Factset Research Systems Inc (FDS) 2012 Q4 法說會逐字稿

Welcome and thank you for standing by.

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

After the presentation there will be a question-and-answer session.

(Operator Instructions)

I would now like to turn the meeting over to Rachel Stern, Senior Vice President, Strategic Resources and General Counsel.

You may begin.

Thank you, operator.

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

Welcome to FactSet's fourth-quarter 2012 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 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 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.

Our comments today will focus only on GAAP figures.

If you are interested in non-GAAP figures consistent with previous quarters, we have included a table at the end of the press release that reconciles to GAAP.

Annual subscription value, or ASV, is a key metric for FactSet.

Please recall that ASV is a snapshot view of client subscriptions and represents our forward-looking revenues for the next 12 months.

Lastly, FactSet undertakes no obligation to update publicly any forward-looking statement 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.

Here is how I plan to spend our time today.

First, I will spend a moment on our recent acquisition of StreetAccount; second, we will review Q4 results; third, I will cover guidance for the first quarter of fiscal 2013 and the new fiscal year; fourth, and finally, we will end with Q&A.

We at FactSet were very busy over the summer, including completing our acquisition of StreetAccount.

In the face of a barrage of news stories the StreetAccount service enables users to get to the kernel of information they need quickly and easily.

StreetAccount is a terrific complementary news service that rounds out our offering from Dow Jones plus many other local news providers.

FactSet entered into an exclusive license with StreetAccount to redistribute its news earlier this year.

StreetAccount is already fully integrated and being enjoyed by our clients through the FactSet workstation.

StreetAccount also has a terrific web product and we continue to market and expand the user base by selling access to StreetAccount in this form.

When we closed the deal on June 29, StreetAccount had ASV of $11.4 million.

The acquisition did not have an impact on our fourth-quarter EPS, nor do we expect it to materially increase fiscal 2013 diluted earnings per share.

As I go through our results for the quarter I will breakout StreetAccount where relevant.

Q4 was a solid quarter for FactSet.

ASV grew organically by $20.4 million.

If we include StreetAccount's contribution, the ASV increase was $31.9 million.

Total ASV rose to $843 million.

By location, US operations rose to $572 million while international operations were responsible for $271 million in ASV.

International operations accounted for 32% of our total ASV.

Buy-side clients accounted for 81% of ASV, while the remainder came from sell-side firms, primarily M&A advisory and equity research firms.

EPS increased to $1.08 this quarter, up 13% from a year ago when a stock option charge in Q4 last year is excluded.

This quarter marks our ninth quarter of double-digit EPS growth.

Next quarter, as you will see from our guidance, we expect to be able to achieve double-digit EPS growth again.

We believe our business model is validated by our continued healthy growth and we think it is notable that FactSet is one of only three US companies that have reported 16 straight years of both positive revenue and positive EPS growth.

Quarterly free cash flow, which is defined as cash generated from operations less capital spending, was $51 million, down from $64 million in the same quarter last year.

Higher levels of net income were offset by lower non-cash items, lower accrued compensation, and higher taxes paid during the quarter.

Free cash flow for the year was $209 million, up 18% on a year-over-year basis.

Over the past 12 months free cash flow was 11% higher than net income, which we believe underscores the high quality of our earnings.

Accounts receivable decreased by $1 million over the past 12 months even as ASV increased.

Our DSOs were at 32 days at quarter end compared to 35 days in the fourth quarter of 2011.

FactSet's cash and investment balance was $203 million at quarter end, down $39 million from Q3.

CapEx was $6 million in the quarter.

During the quarter we repurchased 710,000 shares of FactSet stock for a total of $66 million.

We had 44.3 million shares outstanding at quarter end.

At August 31 we had $190 million authorized for future share repurchases.

A regular quarterly dividend of $14 million, or $0.31 per share, was paid on September 18.

Aggregating dividends with share repurchases, we returned $204 million to shareholders over the past 12 months.

Now let's turn to the P&L.

FactSet's revenues rose 8% to $208 million including StreetAccount revenue of $1.8 million.

Excluding StreetAccount, revenues rose 7% compared to the year-ago quarter.

Operating income advanced to $71 million, up 20% compared to last year.

Net income increased 19% to $49 million.

US revenues increased in Q4 to $141 million, up 7% over the same quarter a year ago.

Included in that figure is $1.8 million of revenue from StreetAccount.

Non-US revenues rose 10% over the last year to $66 million.

Revenues from Europe and the Asia Pacific regions in Q4 were $51 million and $15 million, respectively, with growth rates in each region of 9% and 14%, respectively, year over year.

Let's look at some of the reasons behind our ASV and revenue growth this quarter.

Our Portfolio Analytics suite of products has continued to gain share.

Within the suite of products subscriptions to PA 2.0, Portfolio Publisher, SPAR, fixed income in PA, benchmark in indices, and our risk optimizer products were all in demand.

Our strength in portfolio analysis and our ability to effectively manage the complex requirements of our clients is a marked differentiator for FactSet.

We are also pleased with the demand for third-party risk products distributed by FactSet.

Excluding the StreetAccount acquisition, we added 57 net new clients during the period.

This represents the highest quarterly total in six years.

Adding new clients is one of the first steps for us in increasing ASV.

New clients often come on small and typically grow at an accelerated rate over the first few years.

Our total user count increased by 1,100 users, excluding StreetAccounts, 49,500 at quarter end, due in part to growth on both the investment management and investment banking sides of our client base.

Q4 user growth was strong when considering the high season of hiring for sell-side banks is in the summer and our belief that new hires declined by approximately 20% compared to 2011.

Just to clarify, we do not include in our user count any seats that are on trial.

Our annual client retention rate was greater than 95% of ASV and 92% in terms of clients.

These statistics point to a continued level of high client engagement and satisfaction with our products and services.

Our Market Metrics business has now been fully integrated into the FactSet family.

Our mutual fund local market share product that we introduced last year has been performing well.

In addition to mutual funds, we have expanded the local market share suite of products to include variable annuity, life insurance, and applications for wholesalers.

Let's look at the expense side now.

Operating expenses for the quarter were $137 million, up 3% from the same quarter a year ago.

Operating margins were 34%.

Cost of services as a percentage of revenues increased 70 basis points over last year as a result of higher compensation expense from new hires in software engineering and consulting, increased headcount in our content operations, and our new StreetAccount employees.

Higher compensation was partially offset by lower stock option expense.

SG&A expenses as a percentage of revenues declined by 400 basis points compared to the same period in 2011.

The decline was due to decreased variable compensation and lower stock option expense due to a charge for investing our performance options last year.

These decreases were partially offset by higher bad debt expense and losses on hedges of the Indian rupee.

Our headcount continues to grow as we reached 5,735 employees at August 31, a net increase of 208 employees including StreetAccount.

Our headcount is up 9% year over year.

The fourth quarter is also typically when we add new employees who have recently graduated from college to join our consulting and engineering teams.

Our effective tax rate for Q4 was 31.7% compared to 30.9% a year ago.

Last year the rate included the impact of the US federal R&D tax credit which expired on December 31, 2011.

Now let's turn to our guidance for the first quarter of fiscal 2013.

Revenues are expected to range between $210 million and $213 million.

Operating margin is expected to range between 33.5% and 34%.

GAAP diluted EPS is expected to range between $1.10 and $1.12 per share.

We expect that capital expenditures for the full fiscal year of 2013 should range between $20 million and $28 million net of landlord contributions.

We project that our annual effective tax rate will be between 31.5% and 32.5%.

To sum up, we had a solid quarter and we ended our fiscal year well.

I would like to reflect for a moment on some of our achievements this past year.

During fiscal 2012 diluted EPS rose 13% to $4.12.

We again delivered double-digit EPS growth.

Revenues increased 11% to $806 million.

Free cash flows grew 18% over the past year to $209 million.

We added 155 net new clients this year, up from 127 last year.

We acquired StreetAccount and integrated its news into our platform.

We increased our dividend by more than 10% for the seventh consecutive year.

We also hit some other high points this year.

For the fourth time in five years we were named to Fortune's 100 Best Companies to Work For.

We were named to one of the UK's 50 Best Workplaces for the fourth year in a row.

We were also named to Glassdoor's 50 Best Places to Work.

All these metrics simply show that even now FactSet continues to grow.

Our business continues to expand into adjacent areas, including the wide variety of content we collect and process as we have grown organically, aided by small strategic acquisitions over the years and remain focused on our core client base.

We continue to deliver blue chip client service provided by our home-grown consultants.

With them and with our experienced sales and products teams, we provide superior service for clients that demand and readily pay for the very best.

In conclusion, for this year as a whole all of our important metrics ticked up again.

ASV, revenues, EPS, free cash flow, clients and workstation counts, and employee growth all went up.

We continue to succeed in a difficult market.

As we began another fiscal year, year-to-date global equity returns have been impressive thus far in 2012.

However, this trend is currently short-term and we must continue to offer better service than our competitors, more relevant content, and better applications that bring all the pieces together for a smooth, efficient client experience.

These efforts continue to be our focus for fiscal 2013 as we look towards growth and success over the long term.

Thank you for your participation in today's call.

We are now ready for your questions.

(Operator Instructions) Shlomo Rosenbaum, Stifel.

Thank you very much for taking my questions.

Could you just, Peter, talk a little bit about the breakdown from StreetAccount's ASV between the buy side and the sell side?

Hi, Shlomo; it's Phil.

I think probably the best way to describe it would be that the mix is very consistent with our client base, so it didn't really change the percentage for the quarter and probably won't going forward as well.

Okay.

How much of your existing client base already uses StreetAccount?

And so what I am getting at is what is your cross-sell opportunity there?

I think we see an exciting cross-sell opportunity.

I don't think at this point -- there is probably two ways to look at it, there is the user opportunity and the client opportunity.

They have a much larger client base than we do.

We didn't include it in our client metrics just because it would have skewed the client count, and really until we get the metrics in line where we think they can be useful we didn't include the numbers.

But we didn't include the users as well.

So there is lots of clients for us to go sell and new relationships to build upon.

Then there are additional users within our current clients as well that create a great opportunity for us.

Okay.

Then in terms of -- I know you guys said that the acquisition is not material for fiscal year 2013 EPS.

What about for next quarter?

Does it make a difference on the periphery, like $0.01 up or a $0.01 down, or anything like that?

I don't think it is material at this point.

Okay.

Then just in terms of the environment; the environment seems to be particularly tough, especially on the sell side.

Are you seeing increased price competition or anything like that?

I would say you had a very respectable user count increase despite what is going on, and just trying to dig underneath that a little.

I think maybe I will give some macro color and then turn it over to Mike.

I think the macro, at least from what I saw this year, the market for us really reset really in the first quarter.

It, obviously, takes a whole year for it to flow through and that is why you continue to see deceleration throughout the year.

But the deceleration really happened in one quarter, it was the beginning of last year, and hasn't really changed much.

A little choppy, hard to see what is going on in the future, but we feel very comfortable about where we are and being able to build from here going forward as the comparables get easier.

As far as what is going on in our client base, I guess an observation, certainly the buy side is going to have a good year when it comes to their revenues.

The opposite happened last fall when the market took a huge negative.

And the sell side, I think all of you are living it as well.

Certainly trading volumes are hard on the research side of the business and the big banks just really haven't figured out how to make as much money as they used to.

So there is definitely a lot of cost pressure in these firms.

I think we are doing very well on a competitive adjusted basis.

You see it in our client count and you see it in our user growth.

And maybe I will just turn it over to Mike for just more color at each of the group's level.

Great.

Thanks, Phil.

Certainly on the sell side we saw very much of a flattish year, the fourth quarter was similar to the way most of the year has been.

The biggest clients, in the fourth quarter we had a mix of some really good wins and one or two clients that we went backwards on.

Good news about the biggest clients going forward is that we have good visibility into the agreement out one, two, three years in some cases.

So we feel like we have got a great base established [on this whole track] as clients, which gives us opportunities to sell into new user groups within those firms, new departments.

We have small penetration among senior bankers.

We have low penetration in areas like sales and trading, wealth management.

So we see good opportunities going forward.

If you are looking at the client acquisition this quarter, we had a very positive quarter on the buy side.

And that happened in all geographies, both in the US and internationally.

We think that is a combination of multiple factors.

It's certainly a function of what we are doing to our product.

Our content acquisition and growth of our content has taken a lot of friction out of the selling process.

Our front end in UI combined with our iPad functionality is making it easier to perfect its use and increasing the appeal to clients that want to purchase the product.

And no doubt that overall market indices are making it -- creating a little bit of a tailwind for us and we hope that continues to drive growth.

Okay.

I am going to leave off with one last thing.

Just in terms of you talked about the broad-based growth, how much is fixed income PA?

Is that becoming more material as time is going on as a percentage of your growth rate?

And then I will get off the question queue.

Fixed income is affecting us a couple ways.

One is it's giving us great opportunities within our existing accounts to expand our presence and help our clients solve a very, very difficult problem that exists in their workflow.

The second thing it's doing is it's creating greenfield opportunities for us and allowing us to go after firms that we previously didn't have a solution at all for.

Firms that manage exclusively fixed income assets.

It is still not a hugely material contributor, though it is increasing in importance, and, well, we are very, very pleased with the progress that we are making.

Thank you.

Pete Heckmann, Avondale Partners.

Good morning, gentlemen.

When I look at the 280 employees that were added in the quarter, how many of those roughly were from StreetAccount?

Good morning, Pete.

49 employees from StreetAccount that we acquired through the acquisition.

Okay.

Should we assume that the majority of the other employees are primarily in content creation in international markets or kind of across the board?

Related to the remaining, we typically hire from college into our consulting and software engineering groups.

We had strong hiring this summer in those groups and we also did embellish our content operations, so I would call it a mix among those two areas in the remaining.

Okay, okay.

Have you started to discuss with your clients yet plans for a potential price increase for 2013?

And if so, could you share us how you view that shaking out?

Hi, Pete; it is Mike.

We have not begun those discussions with clients.

We normally begin to kick that process off in October.

Our requirements are typically we have 90-day terms on price notifications, so that communication will be happening probably next week at this point.

Okay, that is helpful.

And then are there opportunities?

StreetAccount is primarily a US product; it's my understanding at this point.

Are there opportunities to add some content and take that over to your international customers in the near term?

You are correct; its current focus has been primarily the US though they cover the major companies around the world.

I think our focus definitely is to expand its coverage and make sure it matches what the needs of our global client base would be.

Okay, okay.

And just one follow-up, as regards -- with that $11.4 million of ASV from StreetAccount is that net of the revenue from FactSet related to the distribution deal, or is that gross?

And if it is gross is it material?

No, that is net to that (inaudible).

Okay, helpful.

Thank you.

Peter Appert, Piper Jaffray.

Thanks.

So, Phil, when you are giving your commentary on the market environment suggesting that maybe we had seen the worst in the first quarter, I was interpreting that to suggest that maybe we could see a reacceleration in password growth in 2013.

Do you think that is a reasonable expectation?

I think my comment was really just more relating to the euro crisis last summer, kind of reset the client base and what their buying patterns were.

As far as predicting future password growth, you have been in the business of trying to predict password growth for a long time, I am sure it is kind of frustrating.

I think I would fall in the same category, as in I really don't know how many are going to happen in a particular quarter.

And I think it really is because it's kind of a lumpy metric.

We can have big clients who really move that number 500 or 1,000 at a time, or we could have a whole bunch of new clients that really only add up to a couple hundred.

Right.

I wasn't trying to pin you to a quarter.

I was thinking more about just whether you think the worst might be behind us in terms of what you are seeing in terms of selling cycles or conversion rates or some other metrics that you guys might be looking at.

I guess the thing I would describe, at least what I can feel, is it feels like the client base is in a stable environment at this point, if that makes any sense.

And stable isn't necessarily good in some segments.

Sure.

The sell side is very choppy firm to firm as to what is going on and the buy side there is pockets of success and firms that are having difficulty.

But you net it all out and it felt like the year was very equal quarter to quarter as to what was going on in the client base.

Okay.

Then maybe for Mike; he mentioned a little bit about the new client additions.

I was wondering if he could give us a little more color in terms of the 50-plus new clients.

Are any of them clients coming back to you?

Is there any common characteristics in terms of who is coming new to the FactSet product?

It is really a broad-based effort, Peter.

There is no question there is hedge fund creation going on in the US.

There is a new firm creation happening overseas.

I would say the mix tilted this particular quarter a little bit more towards the US away from the international.

I don't know if that is indicative of a longer-term trend.

One of the things we have worked hard on internally on my side is creating more sales professionals who are dedicated solely to acquiring new clients.

We really feel that with all the work that has been done on the product we have got a great opportunity to accelerate client acquisition.

And having people dedicated solely to that effort we think will help us achieve those goals.

Can you give me a sense of what portion of the password growth is coming from existing versus new clients?

It has got to be primarily skewed to existing, because we have got so many client relationships.

A typical new client is going to come on with less than 10 in most cases, so it is hard for them to move the number.

And many of them would come on with two IDs.

Got it, got it.

Then last thing; in terms of headcount addition in 2013, what should we be thinking about?

Peter has been very consistent over the years in trying to describe that.

I think if you think back to the last couple quarters we have described it as we have certainly invested heavily in our content and that accelerated our headcount growth.

And that at this point we are really looking for headcount to be closer to ASV as we move forward.

Okay.

So still the objective, Phil, is to maintain margins roughly at current levels?

It's the way we have always focused on it.

It moves up and down, but that has always been kind of the benchmark for us.

Got it.

Thank you.

Suzi Stein, Morgan Stanley.

Can you talk about your buyback assumptions for next quarter?

Just based on the guidance it seems to imply that you have a plan to accelerate repurchases and I just want to make sure I am looking at this right.

Hi, Suzi; it's Peter.

We don't have any explicit buyback assumptions for any future quarters.

We certainly evaluate that decision every day.

I mean, if you look historically, our buyback activity has definitely fluctuated from quarter to quarter.

Q4 was high for the fiscal year and it ranged from $66 million in Q4 to $15 million in a previous quarter in fiscal 2012, so it bounces all over a lot.

We will continue to evaluate and to optimize that capital allocation decision.

Well, is there anything unusual going on just between operating income and EPS that would make the numbers any different, or no?

I mean we can talk about this offline, but it just to me seemed like the share count must be off based on the guidance that you gave.

I think we can do some research and get back to you on that, Suzi.

Okay.

And then why didn't you provide the adjusted EPS guidance this quarter?

Was there anything in particular that led to that decision?

I think it stemmed from two things.

We got lots of feedback that we were just confusing people because it wasn't what we have done historically.

We gave the breakout in the back because some people do find it useful.

And it didn't seem like the Street was estimating based on that as well, so it just seemed like it was confusing the world.

But we plan to disclose all the data components as we go forward just so that people can derive whatever version of EPS they find the most useful.

Okay, all right.

And then can you just comment on the response that you have gotten from the iPad deployment and just confirm that you are not charging separately for that?

Hi, Suzi; it's Mike.

The iPad app continues to take FactSet in new and exciting directions.

It allows users to be able to consume our content in a very convenient way.

Uptake is, I would say, medium at this point.

It doesn't cost extra, but it certainly is a new app for people to include in their workflow, and it always takes time to change peoples' workflow.

Okay.

All right, great.

Thank you.

Tim McHugh, William Blair & Company.

This is Matt Hill in for Tim McHugh this morning.

My first question; with regards to the growth in international ASV, it looks like it has been outpacing domestic for the past year so I was just kind of wondering what is driving that.

Is it just market expansion, or are you seeing market share gains in the international markets you are in?

Matt, it is Mike.

International represents some exciting areas of growth for FactSet.

We have expanded our sales presence aggressively over the last several years into the Middle East, India, throughout Europe, etc.

And we continue to see significant greenfield opportunities out there.

As our product matures and we add more content, more companies, more coverage around the world it increases the addressable universe that we can go after.

So I would foresee that trend continuing.

Okay, great.

Then just maybe an update on the competitive environment for your various products.

Is there anything over the past few quarters that you have seen a change, either on the equity product side or fixed income?

No, I don't think the competitive environment has changed at all.

Obviously there is Bloomberg, TR and S&P in our space and then some smaller players in various parts of our business, but who is in this space and how they behave hasn't changed materially for quite a while.

Okay, thanks.

Bill Warmington, Raymond James.

Good morning, everyone.

So last month Bloomberg announced a 6% price increase on their terminals and just wanted to ask whether you thought that makes it easier for you guys to raise price, not really a factor.

What do you think?

I think, first of all, it is very consistent with practices that they have done in the past.

They typically announce a price increase and implement it over a couple years.

Doesn't hit all of their users at once because they have terminals under different contracts.

Certainly the fact that they continue to push out the price umbrella gives FactSet opportunity for us to compete.

And then you had mentioned the environment being stable.

I just wanted to know if you could comment on the appetite for products from clients, especially on the buy side, and whether you are seeing [lending] sales cycles there or not.

I perceive the appetite and the demand to be very, very high.

The investment management process is getting more complicated, not less complicated.

What is challenging from a sales perspective is getting clients to actually make a decision.

The sales cycle has lengthened.

Certainly purchase -- buy-side firms, one of the trends we have seen over the last several years, have become more organized in the way they purchase our product.

And in a somewhat uncertain environment individual purchasers don't want to be -- they are risk averse.

They don't want to take a lot of risk and be the person that makes a mistake in their firm.

So we have gone through a period where there is quite a bit of focus on cost containment, but I still perceive that demand for the product, what our users want, is very, very strong.

We look forward to the purse strings loosening and being able to deliver that value.

Would you talk a little bit about sales force headcount in terms of where you are now in terms of size, any additions you made during the August quarter, maybe plans to increase the sales force during 2013?

Bill, it is Peter.

In terms of headcount for our sales force, we have been consistently reinvesting in that headcount for the future and, generally, our sales force headcount is closely following our ASV growth.

It definitely wanes from quarter to quarter, but over a valid sample size that would certainly be the case.

Okay.

Then a housekeeping question just to make sure I have my numbers right.

It looks like the StreetAccount deal went for about $21 million purchase price with a revenue expected about $11.4 million.

Just want to ask if those numbers are right and whether there was an earnout associated with StreetAccount as well.

The number you are pulling is out of the funds flow and that is what is publicly available today.

I am sure there will be whatever details we feel comfortable with in the 10-Q.

Okay.

And there isn't an earnout connected with that acquisition of StreetAccount.

Okay, excellent.

Thank you very much.

Glenn Greene, Oppenheimer.

Thank you, good morning.

I guess the first question for Phil.

Obviously the buy side ASV strength was sort of a nice sequential rebound, also the client growth as you talked about was kind of record levels in the last six years.

It sounds like -- maybe I am reading too much into it -- you suggested, or maybe you didn't, but it sounded like there was some potential that there was a market tailwind on the buy side, at least in the quarter.

So I'm trying to parse through how much you think the strength that you saw in your business was market share related and how much was potentially the market tailwind.

I think if you look at client count and the user count, those are market share related.

We continue to sell more applications into our client base.

And I think for clients to purchase more product for the same number of users there is a little bit of tailwind there, but I know Mike used that term.

I would like to have a tailwind; they are a lot more fun.

It doesn't feel like much of one yet, but it doesn't feel like a headwind either.

Okay.

So the best way to sort of frame it is the overall market is stable and you are still gaining market share?

Yes, I think when I looked at the year I made the comment earlier it really felt the same all year long.

And just to remind everybody, our quarters are first and third are always lighter than second and fourth.

That is just really just -- where our fiscal and our clients hire and the way clients make the decisions it has just always been that way.

So first quarter is one of those numbers I really never know what ASV is going to be in the first quarter because sometimes it's fourth quarter gets pulled forward or backward.

It is a weird time for clients to make decisions before the calendar year-end.

And then as we head into Q2 it has got the price increase, it has got year-end decisions; it is all kinds of things kind of line up in Q2.

And then Q3 is again one of those middle quarters.

Okay.

Then, Peter, just to clarify one of the comments you made in your prepared comments; I just want to make sure I understood it.

But you were talking about hiring being down 20%.

Were you alluding to industry sell-side hiring?

I'm trying to put some context to your business relative to the market.

We were making our own estimates in that calculation and that is just based on the number of sell-side employees that go through our training program.

Those employees are not always FactSet users.

It really relates to the entire summer class.

Sell-side banks don't break up the classes into FactSet users and non-FactSet users.

They train everyone together.

Okay.

And then it sounds like no change in sort of the PA strength that you are seeing.

I would tell you we get a lot of questions from investors worried about one of your competitors coming up with sort of a look-alike product but bundling it within their package.

But have you seen any impact from that competitive alternative?

I think -- you are referring to Bloomberg's core product and they are not the only one in the space that can do attribution, so there are other ways to get attribution done.

But I think if you really take the whole suite of what we are doing and you see that the solution we are providing from the client's perspective we continue to do very, very well in that space.

Okay, I will leave it at that.

Thank you.

John Neff, Akre Capital Management.

Thanks.

I just recall that StreetAccount FactSet itself was the largest customer.

So I just wanted to confirm -- I am sure it is, but I just want to confirm that the $11.4 million is actually third-party ASV.

Yes, John, it is all third-party ASV.

Okay.

And then I am sure we will see this in the K, but just curious if you could give us an update on your assumptions behind the performance vesting RSUs and options heading into 2013.

All those disclosures happen in the K and the Q.

Okay, right.

And then last question.

The base client fee, I just was curious, is that still in place?

I am just wondering if you could run us through some of the strategic thinking behind the price reconfiguration that took place over the last year or so.

Thank you.

So for the past nine months or so we have been testing out pricing that allows a new client to come on board for $24,000 and for just incremental workstations at $12,000.

We bundled in many of the content data sets and many of the add-on applications, but still not bundled in all of the premium products in the PA suite, etc.

It's a long process to change pricing.

We are really focused on new clients at this point and only implementing this price change in existing clients where it makes sense.

Thanks.

Jennifer Huang, UBS.

Thank you for taking the questions.

Just wanted to make sure I am thinking about your expenses correctly.

I know you guys have done a terrific job in maintaining a stable margin.

So if I think about the margin being stable and revenue growth potentially growing at a little bit slower rate than last year that leads to expenses growing at a slower rate as well.

So how much of that is from a slowdown in headcount and how much of that, to the extent that you can quantify it, is a slowdown in maybe other investments?

Jennifer, it's Peter.

When we are managing FactSet at the operating income level we love to look at all of our expenses, and we are looking to optimize particularly expenses that we pay to third parties.

We do the best we can in that area and we spend a lot of time on that.

However, roughly 65% of our total expenses is compensation and so it is logical to think that if our total expenses go down the compensation would also be a factor in that.

And that could either be compensation to new employees or to existing employees.

Okay.

And then secondly, just to follow up on the growth on your international ASV, would you say most of those are also switching from competitors or are those from new fund formation and clients who are using a new product in general?

It is certainly a mix of both.

There are well-established competitors in Europe and Asia, and our product, as it continues to improve, competes very, very effectively against many of the incumbents that are out there.

But there is also lots of new firm creation and as users move from firm to firm they oftentimes like to bring FactSet with them.

And so that is an equally good source of new client growth for us.

Okay.

All right, thank you.

(Operator Instructions) Pete Heckmann, Avondale Partners.

Just a quick follow-up.

You had talked in the most recent Q about 2013 amortization of acquired intangibles of about $5.7 million.

With the acquisition of StreetAccount roughly what would that add for the full year?

I don't have that figure right off the top of my head, Peter.

(inaudible) Commercially it's at $1 million.

$1 million to the year?

Do we have $1 million coming off as well?

So about net flat from what it was before?

Yes, I think, Peter, it ends up being flat because we had some others that were rolling off.

All right, thanks much.

Thank you everyone.

We will see you next quarter.

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