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FactSet Research Systems Inc (NYSE:FDS)
Q4 2019 Earnings Call
Sep 26, 2019, 11:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the FactSet Q4 2019 Earnings Call. [Operator Instructions] I would now like to hand the conference over to your speaker today, Rima Hyder, Vice President, Investor Relations. Thank you. Please go ahead.

Rima Hyder -- Vice President, Investor Relations

Thank you, Chris, and good day, everyone. Welcome to FactSet's Fourth Fiscal Quarter 2019 Earnings Conference Call. We come to you today from London, England, our European headquarters. 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 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, plus one follow-up.

Before we discuss our results, I encourage all listeners to review the legal notice on Slide 2, which explains the risks of forward-looking statements and the use of non-GAAP financial measures. Additionally, please refer to our Forms 10-K and 10-Q for a discussion of risk factors that could cause actual results to differ materially from these forward-looking statements. Our slide presentation and discussions on this call will include certain non-GAAP financial measures. For such measures, reconciliation to the most directly comparable GAAP measures are in the appendix to the presentation and in our earnings release issued earlier today. Joining me today are Phil Snow, Chief Executive Officer; and Helen Shan, Chief Financial Officer.

And now, I'd like to turn the discussion over to Phil Snow.

Philip Snow -- Chief Executive Officer

Thanks, Rima, and good morning and good afternoon, everyone. I'm pleased to report that we ended fiscal 2019 on solid footing. Not many companies in any industry can say that they have delivered 39 consecutive years of top-line growth and 23 years of adjusted diluted EPS growth. We've been able to deliver consistent growth because we have continually innovated and pivoted when necessary, focusing our investments on our content, technology and our people.

In the fiscal 2019, we successfully launched new products, gained new clients and garnered support for many of the new initiatives we are planning to take into 2020. Additionally, we increased workforce productivity, realigned our sales force, improved discretionary expense management, and made important operational improvements to enhance our infrastructure.

On Slide 6, you can see our annual breakout for the different businesses at FactSet and we're proud to report that all four businesses grew year-over-year. Analytics continues to be our largest overall growth contributor. We remain confident about the strength of our entire portfolio and analytics suite and the further integrated solutions offered across the entire portfolio lifecycle workflow. Newer products such as APIs and portfolio management platform have started to ramp up and we are continuing to build out our enterprise risk solution. We are also encouraged by the analytics second half 2019 momentum going into 2020.

Turning to CTS, we believe this business can accelerate its growth rate. Demand for our core data feeds and the addition of new data sets are big drivers for this business. There's an explosion in the volume of data in our industry as the pendulum swings more towards quantitative and data-driven strategies in the search for alpha. FactSet has always served this segment well, and we are now perfectly positioned to take advantage of this trend and lead the market with our integrated content and open platform.

Our wealth business had a strong year with several large opportunities that we have the ability to win we believe we can accelerate the growth in this business. We are quickly innovating our solution for wealth advisors and the client feedback has been outstanding.

Research, our largest business, had a solid year. We are really pleased to see growth across the majority of client types and we look forward to building on the initial success of our deep sector strategy and expanded content sets within the workstation. In fiscal '19, we grew our workstations double digits within banking, corporate and private equity clients and we plan to invest in content to serve this segment of the market during fiscal '20.

As we start the year, we believe in our ability to succeed in a changing environment. We operate amid an industry backdrop of continued cost pressures and evolution. And with more complex and unstructured data and with active and passive investing vying to find an equilibrium, clients are constantly evaluating technology transformations and are clearly willing to invest in solutions that help them become more efficient in their workflows. We believe that FactSet’s smarter connected content will continue to differentiate us in the marketplace. The key to remaining ahead of the curve is an increasingly open platform that includes more APIs, unique and personalized data and speed to market.

FactSet's value proposition has always been to help clients be more efficient and uncover more alpha. And as you know, integrating content well into FactSet’s ecosystem has been one of our biggest strengths and key differentiators in the industry for the last four decades. Over the next three years, we plan to accelerate our investment to increase the breadth and depth of our content and enhance our technology with the goal of driving higher top-line growth. We are doing this now from a position of strength to reinforce and extend our leadership in the market and capitalize on industry trends.

We will take advantage of the shift from public to private investments, increased sophistication and the needs of wealth advisors and their clients, the need for more automation and operational efficiency on the buy side and sell side, and an ever expanding global data universe. Content and its integration is our greatest assets and essential to our vision and strategy is extending the set of facts available on our platform.

Now turning to Slide 7, we outlined the two main areas comprising this investment. We plan to make investments in content for deep sector, private markets and wealth. Within analytics, we will continue to focus on capitalizing on our investment in risk and the integrated portfolio lifecycle. First, deep sector includes detailed data for additional industries and builds upon the proven market success of our banking regulatory data lunched earlier in fiscal 2019. We believe this will help improve retention, allow us to grow existing relationships and also capture new logos in banking. We also see an opportunity to monetize this data within corporates, our fastest growing client type, selling industry-specific data back to companies in those industries.

Second, we seek to create industry-leading private market content, improving the scope of this data. We believe this opens up a larger opportunity for us with multiple clients in banking, private equity, venture capitalists and corporates. The integration of private and public company data will be a differentiator.

Third, we believe we have an opportunity to capture significant market share in the wealth space with increased content investment. For example, on news product, StreetAccount, is already a successful and highly valued product. We plan to invest more in it and make it a global product covering multiple financial markets. On the technology front, we expect to accelerate our investment in three key areas: First, we plan to accelerate our API program, a key piece of our open strategy, which should help us to achieve a higher level of modularity. This is an area that clients are focused on as they embark on their own in-house technology transformations. Second, we expect to create a better experience for our clients that should help them be more efficient and uncover alpha through personalization. We plan to bring our content to life by leveraging machine learning and artificial intelligence and other techniques to create smart content. Third, we believe we will gain significant efficiencies for our clients and ourselves by moving to the public cloud. Time to market of new products should improve on a scalable foundation with variably priced economics. For example, internally, we expect to increase productivity within our sales force and bring scale to our content collection and integration processes. For our clients, we plan to shorten the clients' sales cycle from solution evaluation to purchase as evidenced by the success we have seen in our data exploration product in CTS. Longer term, we believe we can reap cost savings versus our current data center model.

Critical to FactSet’s success are our people, our service model and how we collaborate with our clients. As we move ahead, we're excited by the opportunity to expand our content sets, enhance our technologies and invest in our people. I'm proud of our team's solid performance this year and there's a lot to be excited about as we look ahead to fiscal '20 and beyond. We will take every opportunity to pull further ahead of our competitors with our open platform and connected suite of data and analytic solutions led, as always, by our people who consistently deliver the strongest customer service in the industry.

Let me now turn the call over to Helen, who will discuss the specifics of FY 2019 performance, our three-year investment plan, and FY '20 guidance.

Helen Shan -- Chief Financial Officer

Thank you, Phil, and hello, good morning and good afternoon, everyone. It is great to be here with all of you. We finished our fiscal 2019 with solid operating performance, in line with our guidance with stronger results in operating margin and EPS. For the year, the improvements were largely driven by higher revenue growth, productivity gains and cost management. We grew organic revenue by 6% and operating income by nearly 20%, resulting in an operational margin increase of 340 basis points to 30.5%. On an adjusted basis, the operating margin grew by 190 basis points over the previous year to 33.2%. Our adjusted EPS grew over 19% to $10 per share. We are pleased that we were able to execute successfully this year on our plan to drive solid top-line and bottom-line growth. Additionally, we exceeded our targeted margin expansion.

I will now walk us through the specifics of our fourth quarter, as well as our fiscal 2020 and our investment plan. GAAP and organic revenue increased to $364 million and $366 million, respectively. Growth was driven primarily by analytics, CTS and wealth. For our geographic segments, over the last 12 months, Americas revenue grew 4% and international revenue grew 8% organically. Americas benefited from increases in wealth, analytics and CTS. International revenue was largely driven by analytics and CTS.

ASV plus professional services increased to $1.48 billion at the end of our fourth quarter, at a growth rate of 5.1% and up $35 million since the end of our third quarter. The growth for the quarter was driven primarily by analytics and CTS. Americas and EMEA ASV grew 5% and 4%, respectively, and Asia Pacific continued to be our fastest growing region at 11%. GAAP operating expenses for the fourth quarter totaled $253 million, 2% less than last year. Keep in mind, for year-over-year comparison purposes that we had one-time charges related to restructuring costs and those benefits are reflected in this quarter.

As a result, our GAAP margin increased 510 basis points to 31%. Adjusted operating margin increased to 34%, a 260 basis point improvement from the fourth quarter of 2018. This improvement continues to reflect disciplined discretionary expense management and lower employee cost through productivity gains. As a percentage of revenue, the expense improvement came largely from our cost to services, which was 300 basis points lower than last year on a GAAP basis. On an adjusted basis, the improvement was 240 basis points.

Margins were impacted positively by faster growth in revenue versus cost to services year-over-year. Contributing factors include decreases in employee compensation from both the continued mix shift from high to low-cost locations and the timing of hiring, as well as 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 220 basis points over the prior-year period on a GAAP basis. On an adjusted basis, this change was essentially flat. This result is driven primarily by expense reductions in travel and entertainment, marketing, as well as employee compensation, offset by increased bad debt expense. Our tax rate for the quarter was 15.5%. For the full year, our effective tax rate came in at 16.4%. Excluding one-time adjustments, our annual tax rate was 15.3%. Please keep in mind that when we provided annual guidance for fiscal 2019, we did not include any one-time adjustments in the tax rate. GAAP EPS increased 32% to $2.34 this quarter versus $1.77 in the fourth quarter of 2018. This increase is attributable to higher revenue, improved margins and a lower effective tax rate. Adjusted diluted EPS grew 19% to $2.61. 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 $95 million for the quarter, an increase of 5% over the same period last year. The improvement was primarily due to higher net income and an increase in cash collections, partially offset by higher capital expenditures. As noted on past calls, our capex is higher this year due to new office space build out for some of our locations as some existing leases have neared expiration and increased investments in technology.

Looking at our share repurchase program for the fourth quarter, we repurchased a little over 221,000 shares for $62 million at an average share price of $281. Over the last 12 months, we have returned $320 million to our investors in the form of dividends and share repurchases. For those of you who have known the Company for a long time, you know, we are very good stewards of capital and investors' interests, having increased dividends for 14 consecutive years and maintained a balanced capital allocation framework. Going forward, we remain committed to creating long-term value for our shareholders and to buying back our shares at a steady pace in line with the past several years.

As Phil noted earlier, top line growth drives long-term value. We made progress this year in operational discipline through productivity, such as in the areas of engineering and content collection, cost management through greater empowerment of business leaders to manage budgets and have greater financial accountability and focus, as reflected in our realignment of our sales force within the matrix organization. The value has been realized through our margin improvement. We have also invested this year in our solutions and infrastructure, as reflected in the launch of new products and the implementation of our new HR and finance systems and the early movement of our technology to the cloud.

We achieved our two-year margin expansion target faster than projected. Over the next three years, we plan to capitalize on our FY '19 performance and take advantage by accelerating investments to grow ASV and revenue. Given the early successes that we have seen with our investments in deep sector content and based on our enhanced infrastructure for scale and efficiency, we believe that we can achieve our long-term objectives. Our plan incorporates targeted actions that focus on driving growth across all our businesses, allowing us to scale -- to support the new growth and to streamline processes throughout the enterprise to increase productivity.

We believe that this will result in a meaningful acceleration of revenues, particularly in our faster growing CTS and wealth businesses. We expect to drive higher rates of revenue retention and expansion in our larger and more mature businesses, research and analytics.

As you can see on Slide 14, at the end of 2022, we believe we will accelerate our ASV growth rate, driven by the growth of -- in topline from each of our businesses. The addition of smarter content benefits all FactSets products, continued execution and our deep sector strategy, private markets and wealth should directly benefit all of our businesses.

We expect that all these initiatives will help improve retention, which is critical to our overall success. Our technology focus on additional APIs, personalized content and the move to the cloud enhances our ability to serve our clients better and faster. The returns on the technology spend include the anticipated productivity gains for FactSet as well through the use of automation and benefits of speed through the cloud. We are projecting that our adjusted operating margin will be at or above 33% by fiscal 2022 and that adjusted EPS growth will be at or above 10%.

Turning now to our investment plan, we intend to reinvest additional 100 basis points of our margins into content and technology in each of the next three years. This acceleration is incremental and will result in some short-term margin dilution. The spend will be almost equally spread across the next three years and split between content and technology. Given the ramp-up time needed, we would expect to see roughly 25% of the revenue benefit to be realized in year-two and the remaining 75% to build up in year-three.

Similarly, we expect the productivity gains from the faster development and content collection, as well as the benefits of moving to the cloud through reduction of data centers to be more fully realized in years two and three. While this result in margin dilution in the short term, we expect to capture margin growth as revenue is realized and productivity comes through. The investments in progress we have made in FY '19 have given us the proof points and confidence to execute our strategy. We continue to believe that long-term value must come from higher top-line growth along with productivity gains.

Moving to our annual outlook for fiscal 2020; for 2020, we expect ASV plus professional services for the year to increase between $65 million and $85 million. GAAP revenue is expected to be between $1.49 billion and $1.5 billion. Reflecting our increased investment in 2020, our GAAP operating margin is expected to be 28.5% to 29.5% and adjusted operating margin to be 31.5% to 32.5%. Our annual effective tax rate for the full year is expected to be in the range of 17% to 17.5%. Finally, GAAP diluted EPS is expected to be $8.70 and $9, and adjusted diluted EPS range is between $9.85 and $10.15. In 2019, we have had significant tax benefits from an overall lower corporate rate and other one-time items, as well as a large amount of stock option exercises due to the increase in our stock price.

We are pleased with our operating results this quarter and for the fiscal year 2019 including the improvement in our operating margin. Our key competitive advantages, leading analytic solutions, and open platform, the breath and connectivity of our data and best-in-class client service, will further differentiate us in the market. And of course, we look forward to continuing our proven track record of consistently returning value to our shareholders.

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

Questions and Answers:

Operator

[Operator Instructions] And our first question comes from Manav Patnaik with Barclays. Your line is open.

Manav Patnaik -- Barclays -- Analyst

Thank you. Good morning. My first question is obviously around the margin. So, two years ago, you called out 200 basis points but your guidance is going to end up only being 50. Even if you look at your FY '22 guidance, margins are going to be basically flat from ’19 to ’22. And so my question is, in the context of a lot of the other names in the space including your direct competitor, all finding ways to expand margins despite investments for growth and a lot of the same investments you guys are talking about too. Why is it that FactSet can't do the same?

Helen Shan -- Chief Financial Officer

Hi. It's Helen. I will take it first. Thank you for your question. So I think there is a couple of things; one, when we talked about expansion in our margins, we accelerated and we were able to capture most of that or actually all of that within a one-year period. And as we looked at, as Phil discussed, the ability to take what we view at a leadership position more quickly in our view we're accelerating our margin -- our investments and from what is a longer time period into now. So that's why it's an incremental 1% that we're doing in each of the years. And we think afterwards that will bring us back to the level that we had given initially, which is more into the 33% plus area. So for us right now, we are meeting what we committed to, which was to get to a 200 basis points improvement, but we're accelerating that by investing more quickly.

Philip Snow -- Chief Executive Officer

And, hey, Manav, it's Phil. I guess, I'll add on a little bit to that. We believe we have a very healthy margin in our business and I think -- I don't know exactly which competitors you're referring to but many of them have very high margin businesses that are segments within that portfolio, but the pieces of that businesses that are more comparable to FactSet, I believe that we're doing well against.

Manav Patnaik -- Barclays -- Analyst

I guess, just the 33% level mark example -- I mean, that's kind of been the mark for a long time and you sort of move up and down that. My question is more broadly like why can't you invest to growth and grow margins beyond that 33%?

Philip Snow -- Chief Executive Officer

Well, I think that's our long-term plan. So with the investment that we're making particularly in technology, that's going to allow us to be more efficient. It's going to allow our clients to be more efficient. And when our clients are more efficient that should also drive our top line growth in terms of the products that they're getting from us.

Helen Shan -- Chief Financial Officer

And I think that's an important point. We're not running the business simply to have a margin, we're running for both operating earnings growth and what we want to do is drive top line growth and that's what these investments are meant to do.

Manav Patnaik -- Barclays -- Analyst

Got it. And then just one last one from me. Talking about top line growth. On the wealth side, the low-teens expectation, can you just talk about the sort of the components there, like, I guess that presumably assumes a lot of share gains over time or how much of that is market growth, and any color there would be helpful.

Philip Snow -- Chief Executive Officer

Yeah. So our wealth business is really split into two pieces. Part of it is the digital solution that we acquired a couple of years ago and the rest of it is the FactSet wealth products that we've evolved from workstation to web. So those have different growth characteristics. The piece that we believe will grow materially faster is on the heels of the big deal that we did this fiscal year. We have a very healthy pipeline in wealth. These are large deals that take a long time to evaluate and materialize and the clients have long contract. But we're very optimistic about the future for that part of our business.

Operator

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

David Chu -- Bank of America -- Analyst

Great, thanks. Yeah. Since we don't have the slides yet, so can you just discuss what your top line expectations are for '21 and '22?

Philip Snow -- Chief Executive Officer

Yeah. So the top line expectations for '22, we had in the slides. So what we laid out there, David, was that we believe we will exit 2022 with high single-digit top line growth within the analytics segment; that will be at high single-digit growth. CTS could be in the high-teens to low-20s. Wealth, we believe will be in the low-teens. And research, we believe will be in the low single-digit growth.

David Chu -- Bank of America -- Analyst

Okay. And should we assume like a step up in '21 relative to '20 based on internal expectations or could it be just like roughly in line in '22 is really where it's pickup?

Philip Snow -- Chief Executive Officer

Yeah, I believe that we should see some acceleration from '20 to '21.

Helen Shan -- Chief Financial Officer

But just to kind of keep in mind based on the comments I made before the acceleration really does occur in '22. That's our target for now.

David Chu -- Bank of America -- Analyst

Got you. And just the follow-up. So the timing of spend for 2020, it sounded like it was kind of even. Is this like all in the first quarter or are you saying even like split evenly amongst the quarter, so like one quarter of the incremental spend in each of the quarters or how should we think about the cadence of that?

Helen Shan -- Chief Financial Officer

Yeah. No, it's a good question. I mean, what I was referring to is really the even spend over the year. So each of the different years. I think quarters will vary a bit depending on what it is that we're attacking, but you would see generally going probably across all four quarters.

David Chu -- Bank of America -- Analyst

So you're saying like incremental quarter -- higher spend per quarter?

Helen Shan -- Chief Financial Officer

I think that's right. There might be some quarters where it’s up or down depending on the particular investment. We'll be managing this pretty tightly. So that will be part of the way that we have greater operational view of achieving it.

David Chu -- Bank of America -- Analyst

Okay. Thank you.

Helen Shan -- Chief Financial Officer

Thank you.

Operator

Your next question is from Toni Kaplan with Morgan Stanley. Your line is open.

Toni Kaplan -- Morgan Stanley -- Analyst

Thanks for taking my questions. I was hoping you could give us a sense of the breakdown of the margin drivers in 2020. So the investment program obviously will have a big hit to margins, but could you talk about how you're viewing in terms of the guidance, the other drivers like efficiency, FX, etc.? And also just in terms of the investment program, if you could give us a sense of OpEx versus capex mix there and how we should be thinking about capex over time?

Helen Shan -- Chief Financial Officer

Sure. I'll make sure I cover all that. So I think as we think about the productivity gains, you know, it's fairly the same. But we think we captured 190 basis points this year, of which, let's call, a 60-ish was from FX. We're not assuming any FX benefit next year, Toni, because we don't -- we're not in the business of trying to project FX. You could expect that rest to continue on. So really the rest of it quite frankly is -- and keeping in mind, the investment we're making is on top of what we already have in play, what we have been investing in as we talked about before, whether it's in deep sector or whether it was in the cloud -- the movement to the cloud. So I would think that both from a productivity perspective, we should expect to see that come through the full point -- the additional points, it really is investment. In terms of capex, our capex this year is around $60 million and that would be essentially as things come off and on are roughly the same going forward. At least that’s what we see for FY '20.

Toni Kaplan -- Morgan Stanley -- Analyst

Okay, great. And you're now including professional services in the workflow solutions growth rates. Could you give us a sense of would research have been negative if you hadn't included professional services in it? What segments have the most professional services ASV associated with them? And if you can give the growth rates ex professional services, so we can comp them to the prior methodology that would be helpful but if not, that's fine.

Helen Shan -- Chief Financial Officer

So I think probably that any details around that you can definitely follow up with Rima, but broadly speaking, let me address your question, which is that research would not have been negative with our professional services. Professional services spend is largely in the analytics part of our business as well as some in wealth, but I would not look at research as being impacted by that.

Toni Kaplan -- Morgan Stanley -- Analyst

All right. Thank you.

Helen Shan -- Chief Financial Officer

You're welcome.

Operator

Your next question is from Ashish Sabadra with Deutsche Bank. Your line is open.

Ashish Sabadra -- Deutsche Bank -- Analyst

Hi. Thanks for taking my question. So a question on the fiscal year '20 ASV guidance. When I look at the high end, it seems to be higher compared to what we did in fiscal year '19, although fiscal year '19 benefited from the [Indecipherable] win. So my question is, just given the limited visibility beyond one to two quarters, some of the challenges in the end market and the competitive pressure, how do you -- what are your assumptions for the ASV growth in 2020? Can you just –provide some color on that front?

Philip Snow -- Chief Executive Officer

Yes, thanks, Ashish, this is Phil. So I think overall we wanted to be realistic in terms of our guidance for the midpoint given the continued pressure that we see on active managers and this is a little bit of a wider range of outcomes that we gave you last year. I think for us to hit the high end of the guidance range, the one thing that could really drive us towards that is the wealth business. So we have quite a few large opportunities in the wealth pipeline that is significant, that we'll be getting a decision on some time in FY '20. Those are larger deals. It's pretty binary. You either get it or you don't. So those are the things that we think are probably giving us the greatest chance of coming towards the high end.

Ashish Sabadra -- Deutsche Bank -- Analyst

Okay, that's helpful. And maybe just a quick question on client attrition that has increased. If you look the retention went down from 91% to 89%. Just can you give some color on that front and how should we think about the client attrition?

Philip Snow -- Chief Executive Officer

We're still -- yeah, sure. I'm still very pleased that we're adding clients. I think if you look at that, we're adding clients across a number of different client types and we continue to add users across a number of workflow. So FactSet is gaining market share I think in terms of the people that have the product. I think what you're seeing there in the calculation is probably the long tail of smaller clients that we have and the churn that you see -- in the long tail of clients. We have well over 5,000 clients.

Ashish Sabadra -- Deutsche Bank -- Analyst

Okay. That's helpful. Thanks.

Philip Snow -- Chief Executive Officer

Thank you.

Operator

Your next question is from Alex Kramm with UBS. Your line is open.

Alex Kramm -- UBS -- Analyst

Good morning, everyone. Want to come back to the 2022 kind of what you laid out there. Maybe you could talk a little bit about your confidence level to get there? I mean -- and what really needs to happen? I mean, I can appreciate that a lot of it is I think coming from execution and hopefully you'll do a good job there, but now I remember when you took the job, Phil, a few years ago, you thought the business has the potential to get back to double-digit and we've been decelerating. And I know it's been a tough environment. So I guess I'm wondering if the environment gets worse from here, do you think you can get to those high single-digit again or is this kind of steady state and execution to get you there only? Does that make sense?

Philip Snow -- Chief Executive Officer

Yeah. So thanks for the question, Alex. Yeah, we believe we can get there. It is a tough environment. Our assumption is that it continues to be tough. When we look at the investments that we laid out for content and technology and how they apply to each piece of our business, we believe there is an opportunity to accelerate the growth rate for each one of them. And there's also a lot that we have invested over the last few years in terms of acquisitions, getting those integrated building our open -- FactSet marketplace. Those are just beginning to bear fruit. So I think what you'll begin to see as we move into '20 is a greater contribution particularly with analytics for things like our portfolio management platform, our API program, the wealth product, which is a combination of the BISAM product that we acquired with PA. Those are really beginning to take hold and we saw a very good Q4 for analytics relative to Q4 of last year and an improvement in the pipeline moving forward. So analytics was our biggest mess this year relative to what we thought we were going to do.

I think you can see that the growth rate came down, but we believe strongly in this business, it really is the most differentiated part of FactSet in some ways, and that's going to I think be positive. CTS is great. The trends are at our back there in the marketplace. Clients want data delivered in new ways. Today, they really just get it in feeds from FactSets. Once we've built an API program for CTS that's going to allow us to get more customers there and as we continue to build more of our own content and integrate other people's content, we believe that CTS has a very long runway in terms of its growth rate. I already spoke about wealth and the investments that we're making in research, particularly around private market content and deep sector strategy. We've already seen very positive reactions from our clients, particularly around deep sector. So all those things lead us to believe that what we laid out there for you is achievable in 2022.

Alex Kramm -- UBS -- Analyst

Okay, very helpful. Thank you. And then just, I guess -- well, I guess related to that, to some degree, I think during your tenure over the last few years when things got a little bit choppier, you've also got more aggressive on M&A to essentially buy faster growing areas in the industry, which I think has been helpful. It's been a little bit absent over the last couple of years. So if I look at this today and I look at the targets, maybe a little M&A could help. So maybe give us an update about your latest view -- and then also, is this all organic, by the way, in you assumptions for 2022 or no?

Philip Snow -- Chief Executive Officer

Yeah. That's a great question. Maybe we should have made that clearer. So this is our organic thesis. We are looking at M&A. We decided to take a little bit of a break to get the software that we are quite integrated. And as I mentioned, I think we're there. It took a little bit longer than I'd anticipated, but we are actively looking particularly at content investments that are out there. So when we look at deep sector, when we look at private markets, those are all a buy-build partner strategy. So if there’s stuff out there that's attractive to us, we will execute on it.

Alex Kramm -- UBS -- Analyst

All right. Thanks again.

Operator

Your next question is from Bill Warmington with Wells Fargo. Your line is open.

William Warmington -- Wells Fargo -- Analyst

Good morning, everyone. So you recently realigned the sales force. I wanted to ask how much is that contributing to the lower ASV growth and how long before the sales productivity improves? Or is it really more of a function of the industry headwinds intensifying?

Philip Snow -- Chief Executive Officer

Yeah. Hey, Bill. It's Phil. Thanks for the question. So yeah, we realigned the sales force. We have moved the specialist back into the business lines, which has been very helpful. And we think that will really help us with analytics and CTS in particular in driving higher growth rates. We believe that some of the miss that we saw in analytics was related to the specialists not being more closely aligned with the businesses. So that's already happened. We're also aligning sales and consulting in a way where we're going to I think have more of a focus on client retention for the consultants that support FactSet. So those are two things that we're positive about and we're also believe creating -- a team is dedicated to new business to focus on capturing new logos. So all of that's in flight and the sales team is excited. We just had a couple of very inspiring sales kick-off meetings in Americas and EMEA, and I can tell you from speaking to them personally, that there's a lot of energy and excitement about what we can achieve moving forward.

William Warmington -- Wells Fargo -- Analyst

And then for my follow-up, I wanted to ask if you could give us some examples of the type of content that you're investing in?

Philip Snow -- Chief Executive Officer

Yeah. So we're -- I think we're already investing in some of the content that we laid out today, you're talking about organic investments?

William Warmington -- Wells Fargo -- Analyst

Yes, the ones you're as drivers for the future revenue growth in terms of terms of deep content that you're talking about putting dollars into.

Philip Snow -- Chief Executive Officer

Yeah, so let me say deep sector strategy really what we mean is data that goes deeper for particular industries. So we made a small acquisition that we integrated last year for our banking, a data that's been very well received on the sell side. And we’re looking to look at eight or nine other industries over the next three years that we can integrate.

William Warmington -- Wells Fargo -- Analyst

All right. Thank you very much.

Operator

Your next question is from Peter Heckmann with Davidson. Your line is open.

Peter Heckmann -- Davidson -- Analyst

Good morning. Thanks for taking my question. Helen, could you talk about what level of share repurchase might be implied in your annual guidance, are you -- is any included or not?

Helen Shan -- Chief Financial Officer

Sure, thanks for your question. Right now, we're looking to repurchase shares in line with how we've been doing in the past. So if you look at the last several years on average, it's around the $200 million to $300 million. So that's what we've assumed.

Peter Heckmann -- Davidson -- Analyst

Okay, great. And then in terms of Europe, a little bit slower ASV growth. Was there a portion of that, that you would attribute to some of the uncertainties around Brexit or was it just more broad based?

Philip Snow -- Chief Executive Officer

Hi, it's Phil. I would say that's more broad based. We actually had a very positive year here in the UK and the UK team grew this market faster than the overall EMEA region.

Peter Heckmann -- Davidson -- Analyst

All right. Thank you very much.

Operator

Your next question is from Shlomo Rosenbaum with Stifel. Your line is open.

Shlomo Rosenbaum -- Stifel -- Analyst

Hi. Thank you for taking my questions. Hey Phil, you've been doing M&A and looking to kind of reposition the Company from workstation to workflow for last several years and why is this the right time now to make these investments versus maybe would have been a several years ago or kicking the can down the road, like what came to a head right now?

Philip Snow -- Chief Executive Officer

I think we've learned some things over the years, Shlomo. So we've had a lot of irons in the fire here at FactSet and the trends have been shifting over the last five years and we've been very consistent as you pointed out in your research report in terms of delivering double-digit EPS growth over the years. And I just sat down with the management team about six months ago; we took a very hard look at our business and decided that the best thing for our clients, our employees and our investors in the long-term was to make these bigger bets in content and particularly technology.

Shlomo Rosenbaum -- Stifel -- Analyst

Okay. And then what -- can you just explain a little bit the guidance implies that the topline is continuing to decelerate into fiscal year '20. The definitely was positive commentary you made about changes in the sales force or so can you give us some of the thoughts as to what are some of the cross-currents that you're seeing. Is it just kind of the continued trend downward without the ability of some of this investment to reverse some of that or can you give us a little level of detail greater, so we can kind of understand how you're thinking about it?

Helen Shan -- Chief Financial Officer

Yeah. Why don't I take that one. Shlomo, thanks for your question. So I think the way -- you're right, there are the headwinds out there, but you also see that we have a pretty big range back to the point that Phil had alluded to before, where there can be things that will drive us one way or the other. But yes, we do believe this is with the right time to be accelerating what we had plans in place already, but by accelerating into those investments, we can drive each of the different components as laid out on that slide to those particular growth rate. So, I think is -- from our perspective, it's the investments that will help us get there.

Shlomo Rosenbaum -- Stifel -- Analyst

So why is the top line expected to continue slowing. Is that like I'm just trying to figure out what's going on. I mean, the growth is like 3.8% to 4.5% versus what have been kind of 5% to 6% over the last several years?

Helen Shan -- Chief Financial Officer

Yeah, so I guess I'm thinking about ASV as the way to think about that a little bit. It's a little bit around the timing of when the ASV comes in as well. We are more back half loaded in general in our history as you are I know as well. And next year, we expect to see the same. We saw some of that even in this year, right, which is manifesting itself. So that's why you're seeing that phenomenon.

Shlomo Rosenbaum -- Stifel -- Analyst

All right. Thanks.

Helen Shan -- Chief Financial Officer

Welcome.

Operator

Your next question is from Joseph Foresi with Cantor Fitzgerald. Your line is open.

Drew Gutman -- Cantor Fitzgerald -- Analyst

Hi, this is Drew Gutman on for Joe. I was wondering if you could talk about the recent market volatility and if you're seeing any impact to demand or anything moving forward.

Philip Snow -- Chief Executive Officer

Hey, Drew. It's Phil. So, yeah, I wouldn't say that the volatility we've seen recently is anything more than we've experienced over the last number of years. So that is not I think superseding the other trends that we see out there in the marketplace.

Drew Gutman -- Cantor Fitzgerald -- Analyst

Okay. And then just for my follow-up, just looking at the US revenue growth looks like, it decelerated this quarter. Just curious if there is anything to point out and the demand you're seeing on that as well. Thank you.

Philip Snow -- Chief Executive Officer

Yeah. The US team -- I think we grew the US in mid-single digits. We did have one large cancel in Q3 that may have affected the long-term growth rate there. But we believe there's a lot of opportunity in the US moving forward.

Drew Gutman -- Cantor Fitzgerald -- Analyst

Thank you.

Philip Snow -- Chief Executive Officer

Thanks.

Operator

Your next question is from Keith Housum with Northcoast Research. Your line is open.

Keith Housum -- Northcoast Research -- Analyst

Good morning, guys. Thanks for the question. Hey just -- I'm not sure if I saw or not, but in terms of the ASV retention rate, did you guys disclosed that, and if not, could you do that now.

Helen Shan -- Chief Financial Officer

This is Helen. I'll take that one. No, right now we -- so we showed client retention. We didn't show ASV this quarter. We're actually looking at ways of how we can provide better information along those fronts. So you'll see that come back in the next quarter.

Keith Housum -- Northcoast Research -- Analyst

Okay. Is it fair to assume that that number was below what it has been in previous quarters?

Helen Shan -- Chief Financial Officer

No, it's actually in line, but we wanted to think about how we are defining that to provide actually greater clarity. So that -- but I would not view that as having come down in any material way.

Keith Housum -- Northcoast Research -- Analyst

Okay. And then just as a follow-up, in terms of the investment program, is this primarily going to be in personnel or is going to be a mixture of personnel and perhaps technology tools? And if it is in personnel, is it going to be more employees or is it going to be more like a contractor base that will probably roll-off when a program is done?

Helen Shan -- Chief Financial Officer

Hi, this is Helen, and thanks for that question. So I think across both, it is primarily people. And it is primarily our own people. So we will see -- there is -- in order to accelerate, we are using third party for especially on the technology front, so that will come off and that's what you're going to see a bit when we see the productivity improvements in year-three. So when we talked about some of that margin expansion that will be a piece of how we're going to realize that.

Keith Housum -- Northcoast Research -- Analyst

All right, thank you.

Operator

Your next question is from Kevin McVeigh with Credit Suisse. Your line is open.

Kevin McVeigh -- Credit Suisse -- Analyst

Great. Hey, if you look out to kind of your projected growth rates, how much of that is coming from higher retention or new product, because it seems like the research has been kind of flat, and now you're looking for low-single digit. It seems like a pretty high hurdle given where the business have been trending so just any thoughts around that.

Philip Snow -- Chief Executive Officer

The sales team is definitely focused on retention that will help, but we believe this will come from the investment that we're making. So we accelerated our research growth rate this year with some pretty small investments and we think the concentrated investments we're making again particularly in deep sector and private markets gives us an opportunity to move the needle with the biggest piece of our business, which is very exciting in terms of our overall long-term growth rate. If we can move research up a couple of hundred basis points that really helps us achieve our goals.

Kevin McVeigh -- Credit Suisse -- Analyst

And then any -- it seems like kind of the CTS, if I have that right, that's up a little bit. It just seems like the mix is shifting around a little bit in terms of where the contribution is coming from. Is that the investment or is that the data, what's driving that?

Philip Snow -- Chief Executive Officer

Yeah. CTS had a very good year. I mean, it continues to be our fastest growing segment. There was one large cancel, which I pointed out in Q3, on our last call, which affected that group in particular, and without that, which really was an outlier, CTS would have grown in line with what they grew at in FY '18. So we feel very good about this business. The data exploration product that's in Open:FactSet is allowing clients to evaluate our content at a significantly higher rate than they used to. And as we build out our platform, we believe that CTS continue to accelerate from the current rate that it's at.

Helen Shan -- Chief Financial Officer

If you think about how the content investments are really going to help all four businesses, as you alluded to, going forward, if you're having more content that's clearly going to help CTS, it will help research. As we talk about retention, we saw some of that this year, which is how it gave us some greater confidence and why we think the execution will go well, as we execute across both deep sector as well as private.

Kevin McVeigh -- Credit Suisse -- Analyst

Thank you.

Helen Shan -- Chief Financial Officer

You're welcome.

Operator

Your next question is from George Tong with Goldman Sachs. Your line is open.

George Tong -- Goldman Sachs -- Analyst

Hi, thanks, good morning. You had previously noted a slowdown in monetizing new products due to a client alignment issues around functionality and pricing. Can you discuss what assumptions around new product monetization you're including in your full year guidance, and if you're factoring in benefits from your investment program?

Philip Snow -- Chief Executive Officer

Yeah. Hi, George, this is Phil. So why don't I start with analytics. So as I mentioned previously on the call, we're really beginning to see some of the benefits of the new programs within analytics. We had a couple of nice wins with our portfolio management platform and we crossed a significant milestone in terms of our APIs for analytics. So those are just two very good examples. Another one is Vault, which is again the integration of the official performance system with PA, that's beginning to get a lot of traction. And I would point out research, again, we did that small acquisition of some bank regulatory data that we integrated into FactSet, which is what we do exceptionally well. We've got a very positive response from the marketplace. So those are smaller numbers, but as they begin to get traction, we think that there is a significant opportunity for them moving forward.

George Tong -- Goldman Sachs -- Analyst

Got it. In recent quarters, your competitive Refinitiv has seen an acceleration in organic revenue growth from flat to the 3% range. Can you discuss the broader competitive landscape and what trends you're seeing around pricing?

Philip Snow -- Chief Executive Officer

Sure. So we continue to take market share from Refinitiv. That 3% is not coming from FactSet. We see a big opportunity against them moving forward. And I think we're doing a great job with our competitors. Everyone is facing a tough environment, particularly in the front office and all the solutions we have are well positioned for our clients to allow us to take market share. That's an area where we are in, but we're not nearly as well penetrated as some of our competitors. So as they look to cut costs and we continue to improve our functionality we think there's a great opportunity.

George Tong -- Goldman Sachs -- Analyst

Got it. Thank you.

Operator

Your next question is from Andrew Nicholas with William Blair. Your line is open.

Trevor Romeo -- William Blair -- Analyst

Hi, good morning, it's actually Trevor Romeo in for Andrew. Thank you for taking my questions here. And thank you as well for providing the details on the 2022 outlook. Just wondering, what do you see as the main risks to that outlook? And when you look at the business line break down, which business line would you say has the most upside potential relative to that outlook?

Philip Snow -- Chief Executive Officer

Good question. We're -- our assumptions are that we continue to operate in a tough environment. If there is a massive market correction or a serious recession, obviously that's going to impact not just FactSet, but all of us. And I am bullish about all of our businesses, so they’re different sizes, they’re growing at different growth rates. I would say generally the opportunity for FactSet is to be an open platform. So currently CTS sort of paved the way for us in terms of creating an open platform. But as we build out our API program and each of our business is then able to deliver the value to our clients in new and interesting ways that gives each of them a great opportunity to capture more market share.

Trevor Romeo -- William Blair -- Analyst

Okay. Thank you, that's helpful. And then from a follow-up, just wondering if you could talk about kind of the importance of analytics to the overall Company. If you do see analytics growing -- continuing to grow high single digits, I guess, it could be as big as the research business in a couple of years. So just wondering if you could talk about it in those terms and whether you see analytics potentially being the biggest business line someday. Thank you.

Philip Snow -- Chief Executive Officer

Analytics could be the biggest business line some day. It's already $0.5 billion and it's continued to be an important piece of our offering. Analytics for us is really the products that we build around client portfolios that are on FactSet. So thousands of clients trust FactSet to store their portfolios and we've built great functionality around those for our clients. So very often the analytics products can drive other products with them. And we, like I said earlier, it's a very well differentiated part of our product versus our competitors.

Trevor Romeo -- William Blair -- Analyst

Okay. Thank you very much.

Philip Snow -- Chief Executive Officer

Thanks.

Operator

Your next question is from Glenn Greene with Oppenheimer. Your line is open.

Glenn Greene -- Oppenheimer -- Analyst

Thanks, good morning. Hey, Phil, so just sort of, you were asked this question or similar question to this, but sort of big picture, sort of stepping back, when you came in as CEO, you sort of felt like you needed to make a strategic shift and be more of a broader, sort of portfolio suite of solutions and just sort of workstation. And I guess I'm just trying to understand where we are now and in the context, you had significant margin expansion this year, but you're sort of stepping up investments. And I just want to get a big picture what you're sort of thinking, what you saw six months ago that sort of precipitated the sort of accelerated investments? Was it anything external in the market, anything that you're hearing from your clients, what you're seeing competitively? Just more in terms of the internal thinking about why now and why not do it six months ago or is it just you couldn’t do it that quickly?

Philip Snow -- Chief Executive Officer

Yeah, I think we were -- we have plans. We’re a bigger ship than we used to be. We wanted to make sure that we were thoughtful about this as we laid out a three-year plan. And we're not satisfied growing in mid-single digits. FactSet has always had a high top-line growth rate and we believe that's the best way to create value for our clients, our employees and our investors. So six months is not a big period of time in the big scheme of things, and we are committed to this three-year plan. We're excited about it. Our employees are excited about it and I look forward to seeing the results.

Glenn Greene -- Oppenheimer -- Analyst

Okay. Then just Helen, just a quick one. The shift to the public cloud, is there any way to quantify the potential savings when you sort of complete this project and any data security concerns as you do this?

Helen Shan -- Chief Financial Officer

Yeah. Thank you for your question. This is -- we started this movement starting back at the end of 2018. So it is a multi-year project. We're not necessarily here to give you the dollars around that, but we do expect pretty significant savings again more in the 2021 -- 2022 when we are able to really move and aim for a majority of our technology – our technology to be in the public cloud. Security is definitely always key. It's top of mind for us. And part of the spend that we're doing in the next three years is to ensure that our security is in line exactly with all of the digital investments we're making.

Glenn Greene -- Oppenheimer -- Analyst

Okay. Thank you.

Helen Shan -- Chief Financial Officer

You're welcome.

Operator

Your next question is from Patrick O'Shaughnessy with Raymond James, your line is open.

Patrick O'Shaughnessy -- Raymond James -- Analyst

Hey, good morning. So regarding your 2022 goals, do you think it's possible to get back to 33% plus operating margins without returning to high-single digit revenue growth or do you have to get that revenue growth in order to get the margins to where you want them to be?

Helen Shan -- Chief Financial Officer

I think they're both, I mean, they are inextricably tied. Thank you for your question by the way. They are inextricably tied. So yes, I think we have savings already built in as well, again, as we get to 2021. It will come from the ability for us to scale both on content again, as well as on the cloud shift and right now, we've put a target out there. We obviously aim to do better, but I think we feel very comfortable that we can reach that, it is not purely a top-line play.

Patrick O'Shaughnessy -- Raymond James -- Analyst

Okay. Great, thank you. And then a quick follow-up. In your earnings release today, if I'm reading that correctly, I think you're guiding towards $25.5 million in non-recurring items that you anticipate excluding from non-GAAP results in fiscal 2020. If I'm reading that correctly, can you provide a little bit of detail on what those primary components would be within those $25.5 million?

Helen Shan -- Chief Financial Officer

I'll definitely have you can follow up with Rima on details. But broadly speaking, they are in line with how you've seen that delta in the past. So it's intangible amortization and some deferred revenue. Those have been two of the biggest pieces between that and then after that there are also other, we anticipate some of the cost related transformation on that front as well.

Patrick O'Shaughnessy -- Raymond James -- Analyst

Okay, thank you.

Helen Shan -- Chief Financial Officer

You're welcome.

Operator

Our last question comes from Craig Huber with Huber Research. Your line is open.

Craig Huber -- Huber Research -- Analyst

Great, thank you I have a few questions. First, in the organic revenue number for the quarter you just finished and also the organic numbers you estimated going forward for the next few years, how much of that is price please?

Helen Shan -- Chief Financial Officer

What's assumed in there is fairly similar to how we've recognized in the past about 1% to 2% of that or 1.5% that usually is price based.

Craig Huber -- Huber Research -- Analyst

Okay. So, no change, okay, thank you. And then can you just talk a little bit further about cancellations of your products in the marketplace this quarter that we just finished, and the early part of this quarter? Is that trend materially different for your various products in the US and up in Europe than it was in the last quarter?

Philip Snow -- Chief Executive Officer

Hey, it's Phil. So it was a little bit weaker. We certainly saw a few more cancels in terms of the number of clients that canceled, as well as cancellations within the core client base, but it wasn't a material difference versus Q4 of last year.

Craig Huber -- Huber Research -- Analyst

And then my other question, when you think about your major competitors in the marketplace, are you see anything significant out there that they're doing right now that led you to step up your own internal investment spending?

Philip Snow -- Chief Executive Officer

No, I think everyone's dealing with the same market environment; the mega-trends that are out there we're all dealing with. None of us really compete completely with each other. We compete with parts of each of others businesses. So I think everyone is probably investing to be more multi-asset class, make sure that they deliver a superior technology solution to their clients. We believe that having an open platform and our approach is going to be the winning formula in the market.

Operator

Ladies and gentlemen, this does conclude the Q&A period. I'll now turn it back over to Phil Snow for any closing remarks.

Philip Snow -- Chief Executive Officer

Yes, thank you. So I would really like to thank our clients and I would really like to thank all of the employees of FactSet. And we've got a great management team and I want to give us a shout out to Helen. She's only been with us a year. It's hard to believe, but she's done a great job of really creating operational efficiency and really creating a strong balance sheet. I want to thank everyone for joining us on today's call. We're encouraged by the progress we've made this year and are confident in our plans for investment in long-term growth. As we look forward to 2020 and beyond, we're confident that the investments we are making today will strengthen our position in the industry and in doing so, create greater long-term value for all our stakeholders. If you have additional questions, please call Rima Hyder. We look forward to speaking to you next quarter. Operator, that ends today's call.

Operator

[Operator Closing Remarks]

Duration: 61 minutes

Call participants:

Rima Hyder -- Vice President, Investor Relations

Philip Snow -- Chief Executive Officer

Helen Shan -- Chief Financial Officer

Manav Patnaik -- Barclays -- Analyst

David Chu -- Bank of America -- Analyst

Toni Kaplan -- Morgan Stanley -- Analyst

Ashish Sabadra -- Deutsche Bank -- Analyst

Alex Kramm -- UBS -- Analyst

William Warmington -- Wells Fargo -- Analyst

Peter Heckmann -- Davidson -- Analyst

Shlomo Rosenbaum -- Stifel -- Analyst

Drew Gutman -- Cantor Fitzgerald -- Analyst

Keith Housum -- Northcoast Research -- Analyst

Kevin McVeigh -- Credit Suisse -- Analyst

George Tong -- Goldman Sachs -- Analyst

Trevor Romeo -- William Blair -- Analyst

Glenn Greene -- Oppenheimer -- Analyst

Patrick O'Shaughnessy -- Raymond James -- Analyst

Craig Huber -- Huber Research -- Analyst

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