Executives
Andrew Kramer - Director, Investors Relations
Raymond L. D'Arcy - President and Chief Executive Officer
Andrew Hajducky - Executive Vice President, Chief Financial Officer and Treasurer
Analysts
Thomas A. Giovine - Giovine Capital Group LLC
Ashley Hemphill - William Blair
Hugh Miller - Sidoti & Company
Simon Willis - ING
Mark Sugarman - Citigroup
Interactive Data Corp. (IDC) Q1 2009 Earnings Call April 23, 2009 11:00 AM ET
Operator
Good morning. My name is Ian and I will be your conference operator today. At this time, I would like to welcome everyone to the Interactive Data Corporation First Quarter 2009 Financial Results Conference Call. All lines have been placed on mute to prevent any background noises. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions) Thank you.
Mr. Kramer, you may begin your conference
Andrew Kramer
Thank you very much Ian. Good morning, everybody and thanks for participating on Interactive Data Corporation's first quarter 2009 financial results conference call.
Joining me are Ray D'Arcy, the company's President and Chief Executive Officer; and Andy Hajducky, our Chief Financial Officer.
As is our practice and as we referenced in our news release this morning, we are presenting a set of slides as an optional visual accompaniment to our remarks. You can download and print these slides from our website to follow along or you can view and advance the slides through the webcast viewer if you are listening to the call over the Internet.
Turning to slide number one, I will briefly review the agenda. After I recite the Safe Harbor statement, Ray will briefly review our financial performance and share his thoughts on the first quarter 2009 highlights across the organization. Andy Hajducky will then review our first quarter results in detail and provide as well as our outlook for 2009. We will then open the call to questions and answers.
With that said, slide number two covers our Safe Harbor statement. This conference call will contain forward-looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995 and Federal Securities laws, including statements regarding the company's future financial performance, future operating results and plans and expectations and other statements that are not historical facts.
These forward-looking statements are based on management's current plans, expectations and assumptions. They are subject to known and unknown risks, uncertainties and other factors that may cause the company's actual results to be materially different from those contemplated by the forward-looking statements. The company undertakes no obligation to update these forward-looking statements to reflect subsequent events.
For further information and risk factors that may affect these forward-looking statements and the company's business please refer to the news release issued by the company today, as well as to its most recent annual report on Form 10-K which is available on the company's website at www.interactivedata.com. An audio replay of this call will also made available on Interactive Data's website and on streetevents.com.
Furthermore, during this conference call, management will make reference to certain non-GAAP financial measures, such as organic revenue, organic revenue growth, total non-GAAP cost and expenses, organic income from operations and organic income from operations growth. A reconciliation of these measures to GAAP measures are set forth following the financial tables in our earnings release or in the slides relating to this conference call, both of which are posted on the company's website under the heading of Investor Relations.
Please note that all the numbers in our prepared remarks are for the first quarter of 2009. All comparisons are with the comparable period in 2008 unless otherwise noted, and all comparisons are done on a GAAP basis unless otherwise noted.
And with that said, I'll now turn the call over to Ray.
Raymond L. D'Arcy
Thank you, Andy. Good morning, everybody and thank you for joining us. As you may know, I became Interactive Data's President and CEO on March 2, of this year after spending most of my 30-year career at Interactive Data overseeing our sales and marketing efforts.
I am very proud to be leading such a great company that is made up of approximately 2400 talented, dedicated professionals around the world.
As Andy mentioned, there are slides available on our website that support our commentary and we will indicate which slide we are referencing as we move along.
Let's begin on slide number four with some commentary on our first quarter 2009 performance.
We are pleased with our first quarter 2009 results, especially in light of the unprecedented turmoil that is affecting our core institutional customers. Our revenue grew 2.4% to 186 million. However, our organic revenue growth was quite strong at 8.4% in the first quarter of 2009. Much of this growth was offset by the effects of foreign exchange.
In terms of our reportable business segments, we continue to see strength within our Institutional Services segment, which is the largest and fastest growing of our two segments. This segment's organic revenue grew at 9.5% as a result of robust demand for our independent fixed-income evaluations in other high-value reference data content.
Our second segment is our Active Trader services segment which is composed of our eSignal business. This segment has been challenged to generate sustainable growth over the past year, due to ongoing softness within eSignal's core market, which is the individual an active day trader marketplace.
We've taken steps over the past year to extend the eSignal's suite of products within the institutional market and we are now generating good traction with those efforts. This is highlighted by our recent success at Raymond James, which I will review in more detail later on the call.
From a geographic perspective, Europe was a standout performer. In Europe, excluding foreign exchange and acquisitions, our team generated robust organic revenue growth of 14.2%, led by higher demand for our value aided pricing services.
In the U.S., our organic revenue growth was more modest at 5.7%, as we continue to see good demand for our fixed income evaluations and reference data services.
In the Asia Pacific region, we produced healthy organic revenue growth of 19.4%, up a fairly small base of revenue.
In terms of our operating profitability, income from operations declined slightly by 1.2%, to 48.3 million, primarily as a result of higher, non-cash expenses and the net effect of foreign exchange.
In addition to high depreciation and amortization, we also incurred increased stock compensation based cost.
Non-GAAP income from operations grew at 13% as we took steps to control spending during the quarter.
In terms of net income, we reported 31.9 million, or $0.33 per diluted share. In addition to the effects of foreign exchange and higher non-cash expenses, our net income was also impacted by considerably lower interest income.
Andy Hajducky will review the quarter's results in detail after my comments.
I'd like to turn to slide five, to share some insights into how we think about our business. To me, what truly differentiates and distinguishes Interactive Data in the marketplace and with our customers, are the broad set of capabilities and offerings from across our global organization, combined with our commitment to working closely with customers who truly understand their needs.
As we move forward, it is important we continue leveraging our collective content, capabilities and expertise through the One Company, One Vision initiative that we began implementing several years ago.
To help advance this initiative, I typically won't refer to specific business units; rather I'll refer to the six core product areas that I view as fundamental to delivering a differentiated set of service offerings. Those six product areas are represented on this slide; and they are, Evaluations, Reference Data, Fixed Income Analytics, Real-Time Market Data, Web-Based Solutions and Desktop Solutions.
In combination, these capabilities help position us to address powerful trends that are influencing our customer's spending on financial information. The trends encompass; one, the heightened -- the heightened scrutiny around the valuations of securities; two, the increased regulation and its associated impact on risk management and compliance; three, the increasing adoption of low latency data and related solutions to power automated systems, and four, the continued need to differentiate wealth management offerings in order to attract and retain high net worth customers, as both competition and cost pressures intensify.
In addition to those trends, the combination of vendor consolidation and customer cost control programs is creating increased opportunities for us in the real-time market, primarily in the real-time data feeds and wealth management terminals. I'll cover that in more detail in a few minutes.
Let's move on to slide number six for some observations of our current market conditions. It has only been about two months since our last investor conference call and not a lot has changed since then. Based on our ongoing observations and dialogues with our institutional customers, there is still considerable uncertainty about the overall spending plans for market data and related offerings.
Many institutional customers are under increasing pressure to reign in their spending and that is creating challenges as well as opportunities, as it relates to our sales and account management activities.
More specifically, we were pleased with the new sales we closed during the first quarter of 2009, which largely trended according to our plan. In particular, we are seeing good traction with our products and services that can help customers with evaluation, risk management and compliance activities, and help them reduce cost by improving the efficiency of the work flows and related processing functions.
Cancellations and service down grades however, ran higher than we expected. Some of the cancellations were anticipated, particularly those related to certain post-merger related integration activities.
With that said, we also saw cancellations rise as customers intensified their focus on reducing their market data cost by either eliminating any duplicative content, downgrading their level of usage by discontinuing those services that they considered to be non-essential.
Our customer retention rate metric, which focuses on the number of institutionally oriented accounts we maintain over a twelve-month period rather than a revenue attributable to those accounts, was strong at approximately 93%. This is down slightly from the approximate 95% level at the end of 2008.
Let's turn to slide number seven to cover the progress we made to strengthen our business during the first quarter of 2009 and the first few weeks of April. And we will relate these highlights to our six core capabilities.
Let's start with Evaluations. We continue to see strong global demand for our fixed income evaluated pricing services. We are finding that the breadth and depth of our coverage, our independence and our superior customer support, distinguishes us in the marketplace.
We're continuing to add resources into this product area to help us more affectively and efficiently address customer demand. Related to this, we took additional steps during the first quarter to provide greater transparency into how daily market conditions may influence our evaluations. Our transparency initiatives are also designed to help clients with their obligations related to accounting standards like FAS 157.
Expanding our overall coverage universe is also a priority for us. And we plan to continue advancing initiatives and enhancing our pricing capabilities on alternative investments. We also will continue to respond to customer needs for independent evaluations on fixed income securities, related to the U.S. and foreign governments' various stimulus initiatives.
Let's move to reference data, which is the term we use to describe listed markets' pricing and all types of descriptive information about a security. Our reference data was used to power a wide range of mission critical applications, including compliance and risk management applications. We recently added to our capabilities in this area with the introduction of a new business entity service. This service is designed to assist clients with their risks management and compliance activities by providing them with information to help analyze their global exposure to various entities, industries and regions.
We also continued to drive adoption of our basket calculation service, which is designed to provide clients with the intraday indicative values for equity and fixed income EPS and ETMs as well as values from market indices.
At the beginning of April, we announced that Wilshire Associates have selected our basket calculation service to calculate real-time values for selected indexes within the broader suite Wilshire in Wilshire Indexes.
In terms of fixed income analytics, this is a product area that compliments both out fixed income evaluations and reference data content. We are working to migrate existing customers for our core BondEdge service to the next generation version of this offering. To achieve this objective and further expand the targeted market for BondEdge, we recently added new tools and capabilities that can extend the appeal of this service to a broader set of end-users.
These include a new application programming interface and a new package of capabilities designed for the analytic -- for the analytical risk reporting and trade analysis needs of fixed income strategies.
In a real-time market area, as I mentioned at the outset, the combination of vendor consolidation and a focus on controlling cost by customers is driving good, new institutional sales opportunities.
In terms of our efforts to strengthen our real-time value proposition, we added more level 2 data for various markets as well as new exchanges in the Eastern Europe, Middle East and Asia/Pac regions to our coverage universe. We also recently introduced PlusBook, a new consolidated service for the European financial industry. PlusBook is designed to help address the best execution mandates embodied in the markets and financial instruments directive or methods, the European regulatory mandate that went into effect in late 2007.
We view PlusBook as an important service that can help us to further fortify and expand our existing institutional relationships across Europe.
In terms of our web based solutions, this is a product area where we create and host customized, web-based applications. These applications rely on our data, other third-party information and proprietary information from the customer, especially as it relates to many of the bulk management applications we create. As clients strive to reduce cost and maximize the efficiency of their internal IT resources, we've continued to win new projects, both with existing and new customers, in the U.S. and Europe.
Just as important, we're advancing our key product platforms. For example, in January, we added new capability prime portal product that can help investment advisors in the wealth management sector optimizer advisory services.
Our desktop solutions, which are our client, server and browser based workstations, compliment our web-based solutions and are emerging as an attractive area for growth.
As I mentioned at the outset of my remarks, vendor consolidation and the driver institutions to reduce or contain costs are creating an attractive opportunity for us to continue to extend our desktop solutions into the institutional space.
Accordingly, we've redirected resources to further enhance our terminal offerings to better address the needs of institutional customers, including efforts to expand our relationships with complimentary content providers such as Dow Jones for news.
These investments are starting yield tangible results, particularly in the U.S. regional broad (ph) sector. We believe that more than $100 million is being spent annually by small and medium-sized brokerage firms on terminal solutions and we are focused on gaining an increased share in this market.
Earlier this week, we announced that approximately 4,000 financial advisors that Raymond James, are now using our browser-based terminal offering. We have enjoyed a long-standing relationship with Raymond James, providing them with many of our pricing and reference data services, so we are thrilled to be expanding the scope of our engagement with them.
Raymond James is one of two fair resizable regional brokerage accounts where we've had success recently. We believe that this success at Raymond James and our ability to complete those deployments under very tight timeframes, represent important validation of our capabilities.
I'd like to wrap up my commentary on slide eight. When we began planning for 2009, we anticipated that it was going be a very challenging year in light of market conditions and 2009 is living up to those expectations.
With that said, we've made good progress to start the year. We also recognize that we have got a lot of hard work ahead of us if we are going to achieve the goals we set for ourselves entering the year. We expect that the market conditions will continue to remain uncertain in the months ahead and we are continuing to apply a cautious approach to our 2009 outlook.
To reiterate what we said in late February, it is a very fluid environment. As a result, forecasting for 2009 remains difficult. Moving forward, we plan to remain extremely diligent about managing the cost base of our business. We also will continue to focus on identifying and driving synergies across our organization. At the same time, we also are moving forward with investments that we believe will help propel us forward in terms of new sales and stronger customer relationships.
During these challenging times, we are focused on the programs and activities that will help further differentiate us from our competitors and cement our institutional relationships.
Looking ahead, with nearly a quarter of a billion dollars in cash and investments and no debt, we are in an enviable position. We plan to be strategically opportunistic about bringing potentially valuable capabilities and assets into our organization through acquisition.
Finally, as I mentioned at the outset of this call, I am very proud to be leading Interactive Data team. We have managed through challenging market environments in the past and emerged stronger after each one, through team work and a culture for achieving success, no matter the obstacle.
I am confident that we've got the techniques, the intellectual, technical and financial resources necessary to successfully navigate these current challenging market conditions.
That concludes my commentary, and I will now turn the call over to Andy for a review of our financial results.
Andrew Hajducky
Thank you, Ray. Let's begin on slide number 10. Just as a reminder, all the numbers in my commentary are for the first quarter of 2009. All comparisons are with the first quarter of 2008 unless otherwise noted. And all comparisons are done on a GAAP basis, again unless otherwise noted.
So, we reported for the first quarter of 2009, $186 million of revenue or a 2.4% increase over prior year's quarter. The table under the chart on this slide details the factors behind our revenue growth.
Excluding the impact of foreign exchange, acquisitions and related inter-company eliminations, our organic revenue growth was 8.4%.
However, a much stronger U.S. dollar against the euro and UK Pound Sterling served as a significant headwind to revenue growth and negatively impacted revenue by 8.3%.
The Kler's and NDF acquisition contributed a net of 2.3% to our revenue growth. Each of these businesses has been renamed for our convenience in terms of our reporting, we refer to a business by its former name in the 12-months after we complete the acquisition.
As Ray has mentioned, our Institutional Services segment continued to perform well with organic revenue growth of 9.5%.
In terms of the organic revenue growth by business, our pricing and reference data businesses, which is responsible for our fix income evaluations and reference data offerings, continues to be our most consistent and fastest grower. This business produced organic revenue growth of nearly 12%.
In terms of revenue by geography, slide number 11 illustrates our revenue mix by geography. The effects of foreign exchange more than offset the outstanding results in Europe.
We produced 14.2% organic revenue growth in Europe, thanks primarily to strong demand for our valuations and reference data services. A revenue grows 69.2% in the Asia/Pac region reflected the first full-quarter contribution from a majority interest in NDF.
Excluding the effects of foreign exchange and the NDF revenue, we generated 19.4% revenue growth in this region. Assuming foreign exchange rates remain relatively unchanged during second quarter, they will definitely continue to unfavorably impact our second quarter 2009 results.
Moving on slide number 12, I will review our operating performance. Cost of services increased slightly by approximately $243,000 or 0.4%, to $60.4 million. The effects of foreign exchange nearly offset costs related to our Kler's and NDF acquisitions, increased personnel cost related to higher head count and a 2008 annual net (ph) increase and cost associated with higher data volumes and data acquisition.
SG&A expense has increased by $3.4 million, or 5.8%, to $62.6 million. There were four primary factors behind this increase. The first factor was the inclusion of Kler's and NDF expense. Second, we incurred higher personnel costs associated with increased head count and various sales incentive programs. Third, we reported approximately $2.2 million in certain one-time stock-based compensation cost, which related to the retirement of our former President and CEO. The fourth factor involves a net effect of foreign exchange, revaluation activity on our overseas bank balance.
These costs were partially offset by the effects of foreign exchange and in issues put in place during the first quarter to control various discretionary expenses. As Ray mentioned earlier, we will continue to focus on tightly managing the cost base of our business in terms of both prompt services and SG&A as we move forward.
Depreciation and amortization expense increased 9.5% to $14.6 million due to the timing of capital spending in prior quarters and intangible asset amortization associated with the Kler's and NDF acquisition.
In terms of overall operating profitability, income from operations was $48.3 million. Income from operations as a percentage of revenue was 26% versus 26.9% in the first quarter of last year. Given the significant impact the foreign exchange had on our performance this quarter, I would reiterate Ray's earlier commentary about the underlying profitability of our business. Page 14 of our press release provides the details on this.
Excluding the effects of foreign exchange and acquisitions, revenue grew organically at 8.4% and our non-GAAP total cost and expenses grew at 6.9%. That resulted in a 13% increase in organic income from operations.
Now; interest income dropped considerably from the year ago period to $646,000, primarily as a result of notably lower interest rates. Our effective tax rate was 34.6% for the quarter. After deducting the minority interest, in India, net income was $31.9 million or $0.33 per diluted share.
Now, if we turn to slide 13, and I'll our briefly review on our cash position and cash flow highlights. Interactive Data entered the first quarter with an outstanding debt, our cash, cash equivalents and marketable securities totaled $244.1 million. This is a $15.3 million increase since the end of 2008.
In first quarter of 2009, we generated nearly $36.8 million net cash provided by operating activities or $0.38 per diluted share. This decline by $5.6 million, or 13.2% from the first quarter of last year, primarily as a result of the timing of payments and the timing of certain billings and an increase in our receivables.
I will provide additional color on our accounts receivables in just a moment.
In terms of significant cash outflows and shareholder returns, we paid our first quarter dividend of $0.20 per common share for a total of $18.7 million. That represented 51% of our net cash provided by operating activity.
Slide 14 provides an update on the strength of our balance sheet and our capital spending. Our accounts receivables balance at quarter end was $127.5 million, which translates into DSOs of 61 days.
Now this is a two day increase from the same time last year and a five-day increase since the end of 2008. The increase since the end of the year was primarily related to the timing of payments that we received shortly after the end of the quarter from some of our large customers.
Our current ratio was 2.7 at the end of the first quarter, which is up from 2.2 at the end of 2008. In terms of capital spending, our capital expenditures during the quarter totaled $5.7 million. We expect to see the majority of our capital spending occur during the second half of this year.
Let's turn to slide 15 for a very brief update on our stock buyback activity. We were not active in the market during the first quarter and there were nearly 2.8 million shares available for repurchase under our current program.
Within next couple of weeks, we planned to initiate ND51 (ph) program, we consistently repurchase our stock with a focus on mitigating any potential stock option related dilution.
Moving on to slide number 16, I will review our outlook for 2009. As we have discussed today, we expect to continue encountering uncertain market conditions in 2009 and continue to take a cautious approach for our outlook for 2009.
With that said, the fundamentals of our business remain very much intact. Our 2009 non-GAAP outlook is unchanged from the original guidance we provided in February 2009.
However, our 2009 GAAP outlook has been updated, primarily to reflect current assumptions about foreign exchange rates and interest income. Our outlook for 2009 in terms of the specifics are as follows.
Let's cover our expected organic performance first. This is a non-GAAP forecast which excludes the expected contribution of acquisitions completed in 2008, as well as any affect from changes in foreign exchange based on rates as on March 31, 2009.
2009 organic revenue growth over 2008, on a percentage change basis, still expected to be in mid-single digit range. 2009 organic income from operations growth versus 2008 on a percent change basis is still expected to be in the mid-single digit range.
In terms of our GAAP forecast, I'd like to highlight the sensitivity of our guidance, potential changes in foreign exchange rates which we obviously have no control over and which could fluctuate significantly.
In terms of the specifics, we expect our 2009 revenue growth over 2008 on a percent exchanges basis will now be at the low end of our original guidance, which call for 2009 revenue growth in the low single digit range. This forecast still includes an anticipated positive impact of approximately two percentage points from acquisitions completed in 2008.
Our original guidance assumes that 2009 revenue would be negatively impacted by at least five percentage points associated with changes in foreign exchange rates based on 2008 year-end rates. This forecast now includes a negative impact of approximately six percentage points associated with changes in foreign exchange, based on rates as of March 31, 2009.
Let's advance to slide number 17 to finish up the guidance. We now anticipate that 2009 income from operations versus 2008, on a percentage change basis, will show a decline in the low single digit range compared with original guidance that calls for 2009 income from operations, the range from roughly flat to a low single digit decline. This forecast still includes an anticipated positive impact or approximately two percentage points from acquisitions completed in 2008.
Our original guidance assume that 2009 income from operations would be negatively impacted by approximately five percentage point based on year-end 2008 rates.
Once again, the primary driver for this update is foreign exchange as we now expect that changes in foreign exchange rates will negatively impact income from operations by more than five percentage points.
Our effective 2009 annual tax rate is still expected to be in the range of 35% to 36%. As a result of the greater than anticipated impact from the effects of foreign exchange and lower than expected interest income from lower interest rates, we now believe that 2009 net income versus 2008 on a percentage change basis, now expected to decline to the low to mid single digit range. This compares with original guidance, a call for 2009 net income to decline in the low single digit range.
2009 capital expenditures are still expected to be in the range of 56 million to 58 million. As I mentioned, we expect that bulk of these expenditures to occur during the second half of the year and much of our spending will be directed towards fortifying our infrastructure and enhancing our delivery platforms. Also included in this forecast, are expenditures of eight to $9 million for lease hold improvements related to the plant relocation of our midtown New York office and the refurbishment of our European Headquarters in London.
We expect that 50% of these lease hold improvements will be reimbursed by landlords during the year.
So that concludes my review. I will turn the call back to Ray so that we can begin the Q&A session.
Raymond L. D'Arcy
Thank you, Andy. That concludes the management's commentary. At this stage, we would be very happy to take questions, so operator could you please open the call.
Question-and-Answer Session
Operator
(Operator Instructions). Your first question comes from the line of Thomas Giovine from Giovine Investors. Your line is now open.
Thomas Giovine - Giovine Capital Group LLC
Hi guys.
Raymond D'Arcy
Hi, Tom.
Andrew Hajducky
Hi, Tom.
Thomas Giovine - Giovine Capital Group LLC
First, thanks for 10b5 and (inaudible) that's nice to see. I just have a couple of quick questions; the first thing is with regard to acquisitions you had mentioned that you expect 2% pick up from acquisitions, what is your capital plan in order to achieve that? How much are you planning to spend in order to realize that?
Andrew Hajducky
That 2% that we're talking about Tom is the full year effect of the acquisitions that we did.
Thomas Giovine - Giovine Capital Group LLC
I am sorry. So this is not planned acquisitions during the course for the year?
Andrew Hajducky
No these are for the acquisition that we did last year which was Kler's in August and NDF that we closed mid-December. So we're putting in our guidance is what the full impact and full effect is on a full year basis.
Thomas Giovine - Giovine Capital Group LLC
Okay. And then can just broadly speak about what you're seeing in the acquisition landscape today? Just using relatively simple assumptions, your cash balance should go up by about -- I don't know 100 and something million this year which would leave you about 350 million in cash at the end of the year, again this is rough numbers. What you are seeing in investment landscape and then sort of what is the capital plan, rather than just have cash build during the course of the year?
Raymond D'Arcy
I think in terms of capital plan, Andy can reinforce more details on this. The capital plan this year is pretty sizeable compared to what we spent last year and grew up to 56 and 58 million in our capital plans of 2009. Much of it is related to the build-outs of our under location downtown New York City as well as refurbishment of our London location.
And I think that Andy, what's the total percentage growth on that over last year in terms of our capital expenditures?
Andrew Hajducky
It's about 10 to 12% in those spaces.
Raymond D'Arcy
And then as it relates to acquisitions Tom, we -- I'm going to continue what we've done over the last 13 years and that is continue to look that acquisitions that we could bolt on to a number of our core product offerings to enhance the value of those capabilities. And we do have a watch list. We are seeing in 2009 that there are some interesting properties out there that have some price tags on it, they are much more attractive now than they were in the past and but its an active part of our strategy and one that we'll continue to focus on in 2009.
So far, we're -- we've got nothing eminent I would say but we are -- we are continually looking at those properties that could help us advance our presence outside of North America as well as some activities here in the United States that could help improve and enhance some of the product capabilities that we have in our core business.
Thomas Giovine - Giovine Capital Group LLC
We'd clearly love to see you do acquisitions, accretive acquisitions. I guess, I just hope that you all will consider and have the Board consider that, that at least for another year we have a very favorable tax rate with regard to dividends and for a taxable investor you could pick up another 5% by distributing some of that cash this year as opposed to may be after some Obama tax increases. So, hopefully the Board will consider that.
And then lastly, can I ask you guys to give me a call offline for a few other questions after the conference?
Andrew Kramer
Yeah, I'll do that.
Thomas Giovine - Giovine Capital Group LLC
Thank you.
Raymond D'Arcy
Yes.
Operator
Your next question comes from the line of Ashley Hemphill with William Blair. Your line is now open.
Ashley Hemphill - William Blair
Thanks for giving us that detail on retention rates and how you calculate that. But could also define for us how you look at a client in term as of whether by institutional alone or department or actually institutions in different geographies?
Raymond D'Arcy
We segregate our clients really into two categories; institutional, which I define as the financial institutions around the world, hedge funds, banks, money managers, investment advisors and the other way we define clients is in our eSignal business, which we define as the daily the day -- the day trade, the active traders who typically will use our terminal product coming out of our eSignal business.
Ashley Hemphill - William Blair
I'm sorry, let me be more clear. In terms of you institutional clients, lets say for example, do you look at an institution as one single client or do you look at different departments within an institution as two separate clients or if there is an institution that has an office in Tokyo, lets' say and then in London, are those two separate clients?
Raymond D'Arcy
No, those would be one single client, unless if you are referring in terms of the metric that we are using on retention rate Ashley.
Ashley Hemphill - William Blair
Yeah.
Raymond D'Arcy
If you are looking at it in terms of the metric on retention rate, that retention rate calculation is based on how many accounts are actually taking our services. So although, we'll manage a client that may have locations around the world, as one client. They could have as many as 50 different services going into that organization in different parts of the world.
And in the calculation of the metric of retention, each of those accounts would be counted as one. So one client, managed as one client, could actually have 50 even up to 80 different accounts in terms of where they take services from our organization.
Ashley Hemphill - William Blair
Okay and that's what you use in terms of the retention rate.
Raymond D'Arcy
That's exactly right.
Ashley Hemphill - William Blair
Okay. Okay, great. I am just wondering when was the last time retention rates were below 95%?
Raymond D'Arcy
I think, I don't think they have been below 95% for -- since we started reporting them which was may be five to six years ago.
Andrew Hajducky
Yeah you can feel it back actually probably to the 2002, 2003 timeframe, where you see retention rates from below 90% range.
Ashley Hemphill - William Blair
Okay. Okay. And then, in terms of I guess the loss, do you have a sense, was it more so due to consolidations or was it sort of more broad-based?
Raymond D'Arcy
It was more broad based, Ashley. We track our cancellations by type and it runs across the gambit of duplicate services that were no longer required; an intense pressure or intense activity by our customers in the first quarter and particular, just looking at those services that they found to be non-essential, discretionary so to speak. Our core of our business does provide mission critical applications to our institutional client base but there are also those services that, let's just say are on the fringes that if necessary or if there was a need to reduce spending, there was an intense effort on the part of many of our customers around the world frankly to take a look at what discretionary spending could they do without.
And so -- and then -- but it was also a -- as a result of some of the acquisitions that -- or mergers I should say that happened in the fourth quarter of last year, there were just a lot of companies like a couple of hedge funds that we provided services to, that just went out of business. And so, it was across the aboard. My feeling is that in the first quarter there was rather intense effort by our customers, if you take a look at this discretionary spending. I can't predict the future, but we're hopeful that that pressure starts to alleviate because as we get through with some of the discretionary spending for services coming from Interactive data.
You do then wander into the mission critical applications which we think are quite solid and are quite valuable to our institutional organizations.
Ashley Hemphill - William Blair
Okay. And so that gives us, I guess a little comfort that having looked at where the losses were, it doesn't seem to be an impact at all from competition, from the type of players or even because of the price increases?
Raymond D'Arcy
That's correct, right.
Ashley Hemphill - William Blair
Okay.
Raymond D'Arcy
I mean I can't say that, I can't say that we didn't loose anything to competition but it was nothing significant.
Ashley Hemphill - William Blair
Okay. In terms of the new sales in the quarter, any similarities or characteristics that sort of see in that in terms of where those wins will come in from and why?
Raymond D'Arcy
Yeah, I think that first of all we were quite happy with the level of new sales that came in across the board. They met our expectations for the first quarter. And the primary success we had in the first quarter was a continuation of the success we've had in the fourth quarter, which was a desire by many institutions to move to more independent, to independent service for end of day bond evaluations. That was the clear success story again, and it's clearly one of the areas of our organization that we continue to invest in and the one that we have established a lot of our credibility and market share in the financial services sector.
So it was a flight as we call, it's a quality independence for bond evaluation services. And then further, I highlighted the Raymond James sale where we are trying to take our eSignal, what I'm calling the desktop solution services, further up the value chain to the institutional marketplace where we're seeing that there is opportunities in the -- particularly the U.S retail brokerage area where with a consolidation of some our competitors, an opportunity has been created for organizations to look at alternatives and we're in a good position given some of the acquisitions and product developments that we've done over the last several years where we do have alternatives and customers are seeing strong value in those alternatives.
So in general, is the fixed income evaluations, product capability that we have that continues to be a star performer for our organization and some of the efforts that we've made to bring our desktop solutions up the value chain and to the institutional marketplace.
Ashley Hemphill - William Blair
And then we're still looking at those four products that are benefiting from the cost cutting and the consolidation, the risk management and the wealth management, nothing else that sticks out any differently from the fourth and third quarter?
Raymond D'Arcy
That's right. Those are continuing to generate good solid revenue growth within the first quarter, the two that I mentioned are the ones that that I would highlight, it's having the greatest success and the ones that we expect to have the greatest success going forward.
Ashley Hemphill - William Blair
And then, can you just tell me the particular demands strength in Europe for valuated prices services, why? Any specific reasons for that?
Raymond D'Arcy
I think some of the same reasons that I mentioned before. I think that the downturn in the economy last year, I think it's been good selling by our staff in Europe, where a lot of organizations who we're using internal sources of information maybe broke with dealers for their end of day valuations, are now seeing that for compliance and risk management reasons, they do need to be having those services provided by a more independent organization.
And I think that in Europe that was something that wasn't necessarily the top of the priority list and we saw starting the fourth quarter and clearly into the first quarter, it was just more demand, more awareness, what should say, where the end of day evaluations were coming from and the move over to a more independent valuations firm like ourselves was the trend that we saw.
Ashley Hemphill - William Blair
Okay. And then I guess for Andrew and I this is obviously going to be rough so I can just have one question which is; the reason in the quarter for not buying back shares, is it because you didn't have 10b51 in place for the first quarter?
Andrew Hajducky
Yes, we didn't have 10b51 in place.
Ashley Hemphill - William Blair
Okay. Okay. And then just a total number of employees at the end of the quarter?
Andrew Hajducky
2400 approximately, on a global basis.
Raymond D'Arcy
2400
Ashley Hemphill - William Blair
Okay, great, thanks so much guys.
Andrew Hajducky
Okay.
Raymond D'Arcy
Thank you
Operator
Your next question comes from the line Hugh Miller at Sidoti & Company. Your line is open.
Hugh Miller - Sidoti & Company
Thanks. I was wondering if you could just touch a little bit more upon the RGF deal. And considering that was signed very late in the quarter and some of the pressures you guys are seeing within the eSignal product on the Active Trader side. And how we should be thinking about that going forward and the potential like benefit from the Raymond James signing?
Raymond D'Arcy
Well, I think in general Hugh the Raymond James signing is a reflection of the work that's been put into our ability to offer an alternative to what Raymond James was currently using. Not so much in the sense of the capabilities of the product. Although we believe and the Raymond James folks are demonstrating that the capabilities of what they're using from Interactive Data is easier, is more value to them than what they are using previously.
But most importantly it was a change in the way their organization was paying for and utilizing terminal-based products that had a, a rather expensive communication infrastructure surrounding it. And what we were offering is a product that was more Internet-based and it allowed Raymond James and others who are using this product, to eliminate a lot of cost which they were trying to do with regards to the communication infrastructure surrounding the services that they were currently using, that they were previously using.
The only other thing is, I think it made a statement to the industry in the sense that we are a legitimate alternative to some of our competitors who had a greater presence in this particular space and Raymond James is an organization who is quite willing and vocal about helping to provide a reference to other organizations who may want to take a look at the product that we in fact installed for them.
The other thing I think the value that has brought to Interactive Data is, we're pretty tight window for installing 4,000 terminals in a, what was effectively a 30-day period. And ramping up that kind of service in such a short period of time across multitudes of offices across the United States was also something that we're very proud of and I give the folks in our, particularly in our Heywood (ph) office in our eSignal office and there would be all the credit in the world for being able to accomplish that in such a short period of time.
Hugh Miller - Sidoti & Company
And can you talk a little bit about the opportunities for market share gain and obviously, you have stressed that clients are looking to lower total costs and where do you guys see opportunities really to try and consolidate data services they maybe getting from other vendors and trying to win the share there.
Raymond D'Arcy
I think in the comments we made there was, we think that there is the amount of spend that's going on just in the retail brokerage segment for terminal offerings is around $100 million. And so we are clearly targeting that segment and different and the ability to close an organization like Raymond James and another organization that was closed at the end of last year, I think puts in a position where we can have compensation with these organizations with proved statements that organizations like Raymond James and the one that closed in the end of last year. Proof statements that we can in fact provide an offering that can provide greater value for those organizations as well as help them reduce some of their internal infrastructure costs.
Hugh Miller - Sidoti & Company
Okay. And within in the fixed income analytic segment, obviously you guys have invested in the new software that's certainly more robust and provides solutions for people just out side of other core focus BondEdge, but can you talk about the timeframe or what you anticipate you'll start to see some traction there with selling to with additional parties.
Raymond D'Arcy
I guess in this marketplace Hugh, that's tough to comment only although we've got -- I personally have a lot of confidence in the Keith Webster and the management team within our Santa Monica Corporation, who are making some significant changes and modifications in the way that we approach the marketplace. So, I think with any product it takes a few months to get some traction but certainly for 2009 Kieth is pretty aggressive and pretty bullish on the growth expectations for his particular business.
And so, I think if I was speaking for him he would be expecting to some get traction on that clearly by the end of second quarter, third quarter and help us move in to 2010 with a much stronger base of revenue.
Hugh Miller - Sidoti & Company
Hey, great. Thank you.
Raymond D'Arcy
Yeah.
Andrew Kramer
Can we move to our next question.
Operator
Your next question comes from Adrian Taylor (ph) from Exane. Your line is now open.
Unidentified Analyst
Hi, good morning everybody. Thanks for taking my question. Coming back on the cancellations, can you actually give us some more information about where do you see them, like in which countries and in what product lines? Thank you
Raymond D'Arcy
Yeah, in the first quarter the cancellations pretty much came across all business lines and they came across all countries. I don't think there was any monotony on one any part of the world or any part of the organizations that we do business with that weren't going through a extensive review of their costs. And so I can't point to any one area of our organization or any one area of the world that was doing less or more. They all seemed to be focused on reducing cost which is not surprising.
Unidentified Analyst
Okay. Okay, thank you.
Operator
Your next question comes from the line of Simon Willis from ING. Your line is now open.
Simon Willis - ING
Yeah, Simon Willis, the question has been answered, thanks.
Raymond D'Arcy
Thank you.
Andrew Kramer
And we have time for one more question.
Operator
Your next question comes from Mark Sugarman from Citigroup. Your line is now open.
Mark Sugarman - Citigroup
Yeah. Thank you. Just two questions actually. One is, just trying to understand how the cancellations how they sort of come through and timing and affect the organic growth. Can you just give us a sense of any sort of lag in the contracts which, so how many quarters it would take to come through? And secondly, you haven't changed your organic growth. You've only changed your FX growth and yet your translations are at a higher level than you'd expect it. So I'm just wondering how you square that circle. Is it because the number of, the percentage of new customers is coming on more strongly than you'd expect it? Thanks.
Raymond D'Arcy
Yeah, with regards to cancellations Mark, the customers have an opportunity at the end of their subscription period which is typically a 12-month period to cancel their contracts. And so, the cancellations that we saw in the first quarter were for those contracts that would have renewed in January, February or March.
As soon as a customer cancels we stop billing. And so the timing of when the revenues will drop out of our revenue stream are on the month when the cancellation is effective.
With regards to our overall organic revenue growth, yes you are right. We have not changed our guidance on the organic revenue growth for the full year and a lot of that has to do with the expectations of continued strong selling, not only from the products and services that are in place right now but the articulation I made of all the investments that we're making in, new products that we believe are in high demand in our marketplace. So we have expectations that our new sales will continue to be strong. And we have expectations that the cancellations, although uncertain going into the second quarter and second quarter I think is going to be really important to see if the cancellation starts to slow down.
We do expect that those cancellations will in fact start to mitigate and that the new sales that we are expecting for the year will continue at a good strong level.
Mark Sugarman - Citigroup
Thank you very much for that.
Raymond D'Arcy
Okay Mark.
Operator
There are no further questions at this time. Mr. Kramer, you may continue.
Andrew Kramer
I'd like to thank everybody for their participation today and we look forward to speaking with all of you on our second quarter results call in late July.
Thank you very much everybody for participating.
Operator
This concludes today's conference call. You may now disconnect.
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