FactSet Research Systems Inc (FDS) Q3 2019 Earnings Call Transcript

FDS earnings call for the period ending May 31, 2019.

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FactSet Research Systems Inc (NYSE:FDS)
Q3 2019 Earnings Call
Jun 25, 2019, 11:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning. My name is Christine, and I'll be your conference operator today. At this time, I would like to welcome everyone to the FactSet Q3, 2019 Earnings Call. (Operator Instructions) Thank you. Rima Hyder, Vice President, Investor Relations, you may begin your conference.

Rima Hyder -- Vice President

Thank you, Christine, and good morning, everyone. Welcome to FactSet third fiscal quarter 2019 earnings conference call. Before we begin, I would like to point out that the slides we will reference during the course of this presentation can be accessed via the webcast on the Investor Relations section of our website at factset.com. The slides will be posted on our website as 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 Philip Snow, Chief Executive Officer and Helen Shan, Chief Financial Officer. I'd now like to turn the discussion over to Philip Snow.

Philip Snow -- Chief Executive Officer

Thanks, Rima. And good morning, everyone. I'm pleased to say that we're continuing our long record of steady growth in the second half of our fiscal year with growth -- with growth across all our key metrics, including ASV revenue, EPS and margin, cost pressures in the financial sector remain but clients are looking to invest in technological solutions that drive efficiencies and we continue to benefit from their response to our smarter, more connected data and analytics.

This provides us with the ever growing opportunity to take higher wallet share. Now moving on to the third quarter results. This quarter, our sales team achieved comparable gross sales and expanded our footprint globally at net new clients and users. At the same time, we did see a higher than expected rate of cancellations due to industry wide ongoing cost pressures. We think of our business in half-year increments. And as we pointed out in our last call, we expect our second half to be more weighted toward the fourth quarter. Turning to ASV, analytics and wealth were the main drivers this quarter along with the annual price increase for our international clients. Our ASV this quarter was impacted by a multi-year agreement with a corporate client that came to an end this year. Outside of this cancellation, ASV would have grown in line with our fiscal third quarter of 2019.

Helen will discuss this in more detail, but we did benefit on the revenue side from this cancellation as it resulted in a one-time sale of data to the same client. This cancellation impacted our CTS business ASV, otherwise CTS have a solid quarter. Sales of standard data feeds accelerated through our data exploration product which removes the friction from the trial and evaluation process and these were the -- this was the biggest contributor to CTS ASV. Within analytics, our core equity portfolio analytics solutions and transactional revenue from our trading solutions were some of the biggest drivers of growth. The recent launch of our portfolio management platform and continued progress on our risk portfolio services and API solutions allow us to believe in the growth trajectory of this business. However, while analytics was the largest contributor to growth, changes within our specialist sales force and unexpected cancellations led us to fall short of expectations. Additionally, we overestimated how quickly we could monetize some of our new products and we've taken the necessary steps to address these challenges and believe that these adjustments will have a positive benefit on analytics overall.

Taking all of this into account, we now believe that we'll finish the year between $70 million to $75 million for ASV plus professional services, maintaining our mid-single digit growth target, as we told you at Investor Day last year. We've increased guidance for other key metrics such as margin and EPS. And Helen will walk you through those in a few minutes .

Wealth had another strong quarter as it continue to expand gained share and take competitive wins, with a strong pipeline of dynamic sales team that continues to target larger clients, we believe wealth is well positioned to finish this year, strong and will continue to be a growth driver for us. And within research, the results came in better than expected with workstation wins and RMS sales. However, the business also experienced higher cancellations from continued pressure on the buy side. Cancellations in general were higher this quarter across all our regions, mainly from firm closures and consolidation continues to be a trend in our industry. We are proactively making changes to our sales processes, renegotiating client contracts and ensuring clients understand the full value of the FactSet products to help mitigate future losses. Another significant change we made this past quarter was to move all of the product sales specialists into our various business lines, we have instead of continuing to align them to general sales. This organizational change will give the heads of these businesses more line of sight into product and sales and allow for an even more specialized client experience with our sales teams. In terms of geographic breakdown, we continue to have a growing, global presence with diverse clients taking advantage of our open, flexible and configurable offerings. Looking at our Americas and International businesses, Americas delivered a solid growth rate of 5% driven by analytics and CTS and the EMEA and Asia PAC regions grew 4% and 11% respectively, benefiting from the annual international price increase this quarter. Analytics and CTS both continue to be growth drivers in these regions.

In summary, this quarter is a great example of the FactSet team's ability to perform even amid sector wide challenges.We said last quarter that we remain cautious given client cost pressures and this quarter saw increased cutbacks across the industry with clients increasingly tightening belts with an eye to future volatility, which resulted in the higher than usual cancellation rate. Despite these obstacles, we demonstrated growth in Q3 across ASV revenue, EPS and margin and we remain confident in our long-term strategy and believe, we are well placed to help clients navigate a changing environment.

Our open and flexible solutions are resonating in the market, which is seeing growing technology adoption as clients search for new ways to drive efficiency and create value. We believe, our solutions will continue to serve as mission critical for clients in their dynamic investment workflows. We also continue to focus successfully on cost discipline and higher ASV and EPS growth and are taking steps to accelerate our sales pipeline. And we remain a strong steward of returning capital to shareholders with this quarter marking our 14th consecutive year, the Company has increased dividends. Let me now turn the call over to Helen to talk in more detail about our performance this quarter.

Helen Shan -- Chief Financial Officer

Thank you, Phil and good morning, everyone. It's great to be here with all of you.We delivered strong operating results in the quarter with over 7% growth in both GAAP and organic revenue versus the previous year. This increase (inaudible) efficiencies led to a growth of over 20% in GAAP operating income, resulting in a solid expansion in our operating margin.

In addition, we grew adjusted diluted EPS by 20%. The one-time sale of data to a corporate client as referred by Phil earlier increased GAAP revenues by $5 million. Our quarterly results in particular revenue, operating income and cash were positively impacted by this sale. For comparability purposes, we exclude this transaction from our results on an adjusted basis. I will now walk us through the specifics of our third quarter. GAAP and organic revenue increased 7% to $365 million and $366 million respectively versus the prior year. Growth was driven primarily by analytics, CTS and wealth. As prior period ASV is more fully recognized as revenue in the third quarter. For our geographic segments, over the last 12 months, Americas revenue grew 8%, International revenue grew over 6% organically. Americas benefited from an increase in wealth, analytics and CTS. International revenue was largely driven by analytics and CTS. ASV plus professional services increased to $1.45 billion at the end of our third quarter at a growth rate of 5.6% year-over-year, and up $4.5 million since the end of our second quarter. The growth was driven primarily by analytics and wealth, and reflects our annual price increase in our International segment. The positive impact to ASV from pricing was approximately $5 million in line with the prior year.

GAAP operating expenses for the third quarter totaled $247 million nearly flat versus last year. As a result, our GAAP margin increased 470 basis points to 32%. Adjusted operating margin increased to 34%, a 310 basis point improvement from the third quarter of 2018, a level we have not seen in five years. This improvement continues to be driven in part by increasingly disciplined expense management and lower employee costs.

Similar to the second quarter of 2019, movements in foreign exchange rates were also a positive driver this quarter, but to a lesser extent. The dollar strengthened against several of the currencies to which we have the greatest exposure, including the pound, the euro and the Indian rupee, providing a favorable impact to our margins of approximately 80 basis points. As a percentage of revenue, the expense improvement came largely from our cost of services, which was 360 basis points lower than last year on a GAAP basis. On an adjusted basis, the improvement was 250 basis points and margins were impacted positively by faster growth in revenue versus cost of services year-over-year. Contributing factors include decreases in both employee compensation and contractor fees. This benefit was partially offset by an increase in computer-related expenses, as we continue to upgrade our technology stack.

SG&A expenses, expressed as a percentage of revenue experienced an improvement of 110 basis points over the prior year period on a GAAP basis. On an adjusted basis, this improvement was approximately 60 basis points. This result is driven primarily by expense reductions in travel and entertainment, marketing, as well as employee compensation. Given our solid results, we are increasing our guidance range for both GAAP and adjusted operating margins. Our tax rate for the quarter was 18.6% impacted primarily by out of period and one-time tax adjustments. Excluding these discrete items, our tax rate would be 14.2%. Our tax rate has trended lower this quarter from a higher level of stock option exercises and thus, we are lowering our guidance for the fiscal 2019 annual tax rate. I will discuss that further in a few minutes.

GAAP EPS increased 24% to $2.37 this quarter versus, $1.91 in the third quarter of 2018. This increase is attributable to higher revenue, improved margins and a lower effective tax rate. Adjusted diluted EPS grew 20% to $2.62. A 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 $148 million for the quarter, an increase of 24% over the same period last year. This is the strongest free cash flow, we have seen in the history of FactSet. The strength was primarily due to higher net income and improved working capital, including increased cash collections, partially offset by higher capital expenditures.

Our CapEx has trended higher this year due to our new office space build out for some of our locations and increased investments in technology. Looking at our share repurchase program for the second quarter, we repurchased a 175,000 shares for $48 million at an average share price of $272. Additionally, this week, our Board of Directors approved an increase of $210 million to the existing share repurchase program, bringing a total of $300 million now available for share repurchases.

Over the last 12 months, we have returned $327 million to our investors in the form of dividends and share repurchases. We remain committed to buying back our shares at a steady pace and continue to balance the capital allocation between business investment and shareholder returns.

Moving to our annual outlook for the year. We are increasing and narrowing our guidance range for most of our metrics except ASV plus professional services. ASV plus professional services for the year is now expected to be between $70 million and $75 million. We are tightening our GAAP revenue range to $1.42 billion and $1.44 billion. Our GAAP operating (inaudible) benefiting from this quarter's non-core sale transaction will now be between 30% and 30.5%. We are also increasing our adjusted operating margin guidance to 32.5% and 33%. We are pleased with the cost discipline measures that we have taken to be able to implement in order to achieve these results.

As I explained earlier, our tax rate has trended lower this year due to one-time items and a higher-than-expected impact from stock option exercises. We are lowering our annual effective tax rate for the full year. It is now expected to be between 16% and 16.5%. And finally, we are increasing and tightening our ranges for earnings per share. GAAP diluted EPS range is $8.90 and $9. Adjusted diluted EPS range is between $9.80 and $9.90. The midpoint of this guidance represents a 15% growth over the prior year on an adjusted basis. We are proud of our operating results this quarter. Our dedication to cost discipline and process improvement continues to yield growth and we are on track to finish the year on a strong note for revenue, margin and EPS. As we continue to make prudent investments to drive business growth aligned with our long-term strategy, we expect that FactSet will remain resilient, despite sector and industry headwinds. And of course, we look forward to continuing our proven track record of returning value to our shareholders.

With that, we are now ready for your questions. Christine?


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Questions and Answers:

Operator

Thank you. (Operator Instructions) Your first question comes from the line of Manav Patnaik from Barclays. Your line is open.

Manav Patnaik -- Barclays -- Analyst

Hi, good morning. The first question, I guess was when you had first initiated guidance around the ASV. I mean you had almost sounded like it was conservative and you had a bunch of these renewals and all in the back half that could even add to that. So I was just curious like, what was the real change that you're kind of referring to today, like, was it just a lack of visibility or did something materially change along the way in terms of that shift?

Philip Snow -- Chief Executive Officer

Hi Manav. It's, Phil. Thanks for the question. So yes -- it is difficult for us typically to look one year ahead. We -- I think, I've stated multiple times, it's a little bit easier for us to see kind of three to six months out. So based on what we saw in terms of the market and what we thought, each of our businesses could do over the year. That was our guidance at the beginning of the year. I would say to summarize, research, CTS and wealth are all pretty much coming in as or above expected from the beginning of the year. But the biggest area, where we're seeing kind of a difference is our analytics business. So our analytics business as you know, grew at 10% at the end of last year and I would say that's the one where we're seeing the biggest difference versus our original projection. Now, it still is a growth driver. It's going to add we believe the most absolute ASV out of any of the different business lines this year, but it's not, it's just not growing as quickly as we anticipated it would.

Manav Patnaik -- Barclays -- Analyst

Okay. And then maybe if I could just follow up on that point then. Can you just elaborate more, is that because of competition, or I guess just anything there on why it's slowing down, it sounds like temporarily but just why is that happening?

Philip Snow -- Chief Executive Officer

Yeah. So there are a few things and when we look into it. One is the fixed income, a piece of that business is not growing as quickly as it did last year. Part of that we believe has to do with some of the specialist organization that I spoke about. So our specialist were in the sales organization for a few years for analytics and we've got away from having a completely specialized fixed income team and it was more of a multi-asset class team. But I think what we've learned over the last few years is, it's good to have that additional specialization within the Group. So we've shifted about a third of the client facing sales force back into our business lines, so that the leaders of those businesses now can work more closely with the sales specialists who are still going to work very closely with the general sales population. But we do think that that was a piece of it. There certainly wasn't all of it. Another one is, I think we overestimated a little bit how much revenue or ASV we would get from some of the newer products. So part of that was our APIs that we opened up, it was hard to predict. We now have four or five APIs out in the market for analytics, we are selling them. We're just not getting as much as we thought we would at the beginning, but we're very confident in that strategy. And we believe, over time, we'll get material ASV and growth from opening up the analytic suite outside of the core workstation.

So if I was to highlight two things. Those would be the two.

Manav Patnaik -- Barclays -- Analyst

All right, thanks, guys.

Operator

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

Bill Warmington -- Wells Fargo -- Analyst

Yeah, good morning, everyone.

Helen Shan -- Chief Financial Officer

Good morning.

Bill Warmington -- Wells Fargo -- Analyst

So I wanted to ask -- I wanted to ask for some more detail on the Q3 expense speed (ph) and just -- you ran through a -- the numbers, if you could summarize and for me the -- in terms of how much came from the -- from FX, from acquisition integration, from core expense reduction and then trying to get also a sense from of -- of how sustainable it is?

Helen Shan -- Chief Financial Officer

Sure, thanks for that question. When we think about what happened -- what we accomplished in Q3. It's really a continuation of execution on our operational plan. So for the quarter. I would say about 220 basis points were from operational efficiencies and I would classify, that really into little less than half was from expense management of discretionary items T&E, as well as marketing and the balance is driven by productivity improvements and that continues to reflect the mix change between high and low-cost countries in terms of the percentage of employees. So let me give you a little bit additional color on that. If you look at the number of employees in Q3, this year versus last year, we saw a reduction in our -- in the number of employees in our high-cost countries by 4% and an increase in our low-cost countries by 6% and so that really accounts for that mix change. And I'll address the long term view on that. And then -- and then the rest, Bill was on FX. So where the favorable FX provides about 80 basis points for us.

So that is around a quarter of the beat (ph) that we have in terms of the improvement in the margin and that's -- in line to how we did it last quarter except for last quarter it was over 50%, so more of the improvement this quarter came from operational efficiencies. As it relates to the sustainability, another good question. Let me try to address that. If you think about the drivers of where we're getting the benefit. It really is starting with the way that we operate, we established business unit -- lines of business a couple of years ago and this year, we now have cost centers and we have budgets and we have now put the accountability broader and deeper into the organization. So we have folks in our leadership team who have the accountability, have the discretion to be able to manage their head count and expenses and they're doing that. They're managing their spend and they're making more informed decisions.

The other again is the mix between high and low-cost countries.The percentage mix has changed, so if I look at this year to last year, we now have 2% higher in -- of our employees in low-cost countries. And so if I think about those two things, plus some of the integration that we were -- the expense reductions that were expected which quite frankly, it's now quite integrated with the rest of our businesses, we do know of certain contracts, whether it's in technology on content that we've been able to rationalize and those have come through in '19 as well.

So while we continue to look for ways to invest back in for long-term growth, we do believe that a lot of what we have accomplished, we should be able to sustain.

Bill Warmington -- Wells Fargo -- Analyst

Okay. And for my follow-up, so I wanted to ask about the, you moved your terminal business to the cloud a couple of years ago and that enables you to, to lower the cost of delivery and to pursue and win some higher seat count opportunities like wealth management. And when you, when do you move your underlying FactSet infrastructure to the cloud? And what does that mean for near and mid-term margin targets?

Philip Snow -- Chief Executive Officer

So just to clarify , I mean, we. We have our own sort of private cloud, the web product that we deployed to the large wealth deal we did and others that's still in our private cloud, what we have up in the public cloud now is more of the open FactSet architecture, which is part of what CTS is doing and we do use the public cloud for a few other things, particularly on the analytics side when we need additional capacity for some very heavy duty calculations. So I think, we are Bill, on an -- migration to the public cloud, we can't give you an exact timeframe.

We're considering all of that as part of our multi-year strategy. But I think what we have learned is that's the direction we need to go. It's the direction the world is going and it's going to allow us to develop product a whole lot faster and it's also going to remove a lot of friction from the sales process. So we saw that at CTS having -- the CTS offering up in the public cloud, and having the data discovery module has lowered the amount of time it takes to begin trialing our products by orders of magnitude. It take sort of a day now to go up and begin looking at all of the content we have and to make a decision of versus what it might have taken previously which was weeks for both us and the client to begin setting up the trial and getting it all set up.

So that's a great business model. We think we can leverage it for lots of pieces of our business. The analytics APIs that I mentioned on the previous question, a lot of those were available now if you go into our developer portal. So that's another example of where we're removing friction and exposing our product in new and interesting ways to the clients.

Operator

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

Shlomo Rosenbaum -- Stifel -- Analyst

Hi, thank you for taking my questions. Hey Phil, I'm just trying to understand the dynamics between revenue and ASV right now or I'm seeing like the revenue kind of -- organic revenue growth kind of inch up, but I'm seeing the ASV growth kind of inch down. And usually, those things move in tandem, and if I'm saying the ASV inch down, usually revenue should follow the other direction in -- it doesn't seem like you are, you're seeing that that's what you think is going to happen, it sounds like you're confident what's going on. So you can kind of give us a little bit more background on that.

Philip Snow -- Chief Executive Officer

So what I'll do is I'll describe the one-time deal or transaction that I mentioned for Q3 and then Helen can follow up, I think a little bit on your question as well. So -- and as I mentioned in my script, we did have a one-time pretty large cancellation in Q3. It was about $4.5 million in ASV to a corporate client. So this has been a 10-year -- over a 10-year contract where FactSet was distributing one of our core content sets that we collected and the client decided to go in another direction. And I would say that's very comparable to FactSet. Over time, we've taken a lot of third-party content internally, but you've seen us turn into a content company and sort of go in another direction for some content.

So there's always the buy and build partner decision when it comes to content. So that obviously negatively impacted our ASV for this quarter. I might have misspoke a little bit in my script, I think what I meant to say was in the absence of that $4.5 million transaction, our growth rate would have been pretty consistent with the last quarter and on an absolute ASV basis, pretty consistent with Q3, of last year. We did get a one-time payment of $5 million at the end of this contract, which Helen mentioned that was booked as revenue, but I'll let Helen explain that in a little bit more detail.

Helen Shan -- Chief Financial Officer

Sure . So I think the number that you are looking at there for revenue, that's a GAAP number of 7 (ph) -- over 7% and so that includes this $5 million one-time benefit from the sale. So if you strip that out, we're more at a 5.7% increase and that is more aligned, I think to what you're trying to get at. In terms of the -- a lot between ASV and revenue.

Shlomo Rosenbaum -- Stifel -- Analyst

Okay and then just if you don't mind, just on a follow-up, what in terms of what you're seeing in terms of pipeline, what you're selling. You mentioned certain things are not selling as well as they were before. Some of that, it sounds a little bit more kind of belt tightening type stuff or I guess just the environment, not quite as good as you thought it would be, but on the other hand, the tone of what you're seeing just seems still pretty confident. Should we see kind of a pick-up from here? In other words, is your pipeline building that you would expect that we're still bouncing off the bottom in terms of the growth rates or, because I think you said that kind of 5% to 7% organic growth was more at the last Analyst Day is the way to think about things. And just wondering if you could comment in that context?

Philip Snow -- Chief Executive Officer

Yeah, it's a great question. And again, Shlomo, it's hard to see into the future that far. When I look out at Q4, the pipeline is very comparable to what we saw this time last year. So I think we're, we feel good about the adjusted guidance that we gave you sort of based on what we can see today. And obviously, we're busy thinking about next fiscal already. And looking at all of our businesses, we have so much great product coming to market within each of our business lines and we've got larger deals in the pipeline than FactSet historically has had. Some of those are pretty binary, right, though so sort of like the BAML deal, you either get it or you don't. So that can actually, obviously materially affect our growth rate. But I do feel that we have a very good opportunity to continue at the pace we have and accelerate from here.

Operator

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

Toni Kaplan -- Morgan Stanley -- Analyst

Perfect. Thank you. Phil, you mentioned the sort of unexpected cancellations. Could you give us a bit more color on, are there any commonalities across client type. Are they sort of newer clients or long-term clients? The size of the clients or is there any way to sort of group them as opposed to just, that would be helpful.

Philip Snow -- Chief Executive Officer

So Toni, your question is about the clients that cancel completely?

Toni Kaplan -- Morgan Stanley -- Analyst

Yeah.

Philip Snow -- Chief Executive Officer

Yeah. So I think we showed that we were net around 50 positive clients for the quarter. I would say most of the positive additions that were on the wealth and corporate side, which is pretty consistent. We're adding a lot of new names in wealth and in corporations. I think what we saw was a bit of a tick down in the institutional asset management space and a little bit of a tick down in terms of hedge funds. Hedge funds, though were positive versus Q3 last year. So I think, we continue to do very well in existing hedge funds with, our CTS feeds in particular. But I think, we are seeing, I think it's not unexpected. Right. The most challenged part of the market is the institutional asset management space.

So we're seeing very good growth in the asset owner of space which is smaller, for us. But relatively newer compared to history. But if I was to summarize it, I think it's the -- the institutional asset managers or the traditional asset managers those seeing the pressure but we are seeing the cancellations.

Toni Kaplan -- Morgan Stanley -- Analyst

Okay, great. And I know Helen, you talked about the margin sustainability to an earlier question. But just wanted to get an update on -- originally at the Investor Day last year, there was sort of that target of 100 basis points of margin expansion over the next few years. And this year, I think you've had -- you've outperformed that. And so just trying to get a sense of have you accelerated the pace for just given that FX has been a big contributor or should we still be looking at the 100 basis points next year as well. Thank you.

Helen Shan -- Chief Financial Officer

Sure. Now, thanks. Thanks for your question. Listen, we're pleased about how we've been executing our operational plan, and our ability to meet and actually beat our commitment for FY '19. As we sated on the last call, we're not looking to manage to a margin but really grow revenues and earnings. We are going through our strategic planning process right now and so we're planning to determine how do we best invest to sustain for long-term growth and this is going to include spending in areas, such as in content and in our infrastructure including technology -- of technology stack and our people. We're not necessarily -- we did get a benefit from FX for this year and, but we're not necessarily assuming that going forward. But we'll come back to you, when we've got new information as it relates to our margins going forward.

Toni Kaplan -- Morgan Stanley -- Analyst

Thank you.

Operator

Your next question comes from the line of Peter Heckmann from Davidson. Your line is open.

Peter Heckmann -- Davidson -- Analyst

Hi, thanks for taking my question. This may just be a follow-up, but it's a wide range of potential growth rates in the fourth quarter, really just a product of the decimalization of your guidance. Or are there some other uncertainties that you're trying to convey?

Helen Shan -- Chief Financial Officer

Make sure, I follow your question because we've narrowed our guidance across the board.

Peter Heckmann -- Davidson -- Analyst

But, so, if we take out the first three quarters. The fourth quarter is implying kind of 1% to 7% revenue growth.

Helen Shan -- Chief Financial Officer

Well, that's because, I think you're talking about revenue is because the numbers are so large, $1.42 billion to $1.44 billion, you're trying (ph) back into. I wouldn't necessarily look at trying to look at that. I mean that's -- we was much wider before, if you look at our original guidance that was widest. Because the numbers, I think it's a -- it's the law of numbers here that might be a little bit confusing. I don't see that we -- you shouldn't necessarily look to a difference in our -- we're not trying to convey a material difference in our growth rate.

Peter Heckmann -- Davidson -- Analyst

Okay. Okay and then just as a follow-up. Can you just talk about the tax item that occurred and was added back to non-GAAP EPS?

Helen Shan -- Chief Financial Officer

Yeah, sure happy to do that. So yeah, these were related to a number of things including adjustment to our provision from last year. R&D tax credit, some -- an impact from US tax reform, the toll charge, true up. So it's really a number of things. Again out of this -- this period and in some cases from last year. So that helps drive that delta. But also, as we mentioned, overall, the higher exercise of options by employees where we get the tax benefit of that, it was higher than we would have expected. And that's a material reason as well.

Peter Heckmann -- Davidson -- Analyst

Got it. Thank you.

Helen Shan -- Chief Financial Officer

You're welcome.

Operator

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

Alex Kramm -- UBS -- Analyst

Hey, good morning, everyone. Just Phil, in your prepared remarks, when you were addressing the tough environment out there. You were talking about taking steps with your clients to make sure cancellations will decline. Is that -- it sounded to me like you're taking some pricing steps maybe on the negative side to maybe lock in some clients, can you just flush it out a little bit to know what's going on there? Thank you.

Philip Snow -- Chief Executive Officer

Sure. So I think really -- what we're doing there, Alex, is continuing to elevate the level of conversation, we have, particularly with our larger clients. So given the breadth of our offerings now and the challenges our clients face, there is a very good opportunity to sit down with them, educate them about everything we can do from a content and technology and workflow standpoint. And look to get into multiyear agreements, where we can grow and succeed together. So I think that's a little bit more of what we're referring too. Of course in a competitive environment, price does come into it, but I think, we're looking to have conversations with clients before their contracts come to an end to talk about lengthening the contract and restructuring things in a way, which is a win-win.

Alex Kramm -- UBS -- Analyst

Okay, thank you. That's helpful. And then just, just for the 4Q guidance on ASV or the implied 4Q guidance. Maybe, we're splitting hairs here. But if I look at the sequential quarter-over-quarter increase that you need at the mid point. I think, it's still a decent step up and I know the fourth quarter is usually a pretty good quarter. And I think somebody asked that before in terms of the pipeline, can you just describe like are there a couple of big wins that you have in the pipeline that need to happen to get to this or is this is a very diverse set of wins that you're looking for. I guess, I'm trying to ask like are you really looking for a couple of big ones here to make the year or is it just business as usual that should get you there?

Philip Snow -- Chief Executive Officer

That's a good question. It's the second. It's the business as usual. So I took a very close look at the pipeline. Q4 is a massive quarter for us. But in there, it's a very strong diverse portfolio of opportunities both by geography and by business line. So there are no massive deals, either on the positive or negative side that I believe will impact the quarter in a binary fashion. I think, it's really just a question of the sales team executing at a very high level, which they will do to close a large number of deals in a relatively short period of time. But that's what we do every Q4.

Alex Kramm -- UBS -- Analyst

All right, very helpful. Again, thank you.

Philip Snow -- Chief Executive Officer

Sure.

Operator

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

Drew Gutman -- Cantor Fitzgerald -- Analyst

Hi, this is Drew Gutman on for Joe. I just wanted to ask about how the impact of wealth management this year and what you've seen moving forward?

Philip Snow -- Chief Executive Officer

Yes. So obviously, we had that fantastic deal that we signed last year and executed on this year and we capture the majority of the revenue in the first half. What we've been doing for the rest of the fiscal year really is just building the pipeline. So we've got a lot of interest from a lot of clients given the visibility of that deal. We've had some very successful trials that we've been running and I would expect the majority of the impact to start hitting next fiscal year, not in Q4, of this year.

Drew Gutman -- Cantor Fitzgerald -- Analyst

Great. And then just as a follow-up. Looking at the Americas, it looks like it continues to be strong, so maybe you could just touch on the demand there and what you're seeing from there?

Philip Snow -- Chief Executive Officer

Yes. So the Americas team is performing very well. In a lot of ways, it's our most mature business just in terms of the products that we have for this market and the size of the sales team.I think Americas is really going to benefit highly from some of the new products that we've been releasing, a great example is our portfolio management platform. So we've been hard at work the last two years or three years integrating the acquisitions we did for what we've been calling the portfolio lifecycle and this quarter is the quarter that we released our portfolio management platform, which we believe will have a good impact for us in the front office of the buy side and the Americas sales team now, I think is really getting geared up to go out there and begin to educate clients about this offering.

Drew Gutman -- Cantor Fitzgerald -- Analyst

Great, thank you.

Operator

Your next question comes from the line of Ashish Sabadra from Deutsche Bank. Your line is open.

Ashish Sabadra -- Deutsche Bank -- Analyst

Thanks for taking my question. Phil, maybe just a quick follow-up, you talked about increased competitive pressure also which is weighing on cancellations but you're also seeing some of your clients having cost pressure and then the changes within your sales force as well. So question there is with all these headwinds, is there any potential risk to converting the pipeline in the fourth quarter given fourth quarter is such as strong in terms ASV and pipeline conversion?

Philip Snow -- Chief Executive Officer

I got a lot of confidence in our sales force and we have a great product here. And clients like working with us. They trust FactSet. So I think, we're very well positioned to execute on Q4. There is nothing as I look out over the next few months that makes me feel any different than I felt at this time last year.

Ashish Sabadra -- Deutsche Bank -- Analyst

Okay, that's helpful. And maybe Helen, a quick question. The one-time revenue of roughly $5 million which we saw in the third quarter, is it fair to assume that it flowed directly to the bottom line in the sense, there wasn't really any cost associated with it? And so, what was the amount -- sorry. Go ahead.

Helen Shan -- Chief Financial Officer

Yeah, so you are correct on that, so that's why you're seeing that difference between GAAP and more significant difference between GAAP and adjusted this quarter. So you are right that just flowed straight through.

Ashish Sabadra -- Deutsche Bank -- Analyst

Okay, thanks.

Operator

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

David Chu -- Bank of America -- Analyst

Thanks, guys. Can you just discuss what you're seeing from the sell side. It looks like ASV moderated quite a bit after five straight quarters of acceleration?

Philip Snow -- Chief Executive Officer

Yes. So the sell side is pretty lumpy. We've had a very good run in terms of increasing our footprint on the sell side. Q4 is a little hard for us to gauge, that's when a lot of the banks do their hiring, and that's actually one of the hardest things to predict in terms of the Q4 pipeline sometimes as how many new hires the banks will have and that can be a lot of people multiplied by the price of the FactSet workstation. So we typically get more visibility on this as the quarter comes to a close, but we're very pleased with the work we've done on the sell side and we're doing a lot within our product, particularly on the content side that I think is going to be exciting for our sell side clients as we move into -- to next fiscal year.

David Chu -- Bank of America -- Analyst

Okay and then Helen just based on the guide, it looks like intangible asset amortization, is it really expected to fall off in the fourth quarter? Just wondering, if I'm thinking about this correctly?

Helen Shan -- Chief Financial Officer

Sorry, that you expect it to fall off, you said.

David Chu -- Bank of America -- Analyst

Yeah, because, I mean it looked like it was about -- over $5 million this quarter, right or around $5 million. And based on your annual outlook, does it -- it's expected to fall off quite a bit .

Helen Shan -- Chief Financial Officer

Okay. So that's probably a question, you want to follow up with Rima on, but there is nothing material change that that we would see happening. So there might be something which need to clarify with you.

David Chu -- Bank of America -- Analyst

Okay. Sounds good. Thank you.

Helen Shan -- Chief Financial Officer

Right. Thanks.

Operator

Your next question comes from the line of Peter Appert from Piper Jaffray . Your line is open.

Peter Appert -- Piper Jaffray -- Analyst

Hi, good morning. So just -- stock has been a big outperformer obviously. And I'm wondering if that has any impact on your thought process in terms of the -- the pace of buybacks going forward?

Helen Shan -- Chief Financial Officer

Sure. Thanks for -- thanks for that. I'll take that one. I mean, year-to-date, we've bought back stock around $150 million (ph). But we're opportunistic is how we enter into the market like you, we watch the share price every day. So we're pretty happy with the trajectory of how the stock performed over the quarter. But from our perspective, we weren't necessarily in the market there to chase that. We continue to be very good about returning cash to shareholders.

We increased our dividend this past quarter, and we just increased the share repurchase program. So right now, we're looking for probably continue to target around $200 million for the fiscal year, but again, we're opportunistic. So we'll see how things go .

Peter Appert -- Piper Jaffray -- Analyst

Okay. And then, Phil, I'm wondering if you have any thoughts on is -- the change in the competitive dynamic with Refinitiv now separated from Thomson Reuters, whether you're seeing that having any impact on the market or any changes in behavior related to that?

Philip Snow -- Chief Executive Officer

No. Peter, I mean we've not -- actually not seeing much of a change in behavior. So there are -- we do compete with Refinitiv. I would say, that's primarily going to be on the wealth side, I would say moving forward. But beyond that, we've not seen much of a change at all.

Peter Appert -- Piper Jaffray -- Analyst

Okay, thank you.

Philip Snow -- Chief Executive Officer

Sure.

Operator

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

George Tong -- Goldman Sachs -- Analyst

Hi thanks, good morning. You called out the cancellation by a large corporate client this quarter since they decided to go in another direction.Can you elaborate on why the client canceled? If it was due to pricing or product capabilities and then talk about how cancellation rates more broadly, are trending.

Philip Snow -- Chief Executive Officer

Yeah, so that's, it's difficult to put yourselves in the mind of the other clients. But I think, as I mentioned earlier, if you're thinking about having content within your organization or on your platform, you've got a buy, build or partner decision. It's something that FactSet faces every day and I think in their case, they probably decided that either building it or partnering with someone else was the best solution for them and that could be complicated in terms of their decision making process. When we're talking about cancellations of this type on FactSet, this was a little bit of an outlier for us, honestly, so we do have a very good business with corporates. But this was probably the largest one that we had. So I would not expect more of this -- of this size or frequency, like I said this was a 10-year contract, it was a very long contract.

So there was nothing about our products which we've continued to improve and is massively successful on our platform. That was the reason for the cancellation.

George Tong -- Goldman Sachs -- Analyst

Got it. And you indicated that you overestimated how much revenue you would get from new products and that contributed to some of the ASV guidance modifications. Can you discuss what caused that over estimation, whether it's a function of evolving competitive dynamics more recently, whether it's due to pricing or if it's due to sales force efficiency?

Philip Snow -- Chief Executive Officer

Great question. A lot goes into, I think the business plan. When you are releasing new product there's a lot of factors. So I think, one of the things I'm excited about is the increased discipline that we have here internally in terms of what we're spending our money on -- on our projections. I think, we're going to get better and better over the time. I'm very confident in the direction. Like I said, we've already begun to monetize analytics APIs, but we've just learned a few things in the market in terms of the functionality the clients would want, how we want to price it and so on. So that's -- that's really all the color I can give you on that one.

George Tong -- Goldman Sachs -- Analyst

Got it. Helpful. Thank you.

Operator

Your next question comes from the line of Hamzah Mazari from Macquarie Capital. Your line is open.

Mario Cortellacci -- Macquarie Capital -- Analyst

Hi, this is Mario Cortellacci filling in for Hamzah. Could you just give us an update on what you're hearing from clients given the current environment. Just want to see if maybe you could compare what you're hearing in the US versus Europe versus Asia and kind of compare those for us?

Philip Snow -- Chief Executive Officer

So I think the themes are very consistent, Mario, globally. Clients are looking to drive efficiencies within their organizations, so that they can free up their resources to work on higher value activities and really look for more offer and so on. So a lot of our conversations really around how we can help them with those efficiencies. Part of that is just them consolidating their services on to FactSet. Lots of clients are trying to make sense of all the data they have within their organizations as the pace of data explodes and people need to look and sift through more of it. So we have lots of conversations with clients around, how to help them, organize their data, how to outsource stuff, things they want to do in the public cloud, that we can help them with. It really -- it's not that complicated. I think clients, just want to do some of the things more efficiently with firms like FactSet, so they can really focus on where they add value.

Mario Cortellacci -- Macquarie Capital -- Analyst

Got it, thanks. And just a quick follow-up. I mean, we know that there is pressures from clients regarding cost, but I mean, could you give us a sense of where or when you can reach an equilibrium or do you have working time frame that you guys use while planning for the future. Or how do you think about catalysts that could help you with pricing longer term?

Philip Snow -- Chief Executive Officer

Could you restate the question?

Mario Cortellacci -- Macquarie Capital -- Analyst

Sure. Yeah, I mean we -- so we know that there is costs from, I'm sorry, there is cost pressures from clients. Do you want to see if you ever thought about like an equilibrium regarding pricing or is it the time frame that you use while planning for the future. Or maybe if you think about catalysts that could help you with pricing longer term?

Philip Snow -- Chief Executive Officer

So if pricing is something we're looking at, FactSet is very modular in terms of our pricing. And we may have over complicated things as we've evolved as an organization. So we're in the middle now of evaluating our business model. And as we open up our platform, we're considering new ways that we can get into enterprise agreements with our clients. So that's a piece of work that's ongoing. And I would expect that you might hear more from us on that, but it wouldn't be for probably at least a couple of quarters.

Helen Shan -- Chief Financial Officer

So I guess, one thing you might consider, obviously the way to continue to capture price is putting more value for the client, as Philip saying, that's what we're focused on. Clients want to pay for what they will continue to have pricing pressures, but the way to get to the ability for equilibrium to use your words is that we'll continue to add value and clients will want to pay for that.

Mario Cortellacci -- Macquarie Capital -- Analyst

Thank you.

Operator

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

Keith Housum -- Northcoast Research -- Analyst

Good morning. I was hoping to explore the professional fees line, I know but you guys have includes an ASV. If you could provided the color, obviously that number has been increasing. But how long does it usually take those professional fees to turn around and get recognized into revenue. And then perhaps is the margin profile different from those fees than you would think of the rest of the ASV bucket?

Helen Shan -- Chief Financial Officer

Sure. Let me try to talk that through, and then any follow-ups you have, you can definitely have with Rima. But the way that we take a look at professional fees, is that we look at that over the last 12 months and add that in. We don't try to project out per se from an -- it's -- and you'll think about ASV is an annual subscription value, professional fees are quarter-by-quarter. So from that perspective, it's really looking backwards on what we have already captured. In terms of how that comes through, from a revenue perspective, it goes through in the quarter that it gets realized.

Keith Housum -- Northcoast Research -- Analyst

Got you. How about the margin profile of that business?

Helen Shan -- Chief Financial Officer

Well, it's more of a people-intensive business. But honestly, it get added on to some of our -- it's a mix. So some of it gets added onto our other existing business. So we don't really necessarily look at it as its own stand-alone business.

Keith Housum -- Northcoast Research -- Analyst

Okay, then just real quick, in terms of the change in sales leadership over the quarter. Any change in the sales strategy in terms of how you guys go to market?

Philip Snow -- Chief Executive Officer

So I think sales has executed exceptionally well over the last two years. I think the biggest change is moving the sales specialists into the business lines that we've created. I think the biggest impact we'll see there is within analytics and CTS. So about a third of our client facing sales force, our sales specialists that know these products in very high detail, they're very good at pre-sales and they also do the implementation. So we think, we will get great efficiency by moving the specialists into these groups. That's one change. I think, we're also going to be looking at the FactSet consultants and how they are coupled up with the sales force to make all of our client facing staff a little bit more commercially focused not just the general sales people. And continuing to push out the regional model that we've begun over the last two years, as well as expanding our focus on the C-suite.

So we had a strategic client group, which is our Top 30 or so clients, but that's been very successful in elevating conversations and we're looking at ways to expand that within the different regions. So that's the summary. I think some of you will have an opportunity to meet Franck, pretty soon. As we meet with you between quarters and I think, he would be very excited to talk to you about some of the changes he is planning to bring to the organization.

Keith Housum -- Northcoast Research -- Analyst

Thank you.

Philip Snow -- Chief Executive Officer

Sure.

Operator

Our last question comes from the line of Patrick O'Shaughnessy from Raymond James. Your line is open.

Patrick O'Shaughnessy -- Raymond James -- Analyst

Hey, good morning. So Symphony Communication raised another $165 million in capital, during the quarter. Are you guys seeing any signs or any evidence of adoption of Symphony as a chat tool by your client base at this point?

Philip Snow -- Chief Executive Officer

So we -- we have partnered with Symphony over time. We do see within our clients good, I think adoption within the clients, but we've not yet seen a lot of cross firm communication. So I think it's --- I think it's there, but we don't see a lot of communication directly between the buy side and the sell side on Symphony. But I am not -- I don't want to position myself as an expert in that area by any means, so.

Patrick O'Shaughnessy -- Raymond James -- Analyst

Okay, fair enough. And then maybe one last quick question on the tax rate. So moving lower this year due to the stock benefits, any implications as we kind of think about modeling tax rate going forward or are you kind of looking that as a benefit isolated to fiscal 2019 at this point?

Helen Shan -- Chief Financial Officer

Right. So I wouldn't necessarily at this point, change the view on that, that is such a -- I'll use the word unpredictable given the trajectory of our share price, if it continues, we would expect that to be a continued positive for us. So I would probably just stay within our range for now.

Patrick O'Shaughnessy -- Raymond James -- Analyst

Thank you.

Operator

There are no further questions at this time. Mr. Philip Snow, I turn the call back over to you.

Philip Snow -- Chief Executive Officer

Well, thanks everyone for joining us on the call today, we are encouraged by the growth we achieved this year amid challenging headwinds and see this as a proof point that our long-term strategy is working. We expect to finish the year with strong revenue, margin and EPS and to continue to capture wallet share and deliver value to shareholders. If you have additional questions, please call Rima Hyder and we look forward to speaking with you next quarter. Operator. That ends today's call.

Operator

Thank you, this concludes today's conference call. You may now disconnect.

Duration: 57 minutes

Call participants:

Rima Hyder -- Vice President

Philip Snow -- Chief Executive Officer

Helen Shan -- Chief Financial Officer

Manav Patnaik -- Barclays -- Analyst

Bill Warmington -- Wells Fargo -- Analyst

Shlomo Rosenbaum -- Stifel -- Analyst

Toni Kaplan -- Morgan Stanley -- Analyst

Peter Heckmann -- Davidson -- Analyst

Alex Kramm -- UBS -- Analyst

Drew Gutman -- Cantor Fitzgerald -- Analyst

Ashish Sabadra -- Deutsche Bank -- Analyst

David Chu -- Bank of America -- Analyst

Peter Appert -- Piper Jaffray -- Analyst

George Tong -- Goldman Sachs -- Analyst

Mario Cortellacci -- Macquarie Capital -- Analyst

Keith Housum -- Northcoast Research -- Analyst

Patrick O'Shaughnessy -- Raymond James -- Analyst

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