Thomson Reuters Corporation
Q2 2012 Earnings Call Transcript

Published: 31 Jul 2012

[Operator:]

Ladies and gentlemen, thank you for standing by. Welcome to the Thomson Reuters Second Quarter 2010 (sic) [2012] Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Frank Golden, Senior Vice President, Investor Relations. Please go ahead.

[Frank J. Golden:]

Good morning, and thank you for joining us as we report our second quarter results. We'll begin today with our CEO, Jim Smith; followed by our CFO, Stephane Bello. Following Jim and Stephane's presentations, we will open the call for questions. [Operator Instructions] Throughout today's presentation, keep in mind that when we compare performance period-on-period, we look at revenue growth rates before currency as we believe this provides the best basis to measure the underlying performance of the business. In addition, today's results are presented on an ongoing basis and exclude disposals announced to date. Today's presentation contains forward-looking statements. Actual results may differ materially due to a number of risks and uncertainties discussed in reports and filings that we provide to regulatory agencies. You can access these documents on our website or by contacting our Investor Relations Department. Let me now turn it over to the CEO of Thomson Reuters, Jim Smith.

[James C. Smith:]

Thank you, Frank, and thanks to those of you on the call for joining us. Today, we'll review the second quarter results and update you on the progress we've made over the past 6 months against the priorities and strategy I outlined earlier this year. I will then turn it over to Stephane who'll provide you with further details on the results for the quarter. Our results for the quarter and for the first half of the year can be characterized as on track for the company as a whole. In the second quarter, total revenues were up 3% with Legal, Tax & Accounting and IP & Science again recording good, consistent performance. In the aggregate, these 3 businesses were up 7% of which 3% was organic. Financial & Risk grew modestly in what continues to be a very challenging and volatile global financial services market, particularly in Europe. EBITDA increased slightly and the margin was flat with the prior period. Operating profit declined 8% and the margin declined 190 basis points as expected. The operating margin was impacted by Financial & Risk recording nominal revenue growth, offset by planned investments in products, customer service and customer administration as we work to get more product in the pipeline and to improve our service and support levels on the front and back ends. Adjusted earnings per share for the quarter were $0.54 compared to $0.51 in Q2 2011, a 6% increase. Also, last month, we closed the sale of our Healthcare business for $1.25 billion in cash and expect after -- net after-tax proceeds of about $1 billion. As discussed during our Q1 earnings call, the proceeds, plus our free cash flow, will be used for tactical acquisitions, organic investment and for share buybacks on an opportunistic basis. Lastly, and importantly, we are reaffirming our full year 2012 outlook. Now let me turn to our results by business segment. Financial & Risk revenues rose 1%. Growth in Marketplaces and Governance, Risk & Compliance were offset by declines in Trading and Investors. Revenues by geography saw the Americas up 3%; Europe, Middle East and Africa was flat; and Asia declined 2% due to continued softness in Japan. Tax & Accounting had another solid quarter with revenues up 25%, 5% organic, driven by strong sales of ONESOURCE and software sales to professional accounting firms. IP & Science grew 4%. And Legal had another good quarter, with revenues up 3%; 2% organic, driven by Elite, FindLaw and the global legal businesses, including Latin America. Finally, our fast-developing Global Growth businesses grew 19% in the quarter, 8% organic, and now represent about $900 million in annual revenue. For reporting purposes, those GGO numbers are included within the appropriate business segment results. If there was one word I would use to characterize our formal professional division businesses, it would be consistency. Our Legal, Tax & Accounting and IP & Science businesses continue to achieve good results, and on a combined basis, recorded their seventh consecutive quarter of 5%-plus growth. We're reaping the rewards of the investments we've made in these businesses over the past several years as we've strengthened our market position and we are achieving profitable growth. This solid performance is the result of having had a clear strategy and playbook, having a deep understanding of the markets in which we operate, staying close to our customers, focusing on where we can win and investing behind those opportunities has led to consistent results quarter-after-quarter. For example, while we've been rejuvenating Legal's core legal research business by investing in products such as WestlawNext, we've also been investing for growth as we evolve to more of a solutions business. This mix effect resulted in 60% of Legal's revenues growing 7% in the second quarter and improved retention rates, reflecting customer satisfaction with our products. We're working to provide a full suite of services to law firms, thereby enabling them to operate more effectively and efficiently, a critical objective we regularly hear from our law firm partners. And we're doing the same thing for their corporate customers with special offerings for general counsel that help them manage their complex mix of legal matters and outside law firm relationships. No other company's better suited to connect the entire legal community than Thomson Reuters. Our Tax & Accounting business was ahead of the curve over 5 years ago as it began to build a holistic offering for corporate tax and accounting professionals, which is our ONESOURCE product offering. Today, we're extending that leadership with growing positions in rapidly developing economies and by serving governments around the world. And our IP & Science business is executing a similar playbook as it puts some more commercial skin on its products and services. I am confident that the acquisition of MarkMonitor will put us on a path toward an even faster-growing, highly profitable intellectual property business over the next several years. More on this in a moment. Now let me turn to our Financial & Risk business. Year-to-date revenue performance, though tepid, has held up relatively well despite growing headwinds in the global financial services industry. I'm pleased with the operational progress we continue to make. We are controlling those things within our control and our competitive position is improving by the day. Customers are noticing the difference. I'm encouraged for a number of reasons. First, we now have a robust pipeline of new products being launched on time, on budget and to good reviews. Second, Eikon is gaining traction, up 20% this quarter, and as I sit here today, we're no longer selling Reuters 3000 Xtra to new clients in the FX, Fixed Income and C&E sectors where Eikon is our premium desktop solution. And this withdrawal marks an important milestone in our commitment to Eikon as our primary desktop platform and we expect this story to continue across other asset classes as we deliver against the Eikon roadmap. We're delighted that customers now see Eikon as a compelling product with a rich functionality and content. Third, customer satisfaction is up. We've seen a marked improvement in customer satisfaction scores through the first half of the year. Earlier this year, I noted how important it was that we dramatically improve customer experience. I'm pleased to see we're making progress. And lastly, net sales and F&R continued to show improvement in Q2, though they remain negative. So Q2 was better than Q1 and Q1 was better than Q4. The moves we are making are having an impact where they matter most

[Stephane Bello:]

Thank you, Jim. As Frank indicated earlier, I will speak to revenue growth before currency throughout today's presentation. Reported revenues are also highlighted on each slide. In total, our second quarter revenues were up 3%, with acquisitions contributing 2%. Adjusted EBITDA was up slightly from the prior year with a corresponding margin of 28%. The elimination of integration expenses and higher revenues were offset by higher expenses in Financial & Risk aimed at improving product offerings, customer service and customer administration, as Jim just explained. Underlying operating profit decreased 8% and the corresponding margin was 19.3%, a decline of 190 basis points due to the previously mentioned factors as well as higher depreciation and amortization from investments we've made in prior periods. Foreign exchange had a 20 basis point negative impact on our operating margin during the quarter. Now let me briefly discuss the second quarter results for our individual business segments, starting with Legal. Overall, growth in the U.S. Legal market remains muted yet we continue to see good growth in areas away from core legal research. Based on our Peer Monitor Index, second quarter demand for legal services moved to flat from slow growth in the first quarter. Transactional practices such as M&A, real estate or bankruptcy contracted while litigation practices were broadly flat. While we have seen a slowdown in gross sales during the quarter due to this environment, this was, in part, offset by higher retention rates, which reflect the better retention profile of WestlawNext. We have now converted 69% of our annual contract value to WestlawNext and now on track to achieve our 75% conversion target by year end. During the second quarter, Legal's overall revenues were up 3%; 2% on an organic basis. And if you break down the second quarter growth rate by revenue type, Subscription revenues were up 2%, transaction revenues were up 15% while U.S. print revenues were down 1%. We are expecting somewhat slower revenue growth in the third quarter due to print timing with growth rebounding Q4. Since print is a highly profitable business, this is likely to have a dampening effect on Q3 margins. Now looking at the performance of the 3 subsegments in our Legal business. US Law Firm Solutions, which is our largest subsegment with 55% of the revenue base, grew 2%. This was driven by 17% increase in Business of Law while research-related revenues decreased 2% versus the prior year period. In Corporate, Government and Academic, revenues grew 5%, all organic, driven primarily by the strong performance of our legal process outsourcing business. And finally, revenues in our global legal segment were also up 5%, 3% organic, and this was once again driven by strong growth in Latin America, which was up 7% during the quarter. So in aggregate, you can see on this slide the continuation of the revenue dynamics we experienced in the last few quarters. While revenues derived from core legal research sold to U.S. law firms declined 2%, the balance of the business, representing 60% of Legal's total revenue base, grew by 7% during the quarter. And as we discussed before, these revenue dynamics drive some downward pressure on margins as our decline in core legal research business enjoys higher margins than the other fast-growing businesses in the portfolio. This is reflected in the Q2 results. EBITDA was up slightly versus the prior year, but the margin was down 60 basis points, primarily due to the change in business mix which, by itself, caused an 80 basis points negative impact on the margin. Operating profit was flat, and the margin decreased 40 basis points. And for the first half of the year, revenue grew 3% and our EBITDA and operating profit margins were both flat. Tax & Accounting had another good quarter. The revenues were 25% of which 5% was organic, driven by acquisitions, revenues derived from our ONESOURCE platform and software sales to professional accounting firms. In the quarter, EBITDA grew 22%, and this was the eighth consecutive quarter of double-digit EBITDA growth. Operating profit increased 19% with the margin down 70 basis points due mainly to the diluted impact from recent acquisitions. These acquisitions continue to perform well, and we have high expectations for our government tax automation business. Governments around the world are seeking ways to increase the effectiveness of their tax policies while also seeking ways to improve tax collection management by modernizing their tax information systems. Also, please remember that Tax & Accounting is a seasonal business with a significant proportion of its operating profit traditionally generated in the fourth quarter. For these reasons, full year margins are more reflective of the segment's underlying performance. The IP & Science business achieved revenue growth of 4% into the second quarter, all organic. Growth was driven by a 4% increase in IP Solutions and a 5% increase in Life Sciences. Scientific & Scholarly Research revenues increased 3%, driven by growth in Web of Knowledge and also publishing solutions. Again, I'd like to remind you that the quarterly revenue growth for IP & Science can be uneven due to the impact of large sales in our Scientific & Scholarly Research business. EBITDA and operating margins both expanded during the quarter, and for the first half, EBITDA was up 7% with the corresponding margin up 130 basis points. Now turning to our Financial & Risk business. Revenues were up 1% with a 2% contribution from acquisitions, so organic revenue was down 1% in the quarter. Recurring revenues, which represent 76% of F&R's revenues, were flat as acquisitions and the benefit of a price increase were offset by the impact of negative net sales in the last several quarters. Excluding acquisitions, recurring revenues were down 1%. Transaction revenues were up 4% due to Tradeweb and acquisitions, which offset lower foreign exchange volumes. Excluding acquisitions, transaction revenues were down 3% organically, which was in line with the first quarter decline. Recoveries revenues were up -- grew 1% and Outright revenues were down 3%. EBITDA and operating profit both declined during the quarter and this was attributable to 2 main factors

[Frank J. Golden:]

Great. Thanks very much, Stephane. And operator, we would now like to open the call for questions, please.

[Operator:]

[Operator Instructions] And we'll go to our first question with Drew McReynolds with RBC.

[Drew McReynolds:]

Just my one question just in and around Investment Management. Stephane, you had just alluded to the sequential improvement from Q1 to Q2. And if I look kind of back to Q4, you did negative 4% to negative 10% in Q1 and then negative 5% in Q2. Just wondering, is this certainly kind of a trend, straight-line trend, I think, for a subscription business. I'm just interested in the volatility from quarter-to-quarter and just was wondering whether that had to do with the kind of seasonal timing of cancellations or contract renewals. And just a related question, can you just update us on where Eikon deployment is for this segment?

[Stephane Bello:]

Sure. On the trend for Investment Management, the decline we experienced in the first quarter was probably not reflective of the trend. It was -- the 10% decline we experienced in the first quarter was higher than the trend that you would see. Look, our focus on Investment Management has really been to work on improving the retention rate in that segment while we are building the capabilities to essentially start providing new products. We're starting rolling out Datastream for Investment Management across the globe, which before that was only confined to regions outside of the U.S. and we're experiencing some success with that deployment. However, Investment Management is at the probably tail end of the Eikon deployment, and as such, in the U.S. we do not expect to be able to deploy Eikon until the latter half of 2013. So that obviously is going to continue to weigh on the growth rate that we see in Investment Management going forward.

[Operator:]

And next, we'll go to the line of Sara Gubins with Bank of America.

[Sara Gubins:]

I just wanted to confirm your comments about 2012. It kind of sounds like underlying operating margin will probably be in the lower half of that 18% to 19% given acquisitions. Is that fair?

[Stephane Bello:]

Look, as I said, we haven't changed the guidance, but at we put the guidance forward, we knew that we were going to have to do some acquisitions, we would do some acquisition and we expected these to be dilutive. So obviously, as we do these acquisitions, we do them in a measured way, in a way that enables us to stay in the guidance, but obviously that have a negative impact on margins. But not, as I said, not enough to push us outside of the range.

[Operator:]

And next, we'll go to the line of Peter Appert with Piper Jaffray.

[Peter P. Appert:]

Stephane, can you give us any incremental color on the negative net new sales in the current quarter? You said, I think, it was better than the first quarter, but any further quantification of that? And also just any color on pace of cancellations you're seeing?

[Stephane Bello:]

Sure, Peter. We -- Jim mentioned, right, net sales in the quarter were still negative. They were better than in the first quarter. So they were -- I would say they were marginally better than in the first quarter. So we've seen an improvement, which is, by itself, good given the deteriorating environment that we are facing. But the environment -- I'm sorry, but the improvement is -- was modest in the second quarter as we continue to see, obviously, tremendous pressure from our customers in terms of headcount reductions that they're implementing and that's obviously having an impact on the number of desktop that's being sold. So there was -- I mean, Q2 was directionally better than Q1, but it was a modest improvement.

[Operator:]

And next, we'll go to the line of Vince Valentini with TD Securities.

[Vince Valentini:]

Staying on Financial & Risk, given you've had negative net sales year-to-date and you're now, given the macro environment, fully understandable, a bit cautious about getting positive by Q4. It sounds like you'll have a negative flow into 2013. So I'm wondering about margins in that segment. Is there anything you can do if you continue to have flat or even negative revenues through 2013 to give us confidence that we won't see a pretty substantial drop in margins given the high fixed cost base?

[James C. Smith:]

That's a very good question. And I -- in my comments, I deliberately noted that we were going to take a very, very thorough look at '13 and that we would be very measured in balancing the need to continue to get growth with the absolute imperative to maintain profitability. The truth of the matter is, Vince, that as we get better clarity into the cost base, particularly in F&R, I see increasing opportunities for us to keep the cost structure under control and appropriate to whatever the external environment might be.

[Operator:]

Next we'll go to the line of Suzi Stein with Morgan Stanley.

[Suzanne E. Stein:]

As you look at your portfolio in Financial & Risk, it seems like you're selectively making acquisitions, but is there an expectation that there'll be any significant disposals to rationalize your business? And then you talked a lot about the macro environment, but can you just comment on the impact that the competitive environment is having on the space?

[James C. Smith:]

Sure. So 2 questions there. On the first one, I think we'll pursue the same strategy that we pursued for a long, long time, first at the old Thomson Corporation and then at the professional division, which is to work very hard to execute a growth strategy and to invest behind the places where we can win. We have a number of those fronts we're sizing up right now. We have a number of those initiatives we're working. And if we can find a way to grow and a way to be really competitive in the space and a place to win, we're going to invest behind it. By the same token, as we try to work a growth strategy, sometimes we conclude that our resources are better spent elsewhere and we will exit those spaces, and we are just in the process right now of kind of working the growth strategies across the face of the Financial & Risk business. And I would expect that we would continue to take judgments on various segments and various businesses as we have done continually over the past years on the first space. When it comes to the competitive environment, frankly, as I noted, our competitive position improves by the day and I think that, frankly, we are far better positioned competitively today than we were at the beginning of the year. And frankly, we're holding our own in a tough marketplace right now, but we're holding our own with an improved position.

[Operator:]

Next we'll go to the line of William Bird with Lazard.

[William G. Bird:]

Can you give us a sense of just your point of view on when you're likely to hit the trough quarter for F&R? And maybe you can talk little bit about just some of the insights you're gleaning from pushing corporate costs down to the business units and where you are in that process

[Stephane Bello:]

Sure. It's hard to predict where we're going to hit the trough for F&R. It really depends on the external environment. What I can certainly say is that we've been experiencing negative net sales now for a number of quarter. We've seen a slight improvement in the trend of the negative sales in the last couple of quarters, but we still -- obviously, our revenues are still going to be impacted by the net sales performance we had in the last fourth quarter in the balance of 2012 and 2013. So it's very hard to call the trough given the uncertainty and unpredictability of the external environment, frankly, at this point in time. And with regard to your second question, what you're referring to, I think, is the fact that we're trying to push down cost that was managed centrally within F&R down to the segments of F&R. And we continue to do -- to make progress there and this is absolutely critical as we enter the 2013 budget and plan period. We feel that we are much better equipped than we were last year at this point in time. We have essentially now pushed down on average about 60% of the cost basis of F&R to the segments and about 2/3 of that amount is controlled directly by the segments and another 1/3 is essentially managed at the center, but with the levers clearly in the hands of the individual segments. So it becomes easier for us to identify, to be much more surgical in terms of looking at the customers trying to identify areas where we need to make cuts going forward.

[Operator:]

Next we'll go to the line of Adam Shine with National Bank Financial.

[Adam Shine:]

I guess one question on margin for Stephane and another margin question for Jim as well. With respect to F&R and the spending in Q2 related to customer service and administration, Stephane, are these costs that sort of reset the cost base going forward or were they onetime in nature in the Q2? And as it relates to Legal, Jim, you talked about a changing mix. Was this a onetime issue as it related to the 60 or 80 bp decline in margins related to mix in Q2? Or similar to Vince's question earlier, do we see margin pressure as the mix changes going forward into 2013?

[Stephane Bello:]

Let me try to take both questions, starting with your question on Legal. The mix issue is not a onetime issue. It's essentially reflective of the change in revenue mix you see in the portfolio. So what's happening is that we have the 60% of the portfolio that's growing at 7% has lower margins, and actually these margins are improving as we gain scales in these new sectors. But as they're like smaller segments, we don't quite yet have the scale that the core legal research business has. And so what's happening essentially is that you're seeing dynamics, which are, in a way, positive or accretive from a growth perspective because the portion of the portfolio that's comprised of this high-growth business gets bigger and bigger. But obviously it has a dilutive margin -- a dilutive effect on margins. And what I mean by that is that even if the margin of each group, if you want, the high-growth business and the core Legal business remained the same, just simply because of the growth dynamics you see mathematically a negative impact on margins. So what our Legal business is doing essentially is 2 things

[Operator:]

Next we'll go to the line of Tim Casey with BMO Capital Markets.

[Tim Casey:]

Could you contrast the, I guess, the net sales in the underlying performance in F&R between Europe and North America? You highlighted that obviously Europe has got its challenges. Is there a material difference in the performance of that unit by geography right now or is it all feeling the pain?

[Stephane Bello:]

Yes. Look, we're feeling the pain across the globe, but it's clearly where we're having the largest amount of negative net sales is in Europe by a pretty large margin, I would say. But that -- and that's not surprising when you look at what's happening in the external environment. But there is clearly like a pretty large negative drop in Europe in net sales at this point in time. I would say, I mean, given our perspective, net sales are about 3x more negative in Europe than they are in the Americas to give you an order of proportion.

[Operator:]

And next, we'll go to the line of Doug Arthur with Evercore.

[Douglas M. Arthur:]

Yes. Just a question on the Marketplaces business, which formally Enterprise. Organic growth very strong in '11, mid-single digit in Q1, 1% in Q2. Is that timing? Is it -- you cited the foreign exchange-related revenue decline in the quarter, so is that sort of a cyclical issue? What's going on there and what's the outlook?

[Stephane Bello:]

So Marketplace is comprised of 2 main businesses

[Operator:]

Next, we'll go to the line of Brian Karimzad with Goldman Sachs.

[Brian Karimzad:]

I wondered if you could, first, give us an update on the progress of selling those 3 businesses you put on the block at the beginning of the year, it was I think, property tax services, a law school publishing business and a little bit of Wealth Management in there? And then perhaps help us understand why the revenue in those businesses has declined about 1/2 from the $500 million first half run rate last year?

[Stephane Bello:]

Okay. The 3 divestitures that we announced earlier this year are progressing well. I would say we are in the final negotiation stage for those divestitures. So we're hopeful that the 3 deals should be signed in the third quarter, during this quarter. And with regard to your second question, not sure exactly what you're referring to, but I think that what drives the decrease in revenues from disposals is mainly the Healthcare business, which we've divested earlier in the quarter and that was obviously a much larger business that we had for the entirety of the second quarter last year and which we sold early in the quarter. So that's what has driven the big drop in revenues. Hopefully, that's what you were referring to.

[Operator:]

Next, we'll go to the line of Nick Dempsey with Barclays.

[Nick Michael Edward Dempsey:]

First of all, just looking in the investigation into the Municipal Market Data index, which you guys run, I wonder if you could be in any way liable if they discover any foul play in the compilation of that index or is that not something we should worry about? And the second question, just going back to net sales at F&R, can you remind us how you think about the lag between net sales growth and when that impact on divisional revenue growth or how precise can you be?

[Stephane Bello:]

Okay, I’ll take the net sales question, first, Nick. And you see that the impact of the net sales performance going through revenue over really the ensuing 12 months, so it's a pretty long lag effect that you're expecting to see. And with regard to your other question, I'm going to turn it over to Jim to answer the question, your first question.

[James C. Smith:]

Yes, sure. Obviously, on a number of these regulatory fronts, we get lots of questions just across-the-board on these issues and we're always very forthcoming and cooperative with all regulatory agencies or all the matters that they're investigating. But at this point, we do not believe we have any exposure at this point at all.

[Operator:]

Next, we'll go to the line of Phillip Huang with UBS.

[Phillip Huang:]

We've seen some -- my question's on the Legal side. We've seen some increasing softness in the U.S. core legal market recently as Stephane had mentioned earlier, particularly in litigation where it's turned flat in Q2 after 6 consecutive quarters of growth. Do you see the challenging -- the challenges sort of persist through the remainder of the year and into next year? And also, unlike the prior cycle, you now have stronger growth outside of core legal, I was wondering if you believe overall legal organic revenue can maintain positive growth in the foreseeable future?

[Stephane Bello:]

Well, hard to predict what the litigation market will do in the U.S. It's been -- I would say demand for legal services has been kind of, I would say, around flat since early -- since, say, the third quarter of 2009 after incurring a bigger decline for the 12 months prior to that period. Hard to predict where that's going to go. What we focused on is really to make sure that we don't pin our hopes for organic growth in the Legal business on our core legal research segment. It's really -- the whole strategy was really to essentially invest heavily behind broader solutions to -- that we offer to our customers away from core legal research. And I mean, thankfully, we've been reasonably successful in that endeavor and that's why you're seeing now organic growth rate for our Legal segment, which are, frankly, above what you would expect if we -- if our business had been just constrained to core legal research, and that's really what we intend to continue doing and that's how we hope to be able to continue to deliver what are attractive organic growth rates for the business relative to competitors and relative to what the market would give us if we were, as I said, purely invested in core legal research.

[Operator:]

And we'll go to the line of Matt Walker with Nomura.

[Matthew Walker:]

Just a couple of questions, please. The first is in -- the first is actually on the Legal business. I think the WestlawNext, the usage, is actually, if I'm understanding rightly, the usage is going down because the searches are faster. What's going to be the pricing mechanism going forward because you used to look at how much people used the product and then sort of charge them accordingly, so is there a new kind of charging model coming along? And the second question is on the Markets business, is there some -- I mean, obviously you're investing in some of the existing products, is there something that you're working on, a terminal or a product which goes beyond Eikon to sort of a next-generation product?

[James C. Smith:]

Well, I'll try to take a stab at both of those. In the Legal business, you're right. The times spent online have gone down because the searches are dramatically faster. They're just dramatically faster and more thorough and you get to the right answer a lot quicker. At this point, that's not changed the dynamic in any negative way. It's, in fact, changed it in a positive way because what we're seeing is increased renewal rates for people who are using WestlawNext so that's a very positive thing and we also, particularly over the first half of this year, taken a very, very strong stance in holding the line on our pricing models and we've added more and more transparency for our customers and explained to them why they're being charged what they're being charged and how much more effective the product is. And to date, that's holding and it's been quite successful and we've been quite pleased with the renewal rates of having that better product. I do think it's safe to say that we've seen a steady decline over the last 3 years, I think, in our ancillary revenues of customers paying by the drink when they search outside of their plans and I think that's just, again, an ongoing trend and predictability is important. So when renegotiating contracts, been rolling more things into the plans and trying to provide more predictability and transparency for our customers, I think that is something that's here to stay. But to date, faster search has resulted in happier customers and improved renewal rates. So I think that's a very good thing. As far as beyond Eikon, we have a number of products in the works that, I think, are very, very compelling. One lesson we have learned from the past is that we're not going to be trumpeting new products before we know that they're scalable and they're ready to be released on the market, so I'll keep quiet about that for now. But it's fair to say that while we're working to roll out the current generation of Eikon, making it better and better and better with each product release and while our customers are very happy with it, we have no shortage of ideas for how we can continue to improve Eikon and continue to offer innovative products and services to our customers. So we're pretty excited about the way the product pipeline is shaping up for the next couple of years.

[Frank J. Golden:]

Thanks, Jim. And that will conclude our call, and we'd like to thank you for joining us today.

[Operator:]

Thank you. And ladies and gentlemen, this conference call will be available for replay starting today after 10