Q3 2020 TMX Group Ltd Earnings Call
Good morning, and welcome to the TMX Group Limited Q3 2020 financial results.
I will now turn the call over to Mr., Paul Malcolmson, managing director Investor Relations.
Thank you operator, and good morning, everyone I hope that you and all your families are saying well see.
Thank you for joining us this morning for the third quarter 2020.
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As you know, we announced our results late Saturday and a copy of our press releases are available on TMX Dot com under Investor Relations.
This morning, we were once again, Jordan virtually untapped with US John Mccarthy, our Chief Executive Officer, and Frank to Lisa Our interim Chief Financial Officer.
Oh My opening remarks, we will have a question and answer session before.
Before we begin I want to remind you that certain statements. We make on today's call may be considered forward looking I refer you to the risk factors contained in todays press release.
We're fortunate we have filed with regulatory authorities now would like to turn the call over to John.
Well, thank you Paul and good morning, everyone. Thanks for dialing into the call today to join our discussion of TMX group's financial performance for the third quarter and for the first nine months of 2020.
As we kick off the call today, let me start by wishing everyone continued good health.
I'll be happy with TMX to thank all of those on the Frontlines working diligently to protect and support our communities throughout the ongoing COVID-19 pandemic.
Today as Paul mentioned, we have frankly, so TMX interim CFO with us on the call and Frank will take us through the Q3 numbers in a few minutes and will join us for the Q and a follow because remarks, but.
Let's begin today as I have shared with many of you at various investor event in conversations over the last few weeks I want to reiterate how honored I am to be a trusted to lead the screen organization.
During my time here I have been fortunate enough to work closely with our tremendous people across our various business areas and corporate functions to shape and advance the evolution of TMX.
Five years ago, we undertook a major initiative to transform TMX streamlining our business model and prioritizing our growth opportunities.
Accelerated by important steps, we have taken in executing our long term strategy, including the acquisition of Trayport. Each phase with this transcript transformation has been met.
In my view, our track record of execution helped to set the stage for a promising future for T.N.X. I am most excited about the job ahead.
Now turning to our performance we.
We are pleased to report positive results for Q3 was 6% growth in revenue and 13% growth in earnings per share compared with Q3 2019.
Frank will take you through these details are the year over year comparative analysis for the quarter in a few minutes. This.
This morning, I want to take a look deeper into the first nine months of 2020 for TMX to highlight some important trends in achievements and also to what context around how the industry challenges. This tumultuous year have informed our thinking as we embark on the next steps forward in our strategy.
Overall, she amex's results through the first three quarters reflect the resiliency of our business model during the period of sustained market uncertainty.
And demonstrate the value of our consistent strategic focus on diversifying revenue streams.
Revenue for the first nine months was 645.6 million up 7% compared to the same period last year and earnings per share was up 3% or 11% on an adjusted basis.
Higher revenue was driven largely by increases from our equities and fixed income trading and clearing businesses and from GE Saeed, including Trayport.
These increases were slightly offset by lower revenue from our derivatives business and what has been a prolonged historically low interest rate environment.
Revenue from equities and fixed income trading was 96.4 million up 21 million or 28% compared with the first nine months of 2019.
And even as we move beyond the period of unprecedented volatility in the first quarter.
The trading volumes remained robust throughout the first nine months of this year.
Combined volumes on our equity markets, including Toronto stock Exchange TSX venture exchange an alpha.
39% compared to the first nine months of 2019.
Inside the Treaty data. We are also seeing important signs of progress and sort of our recent business initiatives, including increased adoption of ti such dark or dark trading solution.
Yes, like dark Shearer dark treating in tier one tier second listed securities.
Grown to almost 28% an increase of 6% year to date and you have seen a positive uptick in treating since the launch of a new liquidity program in July.
Turning now to treat port activity and results remained strong through the first three quarters.
Revenue, including Desertec was 101.4 billion for the first nine months ended September Thirtyth 2020, an increase of $12.7 million or 14% from the same period in 2019.
With a 6% increase in average trade or subscribers and an 8% increase in average total subscribers.
Higher dual energy markets activity and increased volatility in the first nine months of the year drove record volumes in both the European power and gas markets.
And we also see continued its all positive results from recent report initiatives to capitalize on secular trends in the marketplace specifically.
Specifically in the burgeoning liquid natural gas market and I'll limit powertrain.
Volumes in benchmark European and Asian, LNG contracts were up substantially from 29 to an algorithmic power trading European Intraday markets Global energy markets continued to gain momentum volumes and eat pet Spock grew 22% compared with the first nine months of 2019.
Commodities markets are globalizing and the three or four teams exploring opportunities in disaggregated asset classes, where we can add value by consolidating pricing data on a single platform as.
As well as new ways to address client needs for data and analytical applications.
Now turning to our capital formation business, you have seen encouraging positive shift the momentum over the last few months highlighting both the increasingly global appeal, Okay, Canada capital markets ecosystem, and the long term value of lifting on TMX exchanges.
Hi profile Ipos and new listings have garnered recent headlines in sectors TSX and TSX venture are traditionally known for such as mining and resources and also with the innovation Center will be when we are building in your national reputation as a leading marketplace among established and starter stage companies as well as investors.
The TSX TSX venture ecosystem, which includes our vastly very group of stakeholders is a global differentiator and a competitive advantage.
In October Newcrest money, Australia's largest gold producer began trading on TSX the.
The company's CEO was quoted the media thing up listing on the Toronto stock exchange would improve the global visibility of the company and broaden access to more North American capital pools.
A strong testimonial improve high regard for Kansas markets throughout the world.
That global visibility is no accident, Canada is the number one marketplace to raise capital for money. It is a fact and a well earned reputation.
Through September Thirtyth.
The T. EPS next at TSX venture mining companies raised a total of 5.5 billion, an increase of 56% compared with the same period in 2019.
In parallel with the resurgence in money markets continued to build on a newly established international reputation as a center of innovation through the first nine months of 2020.
Industrial response has been loud and clear through.
Through the end of September S&P, TSX index was up 41% year to date and has consistently outperformed Canadian in U.S. benchmark indices over the last few years.
September marked the largest tech IPO by amount raised in Toronto stock Exchange history with the addition of new bike work Montreal based payments company added to our stock list.
Dubai joins the list of recent Tech IPO success stories, including Lightspeed, the Seagull and die in Durham.
Hi Tech companies have raised 6.2 billion and total financing through the first nine months of 2020, and that's more than any other full year in the last decade.
In our derivatives now overall revenue was 95.4 million in the first nine months of the year.
One 4.5 million or 5% from 2019, driven by a 2% decrease in revenue from X.M.C.D.C.C.
TCC EZ reduced revenue from box as our agreement to provide transitional services ended June Thirtyth 2020.
Well the extreme volatility really 2020 drove higher derivatives volumes in the first quarter. The historically low interest rate environment had a negative impact on volume and Amex's key products and revenue in the second and third quarter.
Importantly, though we remain on track in terms of enhancing our existing groups product suite and expanding our global reach.
Later this month, we will relaunch treating into to your government of Canada bond futures contract or CJIS, Ed we tweak the contract structure in response to client demand and to stimulate additional activity on the contract.
Treaties on London time Zone has also been a success.
Overall proportion of volume treated in our leading products during the extended hours sessions was approximately 6% for the first nine months this year and we hit peaks of 10% above the volatility in Q1.
The preliminary ground work is also underway for the next phase of our next extended hours initiative expansion into Asia.
We have laid the foundation on Aquari solution and are working with industry stakeholders to pave the way for adoption.
We have also initiated digital and virtual engagements with clients in the region.
Extending hours to seek with an Asian market will align us with global peers. It will increase international visibility for Canadian markets, and ultimately enable us to connect to more clients.
Turning now to another important development and a little closer to home, but also in pursuit of expanding our business and client base in September TMX announced the agreement to acquire FC Trust Company of Canada.
From a strategic standpoint, this acquisition fits squarely within our broader capital formation growth plans and will strengthen the ethic stresses competitive position and value proposition and the transfer agency and corporate Trust service business.
The addition of HST, Canada will probably bring dynamic new capabilities to our business and most important of all other team of professionals with proven expertise to our own exceptional talent base.
The transaction is expected to close within six to 12 months from signing at the end of September subject to receipt of the regulatory approvals.
And I want to take this opportunity to thank all TMX as employees across Canada, and our virtual offices around the world for their exemplary and unwavering dedication to performance this year.
Now eight months of operating in work and the remote working environment. Our people have worked hard to ensure that we maintain close connection to our clients and that we delivered excellent standards and sort of as our markets require.
The separate is crucial.
Ultimately our success is rooted in our client success.
So we continue to look for meaningful and informed ways to improve the client experience issues investors and traders.
Well I open my remarks, with how much TMX has changed over the last few years.
And in particularly in 2020.
Months can seem like years and years can seem like decades.
But I want to emphasize something that has not changed about the way we think about CMS his role in the marketplace.
Something that if anything has become more pronounced.
TMX is directly and deeply connected to the markets we serve.
We've learned a lot about ourselves in times of crisis, and COVID-19 has taught us many lessons I'm, Sean a bright line for TMX on the near term priority areas, where we can have a positive and lasting impacts.
And as we are acutely aware vibrant public markets are crucial to the excess of the economy.
Access to capital throughout the markets. During this most challenging year, it's helped many companies adopt and persevere and provided them with opportunities to build stronger from the futures and we pledged to continue that support.
As we move forward TMX will be stepping up our advocacy efforts.
Leveraging our position at the center of Canada's markets to pursue meaningful ways to help our clients succeed and to make our markets the markets of choice for connecting companies investors and traders to growth opportunities.
We've made our position clearly federal and provincial levels of government seeking equal treatment and burden reduction for small public companies.
Advocated for fair treatment for public companies as a perpetual campaign for TMX.
And there are other four have been topics, where we can work closely together with our capital market stakeholders to affect meaningful change.
I strongly believe TMX has a key role to play in leading the way helping to strengthen candidates competitive standing on the world stage and a part to play in shaping the economy the free future.
Our purpose is simply to make markets better.
It's in our core values its intrinsic to what we do.
And with that I will turn the call Frank who will provide additional details on our third quarter results. Thank you.
Thank you John and good morning.
Looking at our Q3 results as John mentioned revenues were up 6% from Q3 of 2019.
This was driven by significant increase in revenue from both equities fixed income trading and clearing and capital formation as well as from global solutions insights and analytics for GSK offset by a decrease in derivatives trading and clearing revenue there.
The results once again demonstrate the benefits of our diversification over the past few years and the resiliency of our business model.
Operating expenses were up 2% over Q3 of 19 in our EBITDA margin was that 58%.
With our operating leverage we were able to deliver an increase of 13% in diluted earnings per share and a 12% increase in adjusted diluted earnings per share.
Looking at revenue high market volatility during the quarter continued to drive significant highly are significantly higher equities trading and clearing volumes. The average VIX was almost 26 in Q3 20 compared with about 16 in Q3 19.
In equities and fixed income trading there was a 21% increase in revenue in Q3 2000, compared with last year, driven by a 39% increase in volumes across all of our exchanges.
The impact from the higher volumes somewhat offset by a less favorable product mix in Q3, 20, compared with Q3 19 there.
There was a significantly higher trading volume in TSX venture securities up 81% in the quarter, which has a lower capture rate as compared with a 20% increase in volumes on trying to stock exchange securities.
In addition in the market and closed facility or Mark.
Where we have fee caps on where we see caps our total capture rate on mop trades was less as compared with Q3 19.
It was also an increase in fixed income trading revenue, reflecting increased activity at swaps.
Cts revenues increased by 9% from Q3, 19 recoverable costs of $1.2 million related to CBS is killing operation netted in Q3 19 were included in both Cts revenues and SGN expenses in Q3 20.
In addition, there was higher international depositary clearing and settlement revenues due to higher revenue due to higher volumes in Q3, 20, compared with Q3 19.
The increases in revenue were partially offset by higher rebates.
Now turning to capital formation, the significant increase in revenue was almost entirely driven by an increase in additional listing fee revenue compared with Q3 19, reflecting higher revenue on TSX venture due to an increase in both the number of financings and total financing dollars raised.
There was also an increase in additional distinct she revenue on trying to stock exchange, reflecting a 41% increase in the number of transactions Bill that's a maximum listing fee of 250000.
And an increase of 9% in the number of transactions built below than occupancy.
Revenue in our G.S. I eat segment was up 9% over 2018 with increases from both tray Park in extra additional data business.
Revenue from Trayport was up 17% to carry in dollars and up 8% concerning as we benefited from the favorable impacts from a weaker Canadian dollar relative to steer our certainly in Q3 2000, compared with Q3 19.
The overall increase in revenue was also driven by a 5% increase in trader subscribers and a 6% increase in total subscribers.
Revenues from our traditional data business increased by 4% from Q3 19 to Q3 20.
With high revenues from subscriptions uses speech quotes co location benchmarks indices.
As well as revenues rage under reported usage of real time quotes in the prior periods.
The average number of professional market data subscriptions for TSX and Tsxv products was up 1% in Q3 20 compared with last year.
Our next subs were down 6%.
With respect to derivatives threatens trading and clearing revenues declined from Q3 19 to Q3 20 by 26% largely driven by 22% decrease in revenue from Amex and CDC seat.
This decrease in revenue was primarily due to a decline in overall volumes, particularly in the three month Canadian bankers acceptance futures or box contracts.
Well open interest only decreased by 2% from September Thirtyth 2019, there was a 26% decrease in volumes on the Max.
In addition, there was a decrease of approximately 1.6 million in revenue from Q3 19 to Q3 20 relating to our agreement to provide transitional service the box, which entity in the prior quarter.
As I mentioned operating expenses were up 2% from Q3 19 deals.
The increase in cost was primarily attributed to higher short term employee performance incentive costs.
Increased head count higher.
Higher consulting fees or write off of leasehold improvement costs as well as increased cost related to managing our business during the COVID-19 pandemic.
In addition, we incurred 1.4 million or two cents per basic and diluted share in transaction related costs related to the proposed E.S.T. Canada transaction.
As I mentioned there was also an increase in recoverable cost weighted Cts.
Which were included in both Cdis revenue and SGN expenses in Q3 20.
The increases were somewhat offset by a decline in long term employee performance incentive plan costs as well as travel and entertainment expenses.
The deep a diary show was that 1.8 times at September 30th down from 2.1 times at the end of 2019.
We also held over $320 million in cash and marketable securities at the end of the quarter.
It was 135 million in excess of the hundred and 85 million, we target to retain for regulatory and credit facility purposes.
Last evening or board declared a dividend 70 cents per common sure payable on December 4th to shareholders of record as of November 20th.
50% of our adjusted EPS. This is at the high end range of our target payout ratio currently at 40% to 50%.
And now I would like to turn the call back over to Paul.
Thanks, Frank Operator could you. Please outline the process for the question and answer session.
At this time have you would like to ask a question simply press Star then and number one on your telephone keypad now we will pause suggest a moment to compile the Q&A roster.
Your first question comes from the line of Melinda Roy of Deutsche Bank.
Hi, Good morning, everyone. Thanks for taking my question.
Maybe just that start out uhm with a question on the derivatives business. So can you maybe talk about the rug, New Hampshire dynamic going on in the business and that looks like it improved nicely from the chocolate corner level.
And is that copyright.
The animals in the fourth quarter based on the volume product mix in school, so far corner today.
Yeah I could take good question. So yeah. As you know it was pointed out the derivatives volumes were up but were down 26% quarter and our revenues were down 22%. So there was a whole set of India and the average revenue per unit recapture eight we did have some some accrued regulatory uhm revenues in the quarter that were that way.
Unique to the court in about 600000 worse on a go for paces, excluding that we expect the the the kept you right to be to be constant.
Alright, thank you.
Your next question comes from the line of Jeremy Campbell of Barclays.
Hey, Thanks, everybody. So John it was great to seek affirmation improves quarter I you know I know these can be a little bit chunky quarter to quarter around what sort of thing and what's your financing stuff like that but just kind of wondering if you see the the robust quarter is a little bit more one tiny idiosyncratic or if the pipeline is robust enough to kind of keep them or.
And I'm going from here.
Yeah, well, Jeremy Thanks, quite a <unk>, that's a great question and.
Oh, let me start with the end of peace, which is the pipeline. We see continues to be robust. So the the activity levels of our team or continue to work on a lot of new file activity and into the future. So it's a strength. That's gonna continue this year and I think the piece of you you take some some comfort and is it it is actually fairly broadbase, it's not exactly that.
Just one sector is driving this you know when we talked in the call. So far about the strength in mining the strength in an an tech but we're also seen some industrial we are seeing actually and we had an I P. O of a natural gas company in this last month, which is the first major energy IPO. We've had in two years. So it is a very.
Strong robust market and I see that activity continuing.
And then maybe just kind of pivoting to derivatives little bit obviously, a bit of a tough macro headwind you guys might you got a lot of irons in the fire with depending relaunch with a two year moving the agent Timezone trading I guess can you just give us a on a qualitative basis, a little more color around kind of client engagement and expect attraction for either you know the new rates products, whether it be.
Ongoing you know five year attraction or the new two year and then you know what your interactions with the these Asian clientele are as you cannot shifts over to a new new time zone.
Yeah, and if I start with the actual product piece, the both and not just the two year that we're working on today, but the the core of future that we relaunched in the summertime, which is getting more traction both those we're done with direct interaction with the client base in terms of how to structure adjust tweak those contracts. So when we bring the two year to market is based on the ongoing engagement with the client community in terms.
And what they need to see in that contract. So that's you know despite the fact that we're not knowing you know what I'm doing I'm doing a lot of face to face meetings, you know using the virtual too as we're actually getting a lot of client engagement and it's been much more active than it was in the early part of the pandemic where people were just trying to keep their shops open.
On the Asian market development side, and a lot of the work we do here in terms of the the the clearing work that what we do around market structure regulatory but on the business development decide we have been doing some of that remote but more recently, our our head of the Asian market development, Tony see we have actually got him now back in region. So he was back in Hong Kong about a month or so.
Who has done his quarantine and is up and running on those client engagements to build a demand and the connectivity for when we were able to launch this next year.
Great. Thanks, a lot.
Your next question comes from the line of Grand riding of T D Securities.
Morning Graham.
Good morning.
Let me just start with equity trading volumes have been obviously very strong. This here can you just provide some context her on some of the reasons that are driving the stronger volumes and then how much it how much of it is driven by higher retail participation. This year.
Well, we we I mean, we're certainly seeing the lift across the board and and Paul feel free to chime in here as well so that that participation continues to be strong, but I think we know one of the underlying factors is you've got continuing volatility drivers in the marketplace. We are anticipating there is potential for volatility this week and beyond depending on what happens so.
The border.
But in the longer term when we're in this kind of sustained low interest rate environment. That's generally a positive factor for for equity trading.
So while it's been challenging for our derivatives franchise in terms of fixed income futures. It is a lift for for valuations and equity trading activity. So we have seen that sustained that way.
Okay understood and.
Try part delivered again this quarter is a solid quarter, but it was also I thought decent 4% growth from you know your arkan insights business, excluding tray port just some color. There on Navy are there any sort of key pieces that I've had to lift this year or is it fairly broad based you seem to mention a few things I B M D N a.
Yeah, It's fair to say, it's fairly broad base, you're seeing the lift in terms of the demand for some of the subscriptions, particularly around you know as it ties into use of those equity products for your continued strengthen Colo Uhm I think we talked last time about the effectiveness of our our price change around co location that we put through in the quarter.
And then on the forward looking piece I think we've talked in the past as well that we are actually working on expanding that facility going into 2021, so the ability for us to actually take on additional rackspace for clients supports not just a lifting cola revenues as we go next year, but how it supports trading revenues because we can have more clients co located with our systems.
Paul anything you want to add that I missed in there.
No I think that covers it Jones.
But the the increase in your rack expansion that's not in your numbers, yet that's something coming through next year correct. That's correct.
Right that you tube next year.
Okay. That's it because our the price increase of the Colo actually increased on that's September. The first so we do we do are seeing those pricing coming through immediately.
Okay understood.
Your next question comes in the line of Nick Freebie of C. I B C capital markets.
Good morning.
Uhm morning, John.
Now that you've been appointed permit C. E. O is I'm wondering if you could just give us a bit of a general sense of what priorities might be at the top of your agenda for the next two years, you know whether that's advancing the M&A strategy.
Or otherwise just a instead of that problem would be appreciate it.
Yeah, I'm happy to and then you know it's actually a good timing because we're we're right in the middle of the work we're doing on on updating and refreshing strategic thinking the strategic planning long-term planning going forward. So we'll be talking to the board. This afternoon about some of those growth focuses going forward, but also then coming back in later in the year with how we supported.
We've been really we're talking Nick and three themes and and the overall components of our planner around growth talent and advocacy. So gross are the pieces that we have talked to you about before in terms of focusing on those businesses that have room for us to expand addressable markets expand products to clients and it very much continues to be focused around and continuing.
To build out tray port really expanding on capital formation.
And building and derivatives and global markets and in recognizing there are more things that we can trade both in the derivative space, but even on our on our equity platform.
[noise] talked to in the past about where you know we're testing some new product out on the equity platform like Green bonds. So we're gonna continue to look to do those types of things. So you know everything in our strategic focuses how do we continue to accelerate that strategy for growth, both organically and where we can add product and service and in new regional development like we're doing in the Asian time zone.
But also continuing to look inorganically, four things that'll accelerate and and that's very much where the a S. T acquisition that we announced just two months ago comes in in terms of giving us a real step up and the ability to serve more issuers on more products and services. So you know getting a talent base that helps us with all that support for larger issuer.
Clients. It gives us new capabilities in terms of employee plant management, we can deploy that to get a larger issuer base.
And we're also looking at that issue a community kind of outside of their traditional public company. So a lot of these things you see us do give us the ability also to support private companies as well, which is a large growing space.
And very much the feed your system for the public market. So you'll continue to see us driving those types of growth agendas and looking for vehicles that we can use to accelerate them. The other two pieces I mentioned in terms of kind of untalented advocacy are the two other pillars of how you make it all work. So we focused a lot this year on culture and the organization on bin.
Ploy engagement all the more important when people are working remotely and it's been extremely effective.
Actually we actually just we just want a workplace benefit award for being a top company for communication with companies Dream with our employees. During Covid. So we are doubling down on those kind of efforts around ensuring we've got good good engagement from the employees.
And then that third stool kind of third leg of the stool and advocacy is recognizing that the important place we play in the marketplace or we can advocate for change to make the market's we operate more competitive and so we you know we've been very strong on recommendations for burden reduction in Canada, we've been pushing hard on the federal level on fairness or public companies. So you'll continue to see.
Those themes because when we can make positive change I'm, making the market's more competitive more companies can list more investors can participate and it raises the entire franchise. So those are the core themes in terms of algae drivers strategy going forward.
Got it as very thorough thank you.
Your next question comes from the line of Jamestown.
Hi, James how are good morning Tomorrow.
Morning, I just wanted to clarify that first question right here correctly that there was in the derivatives business about 600000 of quote unquote, one time revenues that we shouldn't that factor into our capture rate calculations yeah.
Yeah, sorry, Okay, that's that's frankie or so they had the in the corner. There was yeah roughly that amount of a crude Ah revenues from the regulatory division and that was fairly unique in the corner going forward. Obviously, the capture is there'll be dependent on the mix between the interest rate the products and yeah sure future.
There isn't than the other products, but that was the guinea part of the quarter into your drink.
Okay and that that is an expected to recur at all in in any future corners. I was really just this quarter, it's not a seasonal thing.
Correct. It was unique in the corner.
Okay Uhm similar type question on the on the equity side equities in fixed income trading revenues.
Obviously, some capture right issues there given that the mix with with venture Uhm, but are you are you able to to break down the impacts of of the product mix with venture and and maybe with fixed income trading volumes, what's what's driving that that lower revenue growth relative to the volumes girl.
With a little bit more detail.
Yeah. So in my remarks, I alluded to the you know the the gross and adventure.
Bonds were about 80% in the quarter and the growth and a chest X side was about 20% uhm. So the average capture rate ventures, essentially about half of that is the the PSX. The chest X securities also in the quarter and we see this as late as well as the higher volumes that we're seeing on Mark and those has the.
Caps as well and so we are seeing roughly a lower after eight year over year based on those bombs acapnial earlier as compared to the other prior quarters.
Okay, Great and then.
Shifting to to expenses quite a few puts and takes there with with some increased covid related expenses. Some decrease covid related expenses. Some other head count severance professional fees et cetera. I was just hoping you could there was an indication as to.
I guess, the the sustainability all this level of spend in that and across the Opex lines.
Yeah. So you know we don't provide a future guidance on expenses. However, we know we we <unk> we always our intention is to maintain consistent expenses going forward. We we do exercise expenses disciplined and as you noted or some items in Q3 related to Covid that were <unk> all set by some of the savings be stolen are discretionary spend items like <unk>.
I will entertainment and conferences and things of that nature. We do have to continue to invest in growth as you know uhm, we don't <unk>, we will spend small pocket of spend into new growth items, largely offset by by continued cost efficiencies give me one one point to note in last year's Q for results.
What was the other one time nature of some of the of the cost is called the benefits. We had a 4 million dollar reversal of or a reversal of the <unk> grant that was given to the related to the C. E O retirement, and there's all there's a lower <unk> cost of 4.5 million that happened and cute.
Four of last year. So I just want to remind you of that uhm as you start to model out your your coupons this year.
Right. Thank you and yeah, I'm going to build and one more piece of if I may have an an and it's again, it's that kind of comparison too you know what's going on in 2020 versus what went on in 2019, we've given that kind of long-term guidance in terms of where we track and where we target in terms of both you know top line and bottom line growth and if you remember last year.
We weren't performing at that level and that was an impact on our short term incentive plan. So you saw savings in the short term incentive plan costs last year that it is the opposite scenario. This year, so bacon baked into those expense run right on the first nine months and you'd expect into the fourth quarter as well as we are you know are outperforming those long term targets. So you should expect to see that reflected in the car.
Space of our short term incentive plan as you have throughout the entire year. So far so that is a deltona ear over here.
Okay I appreciate that that extra color John last one for me that is just just entree part still still pretty robust organic revenue growth, but a little bit of a step down this quarter and if I'm looking at.
Subscriber growth traders in the end total subscribers all that's floor in in Q2, and Q3 2020 relative to that you know, let's say the previous five quarters before that Uhm can you offer is a little bit more color around what what we're seeing in terms of subscriber demand for trade pork and and this.
Persistence of let's say, maybe a step down and grew up there.
Yeah, and when what you're seeing with tray poured is using continued strong demanded usage and and even though the subscriber numbers went up to the same degree in the quarter. We actually had very strong uptick in terms of new client add ons. So I'm gonna I'm gonna get the number wrong in Polk will corrected, but I believe we had six or seven new clients sign on in the corner.
<unk>, but they you know in this market environment, they're tending to sign on with a couple of traders Uhm and then we'll see how their experience goes in terms of building into the product later on.
So that you don't give guidance just directionally on the expense space given.
The pandemic is maybe had you behave a little bit differently. How you have had your expenses this year, but when things return to normal are there certain aspects of your expense space that you think woods potentially be higher or lower in terms of things like travel entertainment conferences real estate that sort of stuff.
Oh, Joe Jeff up a fantastic question and if a piece that we're thinking about all the time I'm a believer in and this is not a projection, but this is more of an expectation that you know traveling conferencing. Those types of friends are not gonna go back to the levels. They were beforehand that you know through all of this we're learning as everyone else's how to do things differently than in the future you are.
Not gonna send 10 people do a conference when you can send 10, two and do things virtually or hybrid those types of things. So you know I expect and some of these areas, we're going to see some permanent save in some areas. We are spending more so we've been spending more of this year in terms of system capacity uhm remote working capacity you know a cyber resiliency those types of things that's a sport.
Thank you before we closed just a brief update from the IR team I'm very pleased to announce the jewelry Park has taken on the new role as senior manager He SG reporting and Investor relations over the past year, Julie has been filling in for Amanda as you know and amend to 10, we'll be back with us from maternity leave in January.
Thank you everyone for joining today and if you have any further questions. The contact information for media as well as for Investor Relations is in our press release and we'd be happy to get back to you on your questions stay well unsafe everyone.