Good day, ladies and gentlemen, welcome to the Nasdaq Strategy Update and eVestment Acquisition call. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. If anyone should require assistance during the conference, please press star then zero on your touch-tone telephone. As a reminder, this conference call is being recorded. I would now like to turn the conference over to Ed Ditmyer, VP of Investor Relations, to begin.
Good morning, everyone, thank you for joining our business update and acquisition announcement call today. On the line are Adena Friedman, our CEO; Michael Ptasznik, our CFO; Bjørn Sibbern, our Head of Information Services; and Edward Knight, our General Counsel. After prepared remarks, we'll open up to Q&A. The press release and presentation are on our website. We intend to use the website as a means of disclosing material, non-public information, and complying with disclosure obligations under SEC Regulation FD. I'd like to remind you that certain statements in this presentation and during Q&A may relate to future events and expectations, and as such, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from these projections.
Information concerning factors that could cause actual results to differ from forward-looking statements is contained in our press release and periodic reports filed with the SEC. I now will turn this call over to Adena.
Thank you, Ed. Good morning, everyone, thank you for joining us this morning at such short notice. I want to use this call to cover two important topics. First, I want to talk about the strategy review I initiated earlier this year upon being named CEO, which we recently completed, and what it means for our future. Second, we will discuss the agreement to acquire eVestment that we announced today, which fits in well with the strategic direction we've chosen. We launched an internal initiative earlier this year, primarily involving the senior executive team, to consider the future of our industry, embrace our opportunities for growth, and make concerted and unified decisions on how and where to focus and deploy our financial and human capital to meet our clients' evolving needs.
We examined the overall environment, including key economic trends, where technology is going to take us over the coming years and even decades. Perhaps most importantly, we talked to our clients and asked them, in addition to their near-term trends, where do they think their business is going in 5-10 years out from now. Many of our clients are seeing the pace of change accelerate. We placed these insights into a framework for Nasdaq to consider how to shape our own future. We focused on our core strengths today and those areas that we believe we must strengthen to address tomorrow's needs. We considered our competitive advantages, such as our focus on advanced technology, our core competency as an innovative engine, and our deep global market structure expertise that comes from operating our own markets as well as serving our global exchange clients.
We considered how we can apply our strengths and competitive advantages to bring new solutions to our clients and where we should develop new strengths and market penetration to become more effective in capturing new opportunities that we see coming over the next several years. What are the key trends that we see shaping our future opportunities? We're focused on several in particular where we think the financial services and commercial world is heading. Among them are the following three. First, a market-based economy. This is the idea that the majority of commerce will be transacted electronically in the future, and that a significant portion of this will happen via mechanisms that allow two-sided price negotiations and requires the highest integrity market oversight, a core competency of our market technology. We see this happening today across many asset classes within and outside the financial markets.
Second, a data explosion. This phenomenon has clearly taken hold in every industry. It reflects the explosion of data that we're seeing and expect to see from many new and non-traditional sources that could impact a client's interaction with the capital markets. That data explosion requires that our clients develop new analytical capabilities, including machine intelligence, in order to turn raw data and information into market insights that impact their business decisions. Third, the evolution and increasing sophistication of the asset management industry. While there's a lot of talk about the active to passive shift that has been happening in this industry, there are other themes also underway. For instance, there's a rising demand for asset management in the private capital side, an untapped demand to bring private equity investing to the broader universe of individual investors.
The new competitive dynamics among all types of asset managers are increasing their need to differentiate in order to compete for assets. That translates to greater technology needs, increasing utilization of quantitative data and analytics to facilitate more advanced investing styles, and a growing demand for compliance and surveillance solutions. Turning to Nasdaq's strengths, we believe we have several that we can apply against these important trends. Technology is clearly a fundamental strength of ours, as evidenced by our world-leading marketplaces and regulatory technology capabilities. The Nasdaq Financial Framework is a prime example of the investment we're making in this area, as is our work around disruptive technologies. Data is another. More specifically, the aggregation of data, our ability to cleanse it, distribute it, but now also the ability to find signals in it and to find intelligence within it.
The recent launch of Analytics Hub is a good example of that. We have deep market structure expertise and regulatory expertise. As the Ocean initiative highlighted and our ongoing success with SMARTS illustrates, we are a trusted market and technology provider to regulators, banks, brokers, other exchanges, and our clients. We have a broad and deep client base that consists of issuers and investors of every type, banks, brokers, exchanges, and regulators. In important ways, we serve as a connector to everything in the capital market system. Finally, we see our brand as a truly unique and differentiating asset. The outcome of the effort is that we have built a strong and resilient business today, we are choosing to reorient our vision, mission, and strategy to focus more effectively on our clients and their evolving needs going forward.
We want to maintain our investments in our core business, those areas that define us, notably our foundational trading and listings businesses and related market data businesses. We also want to increase our investments in those areas where we see the highest growth opportunity. We do see that right now in the market technology segment, including our regulatory technology businesses, in the information segments with our data analytics businesses, and in the corporate services segment with our Nasdaq Private Market solutions. We see all of those areas at the cusp of really catching even higher growth rates. We want to make sure we're increasing our investments to capture and optimize those opportunities.
Likewise, we are reviewing areas, in particular some areas that aren't critical to our core, where we can invest less, where we might manage more towards resiliency and efficiency versus growth, and thus could be able to free up resources in order to put more behind the larger opportunities. As an example of how we intend to increase investment towards unique opportunities in the high-growth areas identified above, Nasdaq is thrilled to have signed an agreement to acquire eVestment, a preeminent data provider in the investment management industry. As we have discussed, we believe that the investment management industry will become increasingly sophisticated users of technology and data across their entire ecosystem, from traditional and non-traditional asset managers to hedge funds and private equity investors.
They will need to use data and technology to advance their asset allocation decisions, their investment decisions, the oversight of their key operations, and their compliance efforts. The Boston Consulting Group has estimated that total investable assets will grow from $71 trillion in 2015 to $100 trillion by 2020, while PwC predicts that AUM run by active managers will increase by nearly 30% from $58 trillion over the same period. In some cases, technology will be needed to scale their strategies and operations. In other cases, as asset owners such as pension funds, sovereign wealth funds, and 401 committees become more sophisticated in their asset allocation decisions, the asset managers will face an increasingly competitive environment for their expertise. All of that lends itself to a significant investment in data and technology, two key strengths of Nasdaq, and a very particular area of complementary expertise for eVestment.
In terms of Nasdaq's positioning today within the investment management sector, in addition to serving the asset management industry with our leading marketplaces, we have undertaken a concerted strategy to use our strengths in advanced technology, markets expertise, and our reputation for integrity to expand how we serve that industry. Notably, for many years, Nasdaq has been a key collector and provider of mutual fund pricing information for over 35,000 funds with its Mutual Fund Quotation Service. As regulatory obligations and risk management have become bigger buy-side focus areas, we have expanded our trade surveillance capabilities in SMARTS and recently complemented it with the acquisition of Sybenetix, a buy-side-focused behavioral analytics compliance tool. Third, as asset managers seeking alpha are turning to deeper market insights and alternative data sources to power their investment decisions, Nasdaq has launched Analytics Hub.
Finally, Nasdaq has recently launched Nasdaq Private Market Alts, which provides alternative asset managers and asset owners a means to create much-sought liquidity in alternative funds and other vehicles. Upon closing, eVestment will become a critical component of Nasdaq's strategy in serving investment management clients going forward. eVestment provides Nasdaq with a unique technology and data capability that has become a must-have, deeply penetrated service for most of the investment management industry. It has trusted relationships with asset managers to share critical fund level and investment level information on a confidential basis to asset owners in order to enable those asset owners to make asset allocation and investment decisions. eVestment enables the asset managers to compete for funds. It is increasingly becoming a go-to data provider to asset managers on invaluable performance and asset flow trends as they continue to define and refine their strategies.
eVestment serves around 2,000 clients, including asset managers, where 92% of the top 50 clients are customers; asset owners, where 70% of the top pension funds are clients; and investment consultants, where 76% of the top 50 are clients. Its database covers over 74,000 investment vehicles spanning traditional and alternative institutional investment categories and includes thousands of data points, not just on performance, but other information such as portfolio holdings, investment strategies, investment professional information, and inflows and outflows. There's no question that eVestment is a truly unique asset with favorable financial characteristics, a large total addressable market and growth potential, a strong network effect, consistent recurring revenue, and a scalable SaaS-based subscription model.
Going forward, we expect eVestment to continue to grow at a double-digit rate in revenue and EBITDA as it captures several key opportunities such as the industry growth in AUM and investment vehicles, geographic expansion, and the expansion of its business relationships with existing clients through additional products and services. Together, Nasdaq and eVestment will integrate our services across MFQS and eVestment and with our Analytics Hub to deepen and broaden the scope of the insights and information we provide to our asset manager and asset owner clients. We also will work together to extend eVestment's reach into Europe and Asia, and we'll seek ways to create value within the platform for asset owners seeking insights on smart beta and other passive strategies, given our deep expertise in that area with our index business.
We are targeting $8 million-$10 million in revenue synergies over the medium three- to five-year period from close. Nasdaq serves a unique role in the financial industry, bringing companies, market dealers, other exchanges, and investors together. We expect to continue to deepen and broaden our role across the financial industry in the years to come, leveraging our strengths and investing in those areas of growth that will define the business going forward. Now I'll turn it over to Michael to review the financial details.
Thank you, Adena, good morning, everyone. Let me run through the financial details. Nasdaq is paying $705 million in cash for eVestment, subject to HSR considerations with the acquisition to close in the fourth quarter of 2017. The valuation on this asset reflects its strong core economic fundamentals, including the steep revenue growth trajectory, which has been above public info/services peers. Its scalable and profitable business model and the resilient recurring nature of its overwhelmingly subscription-based revenues. On our projected 2018 numbers before transaction-related accounting adjustments, the purchase price represents a multiple of 16.5x adjusted cash EBITDA. Because of the growth of the business and its upfront subscription model, GAAP EBITDA is lower than cash EBITDA by approximately $5 million-$9 million annually. We took this into account when evaluating the business.
Upon closing, Nasdaq's reported revenues will be impacted in the short term by a purchase accounting write-down of eVestment's deferred revenues under ASC 805. We expect that the adjustment will impact 2017 and 2018 revenues. It will not impact cash flows or medium- to longer-term reported revenues. While the deferred revenues earn account will result in some earnings dilution in the near term, the transaction is expected to be accretive in 2019 and 2020. eVestment is consistent with our capital deployment priorities in several ways. First, it is a tuck-in acquisition that can catalyze broader growth for us, in particular in how it dovetails with our organic initiatives to better serve the investment management industry.
Second, it is expected to add to the cash flows and earnings growth of our core business. As such, shows how Nasdaq can reinvest its considerable free cash flow generation to expand our business and profitability over time. Third, we expect eVestment to generate attractive returns on invested capital over the medium term with further upside in the longer term. Lastly, we believe the positive impact that eVestment has on valuation-sensitive fundamentals and its organic growth profile, the way it increases the contribution of one of our most important growth sectors, Information Services, and the way it increases the portion of our revenue from the most resilient subscription and recurring sources can benefit our broader valuation over time. The purchase price will be funded through a combination of cash on hand, increased borrowings on our commercial paper facility, and an increase in our term loan.
In terms of our balance sheet dynamics, the additional borrowings are expected to bring our gross debt-to-EBITDA ratio to the low three times at close. We remain committed to reducing leverage back to the mid-two range as previously communicated, though we now expect to reach such level in early 2019 versus our prior expectation of mid-2018. Turning to capital allocation priorities over the near term, we'll prioritize de-leveraging in the near term, but also continue to fund our growth initiatives at current levels, grow our dividend in accordance with the board's recently adopted policy statement, and continue to execute our equity repurchase program with the primary goal of offsetting the impact of share issuance to maintain a stable share count. With that, I'll turn it back to the operator to open up the lines for Q&A.
Thank you. Ladies and gentlemen, if you have a question at this time, please press the star then one key on your touchtone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. To prevent feedback or noise, we ask that you please mute your line once your question has been stated. Again, if you do have a question, please press star then one. The first question is from Kyle Voigt of KBW. Your line is open.
Hi. Good morning. Thanks for taking my question. I guess, just a question on the optimizing investment capital slide that you laid out. Just given that you've allocated probably a disproportionate amount of capital for acquisitions over the past few years towards corporate services with Thomson IR, Marketwired, and Boardvantage more recently, obviously, and then on the market services side with ISE and Chi-X Canada. I guess looking forward, is this kind of a pivot in terms of acquisitions for Nasdaq for the last two deals with the Sybenetix and eVestment deal? Can we expect this to be an emphasis for deal-making going forward?
Thanks, Kyle. I think that it is a good indication that we do see investments into our market technology and information services businesses being a primary objective for us in the coming periods so that we can continue to capture the higher growth aspects of those parts of our business. As you are correct, we have made some acquisitions in corporate services and in our trading businesses with some really good bolt-on high synergy deals to kind of continue to leverage those businesses. I think that as we look at ways for us to expand our business and certainly to grow into and expand our technology footprints and data footprint, we will be focusing on those areas of acquisition opportunities.
Okay. Thank you.
Thank you. The next question is from Rich Repetto of Sandler O'Neill. Your line is open.
Good morning, Adena. Good morning, Michael.
Hi.
Just can we get a little bit more detail on the mix of debt and equity, what you're targeting, I guess? It appears the margins were right around 40%. Is that correct? Anything on breakup fees here in the deal?
I'm going to let Michael answer most of that.
Okay. With respect to debt and equity, it's all going to be financed with either cash on hand, an increase in the term loan, and the CP program. There won't be any equity issued as part of the transaction. With respect to the margins, the GAAP EBITDA margin was about 25%, but you're correct, if you add in from a cash standpoint because of the deferral of the revenue, that margin does increase by the additional amount around what you reflected, not necessarily directly, but around that number. The third part, the third question you had was?
A breakup fee.
Oh, the breakup. Yeah, there is no breakup fee. This is a private transaction. We expect, as we mentioned, closing in the fourth quarter, there won't be any breakup fee.
Okay, the one follow-up. I think what you said is that the cash EBITDA margin is around 40%, is that what you say? The last point would be, is Jim Minnick sticking around?
Yes. Jim definitely will be part of the team, and he and the founders of eVestment will be reporting to Bjørn Sibbern, who runs our Information Services business.
With respect to the cash EBITDA, the cash EBITDA is a reflection of the deferred revenue increase each year because it has been growing so quickly. As we said in the release, there is about $5 million-$9 million of additional revenue that is from a cash basis that you catch up with in future years. You add about $5 million-$9 million on top of that 25% GAAP EBITDA, and you can get the margin. It depends on what that fluctuation is.
Got it. Thank you.
Thank you. The next question is from Michael Carrier of Bank of America. Michael, your line is open.
Thanks a lot. Just with eVestment, I just wanted to understand, when you guys look at the revenue generation, just how is that actually generated or calculated? I don't know if there's different products, but just wanted to get a sense on, is it market sensitive? Is it not market sensitive, in terms of how they generate the revenues?
Sure. It is a subscription-based service, and all users of the system really pay eVestment for the service. In other words, the asset managers, they contribute the information into the product, but they also get a lot of data about their competitive position as compared to other funds. They pay to contribute the data and then get analytics out of it that help them understand their competitive position in the marketplace. On the asset owner side and the consultants, they pay also to receive all those analytics and to be able to use this to make asset allocation decisions. They're the recipients of the output. It's a very deep database. As we said, it has 2,800 different data points that we collect.
It really is a really deep database that allows the asset owners to get very specific and detailed information on the asset managers so that they can make the right decisions. All of that is paid on a subscription basis. It's not related to AUM or market events.
Okay, that's helpful. Just as a follow-up. Speaking on the strategic review, when we think about the different segments that you guys have now, whether it's Information Services, Market Tech, Corporate, or the Market Services, it definitely sounds like Market Tech, Information Services, that continues to be a focus for growth. I guess when looking at the Corporate Solutions and the Market Services, any change there when we think about capital or expenses being allocated? Any meaningful shift when we think over the next one to three years?
I think it's important to note that our Market Services business, particularly, obviously, the largest markets that we operate are really, really core to who we are and are really fundamental to our brand and also to our clients. We will continue to invest in those businesses along with the Issuer Services business because they are really core to who we are, and we want to make sure that we continue to maintain our competitive strengths in those businesses.
I think that as we look at how we want to make sure that we are serving all of our clients strategically, we do want to look across our portfolio of assets and confirm that these are all strategic assets to our clients and make sure that we understand what the growth dynamics are within each of the products we offer to understand how much we might invest in them over the long term. That's really the continued effort that we have underway to make sure that we really are gearing our investment towards those things that we think, number one, are strategic to our customers and their interaction with us, and number two, where we see them growing. The fact of the matter is, our equities engine, our options engine, our Nordics engine, these are all really critical and core to who we are.
We will continue to invest in those appropriately.
Okay, thanks a lot.
Thank you. The next question is from Benjamin Herbert of Citi. Your line is open.
Hi, good morning. Thanks for taking the question.
Sure.
Morning. I just have a question on the revenue synergies, could you speak to that against, I guess, customer overlap, and then also the geographic mix of eVestment's current business?
Sure. What we do lay out on slide 11 are the areas that we see opportunity to interact with eVestment and integrate with eVestment to find new revenue opportunities. The first thing is just looking at the fact that Nasdaq itself has a very sizable and scaled index business. When you look at using our indexes as benchmarks within eVestment, we see that as an opportunity. We also have some real expertise in the smart beta index strategies. Not just our own strategies, but just generally, we understand that part of the business pretty well. As eVestment continues to find ways to serve asset owners and serving up new information about more of the smart beta and passive strategies, we think we can add expertise and content into that.
In terms of our machine intelligence and ways that we look at finding signals in the data, we think that within that closed network, we do believe that there are probably opportunities for eVestment to use more advanced data analysis to find ways to serve both the asset managers and the asset owners with deeper intelligence. We do also hope to bring the Analytics Hub capabilities that we've built and use those to create new signals that we can serve up to the asset managers through the platform. The Mutual Fund Quotation Service is very much a platform we've had for many years. Basically, it's similar in that the asset managers contribute their daily NAV information into the platform, and then we distribute it out publicly to 35,000 different outlets. That's been a service we've had for a long time.
That's an obvious integration opportunity because it serves the same community. We look forward to seeing ways that we can integrate those technologies and create opportunity there. The geographic expansion is really looking at how, particularly in APAC, they do have some penetration in Europe. We obviously have a lot of expertise in Europe that we can introduce, but also helping them get into Asia more holistically. Lastly, on the corporate solution side, we don't see that as a major revenue opportunity. We just see it as the fact that they have a great contact database. We use Thomson Reuters as a contact database today, so there may be an opportunity to augment what we use today to give better contact information to corporates, and then looking at some publicly available information that comes off the platform.
All together, I would say that really it's a combination of at least the first four things that we see as generating the $8 million-$10 million. It's not anything that's one that's dominant over another. We definitely see that. By the way, that $8-$10, some things take time to ramp. It just takes some time to ramp up those revenue opportunities, but we do see more opportunity beyond the 10 as we get out into future years.
Thanks for taking the question.
Thank you. The next question is from Alexander Blostein of Goldman Sachs. Your line is open.
Hey, everybody. Good morning. Another question around the revenue here. I guess if I go back to slide nine, looks like revenue growth slowed a little bit over recent years. Can I guess you guys provide a little bit of color on the driver behind the decline recently, and I guess more importantly, help us bridge the gap between recent revenue trends versus the type of future growth that you guys expected? Just a quick, I guess, clarification. If you guys could provide just a jumping-off point for 2018 revenue, net of the write-down, that would be helpful, too. Thank you.
We aren't going to be providing any forward-looking revenue number. I can say that when we look at the core revenue growth of the business, they have their core business that really has served the very broad asset management industry. A couple of years ago, they bought a particular business that was geared towards the hedge fund industry. The hedge fund industry has definitely gone through more of, I would say, a change, and definitely that business has not grown at the rate that they were hoping it would grow at. It has actually been something that has created a drag on their growth. Their core business has been growing even at higher rates than the overall 12% number in recent years.
The hedge fund platform itself, I think that has gotten to a point of stability, it definitely had a downward trend over the last couple of years that has hurt their overall growth trajectory. As we look forward, we think that hedge fund issue is really kind of largely played out in terms of creating a drag, and that the core business continues to have very strong growth characteristics. That's why we feel confident in saying that it will continue to grow at that double-digit rate.
Just looking at the last couple of quarters, the GAAP revenue was around $21 million. Again, as Adena said, we're not giving the forward-looking numbers, it gives you something to think about.
Got it. Thank you.
Thank you. The next question is from Kenneth Worthington of JPMorgan. Your line is open.
Great, thank you for taking my question. It seems like eVestment interacts with maybe the sales, distribution, and marketing parts of the asset manager. To what extent does Nasdaq interact with the same parts of the asset management organization? Maybe help me better understand how the cross-sell works where eVestment talks to one part of the asset manager organization and Nasdaq talks to another.
Yeah, no, it's a great question, Ken. I think historically, that has been the case where eVestment has the parts of the organization that are contributing the data are in that sales and marketing parts of the organization. Today, what we're finding is more of the asset managers at the senior executive level are using the platform to understand their competitive position. While you've got one part of the organization entering the information, and certainly using it for certain purposes, other parts of the asset management organization today are leveraging the output and the analysis because of the fact that eVestment's becoming more sophisticated in helping them understand where they stand competitively and understanding their overall position. That's more of an executive level part of the platform.
We see this as an opportunity because I think from our perspective, we obviously interact with the trading organization, and we interact, certainly with Analytics Hub, we're starting to interact really with the investment side of the business, to make sure that they think about how to leverage deeper insights to make their investment decisions more intelligent. We think that can actually be a dovetail into where eVestment has taken their platform from the users of the information.
Okay, great. Thank you. Then one of the other big trends in asset management is the consolidation we're seeing in the industry. How does a more concentrated asset management industry impact the potential growth for eVestment? I think you mentioned that it's more of a subscription-based model rather than an AUM model. Does consolidation create some constraints on the growth outlook?
I think a couple things. First is that the way that they're paid is on number of users and number of strategies, not necessarily at an enterprise level for a particular asset management group. Even if there's some consolidation, it's oftentimes that a lot of asset managers are actually launching new strategies to try to create new opportunities to compete in the business. Even when they do merge, they often will maintain their strategies because otherwise they can create some disruption for their investors in specific funds. We don't really see. We also see, as we said, the general growth in AUM giving opportunity for new asset managers to be created to find new strategies and ways for them to capture some of those assets.
Even if there is some level of consolidation among the traditional firms, we definitely also see the way that they get paid, we don't see nearly as much risk in the way that they get paid as compared to an enterprise like fee. Lastly, they are growing in the private equity space. In particular, that's a real area of growth for them. They are really just starting to penetrate that part of the business, and that's obviously a high grower in the business in an area that, from my experience, really would benefit from a lot more technology, a lot more standardization, and a better way to be able to compare funds. I see that they have a lot of ways to grow in this kind of transitioning type of environment within asset management.
Okay, great. Thank you.
Sure.
Thank you. The next question is from Chris Harris with Wells Fargo. Your line is open.
Great, thanks. Can you guys talk to us a little bit about the competitive environment for this type of business? Who maybe eVestment's major competitors are, and whether this industry is fragmented or concentrated?
Sure. Well, when we look at the core competitors to eVestment, they don't have a direct peer competitor that really serves the institutional asset owners. Morningstar obviously provides mutual fund information and performance information at a fund level out to a retail audience. I call it an open platform. Mutual funds can provide information in, and that then serves a very broad retail community at a high level. This is more of a closed community where those mutual funds and other asset managers are willing to share much deeper insights and information to a closed network of institutional owners, and consultants to those institutional owners. That itself is a unique asset.
They don't have any sort of direct competitors that span the level of breadth and depth of what they do, and we're very pleased to see the network effect that they've created is a huge asset to them. Some consultants do maintain their own databases, but actually, eVestment is a contributor into those databases. There are consultants who see themselves as providing very deep insights and comparative information to other asset owners, but in a way, essentially, eVestment is one of the providers of data into those consultants so that they can make those types of recommendations. It's not really a direct competitor either. That's one of the benefits we see is that eVestment's done a great job of building a trusting relationship across the entire ecosystem within eVestment investment management. Therefore, they've created a great network effect there.
Okay, great. That's helpful. A quick follow-up on the EPS accretion that we're talking about. It looks like it's being affected by this non-cash item. Wondering if you guys could help us maybe by providing what the accretion would be without that adjustment. I guess as part of your presentation, don't you guys ordinarily exclude non-cash items like this from your non-GAAP reporting? Maybe you can walk us through that. That would be helpful.
This is something that we can't adjust for from the standpoint of a non-GAAP adjustment because of the nature of the revenue. It is an adjustment that we do need to make, and it is going to flow through. As we said in the remarks, that does have an effect, and we're still finalizing the numbers, which is one of the things we have to consider with respect to what the write-down effect would be with respect to that. That's one of the reasons why we can't provide any additional color on that at this point in time, but we hopefully will be able to provide that as we get closer, as we close the transaction.
Okay.
That's one of the factors there with respect to what's affecting it. As we said, in 2019, we do expect in 2020, we do expect it to be accretive.
Got you. Thank you.
Thank you. The next question is from Patrick O'Shaughnessy of Raymond James. Your line is open.
Hey, good morning. Curious about what the historical pricing power has been at eVestment and what your expectations are going forward.
Sure. I think that they've been focused on a lot of ways to grow their revenue. They grow their revenue through a combination of providing new products and services to their existing clients, they've been very successful in, what I would say, growing the share of wallet within the customers as they've added new capabilities into the platform. They've also obviously grown through finding new clients to serve, they've also grown through some level of pricing increases over time. They have been relatively modest in the way that they approach that. They do have the ability to increase price as they add new features and as they continue to provide more value to the clients, they do that.
Great, thanks. For a follow-up, on slide five, you talked about optimizing some of your slower growth businesses. Are there any areas that you can call out at this point where you might do some of the optimization or potential areas for reduced investment going forward?
At this point, I think that we are continuing to do our analysis on that, we don't have any details to share right now. I think as we move forward, we'll be able to provide you more details on that.
All right. Thank you.
Thank you. There are no further questions in queue at this time. I'll turn the call back over to Adena for closing remarks.
Great. Thank you very much. Thank you very much for joining on such short notice. We do appreciate all the questions. We are very excited about the eVestment acquisition and how it fits into our strategy and our approach to using our technology and our data capabilities to continue to provide new value into the financial services industry, and most notably in this particular case, to deepen our relationships with the investment management industry. It is part of a concerted effort to find all of the ways that we can grow and provide our capabilities to that part of the business. We're really, really excited about this scaled business that allows us to really establish great relationships with the entire ecosystem. Very excited about it, and we look forward to giving you more information as we move forward. Thank you.
Thank you. Ladies and gentlemen, this concludes today's conference. You may now disconnect your-