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FactSet Research Systems (NYSE:FDS)

Q4 2013 Earnings Call

September 17, 2013 11:00 am ET

Executives

Rachel R. Stern - Senior Vice President, General Counsel and Secretary

Peter G. Walsh - Chief Operating Officer and Executive Vice President

Philip A. Hadley - Chairman and Chief Executive Officer

Michael D. Frankenfield - Executive Vice President and Director of Global Sales

Analysts

Shlomo H. Rosenbaum - Stifel, Nicolaus & Co., Inc., Research Division

Timothy McHugh - William Blair & Company L.L.C., Research Division

Peter J. Heckmann - Avondale Partners, LLC, Research Division

Glenn Greene - Oppenheimer & Co. Inc., Research Division

Peter P. Appert - Piper Jaffray Companies, Research Division

Alex Kramm - UBS Investment Bank, Research Division

Toni Kaplan - Morgan Stanley, Research Division

Keith M. Housum - Northcoast Research

Operator

Welcome, and thank you for standing by. [Operator Instructions] And now we will turn the meeting over to Ms. Rachel Stern, Senior Vice President, Strategic Resources and General Counsel. You may begin.

Rachel R. Stern

Thank you, operator. Good morning, and thanks to all of you for participating today. Welcome to FactSet's Fourth Quarter 2013 Earnings Conference Call. Joining me today are Phil Hadley, Chairman and CEO; Peter Walsh, Chief Operating Officer; and Mike Frankenfield, Director of Global Sales.

This conference call is being transcribed in real time by FactSet's CallStreet service and is being broadcast live via the Internet at factset.com. A replay of this call will also be available on our website.

Our call will contain forward-looking statements reflecting management's expectations based on currently available information. Actual results may differ materially. More information about factors that could affect FactSet's business and financial results can be found in FactSet's filings with the SEC.

Consistent with previous quarters, we have included a table at the end of our press release that reconciles non-GAAP measures to GAAP. Annual Subscription Value, or ASV, is a key metric for FactSet. Please recall that ASV is a snapshot view of client subscription and represents our forward-looking revenues for the next 12 months.

Lastly, FactSet undertakes no obligation to publicly update any forward-looking statements as a result of new information, future events or otherwise.

I'd like to turn the discussion over now to Peter Walsh, Chief Operating Officer.

Peter G. Walsh

Thank you, Rachel, and good morning, everyone. Here's how I plan to spend our time today. First, we'll review quarterly results. Second, I'll touch on our recent acquisition of Revere Data. Third, I'll provide guidance for the upcoming first quarter of fiscal 2014. Fourth, and finally, we'll end with your questions.

Before moving to the quarter, please allow me to cover one housekeeping item. In Q4, a $2.6 million pretax charge was recorded to reflect vesting of performance-based stock options in connection with the StreetAccount acquisition. Amounts that I disclose as adjusted exclude this charge in order to present comparable figures with the prior year. A full reconciliation of GAAP to non-GAAP figures can be found in the table at the end of our earnings release.

Now let's talk about fourth quarter results. We had our best quarter in terms of both client and user additions since 2011, and our organic ASV grew by $25 million, a 6% increase year-over-year. We ended the fiscal year with $888 million in total ASV. ASV from U.S. operations grew to $606 million and ASV from international operations was $282 million or 32% of the total. Buy-side clients accounted for 81.6% of ASV and the remaining 18.4% was derived from our sell-side clients, M&A advisory and equity research businesses.

This quarter, adjusted EPS was $1.20, a rise of 11% compared to the same period last year. We're proud to deliver double-digit EPS growth again, our 13th consecutive quarter.

Q4 free cash flow was $71 million. For the entire fiscal year, we generated $251 million, 20% higher than free cash flow generated last year. Free cash flow over the 12 months was 27% higher than net income, which we believe continues to demonstrate the high quality of our earnings.

This quarter, our free cash flow grew because of higher levels of net income, non-cash expenses and tax benefits from stock option exercises. At August 31, our DSO was 30 days compared to 32 days in the fourth quarter last year.

FactSet's cash and investment balance was $209 million, down $48 million as compared to Q3. During the quarter, we bought back 1.4 million shares for $144 million. Our repurchase program has $62 million remaining and authorized for future share repurchases at August 31, 2013. The number of shares outstanding at the end of the fiscal year was 43.3 million, down from 44 million shares at the end of Q3. If you combine our regularly quarterly dividends paid and shares repurchased over the past 12 months, we have returned $388 million to shareholders.

Now let's turn to the P&L. FactSet's Q4 revenues rose to $219.3 million, an increase of 6% over the same period last year, of which 5.1% is organic growth and the remainder relates to the StreetAccount acquisition. Adjusted operating income rose to $73.2 million, up 4% over the same period last year. Adjusted net income increased 9% to $52.8 million during the quarter. Our adjusted EPS grew 11% this quarter to $1.20. Adjusted operating income, net income, and diluted EPS exclude the previously mentioned stock-based compensation charge related to the StreetAccount acquisition. This charge was $2.6 million pretax and $1.9 million after tax or $0.04 per share.

In the U.S., fourth quarter revenues rose to $150 million, an increase of 6% over the same period last year. Non-U.S. revenues increased to $69 million, up 5% compared to last year. Excluding foreign currency effects, our international segment growth rate was 6% this quarter. Fourth quarter revenues from Europe and the Asia Pacific regions were $53 million and $16 million, respectively, with year-over-year growth rates excluding currency in each region of 4% and 11%, respectively.

This quarter offered a variety of ASV growth drivers. Let's take a look. A keystone of growth for us is new client acquisitions. In this quarter, we delivered our highest number of net new client wins in the past 7 years. We added 60 net new clients compared to 4 last quarter and 57 in the same period a year ago. Our total client count now has reached 2,500. Consistent with prior quarters, our annual client retention rate was greater than 95% of ASV and 92% in terms of the number of clients. Our clients are loyal, and when we lose clients, it's often as a result of M&A activity or business failure that results in firm closure.

Users of FactSet increased by 1,409 in Q4 compared to 61 in Q3 and 1,057 in Q4 last year. The increase this quarter was the highest since 2011, and total users grew to 50,925.

User growth was strong from both buy-side and sell-side clients. We normally see an uptick in user count during the summer, related to the matriculation of new higher classes post-college graduation at our clients. As a reminder, we only count fee-liable seats as users, not trials.

Portfolio Analysis continues to be a strong product for us. Clients have been buying equity PA seats as they've begun to hire again, an encouraging trend that we hope will continue. Clients have also increased purchases of various applications within that suite of products.

Q4 was our best quarter this year for ASV contributions from Portfolio Publishing, from SPAR and from our suite of third-party risk providers whose models and optimizers are fully integrated for analysis of risk in PA.

FactSet's wealth management efforts have also been rewarded this quarter, with sales at new clients and new users. We have managed to displace some competitors in our deployment of our workstations at wealth management clients, which is still a relatively new area for us.

Our international sales this quarter were solid, with positive momentum of adding new FIPA clients and strong sales in nearly all our Europe, Middle East and Asia Pacific locations. Our global content sales team, which focuses on sales of data outside the traditional FactSet platform, continues to grow and contribute to our ASV.

Now let's take a look at the expense side. Operating expenses were $149 million and our adjusted operating margin this quarter was 33.4%. In the fourth quarter, our cost of services as a percentage of revenues increased 180 basis points compared to the same period last year. This increase resulted from higher compensation from employee growth and higher stock-based compensation from vesting of performance-based options, partially offset by a decrease in amortization of intangible assets and third-party data costs.

SG&A expenses as a percentage of revenues increased by 10 basis points compared to the same period last year. Higher employee compensation and stock option expense was partially offset by lower professional fees and bad debt expense.

At the end of fiscal 2013, our headcount was 6,258, an increase of 358 employees this quarter. The bulk of our new employees joined us in our Hyderabad and Manila locations, while recent college grads increased both our global consulting and engineering teams.

This quarter, the effective tax rate was 28.1%, down from 31.7% a year ago. The decrease was primarily driven by the Federal R&D tax credit, which was not included in the year-ago quarter.

In September, FactSet acquired the assets of Revere Data for $15 million. The Revere business comprises industry taxonomy and supply chain relationship data. We're excited about this latest acquisition, which is consistent with our strategy of buying businesses with data in areas adjacent to our core business that can be easily integrated into FactSet to service our client base.

Acquired ASV was $4.9 million and this amount is not included in our reported totals today. We expect that upcoming Q1 operating margins will be negatively impacted by 30 basis points and earnings will decline by $0.01 per share. We anticipate that fully diluted EPS for fiscal '14 will decline by $0.02 per share as a result of this acquisition. Revere has 50 employees in New York, Youngstown, Ohio and San Francisco.

Now let's turn to our guidance for the first quarter of fiscal 2014. Revenues are expected to range between $222 million and $225 million. Operating margins are expected to range between 33% and 34%, which include a 30 basis-points reduction from Revere. GAAP diluted EPS should range between $1.21 and $1.24. The midpoint of the range represents 10% growth over last year's first quarter earnings. This GAAP diluted EPS assumes that the Federal R&D tax credit will be reenacted during Q1. If the credit is not reenacted, then we expect Q1 GAAP diluted EPS will be reduced by $0.03 per share.

The annual effective tax rate should range between 28.5% and 29.5%, consistent with last quarter's guidance. This range also assumes that the Federal R&D tax credit is reenacted.

As we look back over the past year, we are proud of our accomplishments. This year, all our key indicators went up: ASV, revenues, clients, users, free cash flow and employees. During this past fiscal year, we again delivered double-digit EPS growth, organic ASV increased 6% to $888 million and free cash flows grew 20% over the past year to $251 million.

As the new fiscal year begins, the calendar year is winding down for our clients. We hope that the gains in the market that they have seen so far continue to contribute to their optimism and associate hiring and purchases. But regardless of our client fortunes, we control our destiny because of a sizable forward-market opportunity.

Looking ahead, our focus is to continue our strong execution, translating that opportunity into double-digit earnings growth.

Thank you. We're now ready for your questions.

Question-and-Answer Session

Operator

[Operator Instructions] Your first question comes from Shlomo Rosenbaum, Stifel.

Shlomo H. Rosenbaum - Stifel, Nicolaus & Co., Inc., Research Division

Can you just, Peter, provide some color on the strong net adds, client adds and user adds, and just kind of contrast that with the ASV growth, which was strong sequentially but from a seasonal aspect was kind of the lowest year-over-year ASV that was -- or your lowest amount that was added in the last 3 years. I'm trying to get to the nature of the new ASV and the new users. Are these people that are actually potentially buying pieces of the FactSet Workstation, or are they buying maybe StreetAccount standalone in certain firms that are really just Bloomberg firms that may never sign up with the FactSet Workstation?

Philip A. Hadley

Shlomo, it's Phil. I'll take that question. I guess, when I look at our -- the public information that we provide for you, as an analyst, it's important for you to look at -- certainly, I've always emphasized gaining share in total ASV, gaining share in seats and clients is always important. And I think we had a very strong quarter when it came to gaining share in the marketplace. I think, when I was looking at the data in what we think of our traditional FactSet business, we gained share and had a higher win rate than we had in prior quarters. Just to clarify, one of the points you made, last year's quarter included $11.5 million, or somewhere about that, in acquisition ASV. So on a year-over-year basis, this was a much better quarter than last year. And then I would also go on to throw with that, that it's important to say that the mix was -- this year was more in our traditional business, the way you think of terminals in the buy and sell-side.

Shlomo H. Rosenbaum - Stifel, Nicolaus & Co., Inc., Research Division

So you'd see more in the traditional terminals than people who might be starting off in a low dollar value that might be coming up later as a strong potential cross-sell?

Philip A. Hadley

We wouldn't count anybody in the web products. So anybody subscribing to the StreetAccount isn't in our seat count. Count in total ASV, but not in -- as far as seat gains. So these are core workstations. The clients are -- and relationships, we have greater than 24,000, and then ASV is the total number.

Shlomo H. Rosenbaum - Stifel, Nicolaus & Co., Inc., Research Division

So in terms of like ASV growth, it was up about 6%. Is -- given the strong net seat count, is it -- why are we not seeing a higher ASV growth? Is it because they're coming in at lower price points initially?

Philip A. Hadley

Well, if you think about the pricing for our product, the revenue streams come in lots of different flavors. There's -- the first seats are more expensive than the marginal seats. Whether the seat's on the buy-side or whether it's on the sell-side dictates whether -- the product mix they might subscribe to. Traditionally, our sell-side business isn't anywhere near the revenue per seat that our buy-side, primarily because the analytics products are almost 100% purchased on the buy-side.

Michael D. Frankenfield

Another way to think about it, Shlomo, this is Mike, is that new users and new clients, when they come on, come on at a rate much lower than the average ASV per user and the average ASV per client.

Shlomo H. Rosenbaum - Stifel, Nicolaus & Co., Inc., Research Division

That's the question I was getting to. Is it a bunch of new users that basically are coming in at lower price points than what you traditionally see and eventually, you have a pretty good history of upselling?

Michael D. Frankenfield

If you're referring to the metric of average revenue per client, average revenue per seat, I don't track that. So I wouldn't know. But it's always a good thing when that actually goes down because it means we've got new client growth and new seat growth, which would always bring down that average.

Shlomo H. Rosenbaum - Stifel, Nicolaus & Co., Inc., Research Division

Okay. Then just in general, the gross margin is -- had stepped down. Is this primarily the investment in people, that you talked about this as a significant hiring quarter?

Peter G. Walsh

Shlomo, it's Peter. In terms of gross margin, the 2 significant factors this quarter would be the stock-based compensation expense for the performance options related to StreetAccount. And I think it's also factual that most of our -- a large percentage of our employee hiring is in the cost of services line. And that extends to employees who are in our content operations, software engineering and new consultants from college.

Shlomo H. Rosenbaum - Stifel, Nicolaus & Co., Inc., Research Division

And just from a macro perspective, are you seeing signs of new fund formation, hiring amongst your clients. What are you seeing on the ground?

Michael D. Frankenfield

It's still fairly muted. I would characterize the hiring that happened on the sell-side this quarter as certainly higher than our expectations, but certainly not anything exciting versus prior years. So it's -- I would characterize that as a small positive. We're seeing signs of headcount hiring in -- on the buy-side business, but again, very, very muted.

Shlomo H. Rosenbaum - Stifel, Nicolaus & Co., Inc., Research Division

And then just, when I make this calculation of buy-side growth versus ASV growth versus sell-side, I come out of buy-side growth at about 6%. And based on what you can calculate from your public numbers have been tracking between 9% and 11%. How should I think about that in terms of the ASV growth and the buy-side coming in lower than what, based on this calculation, looks like in the last 4 quarters?

Peter G. Walsh

Shlomo, let me first start just by talking about methodology, and then I'll let Mike or Phil comment. With the dichotomy of the healthiness of the buy and sell-side over the year, we certainly recognize that that split has taken on a higher level of importance. And we did 2 things this quarter. One is we refined the calculation of the split to define IB as IB only and IM as our global IM business, plus our off-platform content sales plus Market Metrics. The second thing we did is we extended the decimal place out a digit, and we disclosed the quarterly history to allow for precise calculations for both ASV contribution and growth rates from each segment. So I think what you're using today is our most accurate view of that split.

Shlomo H. Rosenbaum - Stifel, Nicolaus & Co., Inc., Research Division

Okay. So basically go back, look at the calculation and come back to you if I see any problems from there?

Philip A. Hadley

Yes. And I think that the important point, the same point I made last quarter, Shlomo, is that the way we're talking about the IM business includes Market Metrics and our off-platform business, and the comment I made earlier to answer your question, what you think of the traditional core business of FactSet, the Workstation to our core end users, did well this quarter.

Operator

Your next question comes from Tim McHugh, William Blair & Company.

Timothy McHugh - William Blair & Company L.L.C., Research Division

Yes. I guess, just a follow-up on that last question. I think you gave us, including this quarter and then 4 prior quarters, so we can do the year-over-year growth rate, but I guess the 6.4% growth, I'm just curious how that -- how you define that buy-side portion now, how that compares? Is that faster or slower than we've seen over the last 2 or 3 quarters? Obviously, I know acquisitions bounce it around, but I guess just kind of in the underlying or organic basis, how would that compare?

Philip A. Hadley

So I guess I would characterize it, given the comments I've made, that the core business, sell-side, buy-side, accelerated this quarter.

Timothy McHugh - William Blair & Company L.L.C., Research Division

Okay. Fair enough, I guess. And then the, I guess, just Revere Data, I guess the implication with the drag on margins being 30 basis points this quarter that it's relatively breakeven if I back into that. Is that just the small size of the business? Is there something you can do to bring that back up over time?

Peter G. Walsh

Well, I think we honestly indicated that what the impact we expected on EPS to be in Q1 and also for the year. The Q1 EPS impact being $0.01 and $0.02 for the year I think indicates to us that we think that we can improve its profitability during -- over the next 4 quarters. Because it's not $0.04 for the year.

Timothy McHugh - William Blair & Company L.L.C., Research Division

Okay. Right, fair enough. All right. And then lastly, I know it's hard to predict, but the tax rate now 29%, is that more of a -- your view of the long term, assuming the R&D credit continues to get renewed each year? Is that a fair tax rate to be using now going forward?

Peter G. Walsh

The -- in terms of the long term, if you believe the R&D tax credit will be reenacted, the midpoint of our guidance is the best rate to use in terms of a long-term tax rate. I will comment that the R&D tax credit has been in existence since 1981. And there's only been one year since that time that the credit was not reinstated, either on time or retroactively. The cadence of the renewals does play havoc with our consistency of EPS, often moving a recurring benefit into the one-time category. But if history repeats itself, since 1981, I think our ETR, our effective tax rate in the just-completed quarter is reflective of our ongoing long-term rate.

Operator

Your next question comes from Pete Heckmann, Avondale.

Peter J. Heckmann - Avondale Partners, LLC, Research Division

Could you talk a little bit more about the international business and where you might be seeing some relative strength and weakness? And then along those same lines, can you talk about the investments you've made in StreetAccount, to add some international content, international users?

Michael D. Frankenfield

Pete, it's Mike. The international story remains fairly consistent. This year, we saw the slowdown in Continental Europe, although individual countries within Continental Europe certainly performed well, but if I was to characterize that entire region as one region, I would say, you saw the slowdown there. The U.K. market tends to very much mirror the United States. And I would say the fastest-growing part of our international operations is our Southeast Asia, Middle Eastern operations, which are small in aggregate ASV, but growing at a higher percentage.

Peter J. Heckmann - Avondale Partners, LLC, Research Division

Okay, and then success on StreetAccount, developing the user base over there?

Michael D. Frankenfield

We're in early stages of developing StreetAccount outside of the United States. It's exciting. I would say that the product development is ahead of where we are on the sales side. So the sales force is doing its best job to begin to establish some brand recognition internationally, to get the product out to users and gather the feedback so we can really measure how well we're doing. And we think we're doing quite well.

Peter J. Heckmann - Avondale Partners, LLC, Research Division

Okay. And then there were some more pronounced moves in FX. Would you characterize FX net of your hedges generally as a benefit on the cost line this quarter?

Peter G. Walsh

Pete, it's Peter. I think FX overall had a slight benefit on the cost line. Looking ahead, the pronounced changes for us is really in the dollar-rupee ratio. We did extend our hedge on the rupee, taking it out 2.5 years, looking ahead at 75% of our exposure. So we do that when we see an opportunity to lock in a forward savings. And we saw that opportunity present itself this quarter.

Peter J. Heckmann - Avondale Partners, LLC, Research Division

Got it, got it. Okay. And then can you talk a little bit about instant messaging? Have you seen any uptake there, any pushback? And if where are you -- if you are seeing a little bit of success, where that might be?

Philip A. Hadley

Pete, it's Phil. It's a young product on the system. We've got a nice group of core clients who are deep into the product and giving us lots of feedback as to where we should be headed in the marketplace. But it's not a material product for us at this point.

Operator

Your next question comes from Glenn Greene, Oppenheimer.

Glenn Greene - Oppenheimer & Co. Inc., Research Division

First question, just a clarification for Peter, just kind of few client questions on this. But the $2.6 million pretax stock compensation charge, I just wanted to be clear from your comment, it sounded like it was all sort of booked in cost of services?

Peter G. Walsh

Yes, that's accurate, Glenn.

Glenn Greene - Oppenheimer & Co. Inc., Research Division

Okay. Great. The tone that you guys had on PA actually sounded incrementally better, is that kind of a -- the correct read I have? And maybe you can give us some granularity on the contribution to the ASV growth, is PA growth growing commensurate with the ASV growth?

Michael D. Frankenfield

It's Mike. PA continues to be a, really a cornerstone product for us. As Peter described in his introductory comments, we think of PA as a suite of products. Whether it's equity PA, fixed income of PAs, SPAR, Publishing, the risk modules, all of these things are components that clients can pick and choose from to build as complete a solution as their workflow dictates. We saw a really, really good uptake in the risk side of things, in the Publisher side of things. So overall, that segment is continuing to do well. Clients are definitely interested only in the best solution. There are a lot of PA knock-offs in the marketplace. And I think what really what differentiates us is the breadth and completeness of our solution, which is definitely in demand by clients.

Glenn Greene - Oppenheimer & Co. Inc., Research Division

Okay. And then you also sort of made some proactive comments on the wealth management side, which I guess I haven't heard for a couple of quarters, but I know it's an increased focus. And maybe is there any way to give us a little bit color, kind of what you're seeing and the kind of traction you have there? And is it kind of meeting your expectations for the kind of ramp-up you're seeing in that vertical?

Philip A. Hadley

The wealth space is definitely meeting our expectations. We -- when we think about wealth -- the segment of the marketplace we're really targeting is the high net worth managers, the wealth users who are, from a workflow perspective, operating very much like a traditional institutional asset manager and have a need for a lot more than just a simple news and quotes market screen. They need lots of the analytic effects it can provide, et cetera. We had several big wins in the quarter, and we continue to identify those opportunities in the marketplace and chip away at them.

Glenn Greene - Oppenheimer & Co. Inc., Research Division

All right. A question on pricing, and it kind of goes to some of the stuff we've been hearing out in the market. And don't take this the wrong way, but it sounds like, and maybe my information is wrong or whatnot, and you can tell me, but it sounds like you've been discounting perhaps more aggressively to try to take some market share from your competitors. So I'm not really talking about the core customer base, but trying to win share, which to me actually isn't a bad strategy. But could you sort of comment on how aggressive you might be from a pricing perspective to try to win share?

Michael D. Frankenfield

We are always -- we recognize that when a client first buys FactSet, it's a complex system that it takes time to integrate FactSet into the workflow, it takes time to replace existing workflows. And we're always interested in working with clients to offer them concessions, to help them bridge that gap between introducing FactSet and getting full value from the service. One slight change to our practices has been to use that same tactic to help clients bridge contractual obligations they may have with other competitors. So there has been, for us, a slight uptick in initial discounting. But in every case, our plan is and what we communicate with our clients, our new clients, is that as they approach a point where they're getting full value for the product, the discounts phase out and we're back to standardized pricing.

Operator

Your next question comes from Peter Appert, Piper Jaffray.

Peter P. Appert - Piper Jaffray Companies, Research Division

So just a follow-on to that last question, how about from a competitive standpoint, just your assessment of how the pricing environment has changed more broadly amongst your competitive universe?

Philip A. Hadley

Peter, it's Phil. I have to admit, I want to tease you about your note, that we didn't have an exciting guidance in the first quarter. Since when has our first quarter ever been exciting?

Peter P. Appert - Piper Jaffray Companies, Research Division

We're always looking for excitement, Phil.

Philip A. Hadley

You're always looking for excitement? It's -- just to remind everybody, our first and third quarter are kind of odd quarters for our clients to make decisions, and most of our revenue happens in the second and fourth. So it's never the quarter with a huge surprise in it. I think I'd go back, Peter, to the comments I made, and that I was actually very pleased with how we did in just the good old traditional seats and clients, and our win rate against the major players in the space. I don't think an opportunity goes by anymore that you run into a potential client or a client who's looking to expand their services, where they're not investigating Bloomberg, TR or S&P. So for us to gain, that means somebody else had to lose in those opportunities. And I think that's a real positive sign for the strength of our product in the marketplace.

Peter P. Appert - Piper Jaffray Companies, Research Division

Okay. And so with regard to your comment you sort of reasserted there just now, in terms of the forward business being healthy, I think you said accelerating previously, I just want to make sure I understand the messaging behind that. Because if I look at the sequential growth in ASV or the sequential growth in revenues, it slows down a little bit. Is the implication then that maybe the underlying seat count growth is healthy from your perspective, but some of the incremental sales and things like data feeds, et cetera, are a little bit weaker?

Michael D. Frankenfield

So I think there's 2 parts to answer that question. One is just the $25 million this year versus the organic $20 million last year, and using round numbers. It's certainly a better outcome in just total dollars. But as I pointed out that the mix of the $25 million is more in what you think of as our traditional business, which is the bulk of the business, and certainly the part where the greatest big, long-run opportunity is, and by far, the most important when you're thinking about our competitive positioning and whether we're gaining in share or losing share in that particular piece.

Philip A. Hadley

The other parts of our business are lumpier in their nature. The data piece business is one that can be very lumpy, meaning if we can get a big redistribution deal or not. And then our Market Metrics business has had cycles to it as the new products come out. It's hot for a quarter and then not for 2 quarters or 3. And just so -- just putting more focus on what happened in the color this quarter.

Peter P. Appert - Piper Jaffray Companies, Research Division

Okay, fair enough. And then looking at -- I don't know if incremental margin is a metric you're internally focused on. But the incremental margin did deteriorate a little bit as the year progressed, and I understand there can be some seasonality there. But anything else we should be focused on in terms of thinking about that? And I guess I'm asking this in the context of trying to understand if maybe some of the pricing issues you've talked about have put a little bit of incremental pressure on the margin.

Philip A. Hadley

When I look at what we're doing for the shareholders and go down to the core EPS growth for the year being 11-plus percent, I feel very good about what we're returning to the shareholders. And you've heard me say it many times, I don't -- not that I don't pay attention to the things about that, but I look at that as the drivers of shareholder value. And we'll continue to focus on that.

Peter P. Appert - Piper Jaffray Companies, Research Division

So on that then, Phil, you've talked in the past about an objective of doubling the business, and I think that's from an EPS perspective over a 5-year timeframe. Is that still the objective? Have you rethought that long-term growth objective in the context of how the industry has evolved?

Philip A. Hadley

I'm 100% certain that I've never given a timeframe when I talked about doubling the business, but nice try.

Peter P. Appert - Piper Jaffray Companies, Research Division

Gee, I just have this vivid memory of 5 years.

Philip A. Hadley

No. It's not -- well, then your memory after 18 years of this, Peter is getting fuzzier or mine is, one of the 2 of us. But no, I really feel very strongly that we've got such a great opportunity in the marketplace. And if you -- though we may not be exciting as you pointed out, we march forward every year and continue to attack the marketplace. And I'm very proud of what our employees accomplished in the last year.

Operator

Your next question comes from Alex Kramm, UBS.

Alex Kramm - UBS Investment Bank, Research Division

A couple of things left here. First of all, I think as you probably know and I think you pointed out yourself at some point, asset flows or equity flows have -- had a very solid year so far. So I want to try to maybe bridge the gap a little bit because I think some folks are a little disappointed that's not translating really in more ASV or anything like that yet. And the one thing I think some people have pointed out is that a lot of the flows are still going in internationally or into the funds, even U.S. So -- and some would argue that maybe that's not really an area of strength for you or maybe it's not really where you would be benefiting. So maybe, is that something that you're looking at all? Or how would you answer the whole, like international versus U.S. fund flows?

Philip A. Hadley

We certainly benefit when our client's revenues go up. But I do believe there's a lag between asset flows and then hiring more analysts or portfolio managers to manage those asset flows. And as many cycles as we've been through, it's very obvious to me that they're far more cautious coming out of this cycle, about putting on headcounts than they have historically. With that said, Mike did make a comment that there were signs of new class hiring in our larger clients, which bodes well for the future. And then certainly the sell-side surprises as well with net headcount hiring this summer. So both of those are positive, not huge relative to history, but certainly not negative.

Alex Kramm - UBS Investment Bank, Research Division

Okay. And then just a follow-up because maybe I didn't ask the question well enough, so I apologize. But if flows go into international versus domestic funds, do you think it makes a difference to you, given your kind of like core strength or your sort of the -- should they not really be...

Philip A. Hadley

I think we would benefit both ways.

Alex Kramm - UBS Investment Bank, Research Division

All right. Fair enough. Just to touch on the acquisition a little bit here, and this might be detail. But Phil, I think Revere owns a little index business. So I'm not sure how much you've looked at that already, but do you think there's opportunities for -- leverage that in other things you're doing and maybe grow that business? Or is it just something that came with it and let's see what we can do here?

Philip A. Hadley

It's something that came with it. Clearly, we were focused on the industry classification and the supplier relationships, and our ability to integrate that in our product. And the business they have there is very, very, very small.

Alex Kramm - UBS Investment Bank, Research Division

Okay. And then, sorry, it's just that at this stage of the call, I only have a couple of detail questions. This might be too detailed and we might have to follow up on a follow-up call. But when I think about market data, one thing that I think recently -- well, exchange data in particular, it sounds like pricing from the exchanges for life data is going out -- went up in September. And I think there's another increase next year for NASDAQ data, again very detailed. But is that something that actually flows through your, or could flow through your P&L in terms of reselling fees and cost of goods sold? Or is this completely separate from your earnings because obviously, it could -- if there's an increase in pricing, it could increase ASV?

Philip A. Hadley

It is a great question, Alex. I do think there are some in the industry that do it that way. For us, it doesn't come through with a pass-through and we don't count it as revenue or expense.

Alex Kramm - UBS Investment Bank, Research Division

Okay. And then 2 last ones. Buyback, I don't think anybody has asked or maybe I missed it. But obviously, your authorization is kind of expiring once it's getting smaller considering how much you just bought back last quarter. Can you remind us in terms of appetite of buybacks, when maybe the board could look at a new authorization and announce that actually?

Peter G. Walsh

Alex, it's Peter. Quarterly amounts allocated to buybacks over the last 3 years has had a broad range. It's ranged from $15 million to $144 million and has averaged $58 million over that period. It's very -- operationally, it's very easy for us to assemble our board and ask for an increase in authorization if -- when we need to.

Alex Kramm - UBS Investment Bank, Research Division

Okay. And then last one for me. You talked a lot about the Portfolio Analytics business, obviously, a core strength of yours. I think historically, you used to give some sort of metric in terms of how many users, I think, in 2010 for the last time. Can you give us an update of how many of your users are using PA? Or anything that helps us there because, obviously, it's a big focus.

Philip A. Hadley

The primary reason we stop giving those metrics is because the PA suite is a suite of 10 products and it wasn't really giving the ASV a contribution direction that was helpful to the analyst community. And at this point, I think the best thing from our perspective, both a competitive and just ability to provide you with information that's useful, is just to give color on each call.

Alex Kramm - UBS Investment Bank, Research Division

Okay. So -- and in terms of like percentage of ASV or anything like that, in rough numbers...

Peter G. Walsh

That number has never been disclosed.

Operator

Your next question comes from Toni Kaplan, Morgan Stanley.

Toni Kaplan - Morgan Stanley, Research Division

I was wondering, has Thomson's Eikon product thus far made it any harder to convert legacy Thomson clients to FactSet users? And also as Thompson introduces investment management for Eikon, is there anything that you're planning on doing differently as that's introduced?

Michael D. Frankenfield

It's Mike. We continue to monitor the progress of Eikon. We've certainly seen it and we know what it's all about. The majority of Eikon that's out there in our clients, in our core clients, at least for the users that we touch in our clients,it's low. It appears that there's very little overlap. We know that Thomson's working hard to convert their legacy users and their legacy platforms to that new platform. But so far, it's not been a significant factor for us in the marketplace. We're going to continue to execute as we always have. We're going to continue to make the Portfolio Analytics suite as good as it can be. We're going to continue to build out fixed income. We're going to improve our research notes capability and our market displays. So our best strategy against any new emerging product is just to continue to execute on what we do very well ourselves.

Toni Kaplan - Morgan Stanley, Research Division

Okay. And just one last thing, and I'm sure we'll see it in the Q, but for now, are there any performance-based options that were granted in the Revere acquisition? And any detail on that would be great.

Peter G. Walsh

We did grant performance-based options in connection to the Revere acquisition to 2 key employees. But I wouldn't characterize the amount as material.

Operator

Your next question comes from Keith Housum, Northcoast Research.

Keith M. Housum - Northcoast Research

As we look at your new growth in clients as well as in the users, can you provide a little bit more color in terms of your thoughts, in terms of what percentage of that growth was from, especially with the users, from like new hires at your existing customers versus competitive wins and obtaining new clients?

Philip A. Hadley

I'm sure we have that number. It's difficult to tell because in a big client, there's employees coming and going all the time, and who's a new hire and who's a replacement hire is -- it would be very difficult for us to come up with that number. It's really instinctual on our part that kind of tells us that a net-net, XYZ client actually grew and it felt like it was a share gain versus a new hire gain. But it was definitely a positive contributor this quarter. But as Mike kind of pointed out, I don't think it was a huge portion. I think most of what we've gained was really share.

Keith M. Housum - Northcoast Research

Okay. And as we look at your -- the sell-side and, obviously, there's been a lot of bleeding that's happened over the past few quarters in the sell-side. And I understand that some hiring always occurs in the fourth quarter. Is there a sense that that bleeding has come to end, at least for the time being? And at least we've had some stability in the market in the sell-side?

Philip A. Hadley

Mike and I chuckle every year when we try and set up what we think is going to happen on the sell-side because it is really just a guess. And it's even a guess at a quarter-to-quarter basis. I would say go -- it's very easy to view that as a negative on our business. It's actually a great business for us and we do very well over the long period of time. It just has more cyclicality to it than the buy-side has had. And we've done very well in the last year. We've gained share in many of the segments of that market. So that team executed very well and finished the year strong. So I'm very proud of what we've accomplished.

Operator

Your next question comes from Shlomo Rosenbaum, Stifel.

Shlomo H. Rosenbaum - Stifel, Nicolaus & Co., Inc., Research Division

I want to just ask for an update on the fixed income side of things. You had characterized it more recently as becoming a more material part of your sales. Is there any update as the -- are the sales there accelerating, kind of steady as she goes? Any way you can help characterize that?

Michael D. Frankenfield

Shlomo, the fixed income is another important component of the Portfolio Analytics suite. As I said in previous quarters, it gives us an opportunity to address new users within our existing firms. It gives us an opportunity to go to firms that previously were never candidates for FactSet because we just didn't have the asset coverage that they required. Overall business, I'm very, very optimistic about that segment of our business.

Shlomo H. Rosenbaum - Stifel, Nicolaus & Co., Inc., Research Division

And -- I mean, in terms of like the new users you're getting, I mean, is there an outsized portion that are now coming from these fixed income-type users that you weren't able to address as well years ago?

Michael D. Frankenfield

That's probably not the case. The user distribution is fairly evenly distributed amongst all the segments. Typically, when a -- when we're recognizing incremental fixed income ASV, it's providing a workflow solution that may involve just a few users or it might involve several users. So we're focused on the total ASV -- the total workflow solution and the total ASV as opposed to the individual users.

Philip A. Hadley

I just want to close by putting a couple of thoughts in people's heads. I was kind of jotting down notes before this call. And it's -- one of the great things about this business is the breadth of which it comes in, which I apologize, but it's difficult from an analyst's perspective to tease out all the different pieces. But it's really the magic of this business, in that it's not tied to 1 client, it's not tied to 1 user class, it's not tied to 1 geography. It's really a very diverse business, which is one of the strengths of what we provide. I kind of jotted down really quickly. We sell our products through a Workstation, which everybody is very familiar with. But a huge portion of our client base consumes our products through Microsoft Office. Some consume it through feeds where the product work flows through mobile, through web, through e-mail and even some other choices, make it our revenue streams and value we can deliver to clients just continues to expand and be exciting. Who we sell to? We sell certainly to investment managers, investment banks, equity research. Sales and trading is certainly an exciting area for us. Shlomo asked about fixed income at the end and that's certainly an exciting area for us. But in addition to that, we're in the corporate space, via some redistribution. We sell to law firms, schools. We even redistribute some content and things through competitors, which may be surprising to many. But it's a great business that we're in and we're certainly excited about our future. But I just want everybody to be comfortable with the fact that we're not trying to be cagey in how we answer the questions. It's just one level, very simple, a subscription business. At another level, how we derive our revenue and the value we create for our clients is all over the place, and it's one of the magical things about the reason our business is able to march forward every year. So I want end by saying I was very proud of how we accomplished last year. I'm very comfortable that we gained share, and if you're looking at other players in our space, they didn't do as well as we did, and I'm certainly excited about our future.

So thank you very much today and have a great day.

Operator

This does conclude today's conference. Thank you for attending. You may disconnect at this time.

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