Q1 2021 Factset Research Systems Inc Earnings Call

Ladies and gentlemen, thank you for standing by and welcome to the stocks the Q1 earnings call.

The strength of all participants are in the listen only mode. After the speakers presentation. The up your question and answer session.

Of course, and part of especially the need to press star one and your telephone if you're acquiring the further systems. Please proceed probably to zero.

And like you spoke to the scrap as promised we part of you may begin.

Thank you Kevin and good morning, everyone welcome to Factsets first quarter 2021 earnings call.

We continue to be in very remote locations today.

We may have the audio quality issues and we appreciate your patience should we experience a disruption.

Before we begin I would like to point out that the slides we will.

Well reference during this presentation can be accessed.

Yeah. The webcast on the Investor Relations section of our website at Factset Dot com the.

Slides will be posted on our website at the conclusion of this call of.

A replay of today's call will be available via the phone and on our website.

After our prepared remarks.

Eric.

Well open the call the questions from investors.

To be fair to everyone. Please limit yourself to one question the plus one follow up.

Before we discuss our results.

I encourage all listeners to review the legal notice on slide two which explains the risks of forward looking statements and.

Use of non-GAAP financial measures.

Additionally, the.

Please refer to our forms 10-K, and 10-Q four of discussion of risk factors that could cause actual results to differ materially from these forward looking statements.

Our slide presentation and discussions on the school will include certain non.

Non-GAAP financial measures.

For such measures reconciliation to the most directly comparable GAAP measures are in the appendix of the presentation and in our earnings release issued earlier this morning.

Joining me today are Phil Snow, Chief Executive Officer, and Helen share.

And our Chief Financial Officer and.

I'd now like to turn the discussion over to fill the snow.

Thanks, very much and good morning, everyone.

I'm pleased to report that the fact that the started its fiscal year on track to meet its first half goals. We've learned a lot of a calendar year 2020, how resilience office.

The how well we can work remotely and the strength of our client relationships.

The last 12 months of also served as a reaffirmation of our investment strategy and content and technology.

Factset is focused on supporting client workflows across the entire portfolio lifecycle is increasingly serving.

And the differentiator for us and the market and we entered the new calendar year with increased visibility and measure of confidence and opposition.

Our focus remains on maintaining the already high client retention.

Adding new clients expanding wallet share with large strategic clients and continued pricing discipline.

The seek to capture more market share strong execution will be key the performance. This fiscal year, and we are optimistic and our ability to close our pipeline.

Our second quarter pipeline is high and now than it was at this point a year ago, and we have proven that we can execute well ultimately weve.

That's the provide clients with the critical data that is the only increasing and important the demand from more and more differentiated content is at an all time high, especially on the buy side and the fact that depth and scale in this area place the says and the solid position.

We believe we offer the strongest state of <unk>.

Reported EPS in the industry and the strength coupled with Factset is comprehensive suite of open and flexible technology solutions are driving more engaged and actionable C suite level of conversations. Moreover, our ability to link diverse content and convert unstructured data into structure and meaningful financial insight.

And is the key differentiator for us and the industry. We all of the provider of choice of many of our clients looking to scale of technology and Mike rate of workflows to the cloud.

We further improved our content and all of you this quarter the the exciting acquisition of true value labs, one of the strongest yes cheaper.

Providers and the industry I'm very pleased with the demand we see from clients and the speed with which we are integrating the company into the effects of ecosystem the.

We're already of Provida on the open Factset marketplace and one of the many E.S.G. day to provide us on our platform.

True value is pioneering technology.

Our alignment with fast the and the U.N. STG is combined with our existing library of content creates a powerful engine for the data collection and signal creation that will suddenly and value for clients across all of businesses.

As we look at Q1 of the growth rate for organic ASV plus professional services the celebrated.

The 40 Bips over the last three months ending at 5%.

Research business, which primarily experienced higher growth due to stronger retention help support the ASV growth this quarter.

The strength and research was offset by delayed decision, making that slowed our ability to close the deal as well as higher cash.

Violations and other businesses. We also saw an increased level of activity and new business as well as expansion with existing clients and.

As we've said before the first quarter typically tends to be our smallest quarter and does not necessarily and indication of our performance for the remainder of the year.

We're also pleased with improved results from.

And so the adjusted operating margin and the EPS this quarter driven by higher operating results Helen will walk you through the details and a few minutes.

Turning to our regional segments, and Americas strong retention and expansion of our research solutions with our largest clients, especially banks and asset managers.

Well the sustained growth and this region.

As we enter our second quarter of 2021, we anticipate closing on large deals with and well banking and that's the Doe and those that we believe will help the stay on track to meet off the first half goals.

Our EMEA region contracts of this quarter largely impacted by canceled.

And there.

There is a heightened focus by the sales team to mitigate these cancellations by increasing new business with the SG as the central theme we.

We have plans to deploy the true value EPS product at the differentiator differentiated offering in this region.

We also continue to see good opportunities and EMEA.

The like Ross Ccs and analytic solutions.

In Asia Pacific the ongoing conversations with clients around the digital transformation and portfolio lifecycle of health of helping to build a strong pipeline across different pockets. The Q2 pipeline looks strong and some large deals largely in our analytics business.

Yes were pushed from Q1 into Q2 as they need the as they near their final stages of closure.

We also see solid demand for Cts data feeds across the region and our new business pipeline reflects that we.

We have conviction and the second quarter pipeline across all regions stemming from the demand we see for our product.

The especially with our and set and portfolio lifecycle solutions. We are the only provider of integrated solutions that originated portfolio of research and with client reporting.

We are targeting the front office with these robust research and analytic solutions tap against the client's technology budgets with digital transformation.

And our focus on somatic based selling, especially with the FCC products and continuing to burnt provide holistic open and flexible solutions the.

The sets us up well to meet our goals for the first half of the year.

In summary, I'm proud of our team for delivering solid results. This quarter, we are reaffirming.

End of fiscal 2021 Guy.

As we look of the world today, we are more confident than ever and that the early investments, we've made and content and technology, coupled with solutions that cover the entire portfolio of lifecycle increase factset value to our clients. While the short term environment continues to be affected by the prolonged pandemic we're take.

And the necessary steps to meet our goals this fiscal year.

We are doing all of us, while maintaining cost and capital discipline across the organization.

The relationships with our clients of strengthened during the pandemic, allowing us to build and even stronger Q2 pipeline and we sort of this time last year.

Of all we have an ex.

Take up racing and this demonstrated again and again its ability to execute and now sort of things over the Helen who will take you through the specifics of our first quarter performance.

Thank you, Phil and Hello, everyone and I'm happy to be speaking with you today and the help.

And your loved ones continued to be safe and healthy.

As we enter the holiday season and ended the year.

And our first quarter, we accelerated revenue growth, reflecting the momentum from the fourth quarter strong and sleep apartments and expanded our operating margin.

We continue to progress and nine.

And then in content and technology.

Okay and then.

In fact, our using a portion of the cost savings associated with the ongoing kind of go next so part of the fund administrators and.

Sales and profit.

We're also pleased to welcome the true value labs team the success.

Given that we closed the transaction and early November financial.

The pack and Arizona immaterial for this quarter.

The acquisition adds approximately $5 million and see which is included in our reported and see such professional services.

We will exclude this amount for organic related metrics for fiscal year 20 line.

Yes.

And Phil stated earlier, we grew organic ASV plus the professional services the 5%.

Hi de acceleration from the previous quarter, and reflecting the seasonally slower start to actually of school here.

GAAP revenue increased by 6% the 388 and.

And while organic revenue, which excludes any impact from foreign exchange and acquisitions.

Increased 5% to $387 million.

Growth was driven primarily by analytics and Cps.

From a geographic segments Americas' revenue.

And 6% and.

The I came in at 5%.

And Asia Pacific revenue grew 10%.

And we didn't quite narrow the benefitted from increases and analytic and Cps.

GAAP operating expenses grew 5% and the first quarter 267 million.

The impacted by higher cost of sales.

Compared to the previous year, our GAAP operating margin expanded by 30 basis points to 31%.

And our adjusted operating margin increased by 40 basis points to 34%.

These improvements are largely due to net day.

Things and continued productivity through work force next and.

And a reduction and discretionary expenses and.

Moving lower travel and office costs.

These benefits were partially offset by higher spend in both compensation and technology.

As.

800, your brand new our cost of sales was 350 basis points higher than last year on the GAAP and adjusted basis.

This result reflects increased hiring from fiscal year 20, as well as higher compensation expense for our existing employee base.

Good and it was also driven by higher Tech.

Of course knowledge of Scott and Jim.

Our shift to the public cloud as part of our digital transformation and multi year investment plan.

The total was partially offset by lower third party content cost.

Well the expressed as a percentage of revenue and she is named proved year over year.

And by 380 basis points on a GAAP basis, and 390 basis points on the adjusted basis.

The primary drivers include materially lower travel and entertainment costs reduce gun to the office closures and lower facility expense offset in part by.

Higher compensation costs.

The pandemic related savings are helping to manage a portion of our higher spend.

Well when the long term, we believe a portion of the savings will become permanent.

Moving on our tax rate for the quarter was 16% compared to last.

The next year's rate of 14%.

Which had included income the benefits related to a change in the foreign tax rate as one of its quite hard to finalizing our annual tax returns.

EPS increased 8% to $2.62 of this quarter versus the $2.43.

And in the prior year.

Adjusted diluted EPS grew 12% to $2.88.

EPS figures were primarily driven by improved operating results.

A reconciliation of our adjustments to GAAP EPS disclosed at the end of our press release.

Free cash flow, which we define the cash generated from operations less capital spending of $71 million for the quarter and.

The increase of 3% over the same period last year.

This increase is primarily due to lower capex and some of the spend as we have finished the portion of our office build out.

Out of the first quarter and see retention continued to be above 95%.

We grew the total number of clients my six per cent compared to the prior year, reflecting the addition of more wells and corporate clients.

And ongoing trend and of crime.

Okay and retention improved to 90%.

Year over year, which speaks to the mission criticality of our solutions and the efforts of our sales team.

For the first quarter, we repurchased 133000 shares per total of $43 million and an average share price of $327.

We remain disciplined and our.

I back program and committed to returning long term value to our shareholders.

We remain measured and our outlook on growth.

We also continue to monitor the factors laid out last quarter.

The central delays and decision making.

Tightening client budgets and.

The challenging new business environment.

As we begin our second quarter, we have more momentum and visibility into our business as reflected in the size and quality of the pipeline and the level of client engagement, particularly and their digital transformation.

This is an area of competitive strength the success.

And we.

But it's the long term growth and the area of content and technology, we are redirecting savings.

The been largely from the pandemic to fund the additional hiring and sales and and the development of products, including in wealth and analytics.

As noted earlier, we expect the question of the team to sell.

Related costs.

Become permanent post this pandemic environment and.

Enabling us to offset.

And going operational expenses.

Oh discipline and cost management, and also reflected and our continued shift and workforce and Nick and his was expense rationalization with the.

And even on vendors.

We believe these collective actions will allow us to achieve solid results that are within our ask why 21 guidance ranges we.

We are reaffirming our guidance per 2021.

With that we are now ready for questions Kevin.

Kevin back to you.

Ladies and gentlemen, that's the of a question or comment at this time. Please press. The Star then the one key on your Touchtone telephone.

Of course, and that's been answered the question, we're still from the queue. Please press the pound key.

Our first question comes from answered the list with William Blair.

Hi, good morning, Thanks for taking my question.

Really.

The margin performance in the quarter nicely.

Nicely above the the full year guidance range.

Given you maintain the flow your guide I was just hoping you could speak to the mix of factors driving implied step up and expenses through the second half of the year through the remainder of this year, mostly just wondering how much of of that.

Streetlight increase.

Is the best and spend versus maybe returned to a portion of a return of a portion of those teeny cost of the facility costs you called out just trying to get a sense for that and maybe the cadence of spend throughout the rest of the tier.

Sure. Thanks, Thanks for your question.

And so yes, we are pleased with how we're performing.

And when we think about the benefit in this quarter. It comes in part from the higher revenue growth given the strong Q4 and.

Net offset by the ALJ growth and expand in both comp compensation and technology and.

Yeah, and the salary growth with the comes with the new hires we did quite a lot in Q4, and that's coming through and that's why when they become more of the run rate and get an orange and wanting to see that come through for the for the rest of the year as was the merit increases that come through and so that's why there's a bit of that cadence and we'll see come and post Q1.

We've also been doing additional spending and the sales and profit hiring and hiring and development and thats kind of see that come true for the back half of the year also.

I think that when we talk about the how thats going to be more permanent that is really will move back to and ongoing normal whatever that.

And the fine dad.

And the environment, but the up a well start to laugh and as we get into Q, partly into Q2, the more into Q3 Q Force and that's also why from a margin perspective.

And we'll see that play out of.

You know some of them because the rest of the year and so that margin.

And as well.

Understood. Thank you and then obviously.

Obviously, one of your competitors announced a major merger late last month.

I was hoping you could speak to one how you anticipate the competitive dynamics and the space to evolve as a consequence of of that deal and then second.

What your outlook is in terms of concern.

They should and the sector broadly and and whether you anticipate continued activity of this type going forward. Thank you.

Hey, Andrew it's Phil Snow and I'll take that one so you know what we're focused on is our strategy, which we feel really good about sort of you think about factset and how.

All of the differentiate ourselves and the marketplace.

So much of that is driven by the workflows that we filled out around the client portfolios of particularly on the buy side and increasingly with wells. So.

Our strategy is covering the portfolio lifecycle.

From research through the client reporting and what we.

We do there in combination with the investment, we're making and digital transformation and for our clients. So you know that's the piece of the market that we see as being truly differentiated for Factset and you know along with the concordance.

The offer between those portfolios and all of the day this up.

Hi.

Can we have on our platform.

And we think the some real advantages too and that strategy and the agility that we have and when we talk to our clients. So you know we the consolidation of the industry has been happening for a long time, but.

But we don't necessarily see this particular.

That was something that wouldn't necessarily affect us and the negative way.

Great. Thank you.

Sure.

Our next question comes from the day, Nick with Barclays.

Thank you good morning, guys I just had the question on the true value Labs acquisition and I think the.

The cross sell opportunities seem pretty evident that was just curious on what this means the U.S Ci strategy, because I think in the past you little more EEG agnostic against share Sina pass through other data through your systems is this does this change that and how should we envision what you guys are working towards.

The rooms at the east cheating.

I've been out of its Phil and I would think of the the way that you know we've handled some other new content. So the we've gotten into so we still want to be that ecosystem, where the concordance that we offer and the software that we provide a is the reason clients want to come to the Factset.

So we.

We have you know I think upwards of 20, yes, she provide us within the open factset marketplace and I believe we've integrated about nine of those with the you know.

Our workstation and other work flows just based on client the man. So I don't anticipate that changing you know I think what we can do.

And if we own and asset which is differentiated like true value is we can.

For the integrate that through.

You know through the different work force for our clients. So we see exciting opportunities for true value just in terms of continuing to sell it you know as the discrete product.

And I'd be a feeder and 80 I just for the signal, but then we can get it really embedded in our of past research management solutions.

We can attach it to the portfolios. So I think it's going to become ubiquitous snow at U.S.T. across the portfolio management.

And then of the strength that we have with of portfolio analytics products.

Is that you can really consider.

The groupings the column the the the the things that you want to know about your portfolio and getting this data in there I think will be exciting for our clients and something that frankly, they're all going to be demanding and needing to do and the future.

Got it and and the maybe just.

If you could give us a and update on open factset and.

I guess, it's been a while just.

Maybe the metrics how things are going there.

Yes, the kind of evolution. So we continue to add lots of the alternative day to provide us the open Factset and you can easily go and look at those now through the Factset web site.

Adjusted So we've got all the whole library of data that we have the you know the.

The the strategy is evolving as we go and as we learn more in terms of what clients are wanting you know the way I would describe opened the facts that now is not that and us just necessarily that youre accessing all day and alternative data providers.

In a in a model and research and environments of but it's really the opening up the effects of the technology stack Sobi continue to deploy more and more apiay price. So that those that want to come into the factset ecosystem and create value you know either with content or technology or able.

And do that so we do see if the momentum both in the alternative data providers and the an hour and and how much we're able to monetize that as well as the use of eight the eyes or the use of eight the ice has actually been driven mostly through the through the analytics group. So far so you know all of the power of P.A.

And the clients and used to through the workstation and now we're able to take those a p. ice and plug them into their own you know technology stacks and workflows and that's something that they wanted a day. So we're it's a big piece of our strategy and I think again, it's one that differentiates us when you think about Factset and and how we go to market and.

The work with our clients.

Got it thank you guys.

Our next question comes from Toni Kaplan with Morgan Stanley.

Thank you and.

Phil just touching on that that digital transformation strategy point and I know you just mentioned the HP eyes, but you know maybe you could talk about.

I you know where you are on the move to cloud and how much is sort of left to go on and and what are the just in general biggest opportunities income finished within this digital transformation theme because I know you've talked about your clients.

It's going on this process as well so they are weighted.

Sort of quantify it or is this more about taking share versus others as you sort of a personalized things and just anything from a product or or strategy or a positioning standpoint would be helpful. Thank you true yes.

Yes, the one metric the could be useful.

How far.

When you come in some of the moving to the public cloud we.

We we said the you know a year or so ago. The health plan was to the 80% and the public cloud bye.

Yeah and of the original three year plan, which would be you know seven quarters from now and we're now 35% of the way there. So that's something that we're measuring.

Oh very closely and of course, the real lots of other.

The is the measure that but I think that's a good one to keep tracker.

You know I'm talking of these days, so and it's a more sito's and see how the hose and I have around their entire work flow and what it is they're doing from a technology standpoint.

During the quarter a lot of clients. So one thing that you know our strategic client group and our of the regional teams of doing with our larger clients sitting down with them really understanding you know the opportunities the the there and the and some of the pressures frankly, the the clients of facing regarding their own digital transformation.

The and we're having very open conversations with our clients about their entire work flow.

The technology stack, we helped blueprint that for them and then we really overlay factset capabilities across their entire work flow to help them understand how we can help them consolidate their.

You know, they're you know, they're the number of provide us the deal with in the marketplace. So the very largest clients.

You know over the years of dealt with hundreds of providers, whether the technology or just content providers.

And the Big force. They think the choose you know who are the one or two funds I'd be really wants to.

Our tie ourselves to for the future as a platform and then how do we get that list of hundreds of providers maybe cut it in half the event right. So that's something that we're spending a lot of time with our clients on.

And this is one of the things that I'm. Most excited about the particularly you know as we look at the second half of <unk>.

The year and.

In terms of the pipeline and really trying to get you know deals that are and the millions of dollars.

And so that pipeline around this thing from clients.

Maybe the Charlie I can just add a couple of things actually and you'll get internal let's see the internally in terms of measure and is.

It's a little bit.

And the seems like we're making good progress in terms of costs and automation and the speed to I'm measuring the speed of when we're integrating the collection of around the speed and processing.

And and those are important pieces because that is part of our digital transformation. That's added again, the high and the fee.

That we measure and true.

Track as well.

That's great and.

You know it sounds from the comments and both the press release and in the earlier in the call that.

You sound like you have more conviction and what's going on and the market and and the pipeline being robust and.

I <unk> you know the investment strategy is it sort of in a in the.

The line of of of what your clients need to just just wanted to help understand.

Bridge that versus your guidance is still sort of calling for further deceleration and and the by the end of the year.

Sure I know last last quarter, you talked about the large deals is that is that mainly the the real bridge between that 'cause. It sounds like you have some momentum right now you know that you're expecting coming I you know just trying to understand why it's why the detail. Thank you.

Yeah, we're certainly anticipating the strong Q2 as I outlined and my comments and I think as we get through Q2 will have.

Even more visibility on the second half the spoken before the sometimes it's difficult to have you know a really high degree of confidence more than six months out but if we.

Feel that's an opportunity to you know.

Change any of our guidance, Tony and thing the best time for us to do that would probably be and March after we've gotten through Q2 and the it's got more visibility on the second half of my way.

Got it, especially the Tony as you think about the back half is always our bigger half so.

And we have greater visibility, but you know our things were continuing to track like the larger deals.

They can they can be.

And moved from Q1, Q2, and she'll talked about so I think it's really it's reflected in our wider range.

In terms of Uh huh, so we have confidence gets reflected in the line.

Excellent. Thanks again.

Yes.

Our next question comes from Hamzah Mazari with Jefferies.

Hi, This is Mary and put a lot of she's filling in for the.

The growth in your the new customers and he said, 6% shrimp and the see if you can give us an update on the wall.

And if you could actually help us.

And how some perspective.

The mix of the size of the clients and that pipeline and the you've talked in the past about having chunk of your opportunities and large opportunities and well and does that make up the overwhelming majority of that pipe line or are there.

Yes.

Well the players that you can and.

And you can tap into and has the mentality shift the that's the.

And as we get much further into cold.

Yes, Hi, Phil.

So and you're right and that there are some big chunky and deals that are out there.

And you know those and usually binary and weakens the need to see a lot of enthusiasm from the marketplace around larger wealth deals and and or you know exploring those moving forward.

And we do see a high volume of smaller or wealth sales as well so with the combination of those two you know plus.

The business that we have around digital.

Which is which is part of the wealth business line.

We reported out on so with those of the there's a good healthy mixture across that you know what we do see a you know just from and some of the market.

On the wealth side is you know and increasing demand for most.

More sophisticated tools for wealth advisors.

We think that you know the human elements of well, it's still going to exist I don't think its kind of be completely automated but you know the clients of well again the demand I think more insight from the wealth advisors moving forward and more of a personalized touch so.

So we're excited about some of the product that we have.

Coming to market, we've heard we've released a new advised the dashboard product, which we.

We have a lot of opportunities for and the pipeline and that really does a great job of organizing and wealth advisors day, So we're able to sit through.

You know the hundreds of thousands of portfolios you know that a wealth of millions of portfolios that a wealth shop is managing and really help and wealth and five of the understand you know what she may or may not need to do that day, and some sort of an order of priority in terms of dealing with the clients and so.

Some of that's just good old Factset software.

And some of it is also the increased use of cognitive computing to highlight some of those things for our clients. So this is an area that we're excited about it's an area. If the market I think where we have some tailwinds and.

The one that we're just going to continue to and Boston.

And my greatest value by one of the output from our <unk>.

The transformation projects.

I'll call it a bit.

[music].

Great. Thank you and then just one more and true.

Over.

Just on the true value acquisition.

So some of the opportunity a little earlier, but if you can.

And talk about how it's differentiated you have all the competitors that are a little more qualitative and.

Our quantitative I mean, <unk> true value systems in the and the competitive environment and then also it sounded like you also have 20, maybe plus.

Yes, she providers of vendors.

On your platform and just why did you choose from a true value over over one of the other ones.

The true value.

And was one of the force, yes, cheap providers to leverage and machine learning and non social intelligence and its collection process. So I.

I would say, it's more on the quantitative side and on the hill. So what what the product does is it comes true unstructured text.

And looks for signals within that and structured test of use use and cognitive computing and so this.

Which we are very excited about so it was kind of.

The two part acquisition it wasn't just the SG signals the true value was creating it was the technology that they also were using and this is technology. We believe we can apply to other parts of of business.

Great. Thank you.

Our next question comes from day to the true with Bank of America.

Yes.

Hi, Thank you. So just in terms of pricing have you made any concessions during the COO of it for customers that of you know had such tough times during the period.

Hi, David This is Phil.

Few months ago, there was.

Certainly you know a few clients.

We spoke to the anticipated they were going to have some difficulty moving forward.

So the were a couple of cases, you know what we dealt with.

Some of our clients to do what Factset does best during these periods of which is really thinking about the long term relationship.

Sure you know understand what our clients and going through.

And and in some cases adjusted for that so you know typically you know it it'll end up being a win win for some short at some of.

Concessions or conversations well also negotiate and systems.

What that means for the longer term relationship and that worked exceptionally well for US you know over the last 20 years when clients and going through these types of issues.

As I mentioned in the script I think there's a lot more conviction in the markets now and a lot less uncertainty for all of us as we enter the calendar year 2020.

The ones. So I don't anticipate that we will be having many more of those conversations.

Got it that's helpful and what are you hearing about client market data budgets and just wondering if the code is having a material and pack or is it going to be a relatively normal here.

I believe it's going to be of relative.

Of the normal yeah, just going back to the the comments I made when around Tonys question is you know the clients and looking to consolidate their technology.

And data into a low and number of providers and in some cases that may ER and you know and that may be the lowest and for them as they face the.

The cost pressures.

But even in those cases, we are well positioned to take market share. So that's the when you sit down with the clients and you're able to provide a holistic solution for them over the long and so.

You know that that kind of end up being a win win if they can see ways to be more efficient and we can see ways to help them for the long run and and fruit.

True you know the amounts of wallet share the they spend with us the that's good for both of the clients and back so.

Got it makes sense. Thank you.

The next question comes from Kevin Mcveigh with Credit Suisse.

Great. Thanks, Hey, Phil you mentioned the.

The kind of the demand for differentiated day, there's never been higher.

But then it sounds like your third party kind of content costs.

Were down and the quarter is that just some of the tech transformation or just any thoughts as to so we think the you know more differentiated data would mean, maybe more investment, but it seems like the third party content costs.

Well, you've been able to manage and pretty well any thoughts around those two dynamics.

Well the as you know when we are on track and cash costs are third party content sets. So the things we may get from other providers.

But they also you know we also spent a lot of ourselves on on the technology on comps.

Tens and investing income so.

I don't think the the amount that we're investing for example, and deep sectoral private markets would necessarily be represented and that third party content, but the LNG of.

More color on the yeah someone.

And now I'm happy to answer that and we managed the budget.

The pretty quickly.

And lot of school and I would say and we have more content set providers, but we became very judicious and making sure that we're rationalizing and the publicly as well.

That might be and the form of price that might be and that's one of the world and duplications, we the Uh huh.

The more efficiently the ex.

Hello.

The member of the contents of life.

From a third party.

That's helpful. And then just if you think about he is chief from a client perspective into 2021.

The feel like you have the the dataset you currently need or would there be maybe more tuck in acquisitions. It just it seems like that's going to be an area.

The more focus, particularly amongst the lesson you less clients and then you know were 2020 was.

Don't be bought the man so whether it.

The third party that we're able to integrate through the marketplace. So through the workstation or you know if there are other assets out there the.

The sense for us to own directly.

Well look at that but I think you're right that's the trend that and we anticipate.

We'll have more of it on the Factset and that's one of the beauties of our platform is that people love the importance of the fact that they can come into one of the ornaments and get everything at one place the play.

Software to the.

The different concept.

Thank you.

The next question comes from Shlomo Rosenbaum of Stifel.

Hi, Good morning, Thank you for taking my questions.

Well, maybe you could give a little more detail and some of the us GE drivers and Oh like where you saw.

Some cancellations and.

Some of the things that were comments that were in the press release about.

Wealth management and analytics being slower growth versus the research product being faster it little bit counter to what I kind of expected and what what's actually driving the revenue right. Now. So maybe can you give us a little bit more detail and.

What's going on.

On the show so hopefully that hanmi up of the lamps business that are outside my window right now.

The funds.

Okay cash.

So yes, those those of relative numbers of the last year. So most of where I think were minus seven and last year, we might of been minus.

Thoughts rate for Q1.

So the <unk> the research numbers were down as they typically are in Q1 and you'll see some.

So and over there in terms of the banking relationships. Its just the retention was higher than it was last year.

And we did see a little bit more weakness and analytics.

And wealth and we.

We did and in the Q1 of last year and Cts.

Kind of held and that's pretty well so again, it's a small quarter.

Those are relative numbers in terms of what effect and the growth rate.

You know what what we see as we look out for Q2, which is typically a much bigger quarter is probably going to.

The a better indications from and from an absolute contribution.

Standpoint, which which of.

The businesses are going to be driving the rest of the growth in the first half.

Okay.

And.

Just could you talk a little bit about the selling environment, you talked a lot about high comp.

That ends and the fact that you're your sales people are doing so much more remotely you know is dead.

Hampering anything at all and I guess, if you could kind of level set you know the growth has been fairly the same over the last several quarters you know within the the several tens of basis points.

Do you think if we were not encumbered environments and and your salespeople we're out there beating people face to face the growth would be higher just just trying to get some sense as to.

Understand what kind of the department you feel like you're in.

I believe you know it would have been higher you know over the last six and nine months just intuitively.

And moving forward, though you know I think we're probably getting the equilibrium.

And you know it's easier to sell the smaller clients.

You know in the short selling environment as we learn how to operate so I think some of the momentum youre going to see probably and Q2.

Is related to research and see T.

I asked about the core workstation and the feeds business.

But as we look out for the rest of the year.

We're learning how to interact with clients as I mentioned the like the these blueprint thing exercises were able to do those virtually and.

Typically those are more analytics heavy right and some of the work flow going from.

Research all the way through the client reporting so factset and our clients have been running at the same time and I do think of we're going to reach the nice equilibrium and sons of being able to.

Effectively monetize the you know some of the products that are more sophisticated and have a longer sales cycle.

Okay. Thank you.

Our next question comes from Alex Kramm with Jupiter.

Yeah, Hey, good morning, everyone. Just just quick follow up on the and the question just prior on cancellations and particular can you give us a little bit more detail of what's yours.

Being what type of clients and also what kind of services and why and I think you highlighted EMEA as particular and area of element of cancellation of or the correctly. So again same question. What exactly are you seeing there like what type of products with what type of clients and the region.

There were a couple of lumpy.

The council and EMEA, Alex the I believe were hedge funds.

Hello, and I don't know if you've got any more detail on the.

Yeah happy not here and I think I think that's right I mean the.

This is the low quarter of so when you pass the mic cancels Alec.

Yes.

And what impact so yes.

Two clients and net hedge fund space.

That's true.

That that will make and pack more this quarter and maybe the order.

And I think what we talked about is the slowdown in decision, making so often the way.

You mean.

And the data as well, but I I wouldn't and there's the concentration in any particular type.

<unk> expenses cancellation and anything new on the Bill talked about earlier and research we saw better then and.

The shares.

Yeah Yeah.

In terms of cancellations.

Okay Fair enough and then just another quick one and deep sector. I don't think you gave us the update today I think you've been at this journey for two years or so now any any updates on take up but also any any more specific numbers you can put around this at this point.

And in terms of how much of this contribute to ASV and this I think should be a and they are at one of your from your growth or growth areas and going forward.

Yeah, we're about 15 months and Alex to this initiative you know and we're very pleased with.

What we've been able to accomplish on the product sides of the teams.

The only built out and we're well on our way to delivering.

You know two or three of those sectors.

And in great detail, so where you're going to see that show up at the beginning is and the research numbers. So it's going to help with retention of particularly on the banking side and over time I believe.

Spoken to help drive new adoption across all types of clients and we're also going to be able to monetize the state and feed so we'll we'll be releasing pretty shortly some deep sector. The seeds that would show up and the Cts number.

Very good thank you.

And.

Our next question comes from Shapiro with Deutsche Bank.

Hi, Thanks for taking my question, maybe had and a quick clarification or can you provide the cost savings from the work any because of the ongoing pandemic or if that's the way to quantify that.

Sure and and you're talking about longer term you kind of.

And this quarter because the clean.

Yes, just the quarter yeah.

Yeah, So and this quarter and I would say, it's one of the continuation.

And what we saw last year, so I would say around the point shading I just okay.

Currently the year that being said, we did as you know the.

Oh, the cover and use that or some of the higher.

Well in both.

Okay sure.

Yes.

That's helpful and then Hell and also on the longer term how should we think about what's the how should we think.

But the the putting the introduction glencore of it.

Yeah, well net that in a normal environment, that's a little bit.

And the one that we are looking and when we get back into that and that would be beyond this year. We think that's around 25 net.

One of the.

And compare that to.

19 of the more normal environment, and I would say that one of them.

And so I would love to that whether that comes purely and funding some of our new initiatives and not that many of the same with that's why the quantities.

The more permanent.

The actual change.

That's fair value.

Book, and maybe a quick clarifying question on the head count growth and fees and content, particularly on the sales side I was wondering if you could provide any color on any geographies. The owner work because of products that you're more focused on the on the scene sprint and see him on the content side is it part of the detect the strategy or any color of what those kinds of thanks.

The second Oh, sorry, the channel as we think about and.

Oh from I think from mentioned this earlier and you know sort of talked about and all that's call tightening of it it agent in the areas that we believe we have a lot of opportunities and when we see cash.

For example, the way we've invested more on.

And it was from Oh cell line.

The business and what breaks and.

The other area. So it's not necessarily any particular geography, and so much going and we wish you know the outcome good opportunities and.

And to each one of the research.

Net area.

On the content I think that he and the couple of <unk>.

Of different places.

Yeah, She's actually where we put the most but also I think and any areas of private markets and two office.

And Oh.

I bought a lot of investment.

That's very helpful. Thanks.

Welcome.

Our next question comes.

George Tong of Goldman Sachs.

Hi, Thanks, Good morning, I wanted to drill and a bit deeper into the selling environment you probably provide some details on cancellations and the quarter can you elaborate on where you are seeing longer sales cycles, and how client budgets are evolving on average year over year.

George I think I pods about of the little bit.

With Shlomo so the sales cycle for our analytics suite and when we do the portfolio lifecycle and sit down with the client and talk about their entire digital transformation.

That can be a six month plus exercise.

Well.

As you know the sales cycles for just deploying Factset workstation zone feeds, they're probably getting short of frankly, just because it's so much more efficient to do things virtually.

And then the question on client budgets, how are those the evolving on average year over year.

We don't have you know.

Sarah visibility into client budgets exactly on what their you know the.

Clients typically share that with us the that level of detail. So it's really hard for us to give you an accurate number.

Got it okay. Thank the led and two pieces, there's the BA you run the business.

And then the annotation digital transformation.

And so we are we.

That's exactly right, we don't ask of workers.

And it seems like that but they have clearly anymore and so and that.

Second budget and naturally line, the conversations and said it was alluding to and the iOS.

And that's where that is.

That was like his line.

Got it that's helpful and just as a follow up question of customer count in the quarter grew faster than if the similar the earlier periods and you noted that you've been seeing more wells and more corporate clients can you elaborate and the spending propensity of these clients relative to other types of clients.

The spending for cash.

The.

Small appliances the.

I have questions.

The the spending propensity of wealth and corporate clients, which appear to be growing faster than the other types of coins and.

Thanks for the US those are typically smaller clients that we sell George So you know the.

Those are I think typically.

The smaller clients you know, they're able to make a decision more quickly and.

On the corporate side, you know I think typically we've seen that sales cycles. The b, a pretty short again, because it's going to be of workstation. The type deal rather than a broad analytics. The conversation that we might have with the but the NASA donor and asset management.

[noise].

Got it thank you.

Our next question comes from Jay Williams with Wells Fargo.

Good morning, everyone.

Good morning, Jeff.

Can we assume that the site.

True of true value line acquisition and.

Indicates the Inc.

Is focused on and owning data and the city of space as opposed to reselling or do you think you'll take more of a a continued hybrid approach going forward.

Well. This this is just the continuation of.

The last few decades, so factset.

You know has a lot of price.

And cried sorry data that we collect ourselves and one half of our employees are and the business of collecting more engineering. The collection of content. So no true value is really very small compared to the overall you know comes and budget or a strategy that we have it's a very.

Good you know and.

Indication of something that.

Pardon Act and that's where the current trend.

But you know it's going to be like it's been for the last tenants. One is in terms of us integrating more and more data onto our platform either through third parties through data that we collect ourselves organically or through acquisitions, let's.

Lets it towards the dry.

The real conclusions from from such a small acquisitions.

Got it thank you very much.

[noise] from last question comes from She's House and with Northcoast Research.

Good morning, guys just the why did go down the further on the true value acquisition I know you've got a lot of questions already but is the do it.

And every year as $5 million. So I guess first question is that pretty much all the revving the kinds of true value and then does this give you the foot hole you need and EPS year do you need in the due our tack on acquisitions and or to make this a bigger part of your business and part of your strategy going forward.

Well, it's a it's an asset the deliveries.

Right and about you know I think you've got the number right.

It's one that's growing and very healthy double digit. So we think we can like you know some of the unique content the that we've acquired over the years of.

Revere and data set was a good example, we believe we can get you know a really amplified per ton of.

For for.

For unique content like this if you integrate it through the Factset platform. Yes, she is going to be a big trend. We believe that's going to continue so we'll keep our eye out for other things that we believe it's important for us to own and but more importantly, we want to be that platform of people come to analyze the data if they want it not just get it.

True a theater and the eye exam for example, the apply what Factset does really well, which is called the data together.

And provide the environment, but clients and you know really analyze the data the wet the way that they want the.

Got you and then.

Changing gears and you're slightly here to your guidance.

How much of your guidance is the kinda.

In terms of going back to work sometime during the fiscal year or what is your assumption in terms of returning back to work and the fiscal year.

I don't think and.

Oh go ahead.

And then.

He said the same thing.

I don't think anything has changed and at this.

Let's turn to we were extremely.

And of the movement.

One of the background and year.

Turn.

Next we'll hear more from cost perspective and.

And.

From a top line equally well Uh huh.

And so you know some from.

From the way, we've been performing and the last one for a.

Well I think the quarters.

Great. Thank you.

And I'm not showing any further questions. The scar more of turn the call back over to flow spoke for any closing remarks.

Thank you all for joining us today I'm encouraged by the conversations we're having with our largest clients and the continued progress of the team has made on our investment plan I look forward to.

Executing on the robust pipeline and the continuing to help our clients solve problems and access critical data anytime anywhere while the prolonged uncertainty and makes our annual performance as it has been in the past the tale of two halves, we remain focused on developing all content and technology and people as well as delivering value for our share.

Please the while this holiday season, and if you have any additional questions call Rima Hyder, we look forward to speaking to you next quarter operator that ends today's call.

Ladies and gentlemen, this does conclude todays presentation. You may now disconnect and have a wonderful day.

Okay.