Ladies and gentlemen, thank you for standing by and welcome to the FactSet Fourth Quarter 2020 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to introduce host of this conference call, Ms. Rima Hyder, Vice President of Investor Relation. You may begin.

Thank you, Kevin, and good morning, everyone. Welcome to FactSet's fourth quarter 2020 earnings call. We continue to be in various remote locations today. And if we have any audio quality issues, we certainly appreciate your patience, should we experience a disruption. Before we begin, I would like to point out that the slides we will reference during this presentation can be accessed via the website 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 to 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. I would now like to turn the discussion over to Phil Snow.

Thanks, Rima, and good morning and good afternoon, everyone. First, I hope everyone is healthy and continuing to do well. And when we started this fiscal year, none of us I think could have anticipated what we'd be faced with over the last six months. And I really couldn't be prouder of our team’s performance and its resolve to be there for our clients as we all quickly adapted new ways of working. Our resilience and ability to execute over the last three months meant our client-facing teams armed with an expanding suite of products achieved the highest quarter of incremental ASV in our history. We finished our fiscal year having delivered 40 consecutive years of top-line growth and 24 years of adjusted EPS growth. I'm pleased with how our digital transformation efforts are supporting this growth and increasing our ability to build personalized solutions for our expanding client base. Earlier this year, we partnered with Forbes insights to survey 200 asset managers and asset owners from around the globe to better understand where they stood with their digital transformation programs and how they're leveraging next generation technologies. And according to the results, 75% of executives believe their firms need to invest more in technology initiatives and also 69% of executives believe that businesses are facing more competitive pressure than in the past as customers expect higher and more personalized levels of service. A successful digital strategy includes having a scalable cloud foundation, a modern data layer with best of breed content, streamlined processes, the use of cognitive computing and the personalized client experience. This is the journey we ourselves are on as an organization. It makes us stronger, and more importantly, will help our clients get to where they too are ongoing. We believe, we're making tremendous progress in…

Thank you, Phil, and hello, everyone. I'm happy to be speaking with you today. And I hope you and your loved ones are safe and healthy. I want to echo Phil's sentiment on the strong performance by the FactSet team. Their efforts are clearly reflected in our full year results. Our financial results in 2020 proved the strength and resilience of our business model, the critical value of our content and the strength of our client relationships. At the start of the lockdown in March, our team quickly pivoted to focus on helping clients and ensure they were able to operate productively from remote locations. We were rewarded with continued loyalty as reflected in our client and ASV retention rates. Since the first quarter of 2020, we accelerated our growth rate in ASV plus professional services through solid execution of our second half pipeline, crossing over $1.5 billion mark and exceeding our most recent guidance for the year. Building upon our operational improvement in 2019, we continued greater productivity through workforce mix and disciplined expense management. We executed on our investment plan, adding needed talent and technology. Savings and costs related to the pandemic contributed to our results as we managed deliberately to keep our employees safe and productive, while working remotely. Our team's notable efforts led to an adjusted operating income improvement of 6% and adjusted operating margin expansion of 40 basis points to 33.6% and an adjusted EPS growth of 9% to $10.87, primarily driven by higher operating earnings and supported by a decrease in our tax rate. We are really pleased with our four year results, especially amid the unexpected challenges of the coronavirus pandemic. Let me now walk you through the specifics of our fourth quarter. As noted on the previous slide, we increased ASV by…

Our first question comes from Kevin McVeigh with Credit Suisse.

Great. Thanks. Hey. Phil, you made a comment. You said a highest quarter of incremental ASV growth in the Company history. Can you kind of just frame the puts and takes around that? Specifically, it looks like on the research side that seeing a little bit more momentum. Is that just structural change around COVID or some of the early benefit of the multi-year investments? Just any thoughts on that would be helpful.

Sure. Hey, Kevin. So, yes, it was broad based across all of the businesses in Q4. It was very strong. Research, I think was comparable to what we did in Q4 of last year. We did see decent hiring in the banks. I think, many people were concerned that that was going to be significantly lower, but we saw pretty good strength there. Analytics had a particularly strong quarter. We saw -- we talked about that earlier in the year where some of the investments we've made previously around the portfolio lifecycle were really starting to gain momentum. So, we did great with our performance system, which was really the result of the acquisition of BISAM integrated with PA and also our reporting system, which was the Vermilion acquisition. So a great quarter from analytics. CTS had a very good quarter, better than Q4 of last year. Our hope is sort to grow CTS a little bit faster this year, but we did have less salespeople I think than we needed at the beginning of the year going into ‘20, which we've corrected going into ‘21. And wealth had a really good quarter relative to the last Q4. So, all businesses grew, firing on all cylinders and the sales team did a tremendous job of executing on the pipeline that we had laid out at the beginning of the second half.

And then, Helen, real quick, the expense management used to be really, really effective. Any thoughts on, just any structural savings, maybe on the travel side or occupancy? And does that allow you to share more with the market or accelerate product development, just thoughts around that? I know, it’s still early, but you've got a couple of quarters here.

Yes. No, thank you for that question, and it's definitely an important one. Right now, given our fiscal year end, we have the situation where we have half a year of non-COVID, half a year of COVID, right? And so, as we think about the go-forward, we have A, proven that we've been able to sell virtually very effectively; and B, we have to obviously take into account how our client's behavior is. And so, when we think about the go-forward, we do assume that we are going to go back to the offices, sometime in the second half for us, but also that there will be some level of change, and that is built into our numbers. Now, that is in part, we are, I'll say reinvesting some of that back into the business, not all of it. But, that is part of what when we gave our guidance for FY21 built in. So, we do think that there are some, you were calling it structural change, but there will be some level of difference of how we just operate as a business that is taking into consideration.

Thank you.

You're welcome. Thank you.

The next question comes from Shlomo Rosenbaum with Stifel.

Hi. Good morning. Thank you for taking my questions. Hey, Helen, can you talk a little bit about the pipeline and what you're seeing, just as you -- kind of the cadence of sales running through the quarter and into the first quarter, just give a little bit more color on the support for kind of the accelerating organic growth rate that you’re speaking over the course of the year.

Sure. I'm happy to touch on that. So, I think as mentioned by Phil, we think about our different businesses, in particular for analytics, one of the benefits we've seen over the course of '20, which we think will continue into ‘21, will be along the lines of expansion. For example, with the reporting and risk and performance, we have found that those who have our core analytics solution within certain period of time, do have those add-on. So that expansion is happening. And so, we think that will just continue to build as we go forward. From a CTS perspective, as Phil mentioned, we have additional sales resources, for example. So, we think that positions us better, and that will reflect itself into '21. And then, what we're really building into our minds here as it relates to both research and wealth is that solid retention. It is in part buoyed by the investments that we've made, and we would expect that to continue. And we're not looking for any of large deals and necessarily be part of what's going to help us to succeed in '21.

Okay, great. And then, just give me a little color as to the ASV growth rate. It seems to be -- an expectation at least for the year is lower than the revenue growth rate. And usually, I look at that as kind of a leading indicator. An ASV grows faster in an improving environment and it would decline faster in slowing environment. Why is that different now?

Sure. So, there's a little bit at the nature of ASV and revenue, which you hit upon. But, when you have a very strong, say Q4, right, so, you're not really recognizing that revenue in year, you recognize it really in the following, let's say, the next 12 months. So, there's a little bit of a lag effect that can occur, because you're not going to see that all in there. So, that's really what we're seeing here, when we're talking about the growth rate, it’s the impacts from the previous year, that's showing through into the subsequent year.

Our next question comes from Hamzah Mazari with Jefferies.

My question was just on Asia-Pac. It's been continuing to outperform. I know you mentioned sovereign funds. But maybe anything you can touch on in terms of the mix of that business or execution? I guess, it's a small base, do you envision that business being as big as the U.S. over time? Just sort of any thoughts there would be helpful.

Sure. Hey, Hamzah. It's Phil. So, yes, Asia-Pac had a slower year of growth than we were expecting. But, we do think that it will return to a higher growth rate this year. It was the first region to get affected by the pandemic. We did see particular strength in a couple of different countries, and we see a lot of good momentum going into next year. So, I don't think that’s sort of a longer term trend in terms of Asia-Pac not growing at rates that it used to grow out. In terms of it getting back to -- over time to the size of the U.S., I mean, it is only around 10% of our business today. So, it certainly has a lot of potential. I think, Asia-Pac is a great market, if you're an asset manager, there's a lot of opportunity on the wealth side there. So, we're very bullish on it. But, it would take obviously a long time for it to get to the size of the U.S. But, I think we've been consistent over time saying we think our EMEA plus Asia-Pac business could be 50% of our ongoing revenue at some point. And I think we're beginning to get close to that now.

Got it. And then, maybe if you could just update us on -- you laid out the multiyear investment plan, just in terms of timeline of that initiative, clearly, we're looking at ASV bounce back, which is sort of a milestone to judge success maybe of that program, but just maybe just update us on the timeline of that initiative. And if there's been any change sort of due to COVID? I know you mentioned the sales cycle, but any thoughts that would be helpful.

So, we're on track. We've not changed our plan. So, the three-year plan that we laid out, we’re still committed to. So, the broad buckets, which were digital transformation, which includes a move to the public cloud, opening up the platform through APIs and more personalization, all of that continues to do well. On the content side, we committed to deep sector, private markets, and some investments for the wealth clients. We did really well this year with the deep sector strategies and we had significant releases in the three sectors. And we believe that that led to some very good retention, some clients, the work that we were doing that. We've secured a lot more content providers to kind of fill out new sectors that we’re working on, and we have a full team of sector specialists for each of the different sectors that we had for the three-year plan. So, like any plan, you'll make some tweaks here and there. But, the plan itself, the overall strategy, the pace at which we're investing, none of that has really changed.

Our next question comes from Toni Kaplan with Morgan Stanley.

First, I actually just want to confirm the ASV guidance range. I think, the press release at the low end had $55 million, but on the slide, I think it said $65 million. So, I just wanted to make sure I have a good handle on what the bottom end is. But, my main question, though, is really, you had a pretty nice acceleration in ASV last quarter to 5%; this quarter, again, to 5.3%. So, so far, you're really not seeing the COVID impacts that I think, I would have thought, and -- but then, on the guidance being lower, it sounds like maybe it's just -- it hasn't happened yet. So, just wanted to understand, is it really conservatism, or is it something that you're seeing in your data, maybe in the retention rates or in something that's leading to sort of the slowdown?

So, yes, the low end should be 55, and I believe, that's already been corrected in a deck. So, we'll get back to those. The range is 55 to 85. We've been very successful, Toni, at selling virtually. So, I'm very proud of the team, and I think we're very confident that we can sell FactSet and support it and implement it virtually, and we're not sure how long that's going to go on. I think, there's a couple of things here. We are always very back-end loaded in terms of ASV. And sometimes it's hard to have visibility into the second half of the year. And this is a year where I think we would all agree that there's a little bit -- there's more uncertainty, more things that could happen. So, we’re trying to put a good number out there for you. If we need to adjust to the second half, we can as we get more visibility. The one area that I think we're a little bit just not worried about, but thinking halfway about is how do we get the much larger deal teed up over the year. Like, can we do as many of those as we did in fiscal year '20? We're able to do them, it's just a question of are the clients themselves in the end markets going to be willing to make those large decisions? So, as we get closer to the end of the year, we'll understand how clients are looking at their budgets. Because we're an August company, that's a little bit different. But I think we're going into the first full budget cycle for clients, since COVID began. So, we're just not sure how that's going to play out exactly. What I can tell you is that we have a comparable pipeline going into FY21 as we had going into FY20. Like I said, if we need to revise our guidance at the mid-year mark, we will, but this is I think the range that we felt was appropriate sort of given what we know today.

Okay. That’s helpful. And I wanted to ask about CTS. Obviously, it's still a double-digit growth rate, but it is down from 15% last year, 20% in prior years. I think, just trend in terms of expanding need for data and things like that I thought were sort of positive tailwinds for that segment. And so, just wanted to understand -- it's a good number, but can you get back to 20% range on that line? And were there any specific drivers of the slowdown this year to get to that number?

Yes. I believe, we can certainly grow this at a faster rate. And as you mentioned, all the trends in the market are there, it really is a tailwind. I believe we're growing this business faster than most of the competitors offer the type of data that was selling. So, I think we're doing well and taking market share and we sold a lot of our core content. So, as more of our -- as we develop more of these content sets and we’ve made a significant investment in content recently, we're going to be able to have more SKUs on the shelf to sell to our clients. One area that didn't come in as quickly as we thought as it might this year was the API. So, traditionally, clients have consumed FactSet content through feeds and our ability to file. We have built a lot of APIs to clients to sort of pull the data in a program that aims it directly. We believe that is a winning strategy. It just didn’t come to fruition as quickly as we thought it might. And we’ve built out a lot more sales channels through other enterprise software providers and through our strategic partnerships and alliances and things. So, I believe it will be our fastest growing segment for some time. And we've got a lot more specialists selling CTS going into FY21 than we had going into FY20. I do think that was -- that somewhat limited us that it's a very specialized sale. And if you don't have enough people to sell it, it can slow down the growth rate.

Thank you.

Sure.

Next question comes from Owen Lau Oppenheimer.

Good morning. And thank you for taking my question. Could you please give us an update on your wins in some non-traditional sectors, for FactSet, like insurance and real estate? And also, could you please talk about the value prop with them, and why they are switching over to FactSet? Thank you.

Sure. Thanks for the question, Owen. Let me talk about insurance. So, we do very well in the asset owner space. We grew that type of client this year I believe in high single digits. And we did have a lot of success with insurance companies, particularly in the fourth quarter. And usually, the insurance companies are going to be using our analytics suite. So, we'll be selling into the general fund. Typically, they'll be subscribing to our multi-asset class risk solutions. So, as we continue to build our capabilities there, that's resonated greatly with the insurance companies. So, that is a space we're very bullish about. We don't do a lot with real estate companies today. That is an area that we're investing in. So, maybe that's something we can talk about at a future call.

That's great. Very, helpful. And then, the follow-up question is, you talked about Asia Pacific, decelerated a little bit, but I also realized that EMEA accelerated from 3.7% to 5.7% linked quarter. Any color you can provide, any -- what's the driver for that? Thank you.

Yes. We had a great quarter and a great year, in the EMEA region. Analytics and CTS were big drivers there. We did very well in some of the very large accounts in the region. And the UK sales team actually really crushed it this year. So, we had a very good performance out of the UK. And we did well with redistributed as well. So, we do have a segment of our business that goes out to other fintech companies or other consumers or financial data other than the buy side and sell side, and that team had a very strong year.

That's very helpful. Thank you very much.

Sure. Yes.

Our next question comes from Bill Warmington with Wells Fargo.

Good morning, everyone.

Good morning.

So, I know that the contracts can vary from client to client. But, could you talk about how, for the majority of your revenue, potential seat reductions could impact or wouldn't impact your revenue?

So, just to address it quickly, which is, when we think about our contracts, like you said, they all varied and they’re multi-year in nature. So, that's point one. The second point will be that many of them, especially the larger ones, which is probably what your question is focused on, we have minimums and then we also have tiers. So, I think from the perspective of a number of users, yes, that may change over time. But, it would have to be something, more material for any kind of impact more specifically as it relates to how our contracts were set up. Now, I'm giving you a general answer, Bill. But that is how we would think about it and probably the way it would play out.

That's helpful. The other question I have for you is, it's really one where I was just doing some --we were doing some calculations earlier today. And if we take the ASV segments, as you have them now, and we take the growth rates that you have done this past quarter, aside this past year, and you just run those out for the next three years. The challenge is, it doesn't move the ASV growth very much. I mean, it takes it from the 5.2%, 5.3% growth to about 6%. And the challenge I'm facing is I’m trying to figure out like how you get it to the upper single digit, which is where that 40% is -- sorry, that 60% is growing now. How do you get the whole Company up to that level?

The big move as far as, Bill, CTS and analytics, we have to execute on those two in particular. And I think, it's seat count as well. So, how well do we do in capturing more seats in the wealth and research space. So, when we laid out a plan, we have a theory where we can move each of these pieces of our business to a higher level, and some have more opportunity than others. But, that's really the theory is how quickly can each of them get to the growth rates that we think that they can attain, so as a group gets to the high single digit number that we outlined for you last year.

The next question comes from Manav Patnaik with Barclays.

Phil, maybe somewhat tied to this prior question. You talked about, there was no pace in the change of your investments, and early in the call, you talked about how all the clients and almost everyone we listened to is going through this accelerated digital transformation and so on and so forth. And I was just curious, your thought process and perhaps why maybe you guys didn’t decide to accelerate, given all the trends that we're seeing there?

You mean investing more in it than…

Yes, investing more and faster or so forth.

Yes. We certainly could do that. I think, we have -- this is an ambitious investment plan that we have and it's I think good to I think see how it goes essentially. So, I think we're very encouraged with the investment that we've made so far. And, if it proves that some of these things produce higher growth rates than we originally imagined, we could certainly consider that. So, we have tweaked some things, and there also is -- there's only so much capacity I think we have to execute on some of this stuff at a certain rate. So, that's another potential limiting factor.

Okay. Fair enough. And then, just to follow-up, on the content side, the private sector expertise you're talking about, could you just remind us or give us a flavor of where you’re sourcing that data or how you're collecting that data and how much of it is more proprietary versus just a partnership to resell the data and so forth?

Yes. It's a combination of partnerships and us collecting data ourselves. So, I don't know if we've been completely public about. Some of the sources we have. So, I want to be a little bit careful there. But it is a very healthy mix. One of the big kind of rocks within our digital transformation strategy is to automate a lot of our own content collection. So, we have a very good machine for collecting content, but if we would have set up our company all over again today, we'd probably do it in a different way. So, we're making that transition. And as we get further along with that journey, I think we'll be able to source more of this data ourselves that can come from a wider variety of documents and more unstructured content as well.

Thank you.

And Manav, just to add, part of it is having content, and part of it is concordance with everything else that we have, which is a differentiating factor and important one. So, I wanted to sort of keep that in mind as well.

Okay. Thank you both.

Thanks, Manav.

The next question comes from Alex Kramm with UBS.

Yes. Hey. Hello everyone. I just wanted to put a couple of these pieces together that you talked about. Maybe I may be stating the obvious. But, since you took the guidance away for 2022, which is understandable, I think there was mostly in ASV comments, right, in terms of top-line growth. But as some people have noticed, you’re also basically saying the investment continues to go forward. So, there was a margin guide that was 33% plus in 2022. And I assume that was predicated on getting to that higher growth and that drives the margin expansion. So, if we're not getting that growth, I assume those margin targets are off the table for now, and will stay in probably more of these levels. Is that that a fair assumption?

Hey, Alex. It's Helen. Thanks for that question. So, since we're not commenting specifically on that, I'm going hedge a little bit. But, I would say, if you take a look at the trend of what we've done in terms of '19, '20 and '21, I would expect us to continue to see some of the productivity and efficiency gains. And yes, for sure, the margin is impacted by the revenue growth in that. But we would still be executing very well against the operational improvements that we've done thus far.

Okay. And then, maybe just to finish on margin, little bit more near-term on 2021, I know it's a difficult year to model. But, A, any seasonal stuff you would point out as we should be thinking about it from a quarterly basis? Again, maybe related to when things reopen, but how you would be thinking about it? And then just, I think you said -- maybe it was 180 basis points that COVID was a margin benefit, 2020. For 2021, did you say how much of a margin benefit COVID you're building in to the model today?

Yes. So, let me touch on that. So for seasonality, normally, our business isn't that seasonal per se. So, the difference would be savings that comes from some of the continued office close or lower T&E as you suggested, the back half of the year is really the -- where that resume. In terms of impact, keeping in mind that -- given our fiscal year, we had half a year in '20 that are under the situation, and let's call it a half a year in '21 that’s under that situation. And the impact in both is roughly around 1% on a net basis, for both the savings that we get from office savings, as well as T&E, but also offset by some of these expenses we're going to have to take in terms of business continuity and ensuring that our employees are able to work effectively from home.

Our next question comes from Andrew Nicholas of William Blair.

It seems like you're particularly successful growing the wealth business in the quarter, as a primary driver of ASV growth, user count, client count. I was just hoping you could speak a little bit more to the growth in the period, what type of clients you're able to bring on board, and the extent to which there were any notable wins in the periods that are worth calling out?

Well, I would say for the year, we had a very broad base success with wealth. There were some much larger deals that we were shooting for that unfortunately we weren't able to capture in the end. But we did capture three significant wins with some marquee names in the three different countries. And we also did very well executing on sort of smaller and medium sized wealth shops. So, we're really encouraged in terms of the products and the service level, I think we've proven that, just from the feedback from the marketplace. And we also had a good year with our digital business. So, for those of you that remember, we made an acquisition a few years ago, and we had a relatively good year there with our digital solutions. So overall, I think, wealth just continued to execute well throughout the entire year. And in one particular case, I think really took advantage of some of the digital transformation that we've been doing, where we were able to unpack different views from FactSet and plug those into a client ecosystem rather than just taking the traditional FactSet experience through the web or through the workstation.

And then, just as my follow-up, the conversation around ESG and ESG data seems to be growing with every passing quarter. So, I was just kind of hoping you could talk a bit about how you're capitalizing on that trend to FactSet, and how material of an opportunity that could be within content technology solutions? Thanks.

Yes. We view that as a significant feature opportunity. Today, we integrate a lot of the best of breed ESG content that's out there, either through the workstation or through the open FactSet marketplace. So, if you go to open up factset.com, you can see we've got I think over 100 now providers of alternative data grouped by theme, and the most popular theme, and I'm guessing the one with the most contributors in it is ESG. So FactSet has always been great about taking everything that's out there and putting it in one place, providing great analytics and service. That's the current approach we're taking the ESG. But we're certainly taking a very careful look at what we can do ourselves from a proprietary standpoint to take advantage of the trend that’s out there.

Our next question comes from David Chu with Bank of America.

So, when you introduced the three-year accelerated investment, the idea was to get roughly like 25% of revenue benefit in fiscal '21 with the remaining in fiscal '22. I'm just wondering, if that's what's embedded into your guide, and what that means in dollar terms?

I think, from the perspective of how we're looking at those 25 and 75 was obviously based off of what we thought we would able to continue to do under the normal conditions. It is some of the benefits that come through from the investments, that comes through in the form of retention, as well as new logos. So, I think from the view of giving an exact dollar, that's not how we think about that. But rather that it is supporting the overall growth in '21. I think, the benefits will come across all businesses. But, given where we are in the different investments, research, gets some of the earlier benefits from that, and we'll see that come through on the digital side into analyzing CTS going forward.

And then, CTS remains quite strong. And just wondering, who are the primary, like users here, just wondering if they're mainly quants and what your thoughts on the sustainability of that user base might be?

So, you're right that a very large percentage of what we've traditionally sold was to quants, either through feeds or through other mechanisms. But, we do sell a lot of data -- into performance systems, other systems. When clients are doing application development, they need a lot of content to do that. So, there are multiple workflows that we sell to. We also sell real time feeds. It's a smaller piece of what we do, but we do have a good offering there. And we're currently looking at all of the different addressable market for us on the feed side. So, as we enter FY21, we’ve sort of taken a fresh look as TCS and where we were pointed, and we're still is going to do very well in quants, but we are ramping up the focus on some areas that we can sell feeds to that traditionally we hadn't spent as much time focused on.

Our next question comes from Ashish Sabadra with Deutsche Bank.

Maybe just a question on the M&A pipeline, how are you thinking about any acquisition opportunity? It's been a few years since we've really seen any acquisition per se. Thanks.

Do you want to take that one, Helen?

Sure, happy to do that. Thanks for your question. So, we, as you can tell from our solid liquidity and balance sheet, we have the capacity to do so. And we've initially chosen to continue to invest in organic as a way of building our growth. But, we continue to analyze acquisitions that support our strategy, in content and technologies, and the ones that have the adequate returns that exceed our hurdle rates. As you can guess, the market is pretty frothy. And from the perspective of evaluation, we continue to look at that in every one of our decisions as we continue to look at many of the opportunities out there. We agree that having inorganic growth will be very helpful to support our overall longer term growth. But, we are going to remain disciplined in making sure that we get those adequate returns. The positive here is that we have plenty of liquidity to be opportunistic, and we'll continue to look to do so.

That's very helpful color. And maybe just to follow up on the question on the '22 target. Where do you see -- like in your scenario analysis, where do you see, which segments or which end markets are, maybe which geography do you see the biggest variances as you think about the 2022 target, any color that you can provide? Thanks.

Sure. I'll take the first shot on that. So, when we think about the scenario that helps support that and as Phil sort of talked to before, what will happen to help from even in getting toward upper range in the FY21, when we think about the factors, which include the exogenous factors of delayed decisions of new business being done virtually as well as budgets, those all have to work more in the favor of -- I'll call it a normal environment. Although, what normal is probably still a bit unclear. But having more confidence, just like with the markets, the more confidence there is in the future, the more there are clients who have confidence in their spend. We know that our products are resonating. We know that they fit the trends and the needs of what they need to be productive on their end. But that confidence in the future and their own markets will allow for them to work with us and for us to be able to reach -- in the scenario that outlines to reach back to where we believe our original strategies meant to take us in the long term.

That's helpful. Thanks.

You’re welcome. Thank you.

Our next question comes from George Tong with Goldman Sachs.

Hi, thanks. Good morning. You talked about being cautious with your ASV outlook due to potential economic, political and pandemic related risks. Can you elaborate on recent client sentiment and spending intentions and whether you're actually seeing some of those risks manifest in what clients are saying?

Hey, George, it's Phil. So yes, we saw a little bit of that in Q4 even. I believe we would have had an even stronger second half if it hadn't been for the pandemic. And I've been on some calls myself, particularly with clients that feel like they're under a lot of cost pressure. Right? So, they're obviously thinking about their own futures, their own employees, and what it is they want to do. So, we're navigating through it, I think it's already happening. But again, I think, a lot of companies budget towards the end of the calendar year. And that's the one thing that we think will get sort of more of as we get to the end of the year. And, as people get more visibility themselves on how they've operated during this period and how long they think the pandemic is going to affect them.

Got it. That makes sense. And then, switching gears to margins, you're not reaffirming your fiscal 2022 margin target of 33% because of less operating visibility. Can you talk about whether this reduced visibility comes from unknown ASV growth which can obviously impact margin flow-through or if it reflects potential changes in what or how much you plan to invest in, since presumably, you have more control over investment levels and more control over margins?

Yes. That's a good question. And you are correct, as we think about where we've got more control and visibility. So, right now, we intend to continue to invest at the pace that we talked about last year. So, that we have the levers, so to speak, if need be. But, it really -- since it's all around revenue growth being higher than and spend -- expense growth, that’s really what -- why we lacked that visibility at this juncture. But, our intent is to continue to invest at the pace that we outlined a year ago.

Our last question comes from Keith Housum with Northcoast Research.

Question for you on the operations. You guys have proven that you're able to sell it virtually, but yet your model has been traditionally high-touch with the consultants visiting customers often. Coming out of the COVID pandemic, is there any expectation that the business model may change and you're able to cut back on some of the high touch T&E that you guys do?

So yes, we've been doing inside sales now for six months. So, I'm really intrigued by how can we be more efficient at selling the higher volume type sales or the smaller clients -- the smaller type clients without necessarily having FactSeters sort of fly around the globe. But, I do think for the larger firms and the more complex deals, there is going to have to be that element as sort of being in front of the clients, talking to them about their overall strategy and building those relationships face to face. So, it's not going to go away. But like every other company, we're going to rethink carefully our business model, how we work with our clients and also how we work as a company. So, I think, it presents -- it presents more opportunity than not honestly. And I've been very encouraged from what I've seen with the sales force and how they've been able to execute during the last six months.

Okay, got it. So, to see if I can clarify, your pipeline expectations as of now, I think we heard several different comments, is that the pipeline is equal the size that was pressed a year ago, but maybe you're not seeing as many large deals in that pipeline as of now, and it's certainly probably not as strong as it was at the end of the second quarter. Is that a good summary of how you see the pipeline right now?

It's a comparable size going into the year as it was last year and deals build up and bring more confidence in those deals as the years go -- as the year goes on. So, the one area that I think we’re just hesitant about and need a little bit more time is, can we build up that pipeline of the larger deals for the second half, the same way that we were able to do that in the first half of last year.

I would now like to turn the call back over to Phil Snow for closing remarks.

I'd like to thank you all for joining us today. I'm pleased with our team’s and Company's performance this year and the strong progress we have made on our investment plan. We're excited for this New Year. As we continue to expand our offering and equip our team and our clients to operate success in this environment, I'm confident we will capture further wallet share and secure additional client wins. And importantly, we remain committed to investing in our people, our clients, and communities to create long-term value for our shareholders. With that, I'd like to thank you one more time for your time. And if you have additional questions, please call Rima Hyder, and we look forward to speaking to you next quarter. Operator, that ends today's call.

Ladies and gentlemen, you may now disconnect. And have a wonderful day.