FactSet 4Q13 Earnings Call Notes

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A digest of some of the top insights that I’ve gathered from this week’s earnings calls.  Full notes can be found here.

5% organic revenue growth

“In the second quarter, FactSet’s revenues increased to $227 million, up 7% compared to last year. Organic revenues grew 5.1% over last year, excluding $3 million in revenues from recent acquisitions. Operating income for Q2 grew to $75.1 million.”

Buy side user growth strong

“Total user count was 51,900 users at quarter end. While users declined slightly at sell-side clients, user growth on the buy side experienced the highest quarterly change since 2004.”

Picking up some wealth management customers

“when we think of wealth managers, I will remind everybody that we are targeting really the high net worth managers who are operating very much like traditional institutional investment managers. We had several big wins in the quarter, some important client displacements that led us to have some really good user growth in that area”

Long sales cycle, long product cycle

“Our sales process is characterized as one that has a very, very long sell cycle. Our product development process involves making bets and developing product that takes years to get into the marketplace. ”

Still uncertainty for biggest sell side clients

“maybe there is a little bit of firm creation on the buy side. There is certainly a little bit of firm creation in the middle market on the sell side. And all of that is — there is till uncertainty amongst the very biggest clients on the sell side.”

Bulge bracket not investing

“So the sell side is characterized really by two clients, they are the large bulge bracket firms and the middle-market firms. The areas that we are seeing the best growth though by no means spectacular growth is in the middle-market area. In the big firms, they continued to be very cost focused spending lot of effort rationalizing their spend. They have not yet turned into the point where they are investing materially in the business. So we are not seeing any sort of material growth in the bulge bracket firms”

No sign of much movement from Thomson Eikon yet

“We haven’t seen much Eikon in our core users. It suddenly popped up in select cases, but so far the majority of what we have heard is that they have released a new version, they have released several versions of the product. We know they are going through some conversions and that we believe most of the Eikon users that are out there today have been converted from other legacy Thomson platforms. We know that they have recently expressed their desire to convert to the Thomson ONE users to Eikon. The Thomson ONE users do have overlap with the FactSet target user group and that’s a group of users and a group of firms that we have been talking to for years. So the direct answer to your question is we haven’t seen it much in our market and we will continue to monitor it.”