Factset Research Systems Inc (FDS) — Q2 2020 Earnings Call Transcript

Thank you, Chris. Good morning, everyone. Welcome to FactSet's second quarter 2020 earnings call. Like many of you, we are also in various remote locations today. We may have some audio quality issues, and we really appreciate your patience in the event we have an audio interruption. 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 Investor Relations section of our website. The slides will be posted on our website at the conclusion of this call. A replay of today's call will be available via phone and on our website. 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 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, FactSet's Chief Executive Officer, and Helen Shan, FactSet's Chief Financial Officer. I'd now like to turn the discussion over to Phil Snow.

Thanks, Rima, and good morning to everyone, wherever you are today. I'd like to take a moment just to address the unprecedented times we are experiencing. And as ever, our foremost priority remains the health and safety of our employees, their families, and our clients. We're doing everything we can to support our stakeholders around the world, and our thoughts are with each of you during this extremely challenging period. FactSet has implemented its business continuity plans, and our incident management team is in place to ensure we respond to changes in our environment quickly and effectively. We're also working closely with clients to support them as they implement their own contingency plans, helping them access FactSet remotely. On the service side, we enhanced our support and resources to manage increased volumes and have extended additional web IDs to clients in need of immediate remote access to financial data. Our open flexible platform is well suited for this environment, and the investments we've made to date in technology allow us to serve our clients better. Additionally, part of our three-year plan is accelerating the digital transformation, and the efficiencies and values that digital transformation brings are even more amplified in a world where both we and our clients are working remotely. To that end, in the context of immense change in our industry and the markets at large, we're pleased to deliver a strong second quarter and fiscal half-year with promising growth across our businesses. Let's now talk about ASV and our geographic breakdown. Organic ASV plus professional services grew at 4.3%, an increase in our growth rate compared to the first quarter, resulting from a stronger second quarter year-over-year. The Americas region performed well with a particularly strong quarter from our analytics business. The Americas also benefited from our annual price increase and continued improvement in our client retention and new business initiatives. This performance was offset by softer results in the APAC region due to slower expansion and higher cancellation rates, which we could partly attribute to delays in expected decision-making amidst the Hong Kong protests and the onset of the coronavirus pandemic. As conditions improve, we see many opportunities to execute, particularly in analytics and CTS, and expect to see this region return to higher growth. Our sales in Europe improved year-over-year due to a lower cancellation rate compared to the second quarter of fiscal '19. Additionally, analytics and research both performed well in the Europe region, and we continue to capitalize on opportunities with wealth and institutional asset managers. Of course, we are being cautious amid greater uncertainty in all our regions due to the evolving impact of the coronavirus pandemic. A quick overview of our second quarter results. Q2 growth was driven by an especially strong performance from analytics. This strength was reflected across multiple aspects of the business, including performance and reporting, trading solutions, and risk management, where we continue to see demand for our multi-asset class offerings. The analytics pipeline looks healthy with strong demand in performance, reporting, and fixed income. Wealth also performed well across all regions. I'm proud of our team for expanding the wealth opportunities we have, especially compared to prior years. We're growing both our product offering and client base, laying the groundwork for a healthy pipeline. Research had a solid quarter relative to the first quarter, driven by stronger client retention and cross-selling to existing clients. Our enhanced deep sector data strategy is helping to pave the way for additional corporate clients. Research also benefited from our annual price increase. Within content and technology solutions, we have a solid pipeline as we head into the second half of the year, driven by strength in our core and premium data feed offerings. We're excited about clients consuming data through APIs and continuing to make our proprietary datasets available on the cloud. An example is our partnership with the cloud data platform Snowflake, which helps users centralize, integrate, and analyze FactSet content alongside other hosted data feeds in an open and interoperable way. As we've said before, we're investing from a position of strength to meet universal client demand for increased efficiency and cost savings, particularly through our efforts in content and technology. This investment is more important today than ever, with clients stressing the need for flexible access to critical data in the current environment. Our continued spending on technology, transition to the cloud, and increased pace of API launches have proven vital these last few weeks, and we believe they will make us more resilient in the long term. Our content strategy is also progressing well and is proving equally important to clients. Detailed, industry-specific data, which we refer to as our deep sector strategy, is highly needed, and we are seeing strong demand for the sectors we've launched as well as those we plan to launch in the coming months. We believe this demand will increase our appeal to a wider client base, especially when combined with our growing private markets and StreetAccount offerings. I'm pleased that FactSet's overall expansion of coverage is receiving such a positive response from clients, helping us address their needs for comprehensive content solutions. Now, before I turn the call over to Helen, I want to highlight that our pipeline at the end of this quarter appeared to be the healthiest in years. As we noted previously, we've been projecting a stronger second half for our fiscal 2020. It's difficult to measure the potential impact of the coronavirus pandemic on our clients, employees, industry, and broader markets, and Helen is going to walk you through the details of how this may impact our business in a few moments. But first, I want to stress that our robust subscription-based business model and our strategy together with our best-in-class products, many of which are critical to clients, position us well to manage through this period. Moreover, we continue to diversify our product and client base over the years. Our plans to invest in content and technology are more important in today's environment than ever. I want to reiterate our commitment to our three-year investment plan. We've proven resilience in times of volatility with a strong balance sheet and have gone on to deliver consistent long-term growth and value to our shareholders, which we expect we will continue in the future. While we believe we have good momentum going into the second half, we fully recognize the scale of the challenge that the entire industry faces, and through it all, our job is to do what we do best: help our clients weather such unprecedented change. Let me now turn the call over to Helen, who will discuss the specifics of our second quarter performance and the second half outlook.

Thank you, Phil. I'm really glad to be here with all of you today. I hope you and your families are healthy and safe. As Phil stated, our priority is the well-being of our employees and ensuring that we can provide uninterrupted service to our clients. At the same time, today is about updating all of you on our second quarter and also discussing our outlook for the second half, given what we know today about the macro environment. As we have discussed on previous calls, our performance is a tale of two halves. We are ahead year-on-year in our first half of 2020 in revenue, operating margin, and EPS. Our three-year investment plan also remains on track as we continue to ramp up hiring and spending in the areas of content and technology. I will now walk us through the specifics of the second quarter's results. GAAP and organic revenue increased by 4% to $370 million and $371 million respectively. Growth was driven primarily by wealth, CTS, and analytics. The result was further supported by our January 1 annual Americas price increase, which totaled $12 million, a $2 million increase over the prior year. For our geographic segments, over the last 12 months, Americas revenue and international revenue both grew 4% organically. Americas primarily benefited from increases in wealth and analytics. International revenue was largely driven by analytics and CTS. GAAP operating expenses for the first half totaled $264 million, a 7% uptick over the prior year. This increase reflects the acceleration of spending related to our investment plan. With expenses growing faster than revenue, our GAAP margin decreased 190 basis points to 29%. Adjusted operating margin decreased by 140 basis points to 32% versus last year. As a percentage of revenue, the decrease in margins came largely from our cost of services, which was 110 basis points higher than last year on a GAAP basis. On an adjusted basis, the cost of sales was higher by 170 basis points. Increased costs for both GAAP and adjusted were driven by our planned spending in technology related to our three-year investment plan, partially offset by productivity gains and salary costs as we continue to shift hiring from high-cost to low-cost locations. SG&A expenses, expressed as a percentage of revenue, grew 80 basis points over the prior-year period on a GAAP basis. On an adjusted basis, the expenses grew by 30 basis points year-over-year. On a GAAP basis, the increase in expenses is from higher professional fees related to the execution of the investment plan, offset by reduced travel and entertainment expenses and lower bad debt expense. On an adjusted basis, the increase was primarily due to higher office and marketing costs. Moving on, our tax rate for the quarter was 14%. This rate includes tax benefits related to stock compensation exercises. Keep in mind that when we provided annual guidance for fiscal 2020, we did include a certain level of stock compensation exercises. Given the strong performance of our stock during the quarter, the exercises in the amount of benefit were higher than we had estimated. GAAP EPS increased 5% to $2.30 this quarter versus $2.19 in the second quarter of 2019. Adjusted diluted EPS also grew 5% to $2.55 primarily due to a lower tax rate. Looking at the first half of the year, EPS growth was driven primarily by operating earnings, boosted by a lower tax rate and lower interest expense. Reconciliation of our adjustments to GAAP EPS is disclosed at the end of our press release. Free cash flow, which we define as cash generated from operations less capital spending, was $75 million for the quarter, a decrease of 15% over the same period last year. This reduction is primarily due to expected higher capital expenditures related to office space build-out for some of our locations, where existing leases have neared expiration. The timing of capex spend related to technology and facilities is important to note as we review the first half of fiscal 2020 free cash flow grew by nearly 16%. For the second quarter, our ASV retention continued to be over 95%. Versus the prior year, we grew the total number of clients by 5% on a last 12 months basis, reflecting the addition of wealth and corporate clients and the retention of 89% of existing clients. These results and our overall healthy client base reflect the activities in flight with our sales organization, who have targets focused on retention, expansion, and new business. For the second quarter, we bought back 268,000 shares for $74 million at an average share price of $277. Our Board of Directors recently authorized an additional $220 million to our share repurchase program, bringing the total size back to $300 million. Over the last 12 months, we have returned over $375 million to our investors in the form of dividends and share repurchases. We remain committed to creating long-term value for our shareholders and plan to repurchase shares at a steady pace in line with last year. Turning to the outlook for the rest of our fiscal year, the environment we live and operate in has changed enormously in the past few months. One of the strengths of FactSet is our business model, which generates stable and recurring cash flows. Another strength is the criticality of our solutions for our clients, as reflected in our high retention rate. Lastly, we have a solid balance sheet with low debt leverage and ample liquidity. As a result, FactSet has proven to be resilient during periods of volatility and has the capacity to invest even through periods of disruption. These attributes should allow us to succeed through downturns and emerge stronger. As we look forward, uncertainty surrounding the magnitude, duration, and overall economic impact of the coronavirus pandemic makes it challenging to assess the potential effect on our ASV growth, both in the second half of the year and further into 2021. However, in determining the possible impact on fiscal year 2020, we considered a number of factors. First, the potential delay in decision-making causing a longer sales cycle. This may also have a positive impact in the form of delayed cancellations. Second, implementation risk due to restrictions on being able to work on-site. While we can do virtual implementation for many of our products, our clients may not have the technology to enable us to execute successfully. Third, possible reduced seasonal hiring at investment banks, who are some of our largest clients over the summer months. It is possible that the negative effect of these factors could present a significant headwind on our ability to realize our strong ASV pipeline in this fiscal year ending in August. Based on what we know today, we believe the risk could be up to $25 million over the fiscal second half. With this risk, we now expect the increase in our organic ASV plus professional services to be in the range of $50 million to $75 million. It is important to note that our business is subscription in nature. ASV booked later in the fiscal year is realized as revenue on a proportionate basis. Given that we booked the highest amount of ASV in the fourth quarter, we expect the impact to 2020 revenues will be limited. It is important to emphasize that these numbers reflect our best estimates at this time. It's simply too early to know what the exact number will be, but we hope to gain more experience and insights from clients over time and be able to better assess the implications for fiscal year 2020 and 2021. We believe that lowering our expenses would help to offset any reduced realized revenue. We remain committed to reducing expenses through the following actions: further reduction of discretionary spending, particularly travel and entertainment, building upon our prior success in prudent expense management and productivity; tighter management of headcount spend with a focus on our most critical areas; and hiring in lower-cost locations; reduction in variable third-party content costs in a manner consistent with client demand. These actions will also moderate depending on economic conditions. For example, travel and entertainment expenses and targeted third-party content costs would be variable in nature. We have also taken additional expenses related to business continuity and the pandemic into account as well. Reflecting our profitability improvements over the past 18 months, our team has proven our ability to manage expenses and increase efficiencies. As noted, we are adjusting our guidance on the ASV range in light of our best estimates today but leaving the rest of our guidance unchanged. Based on our results for the first half, in which revenue growth and operating margins were in line with our expectations and our ability to mitigate the potential lower revenue impact with direct expense reductions in the second half, we are reaffirming the other metrics. In closing, we are often asked how we might perform during a future downturn in the economy. We point to the 2008-2009 time period in which we grew both the top and bottom line. As discussed, our business model is resilient and one of our greatest strengths. In addition, our product base has evolved in terms of its technology, interoperability, and flexibility, making us more critical to clients. We remain committed to our investment plan and will look for other opportunities to grow, support our clients during times of change, as well as deliver value to long-term shareholders. With that, we are now ready for questions. Over to you, Chris.

Thank you so much. Glad to hear you're all well. Given that the quarter ended in February, before a lot of the volatility started to increase, what are the trends that you're seeing in March across the different businesses? If you could just give us like a real-time trends that you're seeing through as late as you possibly could?

Sure. Hey Toni, it's Phil. Hope you're doing fine. So I think as Helen mentioned, during her remarks, we felt very good about the pipeline going into the second half. And from what we can see today, that pipeline is really hanging in there. We are still closing deals. We're talking very closely to our largest clients, some of the bigger deals in the pipeline. We are anticipating some headwinds. But we're not seeing just an immediate response from the clients in terms of either cutting back services or completely pushing out things that were in the pipeline.

Got it. And you did mention the pipeline there, and then also that's the strongest that you've had as you ended the quarter. You mentioned a number of the areas, analytics being very healthy, also research and CTS. Just, I guess, which are the best, most increased parts of the pipeline? What are you really seeing people signing up for and demanding right now?

Yes, sure. Let me zoom out a little bit. The area where we're seeing some really great momentum is within the institutional asset management clients, the core FactSet clients. When we talk about the buy side, there are lots of other firms that are included there, including many wealth clients and hedge funds, but the core institutional asset management clients this year are doing much better for us than last year. I attribute a lot of that to the work we've done around the portfolio life cycle and the strength of the analytics products. The work we did to integrate the acquisitions that you're all aware of from three years ago is really beginning to bear fruit. We can see that with our performance suite, we can see it with advancements we've made in our risk offering. We're continuing to build momentum in fixed income now that the specialists are back in that business line. Our reporting suite, which was a result of acquiring Vermilion, is also doing great. Those are enterprise solutions, so they are not tied to the desktop. I'm very excited about that. That segment of our market has been under pressure, but just to see the turnaround, particularly given the recent trends, is very promising. Our open platform is resonating. We have a very healthy pipeline for CTS going into the second half, and a lot of that is within these core institutional asset management clients who are either feeding systems, or just needing to look at lots of new data in interesting ways. Those are some of the highlights.

Thanks a lot. Stay safe and healthy.

Yes, you too. Thanks.

Thank you. Good morning. Phil, I was hoping for a little bit of compare/contrast of FactSet today versus '08, '09 kind of time frame. Because, yes, I believe in '09, you guys did grow slightly positively, but it also decelerated from what was a really strong growth prior to that. So I was just curious how you would describe the resiliency, diversification, et cetera today.

Yes. It's a good thing to think about, and of course I've gone back and reflected on that a decade ago, Manav. Each black swan event is different, and sometimes it's hard to draw parallels. But there are some things that are different now. Back then, a lot of the markets were broken, right, and we saw Lehman and Bear just completely go out of business. Those were large clients for us. What you saw there was clients disappearing. I don't think that's going to happen the same way this time; you don't know. But I think that's one point of comparison. Back then also, our clients had a lot more flexibility within the contract, so they were able to unwind a little more quickly than they would be able to now if they wanted to. But overriding that, I think the breadth of our product suite now and the fact that we have evolved from just being on the desktop to being more of a workflow solution, is a positive difference. With the exception of our feed business, which was pretty small back then, almost everything on FactSet was tied to people in terms of the workstation. We had PA, which was great, but it was an add-on typically then to the workstation and less of a workflow solution. It was a severe downturn in the markets, but I think the circumstances are different in a positive way for us this time.

Got it. And then Helen, you walked through a lot of cost areas where you have something to exclude. I was just curious on the three-year investment plan. Does that continue at all costs? Is there a point where you think about even slowing that down?

Yes, thank you for your question. At this juncture, what we do typically is to review every quarter where we stand, how milestones are, and what has happened in the environment that makes us rethink any changes that we would need to make. At this point right now, we're looking at prioritizing spend and will make adjustments if needed. We're investing for growth in the long term. The first year was really about investing, as opposed to seeing returns early on. So at this point, there is no plan for any change.

All right, got it. Thank you, guys.

Got it. Take care.

Good morning. Hope everybody is well, as well. Just a first question. If you could talk about whether you think switching costs are a barrier to entry in your business? Particularly when contracts come up for renewal, is there greater price sensitivity in a slowdown? Do switching costs help your retention? Or is it pretty easy for people to switch because competitors come in and they just redo codes to their product instead?

Hamzah, it's Phil. So I think switching costs change and there's a lot of work that goes into that for clients. I think Helen mentioned this earlier, but in the same way that clients may be slowing down their decisions in terms of things that we have actively in the pipeline, in cases where we're working with either an internal solution or a competitor in some sort of bake-off, that will slow the decision-making around that. The change right now for clients is their switching costs. What I will highlight, which we're seeing a lot of positive feedback from our clients on right now, is we can deploy FactSet very quickly, and our web-based product now is proving to be a real winner in this market. We are actively reaching out to our clients like we always do, saying how can we help. We're offering web ideas for FactSet, for clients where they need it, where someone may not even be a user today, and we're deploying that. We're nimble, we're agile, and we're doing what FactSet does best, which is support clients, particularly through periods like this. The fact that we can get those out very quickly is getting a positive response from clients.

Great. And just a follow-up question. Any update as to simplification of your pricing model and moving to more enterprise-wide contracts? Any update there? Thank you.

Helen, do you want to take that one?

Sure, I will. Thanks for your question. Right now, in terms of our ability to continue to capture the value that we provide clients, we will look for enterprise solutions with our larger clients. But that's not something we do uniformly; it's really on a case-by-case basis for our strategic client group. For now, it's about pricing on a workflow basis, and we've had good success with it. So I see us continuing down that path.

Thank you.

Hey, good morning, everyone. Just want to come back to ASV that you still need to do for the end of the year to get to the midpoint. I think it's about $40 million. And how are the expectations? What's supposed to come in terms of what's in the pipeline? How much of the growth of the ASV is dependent on things already signed kind of bigger enterprise implementations versus maybe some of the ASV growth as opposed to come from more users at some of your existing clients? And how cancellations are already factored into the updated ASV? Thank you.

Sure. The one area where we could see some pressure and it’s hard to predict is the summer banking hires at the large banks. We've not heard yet that any of that is getting canceled, but going into the second half, we model that based on prior years and how we think things are trending. That usually leads to a decent uptick in Q4. If the banks decide to slow down hiring or cancel classes, that will affect us. We've modeled a lot of that in already. We have good deals in the pipeline, but our sales cycle is a little longer than it used to be, given that we have some of these enterprise products. These are important mission-critical solutions for clients and we don't expect these opportunities to disappear, just to be delayed as clients look for certainty and assess the situation. In terms of the pipeline, it's pretty evenly split between the Americas, Europe, and Asia-Pac. Asia-Pac is a strong second half pipeline, which will be interesting to watch, especially since that region appears to be managing the coronavirus situation better than others.

Maybe I could just add a little to that.

That was helpful. Yes, please. Thanks.

Yes, that's helpful, Alex. We are in a unique position regarding the quality of pipeline, and how we would think about the risk, as we said, it's delay in decision-making, which is about half of the overall risk, another quarter could be implementation, and the balance could be user growth, meaning if we had a reduction there. On the first two buckets, that is more about timing. We have been considering all factors in our proximity with the clients to give us insights on how to assess the ASV.

That's actually great information. Thank you. I have one more question about the timing. Typically, in the next quarter, you've added around $10 million to $15 million in annual subscription value, and then seen increases of $30 million to over $40 million in the fourth quarter. Are you currently expecting that the third quarter might see almost no growth due to delays, with hopes for a significant rebound in the fourth quarter? How do you view the overall trajectory? I appreciate your insights.

Yes, I don’t know about non-existent. Last year, our Q3 was in the $4 million to $5 million range, and we are seeing Q3 look much better than it did at this point last year. It’s just a question of how much can we close in the next few months. We've not seen major impact, but we're just waiting for data to confirm acceleration or deceleration. We also expect to have a strong Q4 lined up, and the weightings in previous years are consistent with what we've shared.

Thanks for taking my question. I believe you mentioned $25 million of ASV risk, but the guidance at the midpoint was only taken down by $12.5 million. So I was wondering if you could provide some context around how much the guidance was lowered versus how much ASV is at risk. Based on that, would it be fair to assume that the remaining $40 million less $25 million already has decent visibility?

Yes, thank you for your question. As you can imagine, this is a little more arts and science. We looked at the sentiment on deals and adjusted our range. We believe the risk could be up to $25 million, so we took down our midpoint by $12.5 million. We were trying to be less precise, but that was our thinking. The cadence of ASV growth is in-line with recent years, with the majority coming in Q4.

Helen, that's helpful. And maybe, Phil, a quick question on the pipeline. How should we consider the pipeline being delayed, which potentially also presents a risk of getting canceled? Just given how quickly we saw this market going down 25% in such a short period of time. How up to date is that pipeline, given how quickly things changed?

Yes. Helen spoke a little bit to our methodology. The pipeline is updated in real time. We encourage our salespeople to make sure their probabilities are accurate and up to date. We are expecting less straight cancellations and more delayed decision-making at this point. The visibility is good, even with very few calls or inquiries on cancellations right now.

Thanks a lot, sir.

Sure, yes.

Sorry about that. Trying to unmute my phone. Good morning, everyone.

Good morning.

First question I had for you was, why wouldn't the Americas have a similar impact as the coronavirus had on APAC performance?

There will be some impact there, Bill. But the Asia-Pac is a much smaller region. It's a bit more difficult to draw analogies there. The factors in APAC include local conditions, and the opportunities might have been more heavily weighted towards the second half. We see Asia-Pac as a big opportunity for us and one that we want to continue to invest in.

And just to add to that, there was a fair amount of political unrest happening in Hong Kong. Right. So there are multiple factors that need to be considered.

Got it, okay. I wanted to ask for a clarification on the subscriptions. What is the cancellation policy for clients? How much notice is required to cancel fees or to reduce usage?

We have a lot more clients on multi-year contracts with minimums than we did in '08 and '09. Most clients are on annual contracts now that require more advanced notice for cancellations, but it varies client by client.

Got it. Did you come up with that name, Phil? Snowflake, is that yours?

No, I didn't. I do have a brother whose name is John Snow, which provides endless amusement for everybody.

All right. Well, thank you very much.

Okay, thanks.

Hi, thank you. Just a quick question regarding tax spend. Is there anything you're seeing with the turmoil that's making you think about reprioritizing what you're spending on in tech or spending more money to take advantage of certain things? I'm just wondering, how does that work or is it too early to make any changes?

Yes. Part of our multi-year plan is to invest heavily in technology, open up more APIs, move to the public cloud, and offer a more personalized experience for clients. We are executing very well against it. This might be a time to step on the gas regarding that. We're looking carefully at the budgets to understand the visibility for the next six to twelve months, but there’s an argument to go faster.

Can you talk a little bit about whether you're bringing on additional support staff to handle the extra volume of calls from your clients given everyone is working remotely?

Yes, we're beefing up our support desk for clients. We see increased volume. We're seeing FactSet used more than ever. People need access to our system, and we're seeing good usage across the platform. We have increased our support staff primarily in Asia where our operations are strong, and the team is doing everything they can to perform exceptionally well from a systems standpoint.

Okay, great. Thanks.

I just want to add that the situation is demonstrating the importance of our investments in digital technology. We are also glad our infrastructure has allowed us to work remotely without disruptions. It's reinforcing our past decisions.

Okay. Thank you.

Hey, good morning. If you could provide the revenue number from Europe and Asia for the quarter, ideally to one decimal place, rather than waiting for the 10-Q.

Could you repeat that? I might have missed that.

I was hoping you could provide the revenue number from Europe and Asia for the quarter to one decimal place;

Rima can follow up with you after the call on that. She can give you that information.

I think that's right.

Okay. I wanted to ask about the outlook for costs in the May and August quarters, relative to the $258 million of expenses in the February quarter excluding one-time items. How should we think about your hiring plans for the next three and six months, given the environment?

As we discussed, we have maintained our guidance. We'll focus on hiring in the investment areas. If there are less essential new hires, we'll adjust accordingly. At this point, there's no change to our plan.

Thank you. I also want to ask about wealth management. You've talked today about the outlook for bringing on more wealth management clients. Are you still optimistic as you go through this period about adding those larger clients?

Yes, absolutely. We have large opportunities in process, and we're actively communicating with those firms during this time. We're optimistic about closing those deals, and ensuring clients are comfortable transitioning during this period. It's definitely an area we expect to gain business from, but those could be delayed.

Great, thanks. Thanks everyone for joining us today. I hope you're all safe, and your families are well. I'm pleased with what we've accomplished in the first half of fiscal '20. We have a solid foundation which helps us remain resilient through disruptions. These are early days in what could be a lengthy period of global change. I want to stress our unique strength in supporting clients by leveraging our increasingly open and flexible technology stack. This is an important time for resilience and helping clients navigate through challenges. 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.