FactSet Research Systems Inc (FDS) Q3 2020 earnings call dated Jun. 25, 2020
Corporate Participants:
Rima Hyder — Vice President, External Communications
Philip Snow — Chief Executive Officer
Helen Shan — Chief Financial Officer
Analysts:
Toni Kaplan — Morgan Stanley — Analyst
Manav Patnaik — Barclays — Analyst
Bill Warmington — Wells Fargo — Analyst
Alex Kramm — UBS — Analyst
Hamzah Mazari — Jefferies — Analyst
Shlomo Rosenbaum — Stifel — Analyst
Andrew Nicholas — William Blair — Analyst
David Chu — BofA Securities — Analyst
Peter Heckmann — D.A. Davidson — Analyst
Ashish Sabadra — Deutsche Bank — Analyst
George Tong — Goldman Sachs — Analyst
Keith Housum — Northcoast Research — Analyst
Presentation:
Operator
Ladies and gentlemen, thank you for standing by, and welcome to the FactSet Q3 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions].
I would now like to hand the conference over to your speaker today, Ms. Rima Hyder, Vice President of External Communications. Thank you. Please go ahead.
Rima Hyder — Vice President, External Communications
Thank you, Jimmy. Good morning, everyone. Welcome to FactSet’s third fiscal quarter 2020 earnings call. Like last quarter, we are in various remote locations today. We may have some audio quality issues and we appreciate your patience, should we experience a disruption.
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 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 legal notice on Slide 2, which explains the risks of forward-looking statements and the use of non-GAAP financial measures. Additionally, please refer to our Forms 10-K and 10-Q for a discussion of risk factors that could cause actual results to differ materially from these forward-looking statements.
Our slide presentation and discussions on this call will include certain non-GAAP financial measures. For such measures, reconciliation to the most directly comparable GAAP measures are in the Appendix to the presentation and in our earnings release issued earlier today.
Joining me today are Phil Snow, Chief Executive Officer; and Helen Shan, our Chief Financial Officer.
I’d now like to turn the discussion over to Phil Snow.
Philip Snow — Chief Executive Officer
Thanks, Rima, and good morning, and good afternoon to everyone.
To start things off, I’d really like to thank the entire FactSet team for its remarkable efforts over the last quarter. It’s really inspiring to see how FactSetters ago going above and beyond each day to support our clients and each other as we all explore new ways of working.
We’ve been positively surprised on how quickly we’ve been able to adapt to working in new ways and are actively evaluating what this could mean in terms of efficiency, productivity, client experience, talent and work-life balance for our employees.
We’ve maintained a high-level of engagement with both clients and employees over the last quarter and we show healthy trends in client usage and interactions with our client service team. Our annual hackathon had a record number of projects submitted this year with some fantastic ideas. And FactSetters around the world continued to support our communities through company-wide volunteering and donation efforts.
Let me talk a little bit about digital transformation and our investment plan. The events of this year and the uncertainty in what form the recovery might take is likely to put continued pressure on our end markets. There’s even more urgency for firms to revamp their legacy platforms and accelerate their digital transformation efforts. Developing next-generation manufacturing capabilities and delivering a more personalized experience is going to be the key to winning for asset managers and asset owners, and the success that firms on both the buy-side and sell-side have seen in working remotely could be a meaningful catalyst in transforming historically inefficient workflows.
The transition to a more digitally driven future, which was already taking place, is accelerating at a pace few would have predicted three months ago. More firms are moving to the public cloud and upgrading their data and technology faster to meet the needs of a virtual workforce, manage volatility and continue to adapt, evolve and compete.
Our investment plan addresses these trends and is rooted in migration to the cloud and a long-standing mission of providing clients with actionable data and insights where, when and how they want it. Every day, we are supporting our customers with their own digital transformation efforts, delivering personalized and value-added solutions, and as a result, deepening our relationships with them.
We remain confident and on-track with the programs in our three-year investment plan. Our focus on transforming our technology landscape, creating a new universe of data for private markets along with our expansion of critical content for banking and wealth, position us well to capture market share. We’ve found this is a good market for talent and made some key industry hires in the third quarter.
Our business model has shown its resilience and confirmed that our solutions are mission-critical for clients, particularly during times of market stress. We launched many new enhancements in the quarter and added deeper, richer content in finance, insurance and real estate.
Also, we’ve reached an important milestone last week where we had our last VMS install, marking the end of project Next Gen. For those of you that recall this project, it’s been a large undertaking for our engineers over many years, and completing this project allows them to focus on some of the newer things we’re doing such as the shift to the public cloud.
Let me talk a little bit about ASV and the geographic breakdown this quarter. Turning to results, I’m pleased with our performance for the quarter. We executed well on our pipeline and we were effective at managing costs. While we remain cautious given the uncertainty in the markets and the economy, we remain on-track to meet our revised ASV guidance for fiscal 2020, which we have narrowed to $60 million to $75 million.
This quarter, our organic ASV plus Professional Services grew 5%. Our Americas region had a solid quarter with 5% growth, benefiting from a healthy pipeline built earlier in the year. Asia-Pacific rebounded with strong growth of 9% and saw an acceleration in new business and the easing of pandemic-related restrictions in key markets; and our EMEA region, which grew at 4%, benefited from an uptick in demand for CTS and the international price increase.
ASV growth in our third quarter was largely driven by Wealth and Research. We continue to expand our Wealth pipeline and add wins this year despite facing some delays due to the pandemic.
Research grew, thanks to healthy demand from investments and asset management clients, especially in the Americas region, as well as our international price increase and improved client retention. Our deep sector strategy continues to have a positive impact on both retention and our ability to expand our client base beyond the traditional investment space, particularly with corporate clients. Content and Technology Solutions also performed well, driven by continued strong demand for premium and core data feeds and a strategic win with GPIF, Japan’s largest pension investment fund.
Analytics had a slightly weaker quarter, primarily due to some large deals being pushed out to the fourth quarter, but it’s been a solid contributor to-date, and has a healthy pipeline, especially across performance reporting and fixed income.
Additionally, we delivered strong results in our adjusted operating margin and EPS, seeing some cost benefits related to the pandemic, and Helen will walk you through these in a few minutes.
In summary, we’re executing well and remain confident in our ability to finish fiscal 2020 on a strong note. At the same time, we’re aware that the uncertainty surrounding the coronavirus pandemic makes it more difficult to predict the longer-term impact on our pipeline. We’re excited about the pace of innovation at FactSet and our industry and believe we are well-positioned to meet the needs of the virtual workforce, and we are pleased with the high levels of engagement and productivity we have seen throughout the quarter.
As the world around us changes seemingly daily, I’m proud to say that we are still closing deals, bringing on new clients, and finding new ways to collaborate.
Before I turn the call over to Helen, I want to take a moment to talk about the four changes we announced yesterday. I particularly want to thank Phil Hadley who has decided to retire from our Board and to welcome Robin Abrams as the incoming Chair.
Many of you know Phil, who was FactSet’s CEO for 15 years and served as our Board Chair for 20 years. I want to thank him both personally and on behalf of the entire FactSet community for his visionary leadership and profound contributions to FactSet’s success.
Additionally, I’d like to thank Scott Billeadeau, who is going to be with us until the end of the calendar year for his years of client perspective as well as steering the Audit Committee. And we also look forward to working with Siew Kai Choy and Lee Shavel, who both bring a breadth of experience to our Board.
You’ll now hear from Helen, who will take you through more details for our third quarter.
Helen Shan — Chief Financial Officer
Thank you, Phil, and hello, everyone. I’m happy to be speaking with you today, and hope you and your loved ones remain safe and well.
I want to reiterate Phil’s appreciation to the FactSet team. Our colleagues continue to show their strength and resilience in partnering with clients and with each other. The positive outcome is reflected in our results.
We entered the third quarter with solid pipeline. And for a second quarter in a row, we accelerated our growth rate in ASV and Professional Services. We experienced expansion in our operating margin and an increase in our EPS.
Back in March, we noted that the uncertainty of the environment could impact both the top and bottom line in terms of our ability to generate new ASV and the potential to realize savings from lower discretionary costs such as T&E.
With disciplined execution, we secured new wins and used productivity benefits to help fund our investments in content and technology.
I’ll now walk us through the specifics of the third quarter. We increased ASV by $14 million or 5% year-over-year, reflecting solid growth through existing clients with continued strong retention and realization of cross-sell opportunities.
Our annual price increase outside the U.S. generated $7 million, a $2 million increase over the prior year, affirming the value clients find in our suite of offerings.
GAAP and organic revenue increased by 3% to $374 million and $375 million, respectively. Growth was driven primarily by Analytics, CTS and Wealth. Please note that last year we had a one-time sale of data to a corporate client that positively impacted revenue for our third quarter of 2019, specifically in the Americas region. Adjusting for this transaction, the revenue growth rate year-over-year would have been 4%.
For our geographic segments, Americas revenue grew 2%, EMEA 3% and Asia-Pacific was the highest at 7% year-over-year. The regions primarily benefited from increases in Analytics, Wealth and CTS.
GAAP operating expenses for the third quarter totaled $252 million, a 2% [Phonetic] uptick over the previous year and in line with revenue growth. Our GAAP operating margin increased 30 basis points to 32.5%. Adjusted operating margin improved by 150 basis points to 35.5% versus last year. These results also reflect the positive impact of 40 basis points due to favorable foreign exchange rates.
Expenses for the quarter include investments in technology and in new talent and capabilities, offset by net savings in productivity from workforce mix and a reduction in discretionary expenses. The result is an improved operating margin.
As a percentage of revenue, our cost of sales was 70 basis points higher than last year on a GAAP basis. On an adjusted basis, the cost of sales was essentially flat.
Increased costs were driven by technology spend, which includes our shift to the public cloud as part of our three-year investment plan. This total was partially offset by lower compensation costs driven by more concentrated hiring in low cost locations.
Lower SG&A expenses are largely responsible for the increase in operating margin. When expressed as a percentage of revenue, SG&A decreased 100 basis points over the prior-year period on a GAAP basis. On an adjusted basis, SG&A expenses decreased by 140 basis points year-over-year. The drivers include materially reduced travel and entertainment costs, as well as office-related spend. Both reflect the current working environment given closed offices and limited need for travel.
We would expect a portion of this spend to resume once we are able to return to the office and operate in a post-pandemic environment.
Moving on, our tax rate for the quarter was 15% compared to last year’s 19%. This improvement is mainly due to the timing of an income tax expense in the third quarter of 2019, related to finalizing the company’s tax returns. It was no similar event for this quarter.
GAAP EPS increased 11% to $2.63 this quarter versus $2.37 in the prior year, and adjusted diluted EPS grew 9% to $2.86. Both were driven by higher operating results and lower interest expense and GAAP EPS was further boosted by the lower tax rate. 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 $140 million for the quarter, a decrease of 6% over the same period last year. This reduction is primarily due to the timing of certain international tax payments. On a year-to-year basis, free cash flow grew by 4%, despite higher capital expenditures on facilities.
For the third quarter, our ASV retention continued to be above 95%. We grew the total number of clients by 1% compared to our prior year, reflecting the addition of wealth and corporate clients.
Our client retention rate held steady at 89%, demonstrating the value of our offerings to clients, even and perhaps especially during these challenging times.
For the third quarter, we bought back 47,000 shares for a total of $12 million at an average share price of $266. We remain disciplined in our buyback program and the amount we purchased in part reflects the highest performance of our share price this past quarter. Year-to-date, we have repurchased $173 million of our shares.
Additionally, over the last 12-months, we have returned over $343 million to our investors in the form of dividends and share repurchases. We recently increased our dividend by 7% to $0.77, marking our 15th consecutive year of dividend increases. We remain committed to returning long-term value to our shareholders.
Turning now to our outlook for the remainder of our fiscal year. As Phil mentioned, our performance over the past few months reflects the resiliency and strength of FactSet’s business model and the mission-critical value of our content. Moreover, our recurring cash flows and strong balance sheet provides stability during times of market volatility.
We continue to believe these attributes will allow us to succeed through further challenges and emerge stronger when the economy eventually recovers.
Given our solid third quarter performance, we believe we were able to address some of the factors we discussed on our last earnings call. However, we remain cautious for our fourth quarter.
First, we had noted that there might be delays in decision-making, which could cause longer sales cycle. We have seen examples of trials taking more time and disruption in the internal approvals process especially with larger clients. A number of Q3 deals moved into Q4, but in-line with the previous year.
Similarly, this same dynamic resulted in benefits as we experienced lower cancellations versus the prior year. Hence, our retention rate remained high.
Second, we had cited the potential of delays and implementations due to restrictions on being able to work on-site. While we have some clients who were unable to accommodate our virtual implementations, these deals, to-date, have not impacted our top line in a meaningful way.
And third, we had highlighted the uncertainty around seasonal hiring at the investment banks over the summer months. The ASV from our banking business is primarily comprised of large investment banks with mid-sized and boutique firms making up a smaller percentage. To-date, over half of these large banking clients have confirmed their new class hiring members, which are in-line or better than 2019. Consistent with the past, many of these decisions are confirmed by mid-August.
While we are encouraged by the results thus far, we will likely not have a final view until the end of the summer. So, a risk of smaller classes or hiring delays remains.
As many of you know, the fourth quarter is typically our largest. With what we know today, we remain guardedly confident in our ability to execute against our pipeline and moderate our spend.
Based on these factors, we are bringing up the bottom-end of our ASV guidance, the range for our full year is now expected to be $60 million to $75 million.
Given how we have performed to-date and our control of and visibility into the investments and operating spend in the fourth quarter, we are increasing our guidance range for other key metrics, such as GAAP and adjusted operating margin and GAAP and adjusted EPS. We are lowering the guidance range for our annual effective tax rate. These revisions are noted on Slide 14.
In closing, I want to reiterate our conviction in our business model, operating plan and investment strategy. The company’s liquidity position remains strong with low leverage and ample cash flow. Our workforce mix continues to generate productivity as we meet the hiring needs of both the core business and investment plan.
Our spend in digital offerings and on our own infrastructure has served us well while operating in this pandemic environment.
The current situation is generating unplanned savings, but we believe that a more normalized level of activity will return in the future. In the meantime, we will continue to focus on execution and on generating long-term value for all of our stakeholders.
With that, we are now ready for your questions. Jimmy?
Questions and Answers:
Operator
Thank you. [Operator Instructions] Our first question comes from Toni Kaplan with Morgan Stanley. Your line is now open.
Toni Kaplan — Morgan Stanley — Analyst
Thanks very much for taking my question. I just wanted to make sure I understand the expense guidance changes clearly. Is it that you’re benefiting from lower T&E? Is it the productivity that you mentioned? Just trying to get a sense of maybe a breakdown of the pieces that are contributing to the better margins that you’re expecting for this year. Thanks.
Helen Shan — Chief Financial Officer
Sure. Thanks, Toni, for your question. So, I would look at three different areas when we think about what’s driving the expense reduction or really margin expansion. So, the first are expenses that are pandemic-related items, so T&E, office-related, even U.S. medical costs, which were actually lower as many folks stopped going to their normal doctor or medical activity, so we actually saw a savings on that as well.
Then, the second bucket I would call operational discipline. So, that’s our ability to manage third-party content and professional fees, and in some cases reducing, and in other cases it’s more of managing from a timing perspective and the workforce mix, which we’ve talked about before, Toni, as you know, and has continued to play out, while we have, for example, we’ve hired 7% more in our workforce but we’ve actually had 2% hire as a mix of low cost versus high cost.
And then the last bucket I would say are investments, where we were also adjusting both by using our own employees for some of the needs that we have, and then also hiring in low-cost. So, tighter management around third-party costs there was really important.
The three areas I would say are pandemic-related, operational discipline and spend and investments, of which the pandemic piece is largely, I would say, nearly two-thirds of the benefit that we’re seeing in the quarter.
Toni Kaplan — Morgan Stanley — Analyst
That’s very helpful. And, Phil, you mentioned the changes in the industry basically accelerating the technology changes given the COVID period. And I know that your investment plan has been sort of a multiyear period where you’re investing in Content & Technology. And just wondering if anything from this period has changed where you’re planning on spending within the investment plan, maybe change the weightings or change towards different products, or just anything sort of structural in terms of the industry changes, changing the way that you’re attacking it? Thank you.
Philip Snow — Chief Executive Officer
Yes, thanks, Toni. So, I’d say the biggest change and the thing that we’re really focused on is how our clients are going to be working in the future. So, we quickly sent out a survey to our clients when they were working from home to sort of understand how their lives were changing and try to predict how they may change in the future.
So, obviously, the plan is very heavily weighted to moving to the public cloud, opening up the tech stack and creating a more personalized experience.
So, nothing’s going to really change in terms of big buckets, but we do see a great opportunity to streamline workflows that are going to become more digital for our clients around collaboration tools. And we’ve all been in the industry for a long time, so we sort of know which of our workflows are still pretty manual, right, where there’s a lot of people putting together pitch books or models or what have you. And I do think that now people have been surprised. I mean, I’ve been surprised by how quickly we were able to adapt, and that’s what I hear from our clients.
So, I do think it’s sort of really giving people an opportunity to think more boldly, and I just feel like we’re in a really great position to kind of meet those needs for our clients.
Toni Kaplan — Morgan Stanley — Analyst
Terrific. Thank you.
Philip Snow — Chief Executive Officer
Yes.
Operator
Thank you. Our next question comes from Manav Patnaik with Barclays. Your line is now open.
Manav Patnaik — Barclays — Analyst
Yes, thank you. Good morning, guys. You guys talked about the unplanned cost savings and the benefits I guess from COVID. And kind of a follow up to the last question, so — and we talked about this a little bit before, but do you think there’s a case to be made that maybe you can take some of those savings and accelerate and maybe even spend more in terms of your three-year growth plan just since the whole world seems to be digitizing so fast as well?
Philip Snow — Chief Executive Officer
Well, we certainly have taken a look at what we’ve learned over the last year and new things that we’d be interested in doing. So, we do that every year and we’ve been through that process in the last quarter.
So, we’re looking at what we chose to do. That’s solid. We’re going to continue to invest in everything we said we were going to. But we do see some potentially new opportunities for us as well.
So, I do think there’s an opportunity to do more and I do think there’s an opportunity again for us to look at not just the cost savings that we’ve kind of seen in the last quarter, but just look at how we’re working as a company and how we may have been inefficient in terms of how we’re servicing clients and doing other things.
But it’s a much longer process to figure that out, but we’re really actively looking at that and seeing what it might mean for us in the future. So, net-net, I’m very excited in terms of what the potential is for the company.
Manav Patnaik — Barclays — Analyst
Got it. Fair enough.
Helen Shan — Chief Financial Officer
And I think — and Manav, I think one thing just to — yes, yes, just to keep in mind. I mean, costs like T&E U.S. medical is still a little bit TBD as we go into the quarter and obviously play into next year. And also, some of the costs that we are getting the benefit this year or this quarter, rather, is a little bit timing-related, but for sure we’re all looking to see how we can best leverage that into, as Phil mentioned, into the existing investments if not new ones as well.
Manav Patnaik — Barclays — Analyst
Got it. And I was going to ask, Helen, like in terms of your comment and we do expect the business to be back to some normalcy from the cost perspective and so forth. I was hoping perhaps you could maybe use Asia as an example and maybe tell us what you’re seeing there in terms of the recovery and so forth?
Helen Shan — Chief Financial Officer
Yes, I mean, as we think about our thinking as we go forward, I really look at it in kind of two different buckets in terms of the assumptions. So, one is operational costs, how do we see going out of Q3? We talked about the fact that we have seen a good market for hiring new talent. You’ll see that we increased our total headcount. We’re over 10,000 employees now. I think that it’s the highest we’ve been. So, that’s a 7% increase in hiring.
So, we were able to do a lot of that. We’ve continued to invest, as we discussed. And so, I see some of that picking up and therefore driving higher costs going forward from a people perspective.
I think — I just mentioned there are some costs as it relates to things that we held back in Q3. 90 days ago we weren’t sure where the world was going to be, so we wanted to also be quite cautious, and some of that now we’re feeling better having experienced what we had in Q3, so we’re seeing that come through and we’ll look to spend that in Q4 and some of that maybe even into the following year.
As it relates to pandemic-related savings, we also have costs that we’re going to see come through, so those would be related to business continuity, equipment, internet, things that we need to make sure that our workforce is properly ready to work remotely, consistently.
We’re going to have some office reopenings that it’s a little bit unclear yet how we’ll deal with that. And then medical costs, I would expect would come back as folks are now becoming more comfortable and now that we’re reopening. So, I would look at that, Manav, as we think about the go-forward rate.
Manav Patnaik — Barclays — Analyst
All right. Thank you, guys.
Helen Shan — Chief Financial Officer
Welcome.
Operator
Thank you. Our next question comes from Bill Warmington with Wells Fargo. Your line is now open.
Bill Warmington — Wells Fargo — Analyst
Good morning, everyone.
Helen Shan — Chief Financial Officer
Good morning.
Bill Warmington — Wells Fargo — Analyst
So, congratulations on the GPIF Japan win. I was hoping you, guys could give us some additional details on that. What were they using previously? Was it an RFP with multiple competitors? And then when does the new contract start?
Philip Snow — Chief Executive Officer
Hi, Bill. It’s Phil. So, yes, we typically don’t give sort of that level of detail around client wins. We did have a press release around this, which I think is why we’re mentioning it. But what I would point to, I think more is just the opportunity that exists with FactSet for asset owners.
So, we do very well with sovereign wealth funds, with plan sponsors. We’ve got good momentum with insurance companies. But when you think about our Analytics suite and how it’s really geared I think for the asset owner and asset manager in the future in terms of what we’re able to do, I think that just is a good area for FactSet to grow in the future.
That specific win was more CTS related, so they are taking, I think, a good amount of our content essentially to build-out some of their own Analytics.
So, I think that also speaks to our platform efforts and our ability to deliver content in new and interesting ways.
Bill Warmington — Wells Fargo — Analyst
And in your prepared remarks, you highlighted strength in corporate clients as being one area. I wanted to ask about the new corporate clients. Is it being driven by new corporate clients or existing corporate clients buying more products? And are you displacing existing vendors or are these first-time users if you will?
Philip Snow — Chief Executive Officer
So, a lot of our new client wins, I think we were net 55 new clients for the quarter. Many of those came from the corporates and a good amount of them came from wealth advisors as well. So, we’re closing a lot of new names. Typically, these aren’t huge deals, but they really add up when you put them together.
And what we’re selling traditionally is mostly into Investor Relations groups and Business Development groups. But as we build-out our deep sector content — we started with financials, insurance and we’re beginning to get into real estate — I do think there’s an opportunity to sell more to the existing clients and to uncork some corporate clients in industries that traditionally FactSet may not have been as heavily weighted towards.
So, we typically do very well in the sectors and industries that are very data and analytics-driven and regulatory-driven, as you can imagine. But I do think over time, I see a lot of opportunity, particularly as we open up the platform to do more for clients that are not necessarily on the buy-side or the sell-side.
Bill Warmington — Wells Fargo — Analyst
Great. Thank you very much for the insight.
Philip Snow — Chief Executive Officer
Yes. Thanks, Bill.
Operator
Thank you. And our next question comes from Alex Kramm with UBS. Your line is now open.
Alex Kramm — UBS — Analyst
Hey. Good morning, everyone. Could you just come back and flesh out the pipeline and guidance comments for the 4Q a little bit, in particular as it relates to some of the banking comments you made? You made it sound like you have a very strong, I guess, visibility here. Is that based on talking to all these different banks and really having almost 95%, 100% certainty what they’re going to do or where is that coming from?
We’re obviously reading some of the headlines like new hires are getting delayed. They’re getting a few thousand dollars to sit on the beach for two extra months. So, just wondering where that level of confidence is coming from in particular? Thank you.
Philip Snow — Chief Executive Officer
Yes, thanks, Alex. So, I think we typically don’t get a final answer from the majority until August. I think we’ve spoken to about half the banks so far. And early indications are that they’ll still be hiring their classes. Maybe it will get pushed out into Q1, as you mentioned. But when we’re looking at our pipeline for Q4, it’s pretty heavily weighted towards Analytics and CTS which are sort of more of our off-platform offerings and less heavily weighted towards the people, the pieces of business that’s very much workstation-driven.
So, we’ve got a good pipeline for Q4. We certainly have enough in there to support the range that we narrowed this morning in our comments.
Alex Kramm — UBS — Analyst
Okay. Very good. Thank you. And then secondly, I guess this is for Helen. I may have asked this before and maybe a little bit of a too detailed question. But when you look at your adjustments to your numbers these days, obviously, some of those adjustments are getting — have been getting bigger and bigger. I think it was like 5.5 million this quarter for, I guess, one-time-ish items.
But when you look at the footnotes, it’s kind of related to some of these investment spends that you’re doing. So, can you just flesh out what you think is reasonable to back out some of that stuff? Because quite frankly, if you’re backing out a lot of these investments, then you may as well invest more if it doesn’t come to us, if you know what I mean? So, yes, please just help us why that’s reasonable in your opinion?
Helen Shan — Chief Financial Officer
Sure. Yes, and I’ll comment maybe a little bit broadly and then any detailed questions you can also obviously get that from Rima directly.
So, there’s a couple of different things that fall into that. As you know, there’s a number in there that is — I would say most of it is not necessarily investment, new part of our three-year plan. A lot of that is more infrastructure-related, so things that we’re doing, whether it’s on workday or things that are more, I’ll call it, corporate infrastructure-focused. So, those were more one-time.
We also have in there double rent that we have, as we’ve been building out facilities as some of our facilities we’ve got both existing building and we already have a lease on another one. So, that’s not really part of the ongoing, so we call that got out as well.
So, that gives you a little bit of what’s in there. They’re not really directly related to the three-year plan.
Alex Kramm — UBS — Analyst
Okay. Thanks again.
Helen Shan — Chief Financial Officer
You’re welcome.
Operator
Thank you. Our next question comes from Hamzah Mazari with Jefferies. Your line is now open.
Hamzah Mazari — Jefferies — Analyst
Good morning. Thank you. I just had a question around the Wealth business. Could you remind us what your market share is there? Specifically, if you can’t talk about market share, maybe you could talk about how down-market in Wealth you could go?
So, we all sort of know of a few large firms that have armies of financial advisors, but just curious in terms of thinking about the Wealth segment, how far down market can FactSet go?
Philip Snow — Chief Executive Officer
Yes, hey, Hamzah. It’s Phil. Thanks for the question. So, our Wealth segment is around 10% of FactSet in terms of its size, and I do think we’ve got a ton of total addressable market that we can look at. At the very high end of the market, I think we’re suitable for the ultra-high net worth workflow.
You mentioned sort of the armies of financial advisors out there, so obviously we had a big win a couple of years ago that we’re very proud of and doing well with, and it’s uncorked a lot of opportunities for us.
We had a significant Wealth win this quarter, so it wasn’t building on an existing relationship, but we really had sort of a good-size win, displacing a major competitor at a large firm. And we have a digital business, which really can get to tremendous amounts of users that are sort of retail users of a bank essentially.
So, we’ve got a full gamut of stuff, I think, particularly for the Market Data and News segment of the workflow. I think now we’re getting to the point where the product can really begin to leverage our Analytics suite, where those two can come together, where we can begin to do more for existing clients on the risk oversight — in the risk oversight area and some other areas.
So, we’re really optimistic about our ability to capture more market share in Wealth. And as I mentioned just previously, we closed a lot of smaller family offices and wealth advisors each quarter, and we did the same thing in Q3 of this year.
Hamzah Mazari — Jefferies — Analyst
That’s very helpful. Just a follow-up question, I’ll turn it over. It seems like the EU and U.S. regulators are scrutinizing exchanges, buying data businesses quite a bit. And so, we’re wondering if that creates an opportunity for you? And what we mean by that is, a number of years ago you did quite a bit of M&A and then you focused on integration. And now, you’re sort of focused on this three-year organic growth investment plan. And just curious, can you still be opportunistic on M&A while continuing to execute on that investment plan? Or is M&A kind of off the table because you have a lot going on internally?
Philip Snow — Chief Executive Officer
Yes, we continue to look at things that are opportunistic, so absolutely. I think we’ve, obviously, got the balance sheet to support that. We’ve done a lot of work to integrate the software companies that we acquired, but we do think there’s some good opportunity out there for some smaller datasets or providers that could really support what we’ve talked about in terms of the areas of the market that we’re interested.
So, we’re actively looking at things like we always are. Obviously, valuations were pretty high over the years and in talking to banks. I think deals are starting to get done again. Obviously, it was kind of a frozen period there, but I do believe that the ice is thawing a little bit and we’re going to begin to see some deals in our space.
Hamzah Mazari — Jefferies — Analyst
Great. Thank you so much.
Philip Snow — Chief Executive Officer
Sure.
Operator
Thank you. Our next question comes from Shlomo Rosenbaum with Stifel. Your line is now open.
Shlomo Rosenbaum — Stifel — Analyst
Hi. Thank you very much for taking my questions. Phil, can you talk a little bit about the company’s ability to sell in the current environment? Just it sounds like you guys are doing pretty well. How much of it is the same way that you guys are benefiting from retention, so there’s stuff not falling out of the funnel? And how much of it is that you’re actually really doing a good job selling, which is fairly impressive in this kind of work-at-home environment?
Philip Snow — Chief Executive Officer
It’s a good mix, Shlomo. So, we’ve been able to close some new names. We did well in new business in Asia, which as I spoke about on the last earnings call, I thought would be kind of the first region to come back from that standpoint. But talking to our leader of our European business, she’s telling me that we’re beginning to see some good opportunities over there on the new business side.
We have been really effective at closing what was in our pipeline for Q3, so when we spoke about — spoke three months ago. And I think part of what Helen and I were thinking about was would it really delay client’s decisions to buy things? We’ve seen some of that. How well would we be able to implement things virtually? We are very capable of doing that. In some cases, our clients, I think, were having difficulty engaging with us.
But net-net, I think again, we were positively surprised in how we were able to do things more remotely than typically FactSet has done in the past.
So, I think that’s very promising in terms of how we think about selling and supporting clients in the future.
And, yes, there have been a few cases of clients that were planning on transitioning potentially to other solutions and those decisions have been delayed, which has helped us on the other side as well.
But again, net-net, it’s been very positive. I’m sure it’s not lost on you that this is the best third quarter that FactSet has had since 2016. And I think to execute in this environment and produce those results is something we’re very proud of.
Shlomo Rosenbaum — Stifel — Analyst
Okay. Great. One other question, just on the tech investment, are there any milestones that you could talk about? Any early signs of success that you could talk to? Just as we talk about the investment and the potential for you to accelerate the spend, maybe you could talk about some of the things that maybe early innings you’ve been able to accomplish?
Philip Snow — Chief Executive Officer
Yes, so we’ve opened up a lot of APIs. I believe we’re up to about 40 that we’ve put into our developer portal, so clients are able to now come in and program directly into FactSet. They were able to do that in some cases before.
And in our Analytics area, we’ve seen a good adoption of APIs, so we began to sell the APIs for Analytics. A little over a year ago, we had some initial success last year, but it’s really begun. It’s a small number now, but it’s beginning to grow pretty quickly. And I think we’re learning as we go as well. So, that’s one that I would point to.
Shlomo Rosenbaum — Stifel — Analyst
Okay. Great.
Operator
Thank you. Our next question comes from Andrew Nicholas with William Blair. Your line is now open.
Andrew Nicholas — William Blair — Analyst
Hi. Good morning. Thanks for taking my questions. It looks like ASV growth reaccelerated a bit in APAC in the quarter, which is obviously encouraging. I’m just wondering if there’s anything that you can take away from that uptick, whether it be in terms of sales cycles, pipeline conversion, implementation timelines, and then apply that to how you’re thinking about the same dynamics in the U.S. or EMEA over the next couple quarters?
Philip Snow — Chief Executive Officer
Sure. I would say it was just a very good mix in Asia-Pac. I think we saw a good growth in Japan. We saw good growth in Hong Kong and North Asia, and we saw good growth in Singapore. So, I think the team executed well across the whole region. As we just pointed out, we had some good wins on the new business side.
So, we’ve begun to go back to the office in Hong Kong. So, that’s the first office I think that we’ve begun to have employees return to. So, it looks like clients are really engaged over there.
And as we’ve spoken about before, we view Asia as — it’s our fastest-growing region, one that has a ton of opportunity for and where the trends are really in our favor. So, we’re really optimistic about what we’re able to do there across all geographies and all of our business lines.
Andrew Nicholas — William Blair — Analyst
Got it. And then one more would just be on on-site implementations. I know that was kind of a headwind you called out last quarter. Just curious if there’s been any improvement in that capability, whether it be at FactSet’s capability or clients’ ability to handle off-site implementations and kind of how that’s evolved over the past couple months?
Philip Snow — Chief Executive Officer
Yes, it’s been really positive, I think, as I just pointed out on the previous question, that we’ve been able to do almost everything we need to do from an implementation standpoint, virtually. And our clients are learning how to do that as well. And it’s clearly one of the benefits of going to the cloud. If everyone’s up there, I think it just makes it easier for all of us to work together.
And if you have APIs and components that sort of plug in very easily with other people’s systems and ecosystems, it makes the whole thing much faster. It really just clutches the sales cycle and the implementation team versus kind of the heavy lift where it’s a small customer and you have to be on-site.
Andrew Nicholas — William Blair — Analyst
Got it. Thank you.
Operator
Thank you. Our next question comes from David Chu with Bank of America. Your line is now open.
David Chu — BofA Securities — Analyst
Hi. Thank you. So, can you just highlight the cadence of ASV growth over the course of the quarter? Just wanted to see if things were quite slow in, say, mid-March, early April and things picked up quite significantly since then?
Philip Snow — Chief Executive Officer
I don’t think there’s anything different, David, honestly, from previous quarters. So, we had a healthy pipeline going into the quarter. And from what I saw, we were closing things at kind of the same rates that we did in previous years.
Like any sales team, you’re going to have that mad push right at the end of the quarter or the end of a year, so our Q4 is always our biggest quarter. And, typically, in a quarter, people are very anxious to sort of get things in. And one thing that we’ve done, which has really helped is we’ve got a clearer compensation model for our sales team, and they are really incented to bring things in earlier if they can. And they’re getting paid on a more frequent basis, just based on transparent compensation models than they had in the past.
So, I think some of what we’re seeing here is just some of the discipline that we’ve put into the sales force over the last years and all the great work that’s been done there.
David Chu — BofA Securities — Analyst
Got it. Thanks. And then in the past, if we look at like past recessions, revenue growth slowed most sharply at the tail end or as the economy was coming out of the downturn. Just wanted to get your thoughts around timing. I mean, do you feel like we’ve seen the worst in terms of the revenue impact? Or is that something maybe still to come based on just the subscription nature of your business?
Philip Snow — Chief Executive Officer
Well, I think it’s very hard for all of us to predict. So, I do think that this — if you want to call it a downturn, is different than what we experienced in ’08, ’09. But I think all of us, as we look out over the next 12 months, it’s very hard to predict what’s going to happen in the world from a lot of different dimensions, and what the impacts are going to be on the economies, the markets and then us.
What I’ll just go back to is, we’re a resilient company. We’ve just shown that. And no matter what the environment, we’re going to, I believe, execute well against it. But in terms of talking about whether or not we’ve seen the worst of it? I don’t think any of us can say that with any certainty right now.
David Chu — BofA Securities — Analyst
Sure. That’s fair. Thank you.
Operator
Thank you. Our next question comes from Peter Heckmann with D.A. Davidson. Your line is now open.
Peter Heckmann — D.A. Davidson — Analyst
Hey. Good morning. Thanks for taking my question. So, about $19 million of ASV growth year-to-date coming from price increases. Can you talk about how that compares to last year? And kind of your thoughts on the sustainability of that as you build out more depth and breadth of the content sets and go back and try and true-up pricing? How much fights are you getting on those from clients?
Helen Shan — Chief Financial Officer
Sure. Why don’t I — I’ll try to address that. Thank you for your question. So, as you recall, last quarter, when we talked about the Americas, we got an improvement of $2 million year-on-year, and so the International was the same. So, that gives you a sense of the improvement this year versus last year, so $4 million.
But I think what we’ve seen, I mean, we’re in a competitive environment, so that’s always the case. But we have put in a lot of enhancements and value into the products and the offerings, and I think that’s really coming through.
So, what we’re seeing in this year, and we do have also natural price increases in our contracts already, is that continued recognition by clients that the value that we’re bringing in is worth the additional amount.
Now, that being said, we have to continually invest in to be able to do that, and I think the three-year plan is certainly meant to help that along not only with new products but really enhancing our existing and to maintain if not increase our retention rate with our existing clients.
Peter Heckmann — D.A. Davidson — Analyst
Yes, yes, okay. That makes sense. And then I didn’t hear you refer to it, but just in terms of the — you talked in prior calls the outlook for 2022, the ability to — or the aspirational goal of hitting high-single digit ASV growth. Can you give us an update about how you’re thinking about that number, or you think that’s still achievable within 18 months?
Helen Shan — Chief Financial Officer
Yes, I’ll take the first shot there. We’re working hard to make sure we can get the next three months correct. So, I would say there’s a lot of variables right now. Our plan hasn’t changed. We still see in terms of our belief of what the investments will bring and the upside, I think we’ll have more.
We’re going through all that right now as you can imagine in our own budgeting process, but also in thinking through how our investments will fare. So, I think we’ll come back to talk more about that. Right now, we don’t have any change in our view. But, gosh, there’s a lot that can happen and we’re doing work on that right now.
Peter Heckmann — D.A. Davidson — Analyst
Got it. Thank you.
Helen Shan — Chief Financial Officer
You’re welcome.
Operator
Thank you. Our next question comes from Ashish Sabadra with Deutsche Bank. Your line is now open.
Ashish Sabadra — Deutsche Bank — Analyst
Thanks for taking my question. So, maybe just a quick clarification. You raised the lower end of the ASV guidance by the — or took down the revenue guidance for the year. I was just wondering if you could provide some color there, what’s causing that? Is it just the timing of when the revenue gets recognized?
And then just a quick one on the Wealth front. You mentioned a significant win there. I was just wondering if you can think about the sizing for that significant win compared to your prior win, and when will that get implemented and revenue get recognized? Thanks.
Philip Snow — Chief Executive Officer
Okay. Thanks, Ashish. Yes, so I think in March, I think all of us were really wondering what was going to be happening, right, in terms of what was going on in the world around us. We mentioned we had a very strong pipeline, and we were just — it just wasn’t clear to us sort of how clients were going to react and really what was going to happen in the markets, if you remember sort of how volatile things were back then.
So, we came up with a methodology which we thought was good to at least be conservative in terms of what can be achieved. But we’ve learned a lot over the last quarter, and as I mentioned, we were effectively able to execute on the pipeline that we had in Q3, and I still feel good about our pipeline for Q4.
So, that’s why we just feel like we can raise the bottom end of that guidance up to $60 million, to give you a narrower range as we look out for the quarter.
The other Wealth win was at an existing client. I think we were all — where we have a pretty good deployment. And I believe that much of that has already been deployed and that we’re recognizing the ASV for that and the revenue in Q3.
So, it’s not the same scale as the deal that we talked about two years ago, but it’s a significant seven-figure win at an important client for us.
Helen Shan — Chief Financial Officer
And let me just pipe in a little bit as it relates to the revenue. So, the good news is we’ve gotten from this quarter, Ashish, some better confidence. So, that’s a real positive because of some of the unknowns as we’ve already talked about.
Do keep in mind in a subscription business it really does matter when the ASV comes in. And so, as you know, the first quarter for us was softer than we had hoped, and so that does carry through. And depending on what happens on the back half of the year, without the pandemic, the dollars might have been a little bit different and so we believe how revenue was going to come out. But knowing A, that we had a weaker Q1, that’s really coming through a bit from a revenue perspective as we look at the full year.
Ashish Sabadra — Deutsche Bank — Analyst
That’s very helpful. And maybe, Helen, if I can ask a follow-up question on the margin front. Particularly around the low-cost location or employees in the low-cost location, what percentage of our employees are currently in low-cost location and where do you think it can go over the mid-term?
And then, what does it mean for the margins, because you’ve given that a margin growth for fiscal year 2022, given you’re tracking much ahead of it, is there — as you would transition to lower-cost destination, does that — could that provide upside to the margin, the mid-term margin targets? Thanks.
Helen Shan — Chief Financial Officer
Yes, we’ve continued to migrate when we look at high-cost, low-cost. And as I mentioned, it was about 2% improvement in this quarter. That’s been pretty consistent. So right now, we’re roughly around, let’s call it, two-thirds offshore, one-third onshore.
We did actually hire more onshore and it was actually growth and that would have been, I think, the first in a couple of quarters due to the capabilities that we’re trying to build. And in some cases, that can really be found more in the developed markets. So, that’s where you’re seeing that come through, and that was anticipated.
The opposite of that or the balance to that, as I mentioned, is that some of the roles that we saw from our investment plan that we could fill that we thought would either need to be new hires on developed countries we were able to either fill around folks or quite frankly with folks in the lower-cost countries.
Going forward, I mean, that’s still going to be a driver for us. Our own productivity with or without investments was a focus and we saw that from FY’19 through now, and that certainly part of our thinking as we were thinking about the margin that we come out in FY’22 already.
Ashish Sabadra — Deutsche Bank — Analyst
That’s very helpful. Thank you, and thanks on the good quarter — congrats on the good quarter.
Helen Shan — Chief Financial Officer
Thanks. Thank you.
Operator
Thank you. Our next question comes from George Tong with Goldman Sachs. Your line is now open.
George Tong — Goldman Sachs — Analyst
Hi. Thanks. Good morning. Just wanted to dive a bit deeper into the ASV growth outlook. You indicated that the pipeline was healthy in the quarter and that win rates have been relatively consistent. Can you talk about how ASV growth could evolve over the next 12 months, given the high visibility there based on what you’re seeing in the pipeline?
Philip Snow — Chief Executive Officer
Well, I think I’ve been consistent, George, in saying that it’s a little difficulty to see more than six months out with a huge degree of confidence. So, I think we’re comfortable talking about Q4 and the fact that we definitely got the pipeline to support the range that we provided. And Q1, just bear in mind, is typically a smaller quarter for us.
So, I think in terms of talking about next year, we may be able to give you some more visibility on that next quarter, but it’s a little difficult to predict typically. And I think given the current environment, it’s even more difficult to predict.
George Tong — Goldman Sachs — Analyst
Okay. Got it. And then, if we dive into some of the components of ASV, specifically just bifurcating renewal rate performance versus new business trends, can you comment on both of those and how they’ve progressed within the quarter?
Philip Snow — Chief Executive Officer
Yes, I think we’ve seen —
Helen Shan — Chief Financial Officer
So, I can —
Philip Snow — Chief Executive Officer
Go ahead, Helen.
Helen Shan — Chief Financial Officer
Go ahead — I think what we’ve seen in retention is — I’m sorry for that — retention is that we’ve continued to see that be, as we talked about, above 95%. That continues to be strong for the reasons that we’ve already outlined, as decisions can be somewhat delayed but then we get the benefit of that as well.
And new business, I think, has completely remained steady. So, we look over the course of the last couple of quarters that contribution from new business has been around the same level, which is around that two-plus percent of our total growth comes from new business. Sorry, Phil. Didn’t mean to interrupt.
Philip Snow — Chief Executive Officer
No worries.
George Tong — Goldman Sachs — Analyst
Got it. Thank you. Very helpful.
Operator
Thank you. And the last question comes from Keith Housum with Northcoast Research. Your line is now open.
Keith Housum — Northcoast Research — Analyst
Good morning, everybody. Phil, over the past few weeks, you guys experienced another change at the sales level, the Director’s level. I think this is another change or probably the third change over the past several years. Any reason for the change? Any reason for change in the strategy there? How should we be thinking about that?
Philip Snow — Chief Executive Officer
So, I’d refer you back to the 8-K there. So, we don’t typically comment beyond that in terms of changes in leadership. But what I will say is the sales team has been executing exceptionally well. When I look at the four leaders of the Americas, the EMEA, the Asia-Pac region, and our Strategic Client Group, between them, they all have over 60 years of experience in total. So, we’ve got a very deep bench, and they’re all executing at a very high level.
And we’ve put in a tremendous amount of discipline in the sales force over the last number of years in terms of pipeline management, pricing, how we compensate folks. So, I’m really pleased with how the sales force is executing and the talent we have on the team. And I’m confident in their ability to execute as we move forward.
I’m not planning any changes in the organization in terms of how things are structured. I think it’s working really well, and it’s working well with the specialty sales teams that are organized the way they are.
So, we’re looking for a new leader there. And in the meantime, the sales leaders are reporting to me, and I’m heavily engaged with the clients. So, I feel really good about the team that we have on the sales side.
Keith Housum — Northcoast Research — Analyst
Got you. Okay. Appreciate it. And as a follow up, I mean, you guys are well known for having a great servicing group of consultants. You hire kids out of college. And obviously now they’re not traveling, servicing the customers, and that’s obviously an inefficient role to travel. Are we thinking that perhaps those consultants are lesser in number today than they were several months ago? And as you guys travel more, you’ll need to hire more? Or were you guys able to, I guess, redefine what their roles were and working more from home as opposed to traveling?
Philip Snow — Chief Executive Officer
Yes, I think it’s been an evolution with that role. I was one of those consultants once upon a time, and I checked in with one of them who — she’d been with us for a year, and I asked her what life was like working at home? So, she’s sort of at that point where she’s becoming dangerous in terms of how much FactSet she knows. And she told me that it’s been a great experience and working with clients and being able to train clients. And even I find in that it’s even easier sometimes to engage with people over video than it might be like in a room full of people.
So, it’s giving us a lot to think about in terms of how we support clients in the future. But I do think there’s a way for us to continue to evolve what is an industry-leading service model for our clients and just continue that great tradition for FactSet.
So, thank you for the question.
Keith Housum — Northcoast Research — Analyst
Great. Thank you.
Operator
Thank you. And at this time, I’d like to turn the call back to Phil Snow, CEO, for any closing remarks.
Philip Snow — Chief Executive Officer
Thank you. So, I’d like to thank you, all, for joining us today. I’m pleased with our accomplishments year-to-date and our ability to pivot around the challenges and rallying to be there for each other in times of need. It’s undeniably been a challenging few months for us all. And as we reflect on this past quarter, it’s impossible not to think of the broader events that have occurred.
I want to take a moment to address that here, particularly the Black Lives Matter protests. At FactSet, there’s no place for racism or discrimination of any kind, and I want to send a special thank you to the members of our Black Business Resource group for sharing and organizing insightful conversations over the past year, including “Let’s Talk About Race” and the recognition of Juneteenth.
I remain committed to supporting our black colleagues and clients and to listen and learn. And I’m also committed to our overall Diversity and Inclusion initiatives.
We’ve had a focused D&I strategy and effort in place since 2016, and we’ve come a long way cultivating a more inclusive environment. I’m proud of what we’ve accomplished with the launch of our business resource groups, unconscious bias training, leadership commitments and increased investment in retention and advancement programs for diverse leaders.
And we’re now stepping into the next phase of our strategy, and the company plans to significantly expand our investment in diversity and inclusion efforts with a focus on examining the process by which we attract, recruit, support and promote our people to ensure we’re eliminating any and all bias and to make progress. We’ll continue to increase diversity at all levels of the organization, and we’ll do our best to work to be an agent of change.
With that, I’d like to thank everyone once more for your time. 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.
Operator
[Operator Closing Remarks]