FactSet Research Systems Inc. (FDS) Q4 2022 Earnings Report, Transcript and Summary

Good day and thank you for standing by. Welcome to FactSet Fourth Quarter 2022 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 for today, Kendra Brown. You may begin.

Thank you, and good morning, everyone. Welcome to FactSet’s fourth fiscal quarter 2022 earnings call. Before we begin, I would like to point out that the slides we will reference during this presentation can be accessed via the webcast on the Investor Relations section of our website at factset.com. The slides, as well as a replay of today’s call, will be posted on our website at the conclusion of this call. After our prepared remarks, we will open the call to questions from investors. To be fair to everyone, please limit yourself to one question plus one follow-up. Before we discuss our results, I encourage all listeners to review the legal notice on slide two, which explains the risks of forward-looking statement 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 is in the appendix to the presentation and in our earnings release issued earlier today. Joining me today are Phil Snow, Chief Executive Officer; and Linda Huber, Chief Financial Officer. I will now turn the discussion over to Phil Snow.

Thank you, Kendra, and hello, everyone. Thanks for joining us today. I am pleased to share our strong fourth quarter and full year results. We ended fiscal 2022 with organic ASV plus professional services growth of $158 million, accelerating nearly 200 basis points year-over-year to over 9%, topping the high end of our guidance. We achieved annual revenue of $1.84 billion and adjusted EPS of $13.43, with both metrics also above the high end of our guidance range. Our strategy to become the leading open content and analytics platform is resonating with clients and driving our strong performance as we continue to gain market share. We saw growth across fund types, with corporates, private equity and venture capital firms, wealth managers, hedge funds and banking continuing their trend of double-digit organic ASV growth. Specifically, we saw improved retention with most clients this year with further growth coming from better price realization. Our investments in content and technology supported both stronger retention and expansion, as well as significant acceleration in new business. Year-over-year buy-side and sell-side growth rates have increased by 200 basis points and 180 basis points, respectively. On the buy-side, the success of our portfolio life cycle products has been key to our expanded footprint with institutional asset managers. We continue to capture more of our addressable market by increasingly connecting our analytics, content and delivery capabilities across the front, middle and back office. Fiscal 2022 was not only a strong financial year for us, but also a milestone year for FactSet. We completed the largest acquisition in our history with CUSIP Global Services, issued our inaugural senior notes with investment grade ratings from both Moody’s and Fitch, joined the S&P 500, and advanced our sustainability efforts with the commitment to the Science Based Targets Initiative and the 2040 net zero emissions goal. In addition, we continue to expand our content and technology offerings with several key partnerships. It also marked the culmination of our three-year investment plan. Our foresight to invest in content and technology is paying dividends, accelerating topline growth by over 400 basis points since 2019. These investments fueled the largest content expansion in FactSet’s history. Today, we have deep sector coverage for eight sectors. We are making strides in our private market strategy with private company coverage across our content refinery, workflow solutions for private equity and venture capital firms, and cohesive connected workstation integration. We expanded our ESG content through the acquisition of Truvalue Labs and now partnered with more than 45 other ESG providers to aggregate a comprehensive set of data and solutions. And in wealth, our market-leading workstation, Advisor Dashboard and Portfolio Analytics Tools are helping advisers work more efficiently while driving new business wins for FactSet. We also invested in and accelerated our digital transformation. Our digital platform is a competitive differentiator, enabling clients to access our content and analytics via open, modern solutions. We are now a preferred partner for clients on their cloud migration journeys. Our acquisition of CUSIP Global Services aligns very well with the strategy and is a natural extension of our content refinery capabilities. The performance of CGS has exceeded our expectations with the integration progressing well and we see opportunities to expand further by innovating and building new products. While early on in these efforts, we are currently exploring new business opportunities to extend CUSIP identifiers to additional entities. We continue to invest in our people, helping us retain the best talent and stabilize retention even in this competitive market. We have embraced a hybrid work model that trusts our employees to select the work paradigm that allows them to be their most productive selves. We have invested in technology for home offices to ensure all employees regardless of location have setups that facilitate collaboration and efficiency. We have instituted global wellness days to give employees time to reconnect and charge. And we have also seen an increase in traveling and in-person engagements as our leaders encourage employees to meet one another and clients face-to-face wherever possible and we have invested in compensation. To combat the effects of inflation, we have proactively increased salaries for critical roles and extended participation in our bonus and equity pools. Headcount increased year-over-year, thanks to our recruiting team, who did an amazing job of backfilling critical open positions and sourcing new talent to support our investments. We also progressed as a firm with diversity, equity and inclusion. Central to our culture is the commitment to hiring and supporting talent from diverse backgrounds and experiences. With the addition of Kate Stepp as our Chief Technology Officer, women now comprise half of our executive leadership team. That’s just one example of our success and an achievement that makes us proud. As we enter our next phase of investments, our focus remains the same; scaling up our content refinery to provide the most comprehensive and connected set of industry, proprietary and third-party data for the financial market; enhancing the client experience by delivering hyper-personalized solutions so clients can discover meaningful insights faster; and driving next-generation workflow specific solutions for asset managers, asset owners, the sell-side, wealth management, private equity venture capital and corporate clients. We are committed to investing in our people and our products and have invested about $40 million or about 360 basis points of margin in this effort during fiscal 2022. These investments are split pretty evenly between people and products, and will ensure the continued healthy growth of FactSet’s revenue. As we move forward, we will continue to take the same strategic approach to our investments, investing at a similar pace for FY 2023, while delivering on our commitment to margin expansion. This includes the continued build out of deep sector data, real-time, ESG, private markets and wealth data as core parts of our content strategy. In addition, we will continue to invest in our digital platform and in our people. The connected nature of our content and products gives us continued confidence in meeting our medium-term outlook of 8% to 9% organic ASV growth, adjusted operating margin of 35% to 36% and adjusted diluted EPS growth of 11% to 13%. Turning now to our results. In the fourth quarter, ASV plus professional services grew 9.3%, revenue growth in the fourth quarter was 21%, driven by both organic revenue and contribution from CGS, and adjusted EPS increased almost 9% from the prior year period. Our fourth quarter adjusted operating margin decelerated slightly year-over-year to 31.5%, primarily due to higher personnel expenses and technology costs. This quarter’s strong performance was driven by continued expansion in Analytics & Trading and Research & Advisory. New business growth also accelerated as we added small and medium wins, as well as some notable larger wins, including the expansion of our relationship with Raymond James. This win reflects the significant investments we have made on the wealth management side, where we are recognized for having market leading products. Now looking across our regions, we continued to see broad-based organic ASV growth over the last year. The Americas continue to lead ASV performance, contributing more than half of fiscal 2022’s total ASV growth and surpassing $1 billion in total ASV. In the Americas, we grew organic ASV by 9% over the past 12 months. Research & Advisory and Analytics & Trading performed particularly well this quarter with strength from our banking, wealth, private equity and venture capital clients and asset managers. In EMEA, our organic ASV growth accelerated to 8% this quarter with strength across the product portfolio. Specifically, growth was driven by Analytics & Trading wins at asset managers, combined with capturing Research & Advisory and CTS opportunities at banks, wealth managers and corporate partners. In Asia Pac, we saw organic 12% ASV growth driven by Analytics & Trading, with particular strength from asset managers and owners. Growth from wealth managers in the region also accelerated driven by higher retention. Now turning to our businesses, Research & Advisory was the largest contributor to our organic ASV growth this year with a growth rate of 9%, driven by banking, wealth and private equity and venture capital firms. We saw diverse wins from the workstation with new products such as Advisor Dashboard and Cobalt’s portfolio monitoring capabilities gaining traction. We increased Research & Advisory workstation users by 12% this quarter versus a year ago with growth across both the sell-side and buy-side clients. ASV growth from sell-side clients was 13.8%, reflecting increased price realization, strong seasonal hiring and increased wallet share from our solutions. Analytics & Trading ended the year with an impressive 10% organic ASV growth rate, demonstrating continued momentum in our portfolio lifecycle strategy. This quarter marks 6 consecutive quarters of accelerating LTM ASV growth for analytics. We saw an uptick in larger wins, driven by portfolio reporting and performance, with gains among asset managers across all regions being led by the middle office. Performance and analytics professional services also contributed to this acceleration. As we look ahead, we believe demand for our market-leading analytics, expanding asset class coverage and leading technology, on- and off-platform, will continue to drive growth. Finally, CTS grew organic ASV by 11% with wins across asset managers and partners being key contributors. We saw strength in core company data, data management services, benchmarks and security data. In the fourth quarter, we saw several ESG wins with continued client growth. Real-time also gained traction with our all cloud solution appealing to clients looking to reduce costs. In summary, I am proud of our fourth quarter and full year performance and the results of our three-year investment plan. As we look ahead, we remain confident in our strategy and our ability to weather volatile markets. We are entering fiscal 2023 in a position of strength as our clients recognize the value of our solutions. Our fiscal 2023 guidance reflects our ongoing confidence in the business and Linda will provide more detail shortly. I want to wrap up by thanking our incredible FactSet team. We couldn’t have achieved the strong quarter and year that we did without them. We have the best team in the business and remain committed to attracting, retaining and developing this top talent. I will now turn it over to Linda to discuss our fourth quarter and full year performance in more detail and take you through our fiscal 2023 guidance.

Thank you, Phil, and hello, everyone. I join Phil in congratulating FactSetters for an outstanding fiscal 2022. As I approach my one year anniversary as CFO, I am excited by everything we have been able to accomplish together. Our 9% organic ASV growth, adjusted operating margin expansion and 20% adjusted diluted EPS growth, not to mention our largest acquisition, investment grade ratings and successful financing, are a testament to the hard work of our talented teams. I look forward to continuing to work across the organization in fiscal 2023 to build on FactSet’s history of strong performance and returning value to shareholders. Our growth rate for organic ASV plus professional services beat the high end of our guidance range due to our investment in product and excellent execution by our sales team. Retention moved the needle here, with higher price increases across a larger base of clients, reduced erosion as demand for our products increased across client types and successful cross-selling opportunities. Full year revenue also exceeded the high end of our range with help from CUSIP Global Services. Adjusted operating margin was in line with the higher end of our range. Our margin increase was driven by effective expense control in the core business, as well as the addition of the CGS business, resulting in 500 basis points of margin expansion. Our decision was to reinvest about 360 basis points of this margin growth back in our people and products, while allowing the margin for shareholders to rise about 140 basis points. As Phil stated, we are committed to balancing investment at a similar pace for the next few years while delivering our commitment to margin expansion. Finally, we generated solid earnings, exceeding the top end of our guidance range, through strong revenue growth, disciplined expense management and operating leverage. Let me now walk you through the specifics of our fourth quarter performance. As you have seen from our press release this morning, we are pleased to report the acceleration of organic ASV plus professional services and revenue. Before we begin, I’d like to remind everyone that consistent with our definition of organic revenues and ASV, we will exclude any revenue and ASV associated with CGS when reporting organic-related metrics for the 12 months following the acquisition date. However, we will provide some specifics on CGS, so you can continue to track its performance. As Kendra noted, a reconciliation of our adjusted metrics to comparable GAAP figures is included at the end of our press release. We grew fourth quarter organic ASV plus professional services by 9%. This increase reflects momentum across our product portfolio. With current levels of market volatility, we see higher demand for our products as clients focus on driving alpha, as well as finding efficiencies. Fourth quarter GAAP revenue increased by 21% from the prior year period to $499 million, growth was driven by our Research & Advisory and Analytics & Trading solutions and CGS. Organic revenue, which excludes any impact from foreign exchange, acquisitions during the last 12 months and deferred revenue amortization increased 10% to $453 million over the prior year period. We saw organic ASV acceleration across all workflow solutions in each of our regions. For our geographic segments, organic revenue growth over the prior year period for the Americas was 9%, EMEA at -- was 8% and Asia-Pacific at 18%. Turning now to expenses, GAAP operating expenses grew 25% year-over-year to $367 million, impacted by several charges incurred during the period. First, this includes the recognition of $13 million in intangible asset amortization related to CGS in the fourth quarter. As we spoke about last quarter, this intangible asset amortization will be a recurring charge. Also, we saw a higher bonus pool in line with stronger than anticipated ASV performance. In the fourth quarter, our bonus accrual was $37 million, bringing the total bonus pool to $111 million for the fiscal year. As previously stated, we invested $40 million in people and product this year. This is also consistent with commitments we made at Investor Day to continue to grow these buckets to sustain growth. Looking ahead to fiscal 2023, we expect a similar level of investment. Given these expenses, our GAAP operating margin decreased by 240 basis points to 26.5% compared to the prior year period. Adjusted operating margin saw a slight decrease of 10 basis points year-over-year to 31.5%, driven by higher personnel expenses, increased technology expenses and transactional foreign currency impact. As a percentage of revenue, our cost of services was 50 basis points higher than last year on a GAAP basis and 130 basis points lower on an adjusted basis. Primary drivers include higher technology and content related expenses, including expenses related to our shift to the public cloud, as well as amortization of intangible assets and other costs associated with CGS. When expressed as a percentage of revenue, SG&A was 169 basis points higher year-over-year on a GAAP basis and 142 basis points higher on an adjusted basis. The increase is primarily driven by growth in compensation, comprised of higher salary expenses for existing employees, higher bonus accrual in line with stronger ASV performance and higher stock-based compensation expense as we distributed equity more broadly throughout the organization. Moving on to tax, our tax rate for the quarter was 10.3% compared to last year’s 14.7%. This was primarily due to lower pre-tax income and a tax benefit related to finalizing the prior year’s tax returns. GAAP EPS increased 2.3% to $2.69 this quarter versus $2.63 in the prior year, primarily due to higher revenue and lower taxes, partially offset by higher interest expense and margin compression. Adjusted diluted EPS grew 8.7% from the prior year to $3.13, largely driven by higher revenue, offset by the impact of higher interest expense from FactSet’s investment grade senior notes and outstanding term loan. Adjusted EBITDA in the fourth quarter increased to $158.5 million, up 16% year-over-year. And finally, free cash flow, which we define as cash generated from operations less capital spending, was $136 million for the quarter, a decrease of 20% over the same period last year, driven by higher working capital, which includes the timing of estimated tax payments and deferred revenue movements related to CGS. CUSIP Global Services exceeded expectations, adding $6 million in incremental ASV since the close of the acquisition on March 1, 2022. In Q4, CUSIP’s diverse asset class coverage partially offset a weaker issuance market with significant year-over-year gains in time deposit CDs and private placements. In the fourth quarter, our ASV retention remained above 95% and our client retention improved to 92%, highlighting the continued and stable demand for our solutions. Compared to the prior year, we grew our total number of clients by 17% to more than 7,500 clients, largely due to the addition of more wealth and corporate clients. Our user count grew 12% year-over-year, growing to almost 180,000, primarily driven by sales in our Research & Advisory solutions, particularly amongst wealth management users. And turning now to our balance sheet, we continue to progress on the prepayment of the term loan related to the acquisition of CGS. In the fourth quarter, we made a planned prepayment of $125 million, bringing our gross leverage ratio down to 3.1 times from the initial 3.9 times level when we financed the CGS acquisition. We expect to make two more payments of $125 million in each of the next two quarters, enabling us to reach our gross leverage target of 2 times to 2.5 times in the second half of fiscal 2023. As a reminder, while we may continue minor share repurchases to offset the dilutive impact of stock option grants during this time, we do not intend to resume our share repurchase program until at least mid-2023. Lastly, we would like to remind investors that we increased our regular quarterly cash dividend in the third quarter for the 23rd consecutive year. The increase was 8.5% for a per share dividend of $0.89. Turning now to our outlook for fiscal year 2023, we are guiding to incremental growth of $150 million to $180 million for organic ASV plus professional services. The midpoint of this range represents a 9% increase, reflecting continued momentum in our business and our commitment to our medium-term outlook. Please note that CGS is not included in our organic ASV guidance at this time, given that it will not impact organic ASV until the last two quarters of the 2023 fiscal year. We expect adjusted operating margin of 34% to 35%, with the midpoint providing 60 basis points of margin expansion, which aligns with our medium-term outlook of 50 basis points to 75 basis points of margin expansion each year. Finally, we expect adjusted EPS of $14.50 to $14.90, representing almost 10% growth at the midpoint. Given our outperformance in fiscal 2022, we are still on track to deliver 11% to 13% EPS growth over the medium-term. We are confident of our ability to continue to grow in the face of market uncertainty. Our subscription model, diverse product portfolio and enterprise solutions make us a stable long-term investment. Looking ahead to fiscal 2023, growth will be driven by improved retention. We expect two-thirds of our topline acceleration to come from existing clients with low double-digit expansion offset by normal erosion plus increases in price realization. In the past, the majority of our growth came from cross-selling. However, given the incremental improvement in pricing this year, we anticipate the split will be more even between the two. We expect the balance of growth will come from new business, with continued growth in wealth, private equity and venture capital firms, as well as corporates. Our continued investment in technology and content should drive growth in new markets and cross-selling opportunities for existing clients. Drivers include continued commitment to the digitization of our platform. Kate Stepp, our new CTO, is taking a fresh look at our digital strategy. Example areas of focus include scaling the use of cognitive technologies, expanding our API program and driving improved capabilities and productivity in our use of the public cloud. Next, continued evolution in our content refinery, as discussed previously, we plan to make direct investments toward deep sector, real-time, private markets and ESG, development of these content sets are intended to drive retention and expansion across firm types, and finally, workflow solutions for the front office, wealth manager and private equity and venture capital firms will be key. In closing, we are pleased with our performance in fiscal 2022, as we spoke about during Investor Day, we are seeing the benefit of our strategic investments and we feel we have a long runway ahead of us. We believe we are strategically placed to deliver on our targets for fiscal 2023, as well as our medium-term outlook. While we acknowledge the uncertainty in the macro environment, we believe that our focus on investing in our people, content and technology will continue to drive growth over the longer term. And with that, we are now ready for questions. Operator?

Thank you. [Operator Instructions] Our first question comes from the line of Ashish Sabadra with RBC Capital Markets. Your line is open. We expect Ashish you are on mute. Ashish, your line is open. One moment. All right. We will move to the next one. Ashish must be having phone problems. One moment. Please stand by for our next question.

Hello.

Ashish, are you there? Your line is open.

Hi. Can you hear me okay? Thanks. Thanks for taking my question.

Yes.

So we saw some pretty strong momentum across all three workflow solutions and thanks for giving some clarity around the growth drivers going forward in terms of pricing, cross-sell and new wins. But the question that we get from -- that we are getting is around that $150 million to $180 million of ASV growth outlook in the light of the market volatility and concerns about potential layoff on investment banking and pullback on spend by asset managers. So I was wondering if you could just provide some more color on the confidence around the ASV growth for 2023? Thanks.

Sure. Hey, Ashish. It’s Phil. Thanks for the question. So similar to what we saw in 2022, we believe that our growth will be broad-based again in 2023. So there’s pretty even distribution of goals between the different business lines, as well as the different regions. And I think that’s really good news, you have got a great portfolio here, everything is firing on all cylinders. And when we look out at the first half, which we typically have good visibility on, we see a very good pipeline versus last year. So it’s a very high quality pipeline. So in terms of what we can see in front of us, we feel good. We don’t want to be naive. We understand that our clients obviously are going to be facing some pressure here on the budget side, but that plays into our strengths. And we have a great sales team, they are fully equipped to go out and really kind of communicate the value of FactSet’s proposition -- value proposition and there’s a lot we can do to help clients on the efficiency side, as well as obviously alpha generation. One piece of our business that I really want to call out this year is the analytics business. So if you go back to 2021, you can see that business was growing at 6% and it reached double digits this year. So that’s 400 basis points of acceleration in analytics and that is not workstation based growth, primarily. So we are having huge wins across the portfolio life cycle. In the middle office, we have talked a little bit about that in the script, but we are very encouraged by the conversations we are having within institutional asset managers to help them think about how they manage data and their workflow. So that’s just one thing that gives us more confidence going into next year.

That’s very helpful color, Phil. Really appreciate that. And maybe on my follow-up, just on the margin front, particularly as we look at 3Q versus the 4Q margins. Again, Linda, you provided some really good color around reinvestment. But I was just wondering, as we think about how much of it was maybe higher compensation versus more hiring, we obviously saw a big step-up in hiring in the fourth quarter. How should we think about for -- going into 2023 and in this particular inflationary environment, how do we think about salaries and compensation going forward? Thanks.

Sure. Thanks, Ashish. As we had said on the third quarter earnings call, if we did well in the fourth quarter, we did flag that we were going to put up a higher bonus accrual for the fourth quarter. So I am somewhat surprised, frankly, that people were surprised by the level of what we did in the fourth quarter in terms of the bonus. The bonus accrual for the fourth quarter was $37 million and in the third quarter it was $31 million. Our total bonus pool, as we said, was $111 million, which was up considerably over last year. We also increased stock-based compensation and that’s important. We are pushing equity to more people in the corporation, both broader and deeper. So that’s an important change, as well as we try to get our compensation balanced properly. Technology expenses were also up and we had talked about this also at Investor Day, that as we move to the cloud, we are seeing higher utilization of the cloud so that costs a little bit more as well. So most of this was around the increase in the like-for-like compensation, Ashish. We did hire some more people, same balance of 65% in centers of excellence and 35% that are not in the centers of excellence. So nothing too dramatic there, most of that goes to content collection as we are looking to invest in deep sector, as Phil said. But really nothing particularly exceptional, other than that we had a really strong year and a strong fourth quarter and we had a bonus catch-up as I had said we were going to do on the third quarter call. So I hope that helps you.

That’s very helpful color. Thanks again.

Sure.

Thank you. Please standby for our next question. Our next question comes from the line of Faiza Alwy with Deutsche Bank. Your line is open.

Yes. Hi. Good morning. Thank you. So I just wanted to talk a little bit more around margins, Linda. I am curious how much CGS contributed to margins this quarter. I know you had mentioned last quarter that it was -- it contributed about two-thirds of the expansion. So I am curious what the contribution was this quarter and maybe if you can tell us how much you expect it to contribute too in 2023?

Sure. So over the course of the year and I am not going to go into fourth quarter, CGS gives us about 500 additional basis points of margin. And as we said in the script, we reinvested 360 basis points of that margin and we increased our margin over the course of the year by 140 basis points, which we think is pretty significant amount and far in excess of the 50 basis points to 75 basis points that we had guided toward. So as we roll forward, we have increased margin that comes from CUSIP, but we are going to be thoughtful about how we deal with that margin. And again, we would see that we will reinvest about two-thirds and probably about a third will drop down to the bottomline. So we would expect that that will continue at sort of the same pace next year.

Okay. Understood. And then just on, you mentioned pricing, I am curious how much incremental pricing you are embedding for fiscal 2023 versus what we saw in 2022 and it doesn’t sound like you are getting any pushback on that pricing, but just wanted to ask sort of how -- what’s the receptivity to that incremental pricing?

Hi, Faiza. It’s Phil. So, yeah, in 2022, we went out with a 4% price increase and we anticipate we will be asking for a little bit more than that going into 2023, which is completely appropriate given the level of investment we have made in the product and obviously our costs. We don’t expect to be market leading in our price increase, right? We want to be conservative here and make sure that we are thinking about our long-term relationships with our clients. But based on what we were able to do in terms of getting realization from 4% this year, we feel pretty confident that we can get a bit of an uplift going into 2023 with price.

And Faiza, please note that Phil has said before, none of that made its way to his desk in the past year. So we think that price increase went pretty well. It’s been reported in the media that some of those in the competitor space maybe pricing considerably higher. We don’t intend to go all the way up to that, but we do expect that we could do a good bit better than we have been able to do in 2022, because we do have market-leading products. So we are quite optimistic about that for FY ‘23.

I’d also add on that in terms of price realization, we have been able to -- well, I really simplify our rate card and go-to-market and I think capture price for new sales much more than we had in the past. So that’s really helped us in terms of how we execute and the sales force has done a tremendous job in taking a much more simplified set of packages to market. And it’s made the client’s lives easier, it’s made our lives easier, it’s really helped all around. So that’s part of what we think about when we think about price as well.

Great. Thank you so much.

Yeah.

Thank you. Please standby for next question. Our next question comes from the line of Owen Lau with Oppenheimer. Your line is open.

Yeah. Good morning. Thank you for taking my question.

Yes. Hi, Owen.

Hey. So on the stock-based comp, I think, three months ago, we were still talking about the downturn playbook and I think FactSet can adjust the comp accrual to control the expense. I am just wondering, given the current market conditions, are you not winding up that downturn playbook anymore, have you changed any of your view in terms of giving stock-based comp going forward, any more color would be very helpful? Thanks.

Sure, Owen. We are prepared for the downturn playbook if we need to bring that into action. Right now we don’t see any need to do that. Things are holding up very well. Sales are very strong. And as Phil said, this is a high recurring revenue business. So we have pretty good idea of what revenue will look like for the first half of next year because we have already got the ASV in-house. So that’s really, really good. So the numbers are for the course of the year. Last year, we found that we did $89 million in bonus and this year it was more like $111 million, $112 million. So that was a pretty high change given the performance of the company and that’s all formulaic. So as we go back into FY 2023, that bonus pool will reset to roughly $90 million. So that’s the first step. And then if for some reason we underperform, that bonus pool will adjust as well and will go back down, but this was a very strong year. Similarly, last year, we paid out $45 million in stock-based compensation. This year, we paid out $56 million in stock-based compensation. So the reset on that will be closer to the $56 million number, but again the bonus pool can flex and adjust. Our salary line, in fact, because we had slower hiring than we expected, was not up very much. So it’s important that investors understand most of this comes from the flexible nature of the bonus pool increasing. So, in fact, in FY 2021, the salary line was $4.96 and in 2022, it was $5.07 [ph]. That’s only a 2% increase. So we are keeping a very good handle on the salary line. Most of this flex has been in the bonus line, because we had a very strong year, as we talked about in the third quarter. In fact, we are pretty surprised with the reaction because we had signaled that this would be coming. So hope that’s helpful to you and hope that answers your question.

Just probably reiterate something I said in my opening remarks, which is the numbers that Linda just mentioned have allowed us to go broader and deeper in the organization in terms of the number of employees that are participating in the bonus and equity pools, which is really great that we are able to do that, and obviously, has very good consequences for us in terms of talent retention moving forward.

Got it. That’s super helpful. And then something related to that line, which is the adjusted EPS growth, expectation for 2023 it’s 8% to 11%, which is slightly lower than your medium-term target of 11% to 13%. I know last year was strong, but given the market conditions, do you expect you can still meet your medium-term guidance over the next two year to three years or do you expect your EPS growth will run below that for -- in the near-term? Thank you.

Owen, it’s Linda. I do think we are going to be able to meet that EPS growth expansion and one of the things to consider here -- actually, two things to consider. One is the tax rate, so we are guiding to 12.5% to 13.5% next year. Our history has been that we have had one-off items that have been flattering to our tax rate, so we may find ourselves in that situation again. Secondly, we can’t predict what option exercise will be, which is beneficial to our tax rate as well and brings it down, so that one is hard to predict also. So the tax rate might be something that could be helpful to EPS. Thirdly, we have not modeled in any share repurchase for 2023. We thought that was the conservative thing to do. We are hoping to be able to go back into the share repurchase market once we bring our leverage down to where we need it to be, which is 2 times to 2.5 times gross leverage for the company and we are pretty close to that already. We have gone from 3.9 times to 3.5 times to 3.1 times at the end of our fourth quarter. So if that happens, share repurchase will be pushed more towards the back half of the year and it won’t help us that much, but it would be some wind at our backs. So those are some of the various factors, and of course, if we do better on the margin line that will come down into EPS as well. So just some things to consider as puts and takes on the EPS outlook.

Thank you for the explanation. Thanks, Linda.

Sure.

Thank you. Please standby for our next question. Our next question comes from the line of Manav Patnaik with Barclays. Your line is open.

Thank you. Linda, maybe just to ask another way, the 9% growth -- organic growth that you are talking about for the year, is that much different if you look at either the sell-side or buy-side ASV? Just trying to put it in context, it sounds like you guys don’t see any need to go to the downturn playbook contrary to what the market is telling us.

Hey, Manav. It’s Phil. Yeah. So we see strength in both the pipeline for the buy-side and the sell-side. So based on what we can see today, I think, our 9% buildup is a very healthy combination of different firm types and beyond those -- beyond the larger asset managers and banks, we obviously have some other firm types now that are smaller in terms of our base but are growing much more quickly.

Okay. And then the comments around not including CUSIP in the organic growth, I just want to clarify that. So in the second half of the year, I guess, of your fiscal year, it will be part of organic and so does that then -- if it’s growing mid- to high-single digits, does that then drag down that number ultimately for the year?

Manav, that’s correct. So we are looking about 9% growth for next year and you are correct that CUSIP does average down that growth a little bit. We factored that in for the full course of the year. We will be bringing CUSIP online a year after it has closed and so we will be talking more about that as we get there. But the 9% number looks pretty good, CUSIP may bring it down a couple of basis points, but we are only going to be including that in the back half of the year, as you noted.

Okay. Thank you.

Thank you. Please standby for our next question. Our next question comes from the line of Alex Kramm with UBS. Your line is open.

Yeah. Thanks. Hello, everyone. Starting with a couple of questions on margins, I think, they are related. But, obviously, when people saw the margin in the third quarter, some folks got ahead of themselves messaging or not from your end. But should the message really be, if we look over the next few years, that if you commit to 50 basis points to 75 basis points margin expansion per year, that’s what you are going to be delivering, because obviously, you do it this year or next year. And if there’s any upside, you will spend it away for growth, I guess, the question is, on the -- A, is that right, and then, two, is it also on the downside, you would still commit to that 50 basis points to 75 basis points over the course of the next few years? So really that’s how we should read it. And then, secondarily, can you just make a quick comment on seasonality in margin for 2023, obviously, there’s been a lot of movement in 2022, so just people don’t get ahead of themselves?

Yeah. Thank you very much, Alex. I think you expressed it really very well. If we are guiding to 50 basis points to 75 basis points of margin expansion on average over the next couple of years to exit at 35% or so adjusted operating margin in 2025, that’s what we are going to do. This growth in the topline doesn’t come for free. We have invested to be able to make sure that we keep that topline growing despite the market conditions. And we feel we over delivered in 2022. We had said 50 basis points to 75 basis points. We put up 140 basis points. Our midpoint in the guidance for next year is 60 basis points. We may have that wrong. We may get 110 basis points. It’s very hard to tell. There are a lot of things moving around right now. Currency movements are the most dramatic and volatile they have been in 40 years. The Fed action yesterday was not really expected that it would be that dramatic in terms of the tone. So we want to be a little bit cautious as we think about the margin going forward. But, yes, we will protect it on the downside, through the downturn playbook, we will make that adjustment. And on the upside, which is what we experienced in 2022, if we do better, our contract with our employees would be that we pay them higher bonuses because they performed and that will adjust the bonus line again. We will adjust back down to about $90 million as we go into 2023. So there seems to be a lot more dramatic response here than we had anticipated. But I will turn it over to Phil and let him talk a little bit more about the margin commitment.

Yeah. I think that’s right, Linda, and just to kind of re-stress what you said at the beginning there. We are really focused on sustainable top line growth there. I think we can control our costs where needed. But our primary objective, as we stated back in 2019 is to get the top line back up to a much higher number and we have done that. We want to keep it there and we have got a long list of great ideas to invest in as well as some existing programs that continue to need feeding, as well as all of our great employees. So that’s the balance at FactSet. We are a consistent performer. We feel really good about where we are right now, probably, the best we have felt in a long time in terms of our business model and our momentum. We feel like we are in a really good position to make the decisions that we have made and we feel these are the best decisions for the long term for our clients, investors and employees.

Great. And sorry, on the seasonality for 2023 on margin, did you want to address that as well and I do have a follow-up.

Sure. Directionally, Alex, you should probably expect all of this hinges on our pacing of hiring. So all things being equal, the first quarter, it’s a little hard to get all the hiring done exactly pro rata over the four quarters. So the margin might be a bit higher in the first quarter and perhaps the second quarter, and then in the back half, that hiring pace picks up. And if we have any catch-ups again on bonus next year in the fourth quarter, because we have done well, you would see the same sort of pattern occur. So, again, probably the margin trend would be a little higher earlier in the year, and perhaps, a little more muted later in the year, but it could lay out differently if the macro conditions are a little bit different as we move through the year.

Okay. Great. And I will ask my real second question then. Thank you for the clarification. Just a quick one, when I look at your revenue growth targets and your ASV growth targets, I am a little bit surprised, just if I look at historical seasonality on how ASV phases in, the revenue target seems a little bit elevated. I guess what I am trying to say is, given that usually you get a lot of the ASV in the second half of the year, I am surprised how much revenue is coming through already for fiscal year 2023. So is there something different in seasonality that you are expecting, is it that confidence over -- about the pipeline here in the first half, that you actually think revenue starts off much stronger than it otherwise would? So just maybe a little bit of help on seasonality on revenues, because it seems a lot higher than historically speaking, given the ASV guidance? Thanks.

I will start and Linda please add on. So, yeah, we are not expecting anything dramatically different, Alex, in terms of the seasonality. We did do a really great job last year of pulling more into Q1 with some sales incentives. We have a similar program set up for this year. But I think we anticipate as usual that we would capture more than half of our ASV in the second half. I don’t know, Linda, if there’s anything you can do to kind of help answer this.

Sure. We work hand in hand, Alex, with Helen Shan, our Chief Revenue Officer, who’s done an amazing job. And first quarter kickers are very helpful to getting the ASV in sooner and then we have the weight of that ASV over the course of the year, which is very, very helpful. Also, we have had very strong ASV in the back half of 2022, which converts to revenue that we can already see in the front half of 2023. So we feel pretty good about what we are seeing and we actually think that these market conditions will allow us to sit down and talk with a lot more clients about what they can do in terms of cost efficiencies, and that’s where we feel that we really shine. Also, we are doing incredibly well with head-to-head competition. In terms of requests for proposals, we are doing very well and the investment in the product is paying off with a lot of wins. So looking at next year, it’s hard to find what one shouldn’t like about this guidance for next year, 9% topline, margin expansion and EPS growth around 10%. We think that’s pretty healthy. So tax rate breaks a little bit our way. We get back to a bit more share repurchases. We feel pretty good about this guidance. So we hope that helps.

Appreciate the color. Thanks guys.

Sure.

Thank you.

Thank you. Please standby for our next question. Our next question comes from the line of Toni Kaplan with Morgan Stanley. Your line is open.

Hey. Good morning. It’s Greg Parrish on for Toni. Thanks for taking my question. I wanted to ask about the recent wealth win, I don’t know if you could size that at all for us, when should we expect that to be added to ASV? And then the second sort of part of it, if you could talk about the main differentiators that led to the win versus competitors, that would be helpful?

Hey, Greg. Yeah. I think I know the one you are referring to. So I believe that closed in August. So the impact to revenue is going to be pretty low for 2022, obviously, we will capture all of that in ‘23. It was a decent-sized win, but I would not say, it was a win that made the quarter, but it was a good multi-seven figure win and a lot -- thousands of wealth adviser desktops. So what’s driving all of these wealth wins really has a lot to do with the core product itself, but also we have released something called Advisor Dashboard, which had an exceptionally strong Q4. So we had three key Advisor Dashboard wins in Q4. So this Advisor Dashboard is an add-on to kind of all of the advisers that have the regular FactSet product for wealth but just gives a lot more intelligence to the adviser in terms of how they might want to organize their actions for the day. So this is a great market for us as well. The wins at our back. We are growing it in double digits. It’s becoming a meaningful part of FactSet’s revenue. And it’s one that we are going to continue to invest in. So Linda mentioned the RFPs. We get a lot of these. These are large decisions for these big wealth companies. So I continue -- I would expect to see a continued steady diet of these larger wins that we can execute on. It’s hard to get more than a handful every year. But below that, we are doing a lot to close tons of family offices. We are beginning to close more RIAs. There’s just a lot of great momentum in the space and it’s a lot of what’s driving our user count as well.

Okay. Great. That’s very helpful. And then maybe I just want to kind of ask about the broad market environment, maybe if you could like mark-to-market client appetite here, especially given the macro backdrop. I know you are expecting strength and it sounds like you are not really seeing any pressure yet, but obviously, there’s a lot of uncertainty out there. So how are client conversations going, are you expecting potentially maybe some deals get pushed out or is that not the case, if you can kind of just mark-to-market there? Thanks.

Yeah. We are seeing a little bit of, I think, extension in how long it takes to close a deal. We saw some of that in hedge funds. But honestly, a lot of our clients are going through the journey that we have been going through, which is digital transformation. These efforts are not stopping for our clients. You can’t stop. You have to keep investing, I think, to transform your business in this market and we have so many picks and shovels now to help the clients in terms of being more efficient that we feel it’s not a difficult thing to sit down with the C level at our clients, the heads of technology and really educate them about all the great stuff that FactSet can do. I am super excited for 2023. I think there’s a premium opportunity here for FactSet to tell our story in an even newer and more exciting way for our clients in terms of the capabilities we have. We really believe that what we have done here to transform our business is market leading, the opening of the platform, the APIs that we offer our clients now that link in with their own tech stacks, all the work that we are doing with partners like asset services, that’s really helping us. We have a new quant research environment where clients can come in and programmatically access FactSet. So we have been telling the story for years now, we are not just a workstation business. But all of these elements and these different ways that you can utilize our data and analytics just give us a ton of confidence that even if it’s a tough environment for clients and their budgets are constrained, we are going to be at the top of their list in terms of partners they want to work with.

Greg, another point to note, and Phil can speak more about this, the kind of shorthand old school idea is very much based on seat count and even if seat count is somewhat reduced at some of the banks, we don’t price most of what we are doing by seat count anymore. So that’s kind of an old school idea and we just want to make sure that everyone understands that. We see these headlines that there’s going to be some thoughtfulness regarding investment banking and so on, but the class sizes that we have seen so far haven’t moved very much at all. I think what we see here is a delay in the capital market’s pipeline and that will come back at some point. But the M&A deal market, as asset prices are returning back to earth, could be very much a bright spot. So this happens every 10 years or so and we don’t think that the result for us is going to be particularly that dramatic, but maybe Phil might have some more to say about that.

Yeah. I mean just to build on what Linda said here. I mean in banking, we did more -- we closed more ASV in banking in Q4 this year than we did last year, which might surprise some of you and more for the whole year. So we have -- you have seen the growth rates. So that’s held up really well. And within banking, where I think a lot of the concern comes from, from a seat count standpoint, we have really diversified what we sell to the banks now. So we have parts of FactSet that can get integrated into their CRM workflow. We are doing more on the feed side. So we are not just a one-trick pony anymore on the sell-side. There’s a lot of other stuff we can sell to the banks that isn’t related to just workstation.

And probably, lastly, as bankers might move away from the bulge bracket firms, generally they go to other places. They go to corporates, they go to PEVC, they go to hedge funds or they go more to the boutique firms. We have made really good strides with the boutique firms this year, because as those bulge bracket bankers might move on in their careers and move to other firms, they take FactSet with them, they take their preference for FactSet with them and that’s a very important selling tool for us. So we have seen this happening naturally. It’s a real wind at our backs. So even if bankers move around, that’s not an unhappy story for us. It just kind of spreads the gospel that FactSet has the best products to more firms. So that’s a space we are watching, but it’s probably a little overemphasized from what we are seeing.

Extremely helpful. Thank you.

Thank you. Please standby for our next question. Our next question comes from the line of George Tong with Goldman Sachs. Your line is open.

Hi. Thanks. Good morning. I wanted to go back to the margin topic, you mentioned personnel expenses, increased technology expenses contributed to the fourth quarter margin contraction and it was helpful to hear that the bonus pool reset numbers going from $110 million approximately this year to $90 million next year. So that I think helps frame that part. But how do you expect growth in investments into technology and content to evolve next year from current year levels?

Hey, George. It’s Phil. So similar programs as we both highlighted in our opening remarks. I think, I’d expect, again, a pretty even split between products and people and continuing to feed deep sector private markets, wealth, ESG. We have a couple of really cool ideas in terms of where we can invest with CUSIP Global Services in partnership with the ABA. So that’s up and running. And then we also have our upturn playbooks, as well as our downturn playbook. So if things end up going better than we think, we have other investment ideas around different asset classes and workflows that were -- that we could fund as well.

Okay. Got it. Maybe turning to ASV trends, you are guiding to organic ASV plus professional services growth to decelerate to about 8% next year. CUSIP, as you mentioned, is slower growth, so as that becomes organic, it’s going to weigh on the growth. What other factors may be contributing to ASV growth deceleration next year compared to this year?

Maybe just I will clarify something. So I think if you look at the midpoint of our guidance, which is $165 million and you divide that into the $1.84 billion that we ended the year at, that gets you closer to 9%. So the midpoint of our guidance is around 9%. I think if you then factor in CUSIP coming in like in the second half of the year, I think that’s when we consider it to be organic. So I would think of it that way, George. So we don’t really think of ourselves as decelerating that much, right? I think we ended the year at 9.3% or 9.4%, and the midpoint is around 8.9% or 9%. So that’s how the math works on that.

Okay. Got it. Thank you.

Thank you. Please standby for our next question. Our next question comes from the line of Craig Huber with Huber Research. Your line is open.

Yeah. Great. Thank you. Linda, I’d like to go back to the cost question again here. The way I look at these numbers, it looks to me like in the fourth quarter you had $360 million of cost, if we take out the onetime items up about $32 million sequentially or quarter-over-quarter up about 9%, 10%. I know you said that incentive comp was up about $6 million sequentially and stuff. Can you just break down or give me -- help me out here, what’s the other $26 million increase in cost in the August quarter versus the May quarter, obviously, CUSIP was in both quarters fully. That’s my first question, please.

Yeah. Sure. Most of it was technology expense and a couple of points there. We have had higher utilization of our cloud, our amortization because we are building our own software and more of it has come through. So fourth quarter technology expenses last year, just for hardware and software, this isn’t all of it, but just hardware and software, was $21 million and this year it was $35 million. So that gives you some idea, that’s a $14 million increase Craig of what’s going on there. So as we talked about, this is pretty much all about what we did with the employees because of the bonus accrual, some more stock payments, but that’s a lot less important and the technology expense as we are building more of our own software. Now that software amortization has kind of built from $10 million to $20 million and will even go to something more like $30 million just for software amortization next year. So that’s something that everybody should factor in. And as we said in the script, we are taking another hard look at what we are doing with our cloud transformation and we may look again at some of the things that we do on the cloud that may be able to remain on-prem. So we are thinking about that. Kate Step, our new CTO and I are looking very carefully at that. So we want to make sure that we pace all of this accordingly. But it’s -- that’s the main stuff. Its compensation and technology spend. A little bit of T&E because we are able to come out of the last year’s still in pandemic, last year at this time, T&E for the third -- for the fourth quarter was $3 million and for the year it’s $9 million. So we would see that more as a normalized run rate going forward. So we think that that’s probably most of it and just not really so much, Craig, that’s going to make a huge difference here. As we think about housekeeping for next year, Craig, since I have got you on the phone, and I know that you like this, we should think about interest expense next year as about $60 million. But as we pay down that is going to be front-end loaded. So everybody should model interest expense a little bit higher. And we do have hedged 75% of our transaction exposure that has helped us a lot this year, but we cannot hedge according to GAAP translation exposure. So, for example, when you put up your bonus pool in the center of excellence kinds of currencies that we have to pay, the dollar has been moving around so much and strengthening so dramatically during the course of August. We found that, that exposure hit us by a couple of million dollars. So that’s something we could do absolutely nothing about, because you can’t hedge translation exposure. The rest of our hedges are working really, really well. So that would be another thing that added to costs in the fourth quarter and I think that’s all we are going to say about that. For CapEx for next year, again going back to 2023, our midpoint number is probably around $68 million. We are looking to consolidate a couple of offices in Europe, where we have multiple offices from acquisitions in one country. So that’s going to cost us some money and I think the CapEx number is higher because of this amortization view that I already spoke about. So that should give you a pretty good guidance for all your modeling for next year, Craig. Anything else we can do for you?

Yeah. I did want to ask, I mean, obviously, you sound very optimistic, as best you can in this tough environment with your pipeline here. Where are some of the weaknesses in your pipeline, if you could just talk on that end of the spectrum, if you would, please?

Hey, Craig. It’s Phil. Yeah. So we don’t get into that much detail in the pipeline. But as I mentioned earlier, we have got a very broad-based plan here to grow both our businesses and our geographies. So it’s -- you can see that in this year’s results in that the range of growth rates from research and advisory through to CTS was 8% to 11%, and the regions were about 8% to 12%. So we don’t anticipate anything much different than that, so I think just stay tuned.

Great. Thank you.

Welcome. Thank you.

Thanks. Please standby for our next question. Our next question comes from the line of Russell Quelch with Redburn. Your line is open.

Yeah. Thanks having me on the call. I just wanted to go back to CUSIP quickly and I assume the retention rates are very resilient for this type of business. But I just wanted to know, is the pricing power higher, lower or the same as the rest of FactSet and I heard Phil spoke about the investments being made in product enhancements in this business. I was just wondering, what is the time to market for those enhancements and then will these weigh on CTS margins potentially in 2023?

Maybe I will speak to the investments first, and then I think Linda will have something to say on price. So, hey, Russell, so, yeah, these are new investments and we are just beginning to get these going. So they are not going to weigh heavily on margin by any means and I would not anticipate that we would be getting much of a revenue impact from them this year.

Yeah. Great questions that you have there, Russell. We would expect that CUSIP, we can think about pricing. Again, we don’t totally control the business, we are in a transaction -- transition services agreement that can last for up to a year. That’s up to March 1st. We hope to get off that sooner and there are a number of things that we need to do with CUSIP. One of those would be to look at its accounts receivable and one of the analysts was very correct in the third quarter that our days sales had gone up largely as a result of the accounts receivable from CUSIP. I am very, very pleased to note that we have reversed that trend. In fact, our days sales outstanding from the third quarter to the fourth quarter have gone from 42 days down to 37 days. We think that once we get the business completely in-house, we are going to be able to do more with that. And then we will think about pricing. But again, we run this business with the American Bankers Association, and we have to be very thoughtful and we have to think about what we are doing. So we don’t see any margin implications at all, but we could do a better job of collecting our accounts receivable with the CUSIP business. So we will be looking at that and we have a plan ready to go once that comes in-house.

Okay. Perfect. Thank you. And then just one clarification as well, the new 2023 margin guidance, does that exclude both the possible implementation of the $24 million to $36 million of the cost saves that Phil mentioned on the Q3 call, as well as the potential for higher prices that you spoke to earlier in 2023?

It does include higher prices for 2023, which is why we have confidence on the revenue line and we do have -- what we talked about on the third quarter call is we do have the potential for the downturn playbook if things get more difficult. Again, to reiterate that, bonuses come back down from sort of the $111 million, $113 million range back into the 90s and then if we don’t perform, they can drop even below that. We have other things that are scaled to -- incentive payments are scaled to how well we do and we do think that that would provide the first cushion. The second would probably be travel and entertainment, if we do need to look at tightening things. Thirdly would probably be discretionary project spend, particularly in the technology area and we would look at that as well. So we see 2% to 3% flexibility on pricing if we need it. But this is a growth business and we are pretty excited with how things are going and the market share we have been able to take. The fact that we have invested has allowed us to build cutting edge products that are winning in the marketplace. And that’s really an important thing, and we intend to keep that going. Also, our employees are doing great things and our sales team performed just out of the park in FY 2022. So those sales payments are -- had been a little bit higher, we will see what happens with those in 2023. We are rooting for the sales team to have another good year. Hope that helps.

Yeah. That helps. Thanks very much.

Thank you. Please standby for our next question. Our next question comes from the line of Shlomo Rosenbaum with Stifel. Your line is open.

Hi. This is Adam Parrington on for Shlomo. Let’s say, I think, Linda, preemptively answered the question already on the CUSIP AR. Last one would be on the, given the strength of the U.S. dollar, why was FX benefited the company’s revenue from looking at the revenue rec tables taken from reported revenue to organic?

Yeah. Adam, I am sorry, I answered the question that Shlomo correctly pointed out on days sales in the wrong place, that’s my fault. And again, we give him full credit for noting that and he maintains his third quarter gold star for having noticed that. The issue there is…

That’s the one…

The issue is this translation exposure as we put up the reserves for our bonuses. We have a lot of employees in emerging markets and then as the dollar strengthened, that situation was one that we couldn’t hedge. So that’s basically what’s going on there. One thing I forgot to say also regarding the bonus payments, which might have not been evident to everyone. We had some bonus payments that we owed as a result of some of the acquisitions that we have done that have performed pretty well. So that was another couple of million dollars on the bonus line for some of those acquisitions where we had agreements with some of the principals of those businesses. So, with all of that, we hope that, that explains things pretty well, and as we said, we are pretty pleased with our guidance for next year, 9% is the midpoint on the topline, that does include pricing power, which is very helpful to us, margin expansion of about on average median 60 basis points, if things break our way, that might be better. But as everyone has noted, we are conservative and will probably stay that way. Tax rate of 12.5% to 13.5%, we may find ourselves with some one-offs that are helpful to us there and we will see what happens with EPS if we are able to resume our share repurchases, those will have a marginal impact because they will be back-end loaded. So I think that’s about it. I think we have covered all of our housekeeping items. And with that, I think, I will turn it back over to Phil.

Great. Thanks, Linda, and thank you all for all the great questions today. I am very proud of what we have accomplished this year and we are not done yet. We have great momentum heading into 2023, as we remain focused on executing on our strategy and creating long-term value for all our stakeholders. While we recognize the uncertainty in the market, FactSet has a proven 40-plus-year of history -- 40-plus-year history of successfully navigating volatility. Thanks to our business model, innovative product mix and the central role we play for our clients. Regardless of the macro environment, I am confident in our ability to drive sustainable growth given the investments we have made in our businesses. And we look forward to speaking with you again next quarter. In the meantime, please call Kendra Brown with additional questions. Operator, this ends today’s call.

Ladies and gentlemen, this concludes today’s conference call.

Go ahead.

You may now disconnect. Everyone have a wonderful day.