanded our offices in many locations during the quarter.

Our ending cash and marketable security balance was $196 million at quarter-end.

In addition, in the fourth quarter we repurchased $39 million of FactSet stock.

After the $150 million expansion of our share repurchase program $159 million remains authorized.

During the last 12 months we have returned $231 million to shareholders, $38 million through the payment of regular dividends and $193 million through our share repurchases.

Moving now to the P&L.

Revenues rose to $168.2 million, up 8% versus the year-ago quarter.

Excluding $3.9 million in revenues from Market Metrics, organic revenue growth was 6%.

Operating income was $57 million and also rose 6% compared to the same period in fiscal 2009.

In the fourth quarter net income rose to $39.3 million, an 8% increase.

EPS for the quarter was $0.83, up 12% compared to $0.74 in the year-ago quarter.

Included in EPS were income tax benefits of $0.01 per share as a result of higher levels of non-US taxable income.

Let's look at the revenue drivers in more detail.

ASV grew organically by $20.9 million during the fourth quarter.

Of total ASV 82% was derived from buy-side clients and the remainder from sell-side firms, primarily M&A advisory and equity research firms.

As in prior quarters international operations accounted for 32% of our total ASV.

ASV from US operations was $466 million and international operations accounted for $218 million of our ASV.

Fourth-quarter US revenues were $114.7 million, an increase of 8% over the prior-year period.

Excluding Market Metrics revenues the increase was 6% over the prior-year period.

Non-US revenues contributed $53.5 million to the total, also an increase of 8%.

Quarterly revenues from operations in our oversea regions, Europe and the Pacific Rim, were $42 million and $11.5 million, respectively.

Let's review more specifically some of the activity behind our ASV and revenue results.

There are really five bullet points to emphasize here in discussing our growth drivers for Q4.

One, client and user growth showed the highest quarterly change in the last two years.

Our client count expanded by 35 net new clients during the quarter for a total of 2,110 clients.

Consistent with our experience in the third quarter, this quarter we also noted fewer cancellations as we added new clients.

The decline in cancellations is directly related to a decline among our clients of firm closures.

As in the prior quarter, our client retention rate remained above 95% in ASV terms and improved further to 90% of clients, reflecting the continued reduction in client turnover.

Our total user count across all product areas increased by 2,400 users to 42,800, a 6% increase.

This increase in user count resulted from increased users at both investment management and investment banking clients.

Two, a year ago we released new FactSet and we believe it has been an overwhelming success.

Our new platform continues to receive high marks from new and existing clients.

The growth of client usage of FactSet is more than double revenues, signaling to us that we are delivering more value to users.

Three, we added ASV from the sale of FactSet's proprietary content sets, both on and off the standard FactSet platform.

We did not stop investing in and enhancing our proprietary databases during the recent downturn.

We continue now to invest in our own databases including FactSet Fundamentals, FactSet Estimates, FactSet Economics, CallStreet transcripts, and ownership information to name a few.

We continue to work together with our data supplier partners including Dow Jones, Standard & Poor's, Thomson Reuters, and MorningStar to provide a wide range of choices to our clients to suit their particular needs.

Four, our portfolio analytics suite has had its best quarter since late 2008.

Sales of our quantitative products accelerated.

We expanded our suite of risk products to include Axioma models which sold very well across our client base.

The number of PA users expanded again.

PA user and client counts were 6,300 and 700, respectively.

PA users grew a healthy 12% over the last year.

Pease note that this is the last quarter in which we will disclose the number of PA users and clients.

The PA suite is made up of eight separate products and describing the growth of one does not always accurately portray how this suite of products has performed.

Going forward we will continue to provide color on changes in ASV from changes in subscription levels to our advanced analytic products without providing specific metrics.

Five, we have aggressively invested during the downturn in terms of people.

Our total headcount rose to 4,116 employees at the end of the quarter.

This year we increased our ranks by 39%.

It's the second consecutive year employee growth exceeded 30%.

The bulk of this increase has come from expansion of our proprietary collection operations, but we have also invested in sales and consulting and software engineering.

In the fourth quarter we had new classes of consultants and engineers who completed training both in the US and abroad.

Moving now to the expense side for the quarter.

Operating expenses were $110.8 million, up 9.6% from the same period a year ago.

Excluding Market Metrics, operating expenses grew by 6%.

Operating margins were 34.1% in this quarter compared to 34.7% in the third quarter and 35% in the fourth quarter of fiscal 2009.

As we covered on last quarter's call, the margin decline was expected as Market Metrics revenues and expenses were nearly identical.

On foreign exchange we told you that in March 2010 we entered into foreign currency forward contracts to hedge our euro/dollar exposure through the first quarter of fiscal 2012 and our exposure to the British pound through the third quarter of fiscal 2011.

We did not enter into any additional hedges or make any changes to our hedging strategy during the fourth quarter.

With the current hedges in place we believe currency fluctuations will not have a material impact on our operations during fiscal 2011.

Compared to the year-ago quarter cost of services as a percentage of sales decreased by 180 basis points.

Over the last year our third-party data costs and the costs of communication with our clients have declined.

This decline was partially offset by increased compensation costs for offshore employees engaged in the creation of FactSet proprietary content and higher cost for Market Metrics.

The driver of the reduction in third-party data cost was increased client usage of FactSet content.

We have spent the year building out our multipurpose content operations in Manila and Hyderabad which accounts for much of the increase in compensation.

Year over year SG&A expenses expressed as a percentage of sales rose 260 basis points.

This increase was due to higher compensation, higher T&E, and the acquisition of Market Metrics.

We increased compensation expense during the year by increasing our variable compensation and hiring more client-facing employees.

T&E rose because we had more client visits and increased travel from FactSet's expanded global footprint.

The effective tax rate for the fourth quarter was 31.7%.

The components of the effective tax rate are 32.9% for the full fiscal 2010 year partially offset by income tax benefits of 1.2%.

Included in the fourth quarter were income tax benefits of $700,000 related to higher levels of non-US taxable income.

As is the case in the third quarter, the fiscal 2010 rate appropriately reflects the R&D credit only for the first four months of our fiscal 2010 fiscal year.

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

If Congress reconciles the legislation and reinstates the R&D credit, annual EPS will increase by $0.04 or $0.01 per quarter.

Though it has been an eventful year for us, it's hard to believe yet another fiscal year has passed.

Now let's turn to our guidance for the first quarter of fiscal 2011.

We expect revenues will range between $169 million and $174 million.

We expect that EPS will range between $0.83 and $0.85 per share.

As we noted before, a reinstatement of the R&D tax credit would add $0.01 to each end of that range.

We anticipate that capital expenditures for the full 2011 fiscal year, net of landlord contributions, will range between $22 million and $28 million.

Before we conclude this portion of the call, I would like to take a moment more to reflect not only on this past quarter but also on the year as a whole.

I would like to try also to give you a sense of what we see ahead.

FactSet and its clients, paralleling much of the global economy, were negatively impacted during the downturn.

What started as a very difficult year has ended on a more positive note.

In the last year our organic ASV growth rate increased from 0% to 7%.

While Q4 was strong, it is also normally our best quarter.

In our 15 years as a public company Q4 has produced the largest absolute ASV change in 10 of those years.

In summary, we have a lot of work ahead especially since there is still uncertainty in the markets and therefore in our client base.

To take advantage of that opportunity before us we must continue to execute on our plans.

Thank you for your participation in today's call.

We are now ready for your questions.

(Operator Instructions) Dave Lewis.

Good morning.

The first question is PA workstations, and, Peter, you alluded to the strong performance in the quarter, what -- from this environment it was quite robust.

What is driving that?

I know that you guys have been, both on the client side and in terms of the workstation side users, is that -- are you taking share there or is that simply -- or what is driving that?

Thanks.

It's Phil.

I think the key really there is what Peter mentioned when it came to the product suite in that there are eight products in that suite and all of them contribute to the PA workstation count.

I think we continue to do a lot of cross-selling.

In this particular quarter the fixed income product was very strong and continues to accelerate.

And I think as we look forward, the reason that we are no longer using the metric is it's just not accurately portraying the health of that particular business and hasn't historically for a while.

So we feel more comfortable talking about it in the context of [color on the cord].

Okay.

And then user per client increased for the second quarter in a row.

I think two quarters ago or at the investor day you guys cited market share gains from Bloomberg in particular I think.

Is it fair to say that you are continuing to take share in this market given that we are still in a recovering market and it appears that the user per client metrics would suggest that?

Hi, David.

It's Mike Frankenfield.

User count was up in all segments of our business, whether it was the IB segment, the investment management segment both US and internationally.

The fourth quarter it's common to see a spike in user increases due to hiring in the large [wholly private] banks and that certainly happened this quarter but it happened, as I said, across all the business segments.

There is a lot of interest in the new FactSet and the value that that product delivers, and that is certainly one of the major reasons that is driving the growth of user count.

Okay.

Thanks, Mike.

And last one for me and I will hop off.

You guys, I don't believe you have cited any type of metric for new FactSet penetration; previously we used quotes I think the last few quarters as a proxy.

Can you give us a sense for the penetration, where that stands right now?

Thank you.

Hi, David.

It's Mike again.

We began the process just about a year ago of upgrading all of our clients from our original FactSet platform to the new FactSet.

That process has now been underway for about 11 months and we continue to upgrade at a rate faster than our expectation.

The uptake on the product has been very, very strong.

We are not complete with that process yet.

We are going to -- we still have some work ahead of us and we will let you know when we are completely done.

Thank you.

[Chris Kennedy].

Good morning, thanks for taking the question.

Maybe a question for Mike.

Can you just talk about the health or the growth prospects of your customers and differentiate between your buy-side clients and your sell-side clients, please?

I think there is a couple different ways to break that down.

Within our existing clients we continue to see large growth opportunities because our product suite continues to expand.

Our PA product is a great example of growing from one product many years ago to now a suite of eight products, so there is cross-selling opportunities that exist within clients, within existing clients that are very large.

The new FactSet is changing the perception of what FactSet is and that gives us an opportunity, not only to sell a product to existing users within our clients, but also to attract new users within our clients.

Outside of our client base we feel we have a large number of prospects.

There are literally thousands of investment managers around the world that are potential candidates for FactSet.

Our fixed income offering has opened up a whole new set of clients that manage either purely fixed income assets or a combination of equity or fixed income.

So really we feel we are in the early stages of what we, ultimately, can achieve.

Okay, great.

That is helpful.

And then just on the cost of goods sold side, can you just give a little bit more color between the four different buckets?

I think you mentioned communication costs went down, third-party data costs went down.

On the offset, compensation costs went up and Market Metrics.

Can you just give a little more color on those four buckets please?

Sure.

Thanks, Chris.

The primary driver for us is compensation and the easiest way to look at that is just to look at our head count change.

That is the primary component.

Overall, we are really managing FactSet at the total operating expense level so we don't get -- pay too particular close attention to its components.

But if you were going to look at it, cost of services, the biggest driver is compensation.

Okay, great.

Thanks a lot.

[John Neff].

Thanks for taking the question, just one.

You made a huge investment in employee headcount -- you more than double that over the last two years -- and content.

I am just curious, how do you think about or measure the return on that investment over the past two years?

And I know there is both a revenue and an expense component to that, but I would just like to know how you are thinking about that and how it has gone so far.

Thank you.

It's Phil.

We have an interesting product in that trying to take apart our product and say whether the value came from the application or the content it gets difficult and gray.

We do some it internally just to measure, as you point out, how we are doing.

Obviously the acquisition of a fundamental database is a large chunk of those employees, but as you can tell just by the scale of our expansion that we really expanded in many content areas.

It's really, primarily an investment in the future in that the return that you -- all those people you put in and trained, it takes time for them to come up and become productive.

But we feel very confident that the investment we are making will put us in a stronger competitive position as we move forward in the marketplace.

Thank you.

Shlomo Rosenbaum.

Thank you for taking my questions.

Was there an impact to user count and client count from the Market Metrics acquisition?

Shlomo, it's Mike.

As you know, Market Metrics is an exciting new addition to FactSet.

It's going to really help us engage at a much deeper level with our largest clients and provide them a content set and research offering that is essential to them to run their business.

Believe it or not, there were zero increases in users and zero increases in user count; there is a 100% overlap.

And then could you give a little more detail on the fixed income PA workstation?

You kind of talked about that that was a strong area of growth.

Is there anyway you can talk to us?

Is the growth exhilarating there, is it becoming more meaningful, is it going to get close to a point where you are going to --?

I guess you are not going to break it out because we are actually moving the other direction, but if you can give any more commentary on that.

I think only that if you take out of our context that we are talking about it, it has grown from something that is small to something that actually was a contributor in the quarter.

What are the largest areas of opportunity for you guys in the next few years?

What I look forward at FactSet and what we focus on, it's really the same answer to the question that we would always give in that new clients and new users is the number one focus.

When we look at our potential marketplace we think there are 6,000 firms that should subscribe to FactSet so we roughly have a third of the marketplace on a client count basis.

When we look at the user base we are in the 40,000s at this point in an industry with hundreds of thousands, so there are lots of people who should use of FactSet who don't.

Many of those are within the current clients we have.

Mike alluded to the fact that the new FactSet workstation is allowing us to expand our footprint and capture more workflow within our current clients, but also it allows us to go out and tap areas of the marketplace that we haven't been before.

For example, he mentioned a being able to sell to a fixed income firm is something we haven't been able to really effectively do unless they were really a high-yield firm looking primarily at the equities.

So as our product continues to expand, whether that be content, whether that be using quotes, (inaudible) analytics, and then just the core FactSet that captures still many of the users in our client base, we really feel very excited about the opportunity that we have in front of us and don't really think about market share being a constraint in any way, shape, or form.

Okay.

You have made a lot of hires in this last quarter.

Is there some way you could break down product development versus consultant and sales type hires?

I think the answer to the question is the bulk of them are content, obviously given just the sheer magnitude and the fact that -- given the magnitude, it certainly implies there is a lot of offshore hiring.

But Peter also alluded to the fact that we have very healthy sales and consulting and engineering classes this summer as well.

Okay.

I will let someone else get in and get back into the queue.

Robert Riggs.

Thanks for taking my question.

Wondering if you could just give a quick update on the competitive landscape?

Have you seen any new entrants or have any existing players put out any new platforms that they are trying to compete with?

And also just given the success that you have had with the adoption of the new FactSet, have your existing competitors changed the way they are competing?

Are they getting more aggressive on pricing?

Two parts to the question, has the competitive landscape changed?

We are certainly in an industry where quarter to quarter there is very little change in what is going on in the marketplace.

Everybody is always releasing slight enhancements or major enhancements to their product, but the buying patterns of our clients are pretty slow in how they respond to those.

I think really when I look at FactSet I feel very comfortable about our competitive position.

We are clearly very offensive in releasing content, releasing new versions of our software with the sole goal of increasing the price and the value relationship and productivity of our clients.

As far as pricing in the marketplace, I would say in general, if you wind the clock back to whatever you thought the bottom of the market was, pricing pressure on everybody in the industry was very high.

Obviously our clients were incredibly cost conscious at that point.

My gut would tell me that the pendulum has swung back to a more typical market where the value you deliver is really the most important component.

Great.

And then you continued to generate an impressive level of free cash flow.

If you could walk through the priorities for the use of the free cash; I mean you continue to buy back shares.

You did do the Market Metrics acquisition.

Has the priority changed at all there?

Hi, Robert.

It's Peter.

Thanks for the question.

Our priorities with respect to free cash flow really hasn't changed much at all.

We are really balancing out our capital allocation, either -- between share buybacks, dividends, and an occasional M&A transaction.

Our M&A activity is opportunistic so we really focus on organic growth.

So the size of how much we return is really a focus of an inverse relationship to the amount we spend on M&A and also I think it has been picked up more aggressively since interest rates have been so meager over essentially the past year and a half.

Great and then one last one.

DSOs have ticked down pretty steadily over the last three quarters.

Does that continue to go down or are we at a pretty good target, kind of in the low 30s?

I would be continued if it continued to go down.

It's at an industry low rate for any firm by a large gap.

We have just been continuing to fine tune it and really improve our collection process, including how we distribute our invoice is all electronically now.

So I wouldn't expect that that trend would continue.

Great.

Thanks, nice quarter.

Pete Appert.

Phil, can you give us what portion of the year-to-year password count growth was from existing versus new subscribers?

I don't actually have the answer to that, Peter.

If I were just going to use my instincts, I would say in general based on the scale of our industry and our relationship with our largest clients and where all the assets and primary seat count is that the bulk of the seats have to come from the larger firms in the industry.

Just strictly on a seat count basis.

Firm count would obviously be a lot smaller firms, but the seat count, the bulk of it has to come from the larger players.

Which would imply that majority of the seat count growth is from existing clients then?

Correct, correct.

Most of our ASV comes from existing clients.

Okay.

And then, Phil, just to follow up on the question regarding the competitive dynamics.

I see that Cap IQ is buying Markets.com or part of Markets.com.

I am wondering your read on that in terms of does that change the competitive profile in the market in your sense.

Is there any issue in terms of Markets.com being a competitive product or a relevant product from your standpoint?

No, I don't see it changing the market dynamic at all.

Markets.com has been in the marketplace for almost a decade at this point.

FactSet has a very, very strong research product that is widely used by our clients and the growth of that product within our client base has been exceptional.

Thomson, both the prior firm, Thomson with First Call, and Reuters had a research product; so the marketplace really has the ability to consume sell-side research from a variety of different platforms.

So the shifting of the market to Capital IQ I don't think it will change anything.

They even had some portion of a product that would have had sell-side research in it.

And Phil, are there any specific areas in terms of databases or datasets that you still feel are missing from the FactSet offering where you need to focus?

I think if you were listening to our internal discussions it's really just about focusing on what we are currently doing, becoming more efficient, and doing it better, and fine tuning opportunities that we have historically seen in the marketplace but have been unable to take advantage of because we weren't in the content creation business.

So it's still an exciting time for us to be able to take our product development queue of ideas and actually implement the idea with a combination of collecting some more data and presenting the information properly.

So do I take that to mean then it's really just filling out the, for example, the Reuters fundamental database to make it more comprehensive with new databases?

Correct.

Okay.

And then last thing, Phil, the pricing what is your thinking on level of price increases that the market could absorb and how aggressive do you want to be on that front?

It's certainly something we are currently evaluating.

I don't think it will be anything inconsistent with prior years at this point.

And can you remind me, what did you do last year?

3%?

It was a 3% price increase, Peter.

Great, thank you.

Jon Maietta.

Thanks for taking my question.

John already asked this question so it's a little bit of a different flavor on the same question.

You have invested quite substantially with regard to your proprietary content and at some point one would think that this was going to manifest itself in the way of some increased operating margin leverage.

And I was wondering how that may manifest itself in the P&L?

So for example, in a couple of years would we potentially see the step function in operating margins, a step function increase over the period of a couple quarters?

Or should we think about this proprietary content build effort as something that could potentially drive a very gradual increase in operating margins over time?

I think we have been very consistent in our message on operating margins in that we really guide margins to be flat.

It certainly fluctuates up and down based on acceleration or deceleration in growth and expenses, but as a business we look at flat margins.

I guess conceptually you could look at content in thinking that would have natural operating leverage in it.

As I look at the content it's somewhat of an arms race where what was collected five years ago and what we collected five years from now, the amount of information that you need to collect to be competitive and the rate you need to collect it will continue to increase.

So I don't really see it as a margin expansion opportunity.

Okay, thanks very much.

Shlomo Rosenbaum.

Just a couple of housekeeping ones and then a little bit of a bigger global one.

The tax rate has been low for the last two quarters and things have popped up.

Are you still expecting between a 33% and 34% tax rate for guidance?

Hi, Shlomo.

It's Peter.

I think the best way to think about the tax rate in terms of Q1 is to really decompose our tax rate that we just announced in Q4.

So that the components were 32.9% for fiscal 2010 and that really would be, I think, the best metric to look forward.

That was offset by a benefit of 1.2% on the one-time item.

So 32.9% is 2010's effective tax rate and the best metric when you look forward.

And then can you go over the breakdown of European revenue versus Asia Pacific and also do have margins on that?

I know you usually put that in the Q; wanted to know if you have it at your fingertips.

So I don't think we have anything more to add than what was disclosed in the press release from what are the breakdown of the revenues.

Do you need what is more than in the press release?

Oh, that was already -- I am sorry, I just didn't see that.

As far as the margins go, we don't actually track them internally I don't think.

I think it's certainly something that comes out in the K and the Q that is really a function of just financial accounting, but as a business there is very little effort put into allocating real costs globally.

So it's just a function of whatever GAAP accounting produces.

But as a business, the real businesses, you have to look at it in total.

Okay.

And then recently there has been some talk about potential big wave of reductions in force across the financial services industry; it has been talked about in the last two weeks or so.

Are your clients indicating anything to you guys that makes sense to expect that or are you getting any indications one way or the other?

I think we have at least -- certainly my take would be that when I look at our user base and where our core user bases are inside of our clients that the businesses our end users are in are the healthy business that are least likely to be affected by what these banks are talking about.

The buy side is a very stable business and I don't really feel it is under pressure from a regulatory perspective.

And in the sell-side it's the research department and corporate finance, which isn't typically the area that the financial regulations is going to affect.

Unless you have a different opinion, but that is kind of what we see.

Okay, thank you.

Dave Lewis.

Thanks, guys.

Just two quick ones.

Mike, can you give us a sense for just the pulse of the spending in the buy side?

I don't think we really got that much color on what the trends are there.

Thanks.

Hi, Dave.

I think given that index levels have essentially stabilized, our investment manager clients are dealing and seeing more visibility in their operating model.

This is giving them an opportunity to forecast budgets that are flatter growing, which is good for FactSet.

A flat market is great for us because we feel we can continue to expand in that environment.

Thanks, Mike.

And, Phil, just one quick follow-up.

Can you comment on how you are thinking about the growth in the sales force right now given that you have more touch points from which to sell to clients right now?

I am not sure what you are at liberty to say to that.

And I guess the second part of that would be, related to that is -- let me leave it there first and I will follow up.

Okay.

If you take our sales force, we really sell our product in a variety of different ways.

There is the generalist salesperson who is really the relationship manager, who is always supported by a consulting team who is responsible for making sure that the client is healthy and is familiar with all of the products that we have and certainly answering any questions, whether they be on-site or by phone, for those particular clients.

In addition to that, because as you mentioned our product is a very broad product it's impossible for all of our sales people to be experts in everything we have, we have a specialist sales force on many products.

Whether it be something as detailed as the PA product line, but sometimes it's more general when it comes to news and quotes or other functions we might have within FactSet that we want to emphasize.

As far as the growth in the sales and consulting sales force, we mentioned certainly that it's an area of investment for us but not something we break out in particular.

But I think it's certainly, if you look at our business, it's something that obviously is not a leverage point.

It's really a cost of us doing business and we continue to expand the sales force as we see revenue opportunity and to make sure we are able to service the revenue we have sold.

Got you.

And so we should think about it in line with the top-line growth like we saw in the years before the proprietary content expansion roughly?

I think it's the healthiest way to look at it.

Certainly it fluctuates above and below that based on a given year, but over the long run that is the way we think about it.

Thank you.

There are no further questions.

Thank you very much, everybody.

This concludes today's conference.

Please disconnect at this time.