Ladies and gentlemen, thank you for standing by and welcome to the FactSet Q1 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session [Operator Instructions]. I would now like to hand the conference over to your speaker today Rima Hyder. Go ahead Ma'am.

Thank you, Marcella, and good morning everyone. Welcome to FactSet’s first fiscal quarter 2020 earnings call. We're joined here today from our brand new global headquarters in Norwalk, Connecticut. Before we begin, I would like to point out that the slides we will reference during the course of this presentation can be accessed via the webcast on the Investor Relations section of our Web site at factset.com. The slides will be posted on our Web site at the conclusion of this call. A replay of today’s call will be available via phone and on our Web site. After our prepared remarks, we will open the call to questions from investors. To be fair to everyone, please limit yourself to one plus one follow-up. Before we discuss our results, I encourage all listeners to review the legal notice on Slide 2, which explains the risks of forward-looking statements and the use of non-GAAP financial measures. Additionally, please refer to our forms 10-K and 10-Q for a discussion of risk factors that could cause actual results to differ materially from these forward-looking statements. Our slide presentation and discussions on this call will include certain non-GAAP financial measures. For such measures, reconciliation to the most directly comparable GAAP measures are in the appendix to the presentation and in our earnings release issued earlier today. Joining me today are Phil Snow, Chief Executive Officer and Helen Shan, Chief Financial Officer. And now I'd like to turn the discussion over to Phil Snow.

Thanks, Rima, and good morning everyone. We begin our fiscal '20 with growth across most of our businesses. And I want to remind everyone that our first quarter is typically the smallest of the year, and it's important to look at half and full year performance is more appropriate measures of progress. I'm pleased that we have a healthy pipeline for the first half of our fiscal year, especially against the backdrop of sustained industry pressures. On our last earnings call, we outlined a three year plan to accelerate the breadth and depth of our investments in targeted areas within content and technology with the goal of driving higher top line growth over the long-term. Our team has hit the ground running, delivering encouraging early progress in Q1. Within content, our deep sector and private markets sectors are proceeding at pace, and we've hired more sector experts following the launch of our successful banking regulatory data. We're making good progress integrating third-party private markets data into access and are expanding our valued street account coverage into new markets. We believe this expansion of coverage will resonate across all of our business lines, particularly research and Wealth. Our continued efforts to grow our tech stack are also yielding early results. We've tripled the number of APIs available since the start of the fiscal year, and are on track to release more in the second quarter. Our migration to the public cloud is well underway and we've identified opportunities to reduce our fixed data center costs in the long run. From a product perspective, we are building momentum in Analytics with multi-asset class risk, fixed income and Vault, our new performance measurement product, each showing particular strengths. We're also very pleased with our Wealth pipeline and the positive response from clients. Finally,…

Thank you, Phil, and good morning. It is great to be here with all of you. We began our fiscal 2020 with a solid operating performance, 10% earnings growth and operating margin that continues to reflect the productivity and efficiency improvements made throughout 2019. While we are at the beginning of our three-year investment plan, we are on pace as we start to ramp up hiring and spend. I'll now walk us through the specifics of the quarter's results. GAAP and organic revenue increased by 4% to $367 million and $368 million respectively. Growth was driven primarily Wealth, CTS and Analytics. For our geographic segments over the last 12 months, Americas' revenue grew 4% and international revenue grew 5% organically. Americas benefited from increases in Wealth, Analytics and CTS. International revenue was largely driven by Analytics and CTS. GAAP operating expenses for the first quarter totaled $253 million, a 1% growth over the previous year. With revenues growing faster than expenses, our GAAP margin increased 230 basis points to 31%. Adjusted operating margin increased to 34%, a 240 basis point improvement versus last year. As a percentage of revenue, the expense improvement came largely from our cost of services, which was 240 basis points lower than last year on a GAAP basis. On an adjusted basis, the improvement was 210 basis points. Contributing factors include decreases in employee compensation, reflecting the continued mix shifts from high to low cost locations, as well as lower contractor fee. This benefit was partially offset by an increase in computer related expenses as we continue to upgrade our technology stack. SG&A expenses, expressed as a percentage of revenue, grew 10 basis points over the prior year period on a GAAP basis. On an adjusted basis, we saw improvement of 30 basis points. This result…

[Operator Instructions] Your first question comes from the line of Peter Heckmann from D.A. Davison & Co.

So I was just trying to make sure if I m understanding correctly, I mean significant upside, maybe spending didn't ramped as quickly as expected. But because this -- your guidance does imply that we should see negative adjusted earnings per growth in the back half of '20. And how you then think about, I mean, we had 2022. But how do you think about that transitioning that into the first couple of quarters in '21?

It's Helen. So, no, I don't -- but we were essentially going to be doing, because we believe we will still end up with the same amount of spend for the year is that as it ramps up, we'll still be within that range. And then at that run rate we'll continue to see that through the first two quarters of '21. Let me just give a little bit more color. Most of the expense for this year are much more people related, so it takes time to ramp up. I would say if you look over the phasing of the year, it's roughly, just call it 30%, will be in the first half and the balance in the second half. And so that's -- and then the technology spend is more in the latter half of the three-year investment plan. So it'll be a little bit slow out of the gate and it takes time to hire, but we don't expect that to be an issue as we think about the guidance we've given for the year.

And then just while I have you, you haven't talked too much about Portware and the Company's efforts in trading. Can you just give us a quick update there?

Yes. Hey, Peter, it's Phil Snow. So, yes, we're seeing very positive momentum in the trading space over the last few quarters, and a lot of that is attributed to, I think, the integration now the EMS capabilities within co-FactSet. And we're also seeing good momentum with our OMS offering as well. So just to remind everyone, we have execution capabilities, we have order management capabilities and we've integrated those now into a portfolio management platform, which is also beginning to gain some traction. So these are big numbers right now but the trend is positive, and that we're very excited about that part of our Analytics suite.

Your next question comes from the line of Manav Patnaik from Barclays.

My first question is just you know these cancellations that you called out this quarter. Were they contemplated in your full year guidance? And I was just hoping if you could just help, maybe give us a little bit more color on how much of the guidance is assuming that you win a bunch of contracts over the course of the year?

Hey Manav, it's Phil. So I think that cancellations that we called out in Q1 was a little bit more of an expected cancellations within the sell-side across banking as well as research. And very often that's difficult to predict given the numbers are pretty large, and you're never sure sort of coming out of a hiring and into Q1 of what that's going to look like. And I think when we look at Q1 it's typically a smaller quarter for us, as I said in my script. We do go back 2 million or 3 million this quarter, but if you go back even a couple of years into fiscal 2018 that was a fairly small quarter for us as well. So when we look out for the rest of the half, it's significantly weighted, that's a Q2. And when we look at the pipeline versus the pipeline last year, we feel very good about our opportunities as we head into the second quarter.

And then maybe just your comments on growth in Wealth, what were the drivers there? Was it just the ramp of the BAML contract? Or was it a lot of single wins here and there? Just curious if you could give a little bit more color there.

Yes. So, no, I mean, we're doing very well at BAML. I think that was obviously a great deal for us and was a significant contributor to Q1 of last year. So I think you could have expected some deceleration in this quarter just given that was a tougher comp. But we've had some very nice wins in Wealth at larger firms within the Americas, and we also are doing very well in the middle markets part of Wealth and the pipeline is very healthy. So there are some larger deals out there for us, which are little bit more binary. But just going back to the previous question, we're not relying on any, like massive deals to come within the guidance range that we gave at the end of the year.

Your next question comes from the line of Hamza Mazari from Jefferies. Your line is open.

This is actually Mario Cortellacci for Hamza. Just kind of wanted to piggyback off the Wealth question, and you mentioned that there's some binary wins. And it sounds you're doing well in the middle markets channel. But just wondering if, say there is larger deal and more consolidation among the wirehouses, just didn't know how you guys are positioned and obviously when things as is are like you said binary. But how are you positioned and how do you think you'll fare if there is some consolidation among the much bigger players?

I think we felt well. This is a greenfield area for us. It's an area that we're not defending essentially, right, it's all offense. I think the product that we have is exceptional. We put a lot of effort into it. A big piece of our investment strategy for the next three years is to just continue to bolster the Wealth offering in terms of content, as well as -- and technology. There are some things that we're going to do there, I think, to make the life of the next generation of a financial advisor and wealth advisors so much easier. And some of that's integrating our risk capabilities, some of that's taking cognitive computing to essentially make the life of the wealth advisor and the financial adviser much more efficient. So this is a space we're super excited about. Typically, when there is consolidation, it means disruption and is an opportunity for a new newcomer like FactSet to come in and take a crack. So we're in lots of RFPs. These are big firms. They have long contracts. You don't win them overnight. But we feel exceptional about this piece of our business and the opportunity in front of us.

And just one more and I'll turn it over. So like you said, there is a lot of white space in Wealth, and maybe this other part of the business isn't as big of a focus for you. But how much do you think your products lended themselves to say, commercial banking or insurance? Or maybe you can give us a sense of how much you've explored those markets as well?

So commercial banking is really interesting. We had a pretty good win there, and I think it was last year in Asia-Pac and that was a lot of seats but admittedly at a lower cost. But our web offering proved very good for that market, and I think we will continue to explore some opportunities there. We have pretty good business in insurance right now. So what resonate with our insurance clients is our Analytics products. We've got a great multi-asset class risk product, which we continue to invest in. And risk is one of the things I talked about in my script is, we've got a lot of good momentum in the risk space, the pipeline for risk looks really good and some of that is at insurance companies.

Your next question comes from the line of Andrew Nicholas from William Blair.

In terms of the Wealth pipeline, it sounds like you're waiting on a few larger decisions. Any color on when you expect those decisions to be made?

Some of them are this fiscal year. Some of them are further out.

And then I was wondering if you could provide an update on momentum in Analytics, particularly as it relates to kind of the sales force realignment. As that gets further and further in the rear view mirror, just wondering if you could update us on progress with respect to sales momentum.

Yes, so fixed income had very good quarter and we have a very good strong pipeline for fixed income. And that was one of the areas that we did worse than last year than we hoped. And the movement of the specialists back into the Analytics area has really paid off. So we've got some great leadership there, the team is excited. The areas that really are showing very strong momentum are fixed income, risk, Vault. And Vault to remind everyone, is kind of the combination of the BISAM performance product with traditional PA. That is gaining a lot of momentum. We're having a lot of unit sales with Vault. The APIs within Analytics are doing very well. We see a ton of momentum there. And I mentioned, we tripled the number of APIs that we had in Q1. And so a lot of that is our Analytics APIs. So all-in-all, we feel good about Analytics. I also mentioned our momentum there in the trading space. And a lot of these are really the workflow solutions and the portfolio lifecycle. So we've made a bunch of acquisitions three years ago. It has taken us longer than I expected to get those integrated. But I think what we're seeing now and out into the rest of the fiscal year is great momentum in those areas, the workflow solutions and helping the larger clients be more efficient from a technology standpoint.

Your next question comes from line of Toni Kaplan from Morgan Stanley. Your line open.

I wanted to ask another question on the research cancels. Was it related to firms getting out of equities, or banking, or consolidation, or firms closing, or competitive losses? Or just any sort of extra color you could give on what led to the cancels?

Toni, it's Phil. Yes, I think these are -- a lot of the cancels are typical in terms of the seasonal banking shown. There were a couple of firms where we had some things happen that we didn't anticipate. One was at a larger sell side firm and the other was at a middle markets firm. The sell-side firm, it happened that we have a very strong relationship with them, very excited about the opportunities moving forward. I can't get into the specific details. But clearly there's pressure, particularly on the bigger firms. We're feeling some of that. I think that's what you're seeing in the numbers for Q1. But we're doing lots of things right to work our way up the stack as these bigger firms provide more solutions and it's going to be a little bit choppy at some of them, but we feel good about the longer term opportunity for us.

And then for my follow-up, I just want to find out how much FX benefited margins this quarter and if there was anything one-time, if it wasn't FX that helped the margins, just because they were a lot stronger than expected? Thanks.

Yes, sure. Toni, thanks for your question. So this quarter, the benefit of FX was about $1 million, which is actually less than in the previous year and obviously a lot less during the course of FY '19. So that was not a material impact. If you compare our margin this quarter to Q4, we're exactly the same, 33.9%. So I think it's reflecting more of the consistency of the actions that we've put forth over the course of the year.

Your next question comes from the line of Alex Kramm from UBS. Your line is open.

Phil, you talked about your excitement of, I think 2Q launch of some of the more in-depth data around financial services or banks. Can you just talk about the appetite there a little bit? I think this is supposed to be a little bit of a SNL competitor. But one of the things that I'm also hearing is that that competitor has a lot more different industries that they cover, so some firms might still wait until you have the full breadth. So I guess how much of this is going to be a niche solution for now and maybe in a few years, it's going to be a real competitor? Can you just touch it out a little bit? Thanks.

So we're attacking around eight sectors, I believe, over the next three years. To your point, we can't get them all done this year. So we have a very methodical plan to work our way through wage sectors and we're doing it in the order that we think will have the biggest impact for us. We've already hired all from the outside, industry experts for each of these sectors. So they are on board already this quarter. So I think we did an exceptional job there hiring, and it's going to depend on the firm essentially. So some firms may just want one or two sectors, some may want all eight, some may be very happy with 80% of the fund -- 20% of the functionality, but 80% of the value. But we are seeing a very healthy appetite for more choice in this area and we feel that we're going to have some impact this fiscal year. In fact, we already had I think one very good win. I can't remember if it's in Q1 or in the pipeline for Q2 with another firm for the financial data that we have.

And then just secondly, again on the opportunity side, I mean, you mentioned the tough environment, which obviously all of us on this call probably know about. I've been hearing a little bit more of an effort to reduce costs when it comes to the really expensive competitors of yours. So I think you've been benefiting from that to some degree. And I think you've done this all along over the last few years, but are you seeing an acceleration in focus on cutting some of your more expensive competitors and is that going to be something that's going to help in the next couple of quarters or is it business as usual from that perspective?

I think we are seeing more of an appetite for that, I was on a recent trip to Europe, I had a couple of good meetings at larger firms, where I think historically, people have been given choice and it's been a little bit more of a grassroots effort to do this. But what I'm feeling at a lot of these firms that are having more cost pressures is that there's going to be more of a top-down push to save costs and to do some of what you just described.

Your next question comes from the line of Joseph Foresi from Cantor Fitzgerald. Your line is open.

It seems like you're going through, sort of, maybe a portfolio shift because some of the buy side stuff and sell side stuff isn't working as well. I'm sure we can all understand that. When do you think you'll hit an inflection point where organic growth starts to accelerate, because the portfolio has been right sized?

Well, I'm hoping Joe that this is the inflection point and that when we talked to you in Q2, we can point to that. Obviously it's hard to predict the future, but when I look at what I just described in terms of Analytics, when I think about our CTS product suite, which we haven't talked a lot about today, but we're having exceptional momentum there selling our content, the Wealth pipeline our efforts to fill out the portfolio lifecycle, all of that is really great. I think we are seeing obviously people pressure in our industry and a lot of pressure on the research side. So that's the piece that's a little bit harder to kind of predict, but we feel like we've got the right strategy and we've got a team that's sort of really excited to execute even in what is a tough environment.

Yes. I guess my follow-up will be an old question. Maybe we could start to get a breakdown from a percentage of revenue, or you could just give us rough ballpark numbers around the new pieces of the business and what they're growing versus sort of the old pieces of the business, so that we can kind of start to model out the inflection point ourselves. I'm just wondering if there's any thoughts around that or if there is any general numbers because you said you hope that there is the inflection point that we're at right now. Thanks.

This is Helen. Thank you for your question. I mean a lot of what we provide even when we talk to the client, are bundled as well. So, what we don't actually have plans right now to be breaking that out, but certainly we'll give you updates as we go on each call as we can.

Your next question comes from the line of Shlomo Rosenbaum from Stifel. Your line is open.

Phil, just a quick question. Not to beat that research cancellations to death, but is it people that are just no longer there or they are moving to a different platform? I just want to understand that dynamic a little bit more?

I don't have all of that detail, Shlomo. I imagine some of it is just people pressure right, within the research side that does sort of less hiring going on. Some of it may be competitive pressure. I think there are situations there where we're taking market share and others are taking it from us. Again, I'll point to the fact that it's typically a smaller quarter. So we're calling it out this quarter just because it's one of the larger numbers, but in the big picture, when you think about our numbers for Q2 and Q4 especially, I wouldn't read too much into that for this quarter.

But it's not -- I guess, what people are trying to figure out, is there any pickup in Refinitiv, is there anything going on in on the Cap IQ side that's becoming kind of nipping at your heels? Is there any change in any of that stuff? I guess, that's what I'm trying to get to, or is it just really...

We still -- when I look at the competitive win-loss, we're still I think doing well from a market share, taking market share standpoint.

And then just Open FactSet, are there any additional metrics you can give us besides, maybe some of the APIs, how that's tracking? Are you starting to generate any meaningful revenue over there? It seems like an interesting part of the business I want to delve into more.

Yes. So we're beginning to get some momentum there. There are different pieces to it. So the piece that's generating, I think, the growth in CTS is really the data exploration platform that we've created. So it's really the ability to come in and look at our content in addition to some of the Open providers that we've added, some of the alternative data. But a lot of the growth you're seeing is really from FactSet-owned content and we're beginning to see a pretty healthy pipeline for some of the alternative data providers that are combined with that. I think as much the model and the ability to come in and begin programming in Python using Tableau kind of what the analyst of the future and the data scientists in the future is going to want to use, that's really the most exciting piece of it.

Your next question comes from the line of Bill Warmington from Wells Fargo. Your line is open.

So you had mentioned the strength in Analytics, CTS and Wealth, and by application, I would take it that Research had turned negative this quarter. I just wanted to confirm that and ask if that was really the result of the churn that you've mentioned and to ask how long you think it will take to return to low-single digit type target growth?

Yes. So you're right, Bill. The other three businesses were positive this quarter, and Research is negative. Again, it's a smaller quarter. So again, it's hard to predict. We feel good about the Research business as we look out to the rest of the year and on our last quarter, we gave sort of longer-term guidance for what we think that business can do. The investments we're making in deep sector in private markets and StreetAccount, all will we believe, bolster that business and allow it to grow over time.

And then a follow-up question for you on the data feeds business, that seems like a business that could potentially become commoditized. And so I wanted to ask about what you guys are doing to differentiate your offerings there?

Yes. So some of the data is unique, other people have it. I think the value that FactSet has always brought to the marketplace over the last 40 years is the integration of content. So you can deliver data sets all day out of a marketplace or a library, but the hard work is integrating the data so that you can use that as one data base and providing the tools to analyze the data. So that's what we do. We do very well. Of course, it's great to have our own content as well to monetize, but the real value for our content is how well it plays together and how well we can integrate it with other data sets and within other people systems.

Your next question comes from the line of David Chu from Bank of America. Your line is open.

So related to a previous question, can you just provide some color on what you're seeing in terms of client budgets overall? I mean, is cost cutting more in focus versus let's say a year ago?

Yes, I believe it is. I think the active managers in particular, continue to be under cost pressure and it's up to FactSet to provide them tools that allow them to be more efficient. And that's really -- that's where it is with active managers. If I -- so if we think about other client types that are out there, we're making a lot of exciting progress in asset owners, which include planned sponsors and sovereign wealth funds, that's an area of growth for us. We're doing very well with hedge funds. I mentioned that we were positive this quarter. We're selling hedge funds a lot of CTS product. We are seeing good momentum in private equity. So that's an area that we're investing, but it's a smaller area of our business, but that's one that's going pretty rapidly. We're doing well in the corporate space. That continues to build momentum for us. So we're obviously active managers or a big piece of FactSet's business. We're providing good long-term solutions for them, but there are other markets that we're going into, that have a lot of great momentum.

And Helen, is the 1Q CapEx number a proper run rate for the year?

Thank you for that question. Yes, it's about that. We are expecting to be up year-on-year. So I think we ended last year around $60 million and we are looking more like an $80 million for this year.

Your next question comes from the line of Keith Housum from Northcoast Research. Your line is open.

Phil, as we look at the research environment, customers are getting rid of some of their employees, how protected is FactSet if one of your customers just goes from say 100 employees, down to 50 employees. Do you guys have minimums baked into your contracts that you're protected or not?

We do in some cases. So as clients have gotten larger and our footprint has gotten bigger with them, they look for I think more certainty within their budgets over time, and we do have floors in at some point. The other thing that we've made towards, and that continues is a bigger and bigger percentage of our ASV is tied to more workflow solutions and less people. So the majority of what I just described in the Analytics business has a lot less to do with seat count and a lot more to do with workflow and enterprise solutions. And the feeds is the same thing. So obviously, it's an evolution. It won't happen overnight, but I think it's the right strategy for us and one that we're already capitalizing on.

So do I understand then if as research can say consolidates further next year you as well as some protection with some of your contracts based on some of the floors, some may not?

Yes, I think that's right.

And then if I -- just turning to the international side. International revenue is down compared to last two quarters. Was there anything unique I guess at the end of last year that affected that revenue or anything unique in this quarter that your revenue declined actually sequentially?

Yes, I don't think there's anything unique. Europe clearly is under, I think, probably more pressure than the Americas and Asia-Pac. We see a ton of opportunity in Asia-Pac. It's hard to imagine that not continuing if we make the right moves there. But Europe is under a lot of pressure for a lot of different reasons.

Yes, as Philip mentioned before, I mean I think the pipeline is healthy. We have seen some good new business growth. So as we think for the rest of the year, we're feeling more positive about the growth rate.

Your next question comes from the line of Kevin McVeigh from Credit Suisse. Your line is open.

Phil, obviously with Refinitiv change in hands twice within the last 18 months or so as you become part of the LSE any thoughts from a competitive perspective? Does that change the behavior on the continent at all or even in the current form as part of Blackstone, have you seen any competitive dynamic shift?

I've obviously thought a lot about that. It doesn't feel to me that the combination of LSE and Refinitiv is going to be much different frankly to us than what we've been dealing with from a competitive standpoint with Refinitiv over the last couple of decades. So there is still uncertainty I would think within both the client base and their employee base in terms of what's happening, and we're just capitalizing on that uncertainty right now.

And with that I'll kind of lay the opportunity to the extent for any -- as you're kind of integrating would you see competitive advantage on that? If you were to look at other points in history, does that free up incremental opportunity or no?

I'm not sure I understand the question.

I guess was there consolidating I'm sure they see disruption in their sales force, do you take advantage of that. Is there an opportunity to capture incremental share?

Yes, I think so. Yes, I think that's what I was trying to describe, yes, there is uncertainty in the client base and in then their employee base, there is opportunity for us to go into clients and have conversations and take market share.

And then just quick follow-up, the investments you're making in kind of the research product, when do you think the earliest you'll see start to see the revenue benefit from that?

So overall, when we think about both the content and technology we see minimal in this year, but as it ramps up, in general, we would expect to see about 25% of the total growth coming in year two, excuse me, 2021 with the balance coming into 2022. So it's more of a back-ended in terms of the list.

Your next question comes from the line of Craig Huber from Huber Research Partners. Your line is open.

I think I missed the first few minutes of your comments, but I wanted to hear was there any major cancellation fees that showed up in your revenues in the quarter you guys just reported here?

Cancellation fees?

Well, for many clients of yours the remaining revenue that was pulled forward to account for revenues up to $2.5 million sequentially, your ASV of course was down slightly versus three months ago, I guess only the third time in the last 20 years or so. I'm just wondering if there is any clients that canceled any revenues that were recognized pulled forward, maybe to some degree in the November quarter, the first question?

Sure, this is Helen. No, we don't see that there is no pull forward due to cancellation from clients. So that's not how our model works, so that's not a driver at all.

My other question again with the ASV down slightly versus three months ago, you went through your confidence level of Wealth and CTS, et cetera. It sounds like you're still comfortable with the $65 million to $85 million increase in ASV. Is that your thinking that's more back-end weighted for the year?

Yes, correct. So we believe that this year in particular it's always back-end weighted, I think if you go back historically, it may be somewhere between 60-40 just in terms of the split. But the way that we thought about this year and the way that we've sort of modeled out our plan, we believe that the second half of the year is going to be more heavily weighted than typical. And we're still, feeling good about the guidance range that we issued last quarter.

And then I think you said this three-year investment program to enhance the product in excess of $45 million of extra costs, I guess by the time we get to the end of fiscal 2022. How much of that you think will fall into this year versus next year?

So, to go through, let me reiterate how that works. So we have $15 million in each of the years that we will be investing in for '20, '21 and '22. So in terms of what falls into the first year, it's $15 million.

And very little of that was obviously in the first quarter?

Right. Because much of the spend is people related and it takes time to hire, especially for the capabilities that we're building, which has to do as Phil talked about in terms of content, the expertise there and also on the technical sides related to digital capabilities.

Your last question comes from the line of George Tong from Goldman Sachs. Your line is open.

Organic ASV plus professional services growth is decelerated to its lowest level in years. You talked a bit about client budgets coming under pressure and some sell-side headcount reductions. Can you elaborate on changes you're seeing with buyside headcount in both the US and internationally?

Hey George, it's Phil. So yes, I think we're seeing pressure on headcounts in the front office. I think that's pretty well known. I think portfolio managers, traders research analysts, I think over time our thesis is that we'll see sustained pressure in terms of the number of people and that clients are going to want to go to more efficient solutions and more of a technology type solution.

You noted a decrease in your add-on business where you cross sell to existing clients. Can you discuss broader trends you're seeing with new product uptake versus your expectations and traction with the client wallet penetration?

Yes. So a lot of that really had to do with the large deal, but we had in Q1 last year that was booked as an add-on business that was an existing client. So I think that was the vast majority of this and as I mentioned in my script and throughout the call we're seeing a lot of very positive momentum for Analytics product for feeds and on the Wealth side a lot of it is driven by used account.

There are no further questions at this time. I turn the call back over to Phil.

Thanks everyone. I'd like to thank you all for joining us today. It's clear that the changes in our industry are happening and speed and we remain well placed to lead the charge. Our efforts are already taking root as we position the Company for the future, which is reflected in our new global headquarters here in Norwalk, Connecticut. And I'm very proud of the efforts we've made to create space that fuels innovation and collaboration and truly mirrors our Company and values. Demand for open flexible solutions is growing and I want to conclude by reiterating our conviction in our outlook for the year and happy holidays to all of you. If you have additional questions, please call Rima Hyder and we look forward to speaking to you next quarter. Operator, that ends today's call.

This concludes today's conference call. You may now disconnect.