FactSet Research Systems Inc. (FDS) Q4 2012 Earnings Call Transcript

Rachel Stern - Senior Vice President, General Counsel & Secretary Phil Hadley - Chairman & Chief Executive Officer Peter Walsh - Executive Vice President & Chief Operating Officer Mike Frankenfield - Executive Vice President, Director of Global Sales

Shlomo Rosenbaum - Stifel Nicolaus Peter Heckmann - Avondale Partners Peter Appert - Piper Jaffray Suzi Stein - Morgan Stanley Matt Hill - William Blair Bill Warmington - Raymond James Glenn Greene - Oppenheimer Jennifer Huang - UBS

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 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 managements’ 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 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. Here is how I plan to spend our time today. First, I'll spend a moment on our recent acquisition of StreetAccount. Second, we'll review Q4 results. Third, I'll cover guidance for the first quarter of fiscal 2013 and the new fiscal year. Fourth and finally, we'll 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 new stories, the StreetAccount service enables users to get to the [core length] of information they need, quickly and easily. StreetAccount is a terrific, complementary new 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 in 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'll break out 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, U.S. 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 the stock option charge in Q4 last year is excluded. This quarter marks our ninth quarter of double-digit EPS growth. Next quarter, as you'll 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's notable that FactSet is one of only three U.S. 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 receivables 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. U.S. 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-U.S. 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 and 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're 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 StreetAccount. 49,500 at quarter end, due in part to growth on both the investment management and investment banking side 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 vesting of 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 reach 5,735 employees at August 31st, 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 U.S. 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 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'd 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 highpoints 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 U.K.'s 50 Best Workplaces for the fourth year in 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 homegrown 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 picked up again. ASV, revenues, EPS, free cash flow, clients and workstation counts and employee growth, all went up. We continued to succeed in a difficult market. As we begin 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) Our first question comes from Shlomo Rosenbaum with Stifel. Shlomo Rosenbaum - Stifel Nicolaus: 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, this is 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. Shlomo Rosenbaum - Stifel Nicolaus: Okay. And how much of your existing client base already uses StreetAccount? And so what I am getting at is like what's your cross-sell opportunity now?

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 that 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. And then there are additional users within our current clients as well that create a great opportunity for us. Shlomo Rosenbaum - Stifel Nicolaus: Okay. And then in terms of, I know you guys said that the acquisition is not material for fiscal year '13 EPS. What about for next quarter? Does it make a difference on the periphery like $0.01 up or $0.01 down or anything like that?

I don't think it's material at this point. Shlomo Rosenbaum - Stifel Nicolaus: Okay. And 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'd say you had a very respectable user count increase despite what's going on, I am just trying to dig in underneath that a little?

Yeah, I think maybe I'll 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's why you continue to see deceleration throughout the year. But the deceleration really happened in one quarter, it was the beginning of last year. It hasn't really changed much. A little choppy. Hard to see what's 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 comparable is getting easier. As far as what's going on in our client base, I guess as an observation, certainly the buy side is going to have a good year when it comes to the 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'll just turn it over to Mike for just more color at each of the groups’ 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. In 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. The good news about the biggest clients going forward is that we had good visibility into the agreement out one, two, three years in some cases. So, we feel like we've got a great base established amongst the whole (inaudible) clients which gives us opportunities to sell into new user groups within those firms, new departments. We have small penetration among the 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 U.S. and internationally. We think that's a combination of multiple factors. It is 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 and UI combined with our iPad functionality is making it easier for FactSet to use and increasing the appeal to clients that want to purchase the product. And no doubt that overall market indices are creating a little bit of a tailwind for us and we hope that continues to drive growth. Shlomo Rosenbaum - Stifel Nicolaus: Okay. I'm 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’ll get off the question queue.

Fixed income is affecting us in a couple of 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 existed in our work flow. 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's still not a hugely material contributor though it is increasingly important. But we are very, very pleased with the progress that we are making.

Our next question is from Pete Heckmann with Avondale Partners. Peter Heckmann - Avondale Partners: When I look at the 280 employees that were added in the quarter, how many of those roughly were from StreetAccount?

49 employees from StreetAccount that we acquired through the acquisition. Peter Heckmann - Avondale Partners: Okay. And should we assume that majority of the other employees are primarily in content creation in the 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 operation. So, I would call it a mix among those two areas and the remaining. Peter Heckmann - Avondale Partners: Okay. Have you started to discuss with your clients yet plans for potential price increase for 2013, and if so, could you share us how you view that shaking out?

Hey, Pete, it’s Mike. We have not begun those discussions with clients. We normally kick that process off in October. Our requirements are -- typically we have 90-day terms on price notifications. So that communication will be happening in, probably next week at this point. Peter Heckmann - Avondale Partners: Okay. And then, are there opportunities -- StreetAccount is primarily a U.S. product. 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're correct. Its current focus has been primarily for the U.S., so 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. Peter Heckmann - Avondale Partners: Okay. And just one follow-up, as regard 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's gross, is it material?

No, that's net to (inaudible).

Our next question is from Peter Appert with Piper Jaffray. Peter Appert - Piper Jaffray: So, Phil, when you are giving your commentary on market environment suggesting that maybe we'd seen the worst in the first quarter, I was interpreting that to suggest and maybe we could see a reacceleration in password growth in '13. You think that's 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've been in the business of trying to predict FactSet's password growth for a long time, I am sure it is kind of frustrating. I think I'd fall in the same category. 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. We can have a whole bunch of new clients that really only add up to a couple of hundred. Peter Appert - Piper Jaffray: 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 or 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. The sell-side is very choppy firm to firm as to what's going on, and the buy side there is pocket of success and firms that are having difficulty. But you net it all out and it feels about like the year was very equal quarter-to-quarter as to what was going on in the client base. Peter Appert - Piper Jaffray: Okay. And then maybe for Mike, he mentioned a little bit about the new client additions. I was wondering if you 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's really a broad-based effort, Peter. There is no question there is excellent creation going on in the U.S. There is new firm creation happening overseas. I would say the mix tilted this particular quarter a little bit more towards the U.S. than international. I don’t know if that's indicative of a longer term trend. One of the things we’ve 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’s been done on the product, we've got a great opportunity to accelerate, to find acquisition and having people dedicated solely to that effort we think will help us achieve those goals. Peter Appert - Piper Jaffray: And can you give me a sense of what portion of the password growth is coming from existing versus new clients?

It's got to be primarily skewed to existing because we've got so many client relationships and typical new clients are going to come on with less than 10 in most cases. So, it's hard for them to move the number and many of them would come on with few or two IDs. Peter Appert - Piper Jaffray: Got it. And 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 the last couple of quarters, we’ve described it as -- we've certainly invested heavily in our content and that accelerated our headcount growth. And at this point we're really looking for headcount to be closer to ASV as we move forward. Peter Appert - Piper Jaffray: Okay, so still the objective, Phil, is to maintain margins roughly at current levels?

The way we've always -- we’ve always focused on it. It moves up and down, but that's always been kind of the benchmark for us.

Our next question is from Suzi Stein with Morgan Stanley. 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 planned to accelerate repurchases and I just want to make sure I'm 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. I mean, it range from $66 million in Q4 to $15 million in a previous quarter in fiscal '12. So, it bounces all over a lot and we'll continue to evaluate and to optimize that capital allocation decision. Suzi Stein - Morgan Stanley: 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 just research and get back to you on that, Suzi. Suzi Stein - Morgan Stanley: 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've 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 most useful. Suzi Stein - Morgan Stanley: Okay. And then, can you just comment on the response that you've 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 see more content in a very convenient way. The 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 the workflow and it always takes time to change peoples' workflow.

Our next question is from Tim McHugh with William Blair & Company. Matt Hill - William Blair: 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's been outpacing domestic for the past year. So, I was just kind of wondering what's driving that. Is it just the market expansion or are you seeing market share gains in the international markets you're in?

Hey, Matt, it’s Mike. International represents some exciting areas of growth for FactSet. We've expanded our sales presence aggressively over the last several years into Middle East, India, throughout Europe, etcetera, 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. Matt Hill - William Blair: Okay. And then just maybe an update on the competitive environment for your various products. Is there anything over the past few quarters that you've 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.

Our next question is from Bill Warmington with Raymond James. Bill Warmington - Raymond James: So last month Bloomberg announced a 6% price increase on their terminals and I just want to ask whether you saw that makes it easier for you guys to raise price, not really a factor? What do you think?

I think, first of all, it's very consistent with the practices that they'd done in the past. They typically announce a price increase and implement it over a couple of years. It doesn't hit all of their users at once, so 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. Bill Warmington - Raymond James: Okay. And then you've mentioned the environment being stable. I just want to know if you could comment on the appetite for products from clients, especially on the buy side. And whether you're seeing lengthening 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, buy side firms, one of the trends we've seen over the last several years have become more organized in the way they purchase our products. 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've 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 and we look forward to the purse strings loosening and being able to deliver that value. Bill Warmington - Raymond James: 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?

Hi, Bill. It’s Peter. In terms of headcount for our sales force, we've 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. Bill Warmington - Raymond James: And then a housekeeping question. Just to make sure my number is right, it looks like the StreetAccount deal went for about $21 million purchase price and with the revenue expected about $11.4 million, just want to ask if those numbers are right and whether there was an earn out associated with StreetAccount as well?

I think the number you are pulling is out of the funds flow and that is what's publicly available today. I am sure there will be whatever details we feel comfortable with in the 10-Q.

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

Our next question is from Glenn Greene with Oppenheimer. Glenn Greene - Oppenheimer: I guess the first question for Phil. Obviously, the buy side ASV strength was sort of the nice sequential rebound, also the client growth as you talked about was kind of record levels in the last six years. And It sounds like, maybe I am reading too much into it, you suggested or maybe you didn't but it sounded like there is some potential that there is a market tailwind on the buy side at least in the quarter. So, I am trying to parse through how much do 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 products for the same number of users, there is a little bit of tailwind there but I know Mike used that term, I'd 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. Glenn Greene - Oppenheimer: Okay. So, the best way to sort of frame is, the overall market is stable and you are still sort of gaining market share?

Yeah, I think, when I look at the year I made the comment earlier, it really felt the same all year along. And just to remind everybody our quarters are, first and third are always lighter than second and fourth. And that's just really the part where a fiscal and our clients hire and the way clients make the decision, it’s 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 fourth quarter gets pulled forward or backward and it’s a weird time for clients to make decisions before the calendar year-end. And then as we head into Q2 it’s got the price increase, it’s got year-end decisions, it’s all kinds of things tend to line up in Q2 and then Q3 is again one of those middle quarters. Glenn Greene - Oppenheimer: Okay. And 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 and trying to put some context to your business relative to the market?

We are making our own estimates in that calculation and that’s just based on the number of sell-side employees that go through our training program. And those employees are not always FactSet users, it’s 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. Glenn Greene - Oppenheimer: Okay. And then it sounds like no change in sort of the PA strength that you’re seeing. I would tell you, we get a lot of questions from investors worried about one of your competitors coming up with sort of lookalike product and sort of bundling up within their overall package. But have you seen any impact from that competitive alternative?

I think you're referring to Bloomberg's [fourth] product and they are not the only one in this space. They 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’re doing and you see the solution we are from providing from a client's perspective, we continue to do very, very well in that space.

Our next question is from [John Nev] with [Anchor Capital Management].

I just recall that StreetAccount, FactSet itself was the largest customer. So I just wanted to confirm, I'm sure it is, but I just want to confirm that the $11.4 million in ASV is actually third-party ASV?

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

Then I'm sure we'll 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. And then last question. The base client fee, I just was curious, is that still in place? I am just wondering if you could just run us through some of the strategic thinking behind the price reconfiguration that took place over the last year or so.

So, for the past nine months or so we've 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, etcetera. It's a long process to change pricing. We're really focused on new clients at this point and only implementing this price change in existing clients where it makes sense.

Our next question is from Jennifer Huang with UBS. Jennifer Huang - UBS: Just wanted to make sure I'm 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 on 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 as a slowdown in maybe other investments?

Hi, Jennifer, it’s Peter. When we're managing FactSet at the operating income level, we love to look at all our expenses and we’re looking to optimize particularly expenses that we pay to third parties. And 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’s 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. Jennifer Huang - UBS: 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 just clients who are using a new product (inaudible)?

It’s 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 often times like to bring FactSet with them, and so that’s an equally good source of new client growth for us.

(Operator Instructions) And our next question is from Pete Heckmann with Avondale Partners. Peter Heckmann - Avondale Partners: Just a quick follow-up. You've talked in the most recent Q about 2013 amortization of acquired intangibles of about $5.7 million. With the acquisition of StreetAccount, roughly what that adds for the full year?

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

(inaudible) $1 million. Peter Heckmann - Avondale Partners: 1 million for the year.

We have 1 million coming off as well. It's about net; flat from what it was before. Yeah, I think, Peter, it ends up being flat because we had some others that we're rolling off. Peter Heckmann - Avondale Partners: Got it. All right. Thanks much.

Thank you, everyone. We’ll see you next quarter.

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