Factset Research Systems Inc (FDS) 2013 Q4 法說會逐字稿

Welcome and thank you for standing by.

At this time, all participants will be able to listen only until the question and answer session of the conference.

(Operator Instructions)

Now I will turn the meeting over to Ms. 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 2013 earnings conference call.

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

This conference call is being transcribed in real-time by FactSet's CallStreet service and is being broadcast live via the Internet at www.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.

Consistent with previous quarters, we have included a table at the end of our press release that reconciles non-GAAP measures 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 publicly update any forward-looking statements as a result of new information, future events or otherwise.

I'd like to turn the discussion over now to Peter Walsh, Chief Operating Officer.

Thank you, Rachel, and good morning everyone.

Here's how I plan to spend our time today.

First, we'll review quarterly results.

Second, I'll touch on our recent acquisition of Revere Data.

Third, I'll provide guidance for the upcoming first quarter of fiscal 2014.

Fourth and finally, we'll end with your questions.

Before moving to the quarter, please allow me to cover one housekeeping item.

In Q4, a $2.6 million pretax charge was recorded to reflect vesting of performance-based stock options in connection with the StreetAccount acquisition.

Amounts that I disclosed as adjusted exclude this charge in order to present comparable figures with the prior year.

A full reconciliation of GAAP to non-GAAP figures can be found in the table at the end of our Earnings Release.

Now let's talk about fourth quarter results.

We had our best quarter in terms of both client and user additions since 2011, and our organic ASV grew by $25 million, a 6% increase year over year.

We ended the fiscal year with $888 million in total ASV.

ASV from US operations grew to $606 million, and ASV from international operations was $282 million or 32% of the total.

Buy-side clients accounted for 81.6% of ASV, and the remaining 18.4% was derived from our sell-side clients, M&A advisory and equity research businesses.

This quarter, adjusted EPS was $1.20, a rise of 11% compared to the same period last year.

We're proud to deliver double-digit EPS growth again, our 13th consecutive quarter.

Q4 free cash flow was $71 million.

For the entire fiscal year, we generated $251 million, 20% higher than free cash flow generated last year.

Free cash flow over the 12 months was 27% higher than net income, which we believe continues to demonstrate the high quality of our earnings.

This quarter, our free cash flow grew because of higher levels of net income, non-cash expenses, and tax benefits from stock option exercises.

At August 31, our DSO was 30 days compared to 32 days in the fourth quarter last year.

FactSet's cash and investment balance was $209 million, down $48 million as compared to Q3.

During the quarter, we bought back 1.4 million shares for $144 million.

Our repurchase program has $62 million remaining and authorized for future share repurchases at August 31, 2013.

The number of shares outstanding at the end of the fiscal year was 43.3 million, down from 44 million shares at the end of Q3.

If you combine our regular quarterly dividends paid and shares repurchased over the past 12 months, we have returned $388 million to shareholders.

Now let's turn to the P&L.

FactSet's Q4 revenues rose to $219.3 million, an increase of 6% over the same period last year of which 5.1% is organic growth and the remainder relates to the StreetAccount acquisition.

Adjusted operating income rose to $73.2 million, up 4% over the same period last year.

Adjusted net income increased 9% to $52.8 million during the quarter.

Our adjusted EPS grew 11% this quarter to $1.20.

Adjusted operating income, net income and diluted EPS exclude the previously mentioned stock-based compensation charge related to the StreetAccount acquisition.

This charge was $2.6 million pretax and $1.9 million after tax or $0.04 per share.

In the US, fourth quarter revenues rose to $150 million, an increase of 6% over the same period last year.

Non-US revenues increased to $69 million, up 5% compared to last year.

Excluding foreign currency effects, our international segment growth rate was 6% this quarter.

Fourth quarter revenues from Europe and the Asia-Pacific regions were $53 million and $16 million respectively, with year over year growth rates excluding currency in each region of 4% and 11% respectively.

This quarter offered a variety of ASV growth drivers.

Let's take a look.

A keystone of growth for us is new client acquisition, and this quarter, we delivered our highest number of net new client wins in the past seven years.

We added 60 net new clients compared to four last quarter and 57 in the same period a year ago.

Our total client count now has reached 2,500.

Consistent with prior quarters, our annual client retention rate was greater than 95% of ASV and 92% in terms of the number of clients.

Our clients are loyal, and when we lose clients, it's often as a result of M&A activity or business failure that results in firm closure.

Users of FactSet increased by 1,409 in Q4 compared to 61 in Q3 and 1,057 in Q4 last year.

The increase this quarter was the highest since 2011, and total users grew to 50,925.

User growth was strong from both buy-side and sell-side clients.

We normally see an uptick in user count during the summer related to the matriculation of new hire classes post college graduation at our clients.

As a reminder, we only count fee liable seats as users, not trials.

Portfolio analysis continues to be a strong product for us.

Clients have been buying equity TA seats as they've begun to hire again, an encouraging trend that we hope will continue.

Clients have also increased purchases of various applications within that suite of products.

Q4 was our best quarter this year for ASV contributions from portfolio publishing, from SPAR, and from our suite of third party risk providers whose models and optimizers are fully integrated for analysis of risk in PA.

FactSet's wealth management efforts have also been rewarded this quarter with sales at new clients and new users.

We have managed to displace some competitors in our deployment of our workstations at wealth management clients, which is still a relatively new area for us.

Our international sales this quarter were solid with positive momentum of adding new FIPA clients and strong sales in nearly all our Europe, Middle East and Asia-Pacific locations.

Our global content sales team, which focuses on sales of data outside the traditional FactSet platform, continues to grow and contribute to our ASV.

Now let's take a look at the expense side.

Operating expenses were $149 million, and our adjusted operating margin this quarter was 33.4%.

In the fourth quarter, our cost of services as a percentage of revenues increased 180 basis points compared to the same period last year.

This increase resulted from higher compensation from employee growth and higher stock-based compensation from vesting of performance based options, partially offset by a decrease in amortization of intangible assets and third party data costs.

SG&A expenses as a percentage of revenues increased by 10 basis points compared to the same period last year.

Higher employee compensation and stock option expense was partially offset by lower professional fees and bad debt expense.

At the end of fiscal 2013, our headcount was 6,258, an increase of 358 employees this quarter.

The bulk of our new employees joined us in our Hyderabad and Manila locations while recent college grads increased both our global consulting and engineering teams.

This quarter, the effective tax rate was 28.1%, down from 31.7% a year ago.

The decrease was primarily driven by the federal R&D tax credit which was not included in the year-ago quarter.

In September, FactSet acquired the assets of Revere Data, for $15 million.

The Revere business comprises industry taxonomy and supply chain relationship data.

We're excited about this latest acquisition which is consistent with our strategy of buying businesses with data in areas adjacent to our core business that can be easily integrated into FactSet to service our client base.

Acquired ASV was $4.9 million, and this amount is not included in our reported totals today.

We expect that upcoming Q1 operating margins will be negatively impacted by 30 basis points, and earnings will decline by $0.01 per share.

We anticipate that fully diluted EPS for fiscal '14 will decline by $0.02 per share as a result of this acquisition.

Revere has 50 employees in New York, Youngstown, Ohio and San Francisco.

Now let's turn to our guidance for the first quarter of fiscal 2014.

Revenues are expected to range between $222 million and $225 million.

Operating margins are expected to range between 33% and 34% which include a 30 basis points reduction from Revere.

GAAP diluted EPS should range between $1.21 and $1.24.

The midpoint of the range represents 10% growth over last year's first quarter earnings.

This GAAP diluted EPS assumes that the federal R&D tax credit will be reenacted during Q1.

If the credit is not reenacted, then we expect Q1 GAAP diluted EPS will be reduced by $0.03 per share.

The annual effective tax rate should range between 28.5% and 29.5%, consistent with last quarter's guidance.

This range also assumes that the federal R&D tax credit is reenacted.

As we look back over the past year, we are proud of our accomplishments.

This year, all our key indicators went up.

ASV, revenues, clients, users, free cash flow and employees.

During this past fiscal year, we again delivered double-digit EPS growth, organic ASV increased 6% to $888 million, and free cash flows grew 20% over the past year to $251 million.

As the new fiscal year begins, the calendar year is winding down for our clients.

We hope that the gains in the market that they have seen so far continue to contribute to their optimism and associated hiring and purchases.

But regardless of our client fortunes, we control our destiny because of a sizable forward market opportunity.

Looking ahead, our focus is to continue our strong execution, translating that opportunity into double-digit earnings growth.

Thank you.

We're now ready for your questions.

Thank you.

(Operator Instructions)

Your first question comes from Shlomo Rosenbaum, Stifel.

Hi.

Thank you very much for taking my questions.

Can you just, Peter, provide some color on the strong net adds, client adds and user adds and just kind of contrast that with the ASV growth, which was strong sequentially but from a seasonal aspect was kind of the lowest year over year ASV -- or your lowest amount that was added in the last three years.

I'm trying to get to the nature of the new ASV and the new users.

Are these people that are actually potentially buying pieces of the FactSet workstation, or are they buying maybe StreetAccount standalone and certain firms that are really just Bloomberg firms that may never sign up with the FactSet workstation?

Hi, Shlomo.

It's Phil.

I'll take that question.

I guess when I look at the public information that we provide for you as an analyst, it's important for you to look at, certainly I've always emphasized gaining share in total ASV, gaining share in seats and clients is always important, and I think we had a very strong quarter when it came to gaining share in the marketplace.

I think when I was looking at the data, in what we think was our traditional FactSet business, we gained share and had a higher win rate than we had in prior quarters.

Just to clarify one of the points you made, last year's quarter included $11.5 million or somewhere about that in acquisition ASV.

So on a year over year basis, this was a much better quarter than last year, and then I would also go on to throw with that that it's important to say that the mix was -- this year was more in our traditional business the way you think of terminals in the buying and sell-side.

You'd see more in the traditional terminals that people who might be starting off in a low dollar value that might be coming up later as a strong potential cross-sell?

We wouldn't count anybody in the web products, so anybody subscribing to the StreetAccount isn't in our seat count.

Seat count is in total ASV but not as far as seat gains.

Core workstations, the clients are relationships we have greater than 24,000, and then ASV is the total number.

In terms of like ASV growth, it was up about 6%.

Given the strong net seat count, is it -- why are we not seeing a higher ASV growth?

Is it because they're coming in at lower price points initially?

Well, if you think about the pricing for our product, the revenue streams come in lots of different flavors.

The first seats are more expensive than the marginal seats.

Whether the seat's on the buy-side or whether it's on the sell-side dictates whether the product mix they might subscribe to.

Traditionally our sell-side business hasn't had anywhere near the revenue per seat that our buy-side, primarily because the analytics products are almost 100% produced on the buy-side.

Another way to think about it, Shlomo -- this is Mike -- is that new users and new clients, when they come on, come on at a rate much lower than the average ASV per user and the average ASV per client.

That's the question I was getting to.

Is it a bunch of new users that are basically coming in at lower price point than you traditionally see and eventually you have a pretty good history of up-selling?

If you're referring to the metric of average revenue per client, average revenue per seat, I don't track that, so I wouldn't know.

But it's always a good thing when that actually goes down because it means we've got new client growth and new seat growth which would always bring down that average.

Okay.

Then just in general, the gross margin had stepped down.

Is this primarily the investment in people that you talked about, there's a significant hiring quarter?

Hi, Shlomo, it's Peter.

In terms of gross margin, the two significant factors this quarter would be the stock based compensation expense for the performance options related to StreetAccount.

I think it's also factual that most of our -- a large percentage of our employee hiring is in the cost of services line.

That extends to employees who are in our content operation, software engineering and new consultants from college.

And just from a macro perspective, are you seeing signs of new fund formation, hiring amongst your clients?

What are you seeing on the ground?

It's still fairly muted.

I would characterize the hiring that happened on the sell-side this quarter as certainly higher than our expectations, but certainly not anything exciting versus prior years.

So I would characterize that as a small positive.

We're seeing signs of headcount hiring on the buy-side business.

But again, very, very muted.

And then just when I make this calculation of buy-side growth versus -- ASV growth versus sell-side, I come out with buy-side growth at about 6%.

Based on what you can calculate from your public numbers have been tracking between 9% and 11%.

How should I think about that in terms of the ASV growth and the buy-side coming in lower than what based on this calculation looks like in the last four quarters?

Shlomo, let me first start just by talking about methodology, and then I'll let Mike or Phil comment.

With the dichotomy of the healthiness of the buy and sell side over the year, we certainly recognize that that split has taken on a higher level of importance.

We did two things this quarter.

One is we refined the calculation of the split to define IB as IB only and IM as our global IM business, plus our off-platform content sales, plus market metrics.

The second thing we did is we extended the decimal place out a digit, and we disclosed the quarterly history to allow for precise calculations for both ASV contribution and growth rates from each segment.

So I think what you're using today is our most accurate view of that split.

Okay.

So basically go back, look at the calculation, and come back to you if I see any problems from there?

Yes.

I think that the important point, the same point I made last quarter, Shlomo, is the way we're talking about in business includes market metrics in our off-platform business, and the comment I made earlier to answer your question, what you think of as the traditional core business of FactSet, the workstation to our core end users did well this quarter.

Okay.

Thank you very much.

The next question comes from Tim McHugh, William Blair & Company.

Yes, thank you.

I guess just to follow up on that last question, I think you gave us including this quarter then four prior quarters, so we can do the year over year growth rate, but I guess the 6.4% growth -- just curious how that -- for how you define that buy-side portion now, how that compares.

Is that faster or slower than we've seen over the last two or three quarters?

Obviously I know acquisitions bounce it around, but I guess just kind of underlying or organic basis, how would that compare?

I guess I would characterize it given the comment I've made that the core business, sell-side, buy-side, accelerated this quarter.

Okay.

Fair enough, I guess.

And then the -- I guess Revere Data, I guess the implication with the drag on margins being 30 basis points this quarter, it's relatively breakeven if I back into that.

Is that just the small size of the business?

Is there something you can do to bring that back up over time?

Well, I think we obviously indicated that what the impact we expected on EPS to be in Q1 and also for the year.

The Q1 EPS impact being $0.01 and [$0.02] for the year I think indicates to us that we think that we can improve its profitability during -- over the next four quarters.

Okay.

It's not $0.04 for the year.

All right.

Fair enough.

And then lastly, I know it's hard to predict, but the tax rate now 29%, is that more of your view of the long term, assuming the R&D credit continues to get renewed each year?

Is that a fair tax rate to be using now going forward?

In terms of the long term, if you believe the R&D tax credit will be reenacted, the midpoint of our guidance is the best rate to use in terms of a long-term tax rate.

I will comment that the R&D tax credit has been in existence since 1981, and there's only been one year since that time that the credit was not reinstated either on time or retroactively.

The cadence of the renewals does play havoc with our consistency of EPS, often moving a recurring benefit into the one-time category.

But if history repeats itself since 1981, I think our ETR, our effective tax rate in the just completed quarter is reflective of our ongoing long-term rate.

Okay.

Thank you.

Your next question comes from Pete Heckmann, Avondale.

Good morning, gentlemen.

Could you talk a little bit more about the international business and where you might be seeing some relative strength and weakness, and then along those same lines, can you talk about the investments you made in StreetAccount, add some international content, international users?

Hi, Pete, it's Mike.

The international story remains fairly consistent.

This year we saw a slowdown in Continental Europe, though individual countries within Continental Europe certainly performed well.

If I was to characterize that entire region as one region, I'd say you saw the slowdown there.

The UK market tends to very much mirror the United States.

I'd say the fastest growing part of our international operations is Southeast Asian, Middle Eastern operations which are small in aggregate ASV, but growing at a higher percentage.

Okay.

And then success on StreetAccount developing the user base over there?

We're in the early stages of developing StreetAccount outside of the United States.

It's exciting.

I would say that the product development is ahead of where we are on the sales side, so the sales force is doing its best job to begin to establish some brand recognition internationally to get the product out to users and gather the feedback so we can really measure how well we're doing.

We think we're doing quite well.

Okay.

And then there were some more pronounced moves in FX.

Would you characterize FX net of your hedges generally as a benefit on the cost line this quarter?

Hi, Pete.

It's Peter.

I think FX overall had a slight benefit on the cost line.

Looking ahead, the pronounced changes for us was really in the dollar-rupee ratio.

We did extend our hedge on the rupee, taking it out 2.5 years, looking ahead at 75% of our exposure.

So we do that when we see an opportunity to lock in a forward savings, and we saw that opportunity present itself this quarter.

Got it.

Okay.

And then can you talk a little bit about instant messaging, have you seen any uptake there, any pushback, and where you -- if you are seeing a little success, where that might be?

Hi, Pete, how are you, it's Phil.

It's a young product on the system.

We've got a nice group of core clients who are deep into the product and givens us lots of feedback as to where we should be headed in the marketplace.

It's not a material product for us at this point.

Okay.

All right.

Great.

I'll get back in the queue.

Thanks.

Your next question comes from Glenn Greene, Oppenheimer.

Thanks.

Good morning.

First question, just a clarification for Peter, just kind of a few client questions on this.

The $2.6 million pretax stock compensation charge, just wanted to be clear from your comments it sounded like it was all sort of booked in cost of services?

Yes, that's accurate, Glen.

Okay.

Great.

The tone that you guys had on PA actually sounded incrementally better.

Is that kind of the correct read I have, and maybe you can give us some granularity on the contribution to the ASV growth, is PA growth growing commensurate with the ASV growth?

Hi, it's Mike.

PA continues to be really a cornerstone product for us.

As he Peter described in his introductory comments, we think PA is a suite of products, whether it's equity PA, fixed income PA, SPAR, publishing, the risk modules.

All of these things are components that clients can pick and choose from to build as complete a solution as their workload dictates.

We saw really, really good uptake in the risk side of things, in the publisher side of things.

Overall, that segment is continuing to do well.

Clients are definitely interested only in the best solution.

There are a lot of PA knock-offs in the marketplace, and I think really what differentiates us is the breadth and completeness of our solution, which is definitely in demand by clients.

Okay.

And then you also sort of made some proactive comments on the wealth management side, which I guess I haven't heard for a couple quarters, but I know it's been increased focus.

And maybe is there any way to give us a little bit of color, kind of what you're seeing and the kind of traction you have there, and is it kind of meeting your expectations for the kind of ramp-up you're seeing in that vertical?

The wealth is meeting our expectations.

When we think about wealth, the segment of the marketplace we're really targeting is the high net worth managers, the wealth users who are from a work flow perspective operating very much like a traditional institutional asset manager and have a need for a lot more than just a simple news and quotes market screen.

They need lots of the analytic effects it can provide, et cetera.

Several big wins in the quarter, and we continue to identify those opportunities in the marketplace and chip away at them.

All right.

A question on pricing and kind of goes to some of the stuff we've been hearing out in the market, and don't take this the wrong way, but it sounds like, and maybe my information is wrong or whatnot, but you can tell me, but sounds like you've been discounting perhaps more aggressively to try and take some market share from your competitors.

I'm not really talking about the core customer base, but trying to win share, which to me actually isn't a bad strategy, but could you sort of comment on how aggressive you might be from a pricing perspective to try to win share?

We are always -- we recognize that when a client first buys FactSet, it's a complex system that takes time to integrate FactSet into the work flow.

It takes time to replace existing work flows, and we're always interested in working with clients to offer them concessions to help them bridge that gap between introducing FactSet and getting full value from the service.

One slight change to our practice has been to use that same tactic to help clients bridge contractual obligations they may have with other competitors.

So there has been perhaps a slight uptick in initial discounting, but in every case our plan is, what we communicate with our clients, our new clients, as they approach the point they're getting full value from the product, the discounts phase out and we're back to standardized pricing.

All right.

Perfect.

Thank you.

Appreciate it.

Next question comes from Peter Appert, Piper Jaffray.

Thanks.

Just a follow-on to that last question.

How about from a competitive standpoint, just your assessment of you how the pricing environment has changed more broadly amongst your competitive universe?

Good morning, Peter, how you doing?

It's Phil.

Good.

I have to admit I have to tease you about your note, that we didn't have an exciting guidance in the first quarter.

Since when has our first quarter ever been exciting?

(laughter) We're always looking for excitement, Phil.

Just to remind everybody, our first and third quarter are kind of odd quarters for our clients to make decisions, and most of our revenue happens in the second and fourth.

So it's never the quarter with huge surprise in it.

I think I'd go back, Peter, to the comments I made.

I was actually very pleased with how we did in just the good old traditional seats and clients and our win rate against the major players in the space.

I don't think an opportunity goes by anymore that you run into a potential client or a client who is looking to expand their services, where they're not investigating Bloomberg TR or S&P.

So for us to gain, that means somebody else had to lose in those opportunities, and I think that's a real positive sign for the strength of our product and marketplace.

So with regard to your comment sort of reasserted there just now, in terms of the forward business being healthy, I think you said accelerating previously.

I just want to make sure I understand the messaging behind that.

Because if I look at the sequential growth in ASV or the sequential growth in revenues, it slows down a little bit.

Is the implication then that the underlying seat count growth is healthy from your perspective, but some of the incremental sales of things like data feeds, et cetera, are a little bit weaker?

So I think there's two parts to the answer to that question.

One is just the $25 million this year versus the organic $20 million last year and using round numbers is certainly a better outcome in just total dollars.

But as I pointed out, the mix of the $25 million is more in what you think of as our traditional business which is the bulk of the business and certainly the part where the greatest big long run opportunity is and by far, the most important when you're thinking about our competitive positioning and whether we're gaining share or losing share in that particular piece.

The other parts of our business are lumpier in their nature.

The data feed business is one that can be very lumpy, meaning we could get a big reduced deal or not.

And then our market metrics business has had cycles to it as new products come out.

It's hot for a quarter and then not for two quarters or three, and just so -- just putting more focus on what happened in the color of this quarter.

Fair enough.

Thank you.

And then looking at -- I don't know if incremental margin is a metric you're internally focused on, but the incremental margin did deteriorate a little bit as the year progressed, and I understand there can be some seasonality there, but anything else we should be focused on in terms of thinking about that?

I guess I'm asking this in the context of trying to understand if maybe some of the pricing issues you've talked about have put a little bit of incremental pressure on the margin.

When I look at what we're doing for the shareholders and go down to the core EPS growth for the year being 11% plus, I feel very good about what we're returning to shareholders, and you've heard me say it many times.

Not that I don't pay attention to the things above that, but I look at that as the driver of shareholder value, and we'll continue to focus on that.

So --

On that, then, Phil, you've talked in the past about objective of doubling the business.

I think that's from an EPS perspective over a five year time frame.

Is that still the objective?

Have you rethought that long-term growth objective in the context of how the industry has evolved?

I'm 100% certain I've never given a time frame when I talked about doubling the business.

But nice try.

(laughter) I just have this vivid memory of five years.

No, then your memory after 18 years of this Peter is getting fuzzier or mine is, one of the two of us.

I really feel very strongly that we've got such a great opportunity in the marketplace and if you -- we may not be exciting as you pointed out, we march forward every year and continue to attack the marketplace, and I'm very proud of what our employees accomplished in the last year.

Got it.

Slow but steady is also exciting, so -- thank you.

You're welcome.

The next question comes from Alex Kramm, UBS.

Hey, good morning.

Couple of things left here.

First of all, I think as you probably know and I think pointed out yourself at some point, asset flows or equity flows had a very solid year so far.

So want to try to maybe bridge the gap a little bit because I think some folks are a little disappointed that's not translating really in more ASV or anything like that yet, and the one thing I think some people have pointed out is that a lot of the flows are still going internationally or into funds in the US.

And some would argue that maybe that's not really an area of strength for you or maybe it's not really where you would be benefiting, so maybe is that something that you're looking at at all, or you how would you answer the whole like international versus US fund flows?

We certainly benefit when our clients' revenue go up.

But I do believe there's a lag between asset flows and them hiring more analysts or portfolio managers to manage those asset flows.

As many cycles as we've been through, very obvious to me that they're far more cautious coming out of this cycle about putting on headcount than they have historically.

With that said, Mike did make the comment that there were signs of new class hiring in our larger clients, which bodes well for the future, and then certainly the sell side surprises as well with net headcount hiring this summer.

So both of those are positive, not huge relative to history, but certainly not negative.

Okay.

Then just to follow up, because maybe I didn't ask the question well enough.

If flows go to international versus domestic funds, do you think it makes a difference to you, given your core strength or should there not really be --

I think we would benefit both ways.

Fair enough.

Just to touch on the acquisition a little bit here, and this might be detail.

I think Revere owns a little index business.

I'm not sure how much you looked at that already.

Do you think there's opportunities for leverage that in other things you're doing and maybe grow that business, or is this just something that came with it and --let's see what we can do here?

It's something that came with it.

Clearly we were focused on the industry classification and the supplier relationships and our ability to integrate that in our product, and the business they have there is very, very, very small.

Okay.

And then sorry, I only have a couple detail questions.

This might be too detailed.

We might have to follow up on a follow-up call.

But when I think about market data, one thing that I think recently -- exchange data in particular, sounds like pricing from the exchanges for life data went up in September, and I think there's another increase next year for NASDAQ data.

Again, very detailed.

But is that something that actually flows through your -- or could flow through your P&L in terms of reselling fees and cost of goods sold or is this completely separate from your earnings, because obviously if there's an increase in pricing, it could increase ASV.

It's a great question to ask.

I do think there are some in the industry who do it that way.

For us, it doesn't come through as a pass-through.

We don't count it as revenue or expense.

Okay, thanks for clarifying that.

And two last ones.

Buyback, I don't think anybody has asked.

Maybe I missed it.

Obviously your authorization is kind of expiring or it's getting smaller, considering how much you just bought back last quarter.

Can you remind us in terms of appetite of buybacks, when maybe the Board could look at the annual authorization and announce that actually?

Hi, Alex, it's Peter.

Quarterly amounts allocated to buybacks over the last three years have had a broad range.

It's ranged from $15 million to $144 million.

And it's averaged $58 million over that period.

It's very -- operationally it's very easy for us to assemble our Board and ask for an increase in authorization if we -- when we need to.

Okay.

And then last one from me.

You talked a lot about the portfolio business, obviously a core strength of yours.

I think historically you used to give some sort of metric in terms of how many users in 2010 for the last time.

Can you give us an update of how many of your users are using PA or anything that helps us there, because obviously it's a big focus.

The primary reason we stopped giving though metrics is because the PA suite is a suite of 10 products, and it wasn't really giving the ASV contribution direction that was helpful to the analyst community.

And at this point I think the best thing from our perspective, both a competitive and just ability to provide you with information that's useful is just to give color on each call.

Okay.

So in terms of like percentage of ASV or anything like that in rough numbers --

That number has never been disclosed.

Okay.

Thanks anyways.

Thank you very much.

The next question comes from Toni Kaplan, Morgan Stanley.

Hi.

Thanks for taking my question.

I was wondering, has Thomson's icon product thus far made it any harder to convert legacy Thomson clients to FactSet users, and also as Thomson introduces investment management for icon, is there anything you're planning on doing differently as that's introduced?

Thanks.

Hi, it's Mike.

We continue to monitor the progress of icon.

We've certainly seen it and we know what it's all about.

The majority of icon that's out there in our clients -- in our core clients at least for the users that we touch in our clients is low.

It appears that there's very little overlap.

We know that Thomson's working hard to convert their legacy users and their legacy platforms to that new platform, but so far it's not been a significant factor for us in the marketplace.

We're going to continue to execute as we always have.

We're going to continue to make the portfolio analytic suite as good as it can be.

We're going to continue to build out fixed income.

We're going to improve our research notes capability and our market displays.

So our best strategy against any new emerging product is just to continue to execute on what we do very well ourselves.

Okay.

Thanks.

And just one last thing, and I'm sure we'll see it in the Q, but for now, are there any performance-based options that were granted in the Revere acquisition and any detail on that would be great.

Thanks.

Thanks, Toni.

We did grant performance based options and connect them to the Revere acquisitions to two key employees.

I wouldn't characterize the amount as material.

Thank you.

The next question comes from Keith Housum, Northcoast Research.

Thanks for taking my call, gentlemen.

As we look at your new growth in clients as well as in the users, can you provide a bit more color in terms of your thoughts in terms of what percentage of that growth was from, especially from the users from the new hires at your existing customers versus competitive wins and obtaining new clients?

I'm sure we have that number.

It's difficult to tell because in a big client, there's employees coming and going all the time and who's a new hire and who's a replacement hire, it would be very difficult for us to come up with that number.

It's really instinctual on our part that tells us net-net, XYZ client actually grew and it felt like it was a share gain versus a new hire gain.

It was definitely a positive contributor this quarter.

As Mike kind of pointed out, I don't think it was a huge portion.

I think most of what we gained was really share.

Okay.

And as we look at the sell-side, and obviously there's been a lot of bleeding that's happened over the past few quarters on the sell-side.

I understand some hiring always occurs in the fourth quarter.

Is there a sense that that bleeding has come to an end at least for the time being, and at least we've hit some stability in the market on the sell-side?

Mike and I chuckle every year as we try to set up what we think is going to happen on the sell-side.

It's really just a guess.

It's even a guess on a quarter to quarter basis.

I would say, though, it's very easy to view that as a negative on our business.

It's actually a great business for us, and we do very well over a long period of time.

It just has more cyclicality to it than the buy-side has had.

We've done very well in the last year.

We've gained share in many of the segments of that market.

So that team executed very well and finished the year strong.

So I'm very proud of what we accomplished.

Okay.

I appreciate it guys, thank you.

The next question comes from Shlomo Rosenbaum, Stifel.

Hi, guys, just trying to see if you'd let me back on.

Just kidding.

Want to just ask for an update on the fixed income side of things.

You had characterized it more recently as becoming a more material part of your sales.

Is there any update, are the sales there accelerating, kind of steady as she goes?

Any way you can help characterize that?

Shlomo, the fixed income is another important component of the portfolio analytic suite.

As I said in previous quarters, it gives us an opportunity to address new users within our existing firms, it gives us an opportunity to go to firms that previously were never candidates for FactSet because we just didn't have the asset coverage that they required.

Overall, business I'm very, very optimistic about that segment of our business.

And I mean, in terms of like the new users you're getting, is there an outsized portion that are now coming from these fixed income type users that you weren't able to address as well years ago?

That's probably not the case.

The user distribution is fairly I would say evenly distributed amongst all the segments.

Typically when we're recognizing incremental fixed income ASV, providing a work flow solution that may involve just a few users or it might involve several users.

So we're focused on the total ASVs, the total work flow solution and the total ASV as opposed to the individual users.

Okay.

Thank you very much, guys.

I just wanted to close by putting a couple thoughts in peoples' heads.

I was kind of jotting down notes before this call.

One of the great things about this business is the breadth with which it comes in.

I apologize, it's difficult from an analyst perspective to tease out all the different pieces.

It's really the magic of this business.

It's not tied to one client.

It's not tied to one user class.

It's not tied to one geography.

It's really a very diverse business, which is one of the strengths that we provide.

We sell our product through a workstation which everybody is very familiar with.

But huge portion of our client base consumes our product through Microsoft Office.

Some consume it through feeds where the product work flows through mobile, through web, through e-mail and even some other choices, revenue streams and value we can deliver clients just continues to expand and be exciting.

Who we sell to, we sell certainly to investment managers, investment banks, equity research, sales and trading is certainly an exciting new area for us.

Shlomo asked about fixed income at the end.

That's certainly an exciting new area for us.

In addition to that, we're in the corporate space via some redistribution.

We sell to law firms, schools.

We even distribute some content and things through competitors which may be surprising to many.

But it's a great business that we're in, and we're certainly excited about our future.

But I just want everybody to be comfortable with the fact that we're not trying to be cagey in how we answer the question.

It's just one level very simple, a subscription business.

Another level how we derive our revenue and the value we create for clients is all over the place It's one of the magic call things about the reason our business is able to march forward every year.

I want to end by saying I was very proud of how we accomplished last year.

I'm very comfortable that we gained share, and if you were looking at other players in our space, they didn't do as well as we did, and I'm certainly excited about our future.

Thank you very much.

Have a great day.

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