Factset 4Q16 Earnings Call Notes

Phil Snow

Intersection of finance and tech

“At FactSet, we are at the perfect intersections of technology and finance which fuels on our thinking on product innovation. The world’s more open than it’s ever been and both volume and access to information are now at unprecedented levels. We see clients willing to outsource and move more workflows to cloud base solution. With a significant investment and upgrades to our technology stack combined with our content and analytics, we are now able to offer new ways for clients to leverage the power of FactSet.”

Move to passive greater in the Americas than elsewhere

“That’s a great question Bill, thank you. So it is an ongoing trend, I would say that what we are observing is that trend is more pronounced in the Americas than we are seeing in the EMEA and Asia-Pac region and you see that reflected in our growth rates. So we anticipate that it will continue to had in this directions for little while, what I would say is that we have a broader suite of solutions that we had historically to help mitigates some of that.”

Miscellaneous Notes 3.18.16

IDEXX 2016 Shareholder Letter CEO Andrew Silvernail

Values are our foundation

“Our culture is to win as a team in a high performance environment where people are inveted to do and be their best every day. Our values are the foundation of our culture and guide our decisions and actions.”

Sherwin Williams 2016 Shareholder Letter CEO Christopher Connor

The world looks different than in December

“In many respects the world looks different today than it did just a few short months ago when the Federal Reserve Bank took its first step toward interest rate normalization. In most advanced economies a modest choppy recovery is expected to continue.”

JA Solar Holdings’ (JASO) Q4 2015 Results Jian Xie — President

Solar shipments are heading to countries throughout Asia

“By geography, Asia continued to drive our growth, but we are seeing traction in new regions. Asia was over 80% of shipment, a dominant number but down from over 90% in Q3. China declined from over 50% of shipments to 44% as other Asia-Pacific regions grew. For instance, we shipped 180 megawatts into the Philippines, a demonstration of our dominant position in the market. We are also growing in other regions in the regions such as Thailand, India, and Australia. ”

FactSet Research Systems’ (FDS) CEO Phil Snow on Q2 2016 Results

Scott Miller

Haven’t seen a dramatic shift in spending

“Not dramatically different than we had seen in the previous quarters. We are – clearly as we’ve said over the last couple of questions, market volatility gets people thinking and pausing a little bit but we haven’t seen a dramatic shift in the spending. When you do see markets go the way they did, in many cases, there is a requirement for more analytics and more data. So we are approaching it from a proactive standpoint and we haven’t really seen a dramatic shift in spending.”

CLARCOR’s (CLC) CEO Chris Conway on Q1 2016 Results

David Fallon

Sales into ag and natural gas didn’t decline as much as expected

“Better than expected financial performance was assisted by higher than expected sales of fuel filtration products into the Ag and construction equipment markets. Although sales in these markets declined 17% from last year’s first quarter, we as we discussed in our January call, had expected sales to drop 25% to 30%. In addition, although sales in our natural gas filtration market declined 12% from last year’s first quarter, we had expected sales to decline 20% to 25%.”

Jeremy’s Miscellaneous Notes

Former GE CEO Jack Welch said the economy is improving

“Today, as I sit here, I’ve spent the last few days at Private Equity firm Clayton Dubilier & Rice, looking at 6 businesses, things are looking up.  It’s clearly a pocket of change, particularly in the last couple of weeks in February and the first couple of weeks in March.  It’s that recent.  It feels a lot better, there’s just no question about it.”

And he says consumers are leading this rebound in economic strength

“We know the consumer has more money now, whether it’s gas prices or employment levels.  You’re getting strength in autos, you’re getting real strength in housing.  And the housing sector spills off into so many businesses.”

Source: Video Interview http://www.dataroma.com/m/art.php?id=4705

Factset 4Q15 Earnings Call Notes

Added most users ever. 62k total now

“Our net user count increased by 3,210, which is our highest ever increase in a single quarter. Net user count of FactSet terminals totaled 62,205 at quarter end, which represented a year-over-year growth rate of 14%”

Portware opens up opportunities on trading desk

“I am very excited about the acquisition of Portware. Strategically Portware will be a platform to expand our presence in large global asset managers by becoming part of their trading ecosystem. We expect to combine our leading expertise and portfolio analytics with Portware’s innovative suites of trade automation solutions and cross-sell the solutions at FactSet’s blue-chip global buy-side client base.”

Strategy is to become more multi asset

” our strategic focus, as you’ve seen has to become more as a multi-asset class solution for our clients, and we’re excited about the fact that Portware is a multi-asset class solution and gives us more flexibility and opportunities in that area.’

Volatility creates opportunities for us

“clearly volatility in the market is something that we watch we talk to our clients a lot about it. The thing about volatility for us as well is it requires better data, and more analytics and better information in general which plays right into our sweet spot so with the volatility comes opportunity for us. We feel really good about the opportunities out there across both buy side and sell side, our growth has been very broad based across our regions and our client base. So we feel good about the opportunities going forward.”

No signs that volatility has impacted hiring trends

“We haven’t really seen any of that indication we clearly stay close to our clients throughout this volatility. It is felt still fairly healthy as we look at the sell-side graduating classes that we just saw were reasonably healthy, and attrition rates were nothing of know so, we haven’t seen anything that alarms us in that space so far.”

We’ve noticed some froth out there in acquisitions, but not in this one

“we certainly noticed some froth over the last year or two as we’ve looked at strategic acquisitions, but I would not say that the froth played into our thinking in terms of the pricing for this acquisition. We feel like we paid a very fair value for the asset.”

SNL built a great business with a lot of depth of data

“it’s a great question I mean they have built a great product. They go credibly deep in some sectors. We go deep as well. We don’t go quite to that level of depth within particular industries and when we’re evaluating our investments each year we think about that is one of our options, but we sit side-by-side today with SNL quite happily in a lot of our client bases, a lot of things that FactSet does that SNL can’t provide.”

user growth was wide spread, a little heavier to the sell side

“was very wide spread. Sell-side was a little bit higher in the overall number than buy-side was, not surprising. We do see good growth in that sell-side workstation this time of the year as the new-hire class has come in, but it really was just good growth all over the place and an estimate to our salesforce and client service group who are out there and they were doing a terrific job and it showed.”

Factset FY 3Q15 Earnings Call Notes

Buy side business strong

” FactSet expanded in both its buy and sell side user bases. We also increased users within the corporate marketplace, primarily through partnerships with third parties. Client growth was strong this quarter, as we added 47 net new clients compared to 30 last year. New client growth in our buy-side business drove the majority of the increase.”

Broad based growth

“First of all, I would say on both the buy side and the sell side this quarter, the growth drivers were exceptionally broad-based”

“You saw that we had a great quarter in terms of net workstation additions. I think that’s the strongest Q3 we’ve had in probably four years, and that was well distributed between the buy side and the sell side.”

FX has been a benefit to us

“FX has been a benefit to us over the last 12 months. Again, that benefit has translated in two positive impacts for the business. One is head count has grown over 9% as we have reinvested a chunk of that business into investing it back into the business. And the other piece of that is our margin expansion of 110 basis points over the last 12 months.”

More active on M&A than have been in the past

“We continue to evaluate a lot of different opportunities that we come across. There are some natural adjacencies for us, which I’m probably not going to get into in any detail on this call. But we’re as active or more active than we’ve been in the past.”

Only 5% of total market?

“I think we’re continually taking share from all of the major competitors, Dan, that you know of in the marketplace. So each quarter it differs a little bit in terms of who those names are and what types of clients, but we feel like we’re doing very well on a competitive basis. And just to remind everyone, in terms of the overall market, we’re still probably at 5% of that, so we view opportunity against all of our competitors.”

Factset 2Q15 Earnings Call Notes

CEO change

“effective July 1, I will be stepping down from my role as CEO which I’ve held since September 2000…Phil Snow, our current President will become CEO on July 1. In addition, Mark Hale was promoted to Chief Operating Officer yesterday, replacing Peter Walsh”

The buy side is expanding rapidly

“Net user count for FactSet terminals increased 11% this quarter by over 1,800 users and totaled 57,408 at quarter end. Buy-side performance drove user count and accounted for more than half the change. Over the last 12 months, buy-side users grew 11%. FactSet also expanded its sell-side user base both this quarter and over the last 12 months.”

When we IPOd there were 5000 companies with revenues less than 50m. Only 60 made it to $1 B in revs

“As our business crosses $1 billion, I would like to remind you that in 1996, FactSet’s first year as a public company, there were over 5,000 public companies with revenues of less than $50 million. FactSet is one of only 60 companies in that pool of 5,000 to have crossed the $1 billion mark in revenues. This metric is a testament to our business model, our market opportunity and our experienced management team who knows how to execute.”

Growth opportunity through smaller shops

“It’s a typical quarter for us in terms of net new client additions, so healthy additions, a very good mix of hedge funds, wealth shops, traditional asset managers. As we’ve said on previous calls, typically we bring clients on, kind of the smaller size and we end up growing them over time. We already have most of the largest shops out there as our clients and we still view that as our biggest opportunity as a firm is expanding the wallet share that we have in those bigger clients.”

Clients are healthy

“Right now it appears to us as though the clients are in a healthy spot on both the buy side and sell side and are hiring modestly.”

Factset FY 1Q15 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. Full transcripts can be found at Seeking Alpha

Lots of people adding Factset terminals

“:Net user count, of FactSet terminals increased this quarter by nearly a 1,000 users, in total 55,600 at quarter end. The net user addition in Q1 is our highest since November 2007. Overall users are up 9% year-over-year. This is the best annual user growth rate in more than three years.”

Seeing expansion on buy/sell side

“The group came from both buy and sell-side clients. As discussed last quarter, we continue to see an uptick from our investment banking clients whose activities had previously languished over the past few years.

From what we have seen M&A and capital market activities are on the rise. As a result, we’ve seen few cancellations and expected from our investment banking clients.

The market environment for our buy-side clients also continues to be constructive as the majority of our user expansion in this quarter came from this segment.”

The potential customer base is pretty static

“The FactSet — the end customer base is static for us. It’s true for almost every player in this industry. Certainly, the bulk of the revenue of the industry comes from the largest 500 firms in this space. I remember when we went public we had 85 of the top 100. I’m sure we’re deep into the 90s at this point. So the client count hasn’t changed much over time. It’s really about selling workflows to the clients we have.”

Factset 1Q14 Earnings Call Notes

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

Sell side users stabilized

“the sell-side includes only the M&A advisory, capital markets and equity research businesses, which stabilized in terms of users”

Buy side growth not bad

“Total user count was 52,483 professionals at quarter end. While users declined only very slightly at sell-side clients, user growth on the buy-side was strong resulting in 632 net new users.”

Growth was broad based

“when we look at new client acquisition, it was broad-based. It came from new hedge funds, traditional asset managers, and M&A shops.”

Client health improving

“clients’ health overall is improving in the industry. There were fewer firms that went out of the business in this particular quarter. ”

Modest hiring by clients, nothing major

“I think there is modest hiring going on, Shlomo. Nothing dramatic, but we certainly see pockets of growth and incremental hires going on, nothing dramatic.”

the volume is affecting clients depending how they’re situated, but there are signs of health

“The actual trading volume itself is certainly if you are a buy-side or sell-side client, affect your revenue and the levels of investments and depending on where your share is in that process can affect the ultimate staffing, but at this point we certainly see signs of health in our core user classes.”

Higher AUMs and higher market definitely helping

“Clearly, their revenues are driven by AUM and when the market is healthy it goes directly to the revenues, but I think that the last cycle was one where we definitely saw much lower return to investing in their businesses than we had in prior cycles. I think it’s one of those where the cycle it happened, so quickly that people were just way more cautious than they have been in the past, but we definitely feel like the clients are in a healthier place than they were a year ago and definitely one or two years ago.”

INvestment banking volume positive for both mid market and large firms

“I think, that certainly feels like the macro environment, when it comes to investment banking and deal volume both, mid-market and large firms is certainly on a positive trend.”

FactSet 4Q13 Earnings Call Notes

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.”

Factset FY 3Q13 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

$FDS Earnings Call Notes

“We added 4 net new clients, reaching a total of 2,440 clients. At FactSet, we do not count every single company that uses our service as a client. Companies on trial are not included, nor our clients that pay less than $24,000 a year.”

“Our annual client retention this year was greater than 95% of ASV, and our retention rate in terms of number of actual clients was 92%.”

“Our user count increased this quarter by 61 users, to reach a total of 49,500 at quarter end. Buy-side clients added users, while some sell-side clients continued to reduce theirs.”

“We continue to make gains on the buy-side, which accounts for 83% of our total revenues. The sell-side, particularly equity research, has been under significant pressure for some time.”

“Our clients continue to be cautious in a market that is still far from settled. On the sell-side, which constitutes about 70 — 17% of our business, they continue to contract, both in terms of headcount and purchasing, to focus significantly on cost savings. On the buy-side, they’re still hesitant to make large purchases because given market volatility, they cannot be certain where they’ll wind up for this year in terms of performance.”

“I think we’re definitely seeing tiny signs of hiring, but it’s not one of those things where it feels like a market of several years ago.”

“We haven’t seen the significant amount of Eikon in the marketplace. The indications are that most of the rollouts are happening in segments of the market where FactSet doesn’t have a strong presence, including the trading and execution space. We do know that firms are being contacted and there is an initiative across all the Thomson platforms to transition them away from their legacy platform to the new icon platform. And the fact that it’s out there, reminding clients that if clients are in a transition period, we can offer them a seamless transition and offer them a very attractive alternative.”

“I think we certainly have ETF creators as clients, and also the ETF in the same category as passives. Passives have been around for a long time and there are many players in the space that are — and several huge players in the space. And the shift and mix over time into passives has been a long-term trend. I would say certainly, a negative to the active, as an asset class, but I always question where the assets are actually coming from and what do these plays mean.”