Good day, ladies and gentlemen, and welcome to the NASDAQ Strategy Update and Investment Acquisition Call. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time. As a reminder, this conference call is being recorded. I would now like to turn the conference over to Ed Dittmeier, VP of Investor Relations.
Please begin.
Good morning, everyone, and thank you for joining our business update and acquisition announcement call today. On the line are Adena Friedman, our CEO Michael Krasnik, our CFO Bjorn Sibbern, our Head of Information Services and Ed Knight, our General Counsel. After prepared remarks, we'll open up to Q and 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 and 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. And now, I'll turn the call over to Adena.
Thank you, Ed. Good morning, everyone, and thank you for joining us this morning at such short notice. I want to use this call to cover 2 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. 2nd, 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, and perhaps most importantly, we talk to our clients and ask them in addition to their near term trends, where do they think their business is going in 5 to 10 years out from now. Many of our clients are seeing the pace of change accelerate. We then placed these insights into a framework for NASA to consider how to shape our own future. We focus 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 then 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. So, 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 3.
First, a market price economy. This is the idea that the majority of commerce will be transacted significant portion of this will happen via mechanisms that allow two sided price negotiations and require 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. 2nd, the 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 nontraditional sources that could impact the 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 in sites that impact their business decisions. And 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 and 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. And 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. Now turning to NASDAQ's strength, 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 SMART illustrates, we are trusted markets and technology provider to regulators, banks, workers and other exchanges. And our clients, we have a broad and deep client base that consists of issuers and investors of issuers, investors of every type, banks, brokers, exchanges and regulators.
In important ways, we serve as a connector to everything in the capital market system. And 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, but 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. But 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 segment 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. So, 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 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 $1,000,000,000,000 in 2015 to $100,000,000,000,000 by 2020, while PwC predicts that AUM run by asset managers will increase by nearly 30% from $58,000,000,000,000 to $58,000,000,000,000 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, 2 key strengths of NASDAQ in a very particular area of complementary expertise for investment.
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 strength in advanced technology, market 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 quotation service. And 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 Cybernetics, a buy side focused behavioral analytics compliance tool. 3rd, 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. And 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. Eveston 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. Investment 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.
Edvestment serves around 2,000 clients, including asset managers, where 92% of the top 50 clients are customers, asset owners were 70% of the top pension funds and asset and investment consultants were 76% of the top 50 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, professional information and inflows and outflows. There is no question that investment is a truly unique asset with favorable financial characteristics. With 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 the investment 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 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 Evestion's reach into Europe and Asia and will seek ways to create value within the platform for asset owners seeking insights on smart data and other passive strategies, given our deep expertise in that area with our index business. We are targeting $8,000,000 to $10,000,000 in revenue synergies over the medium 3 to 5 year period from close. NASDAQ serves a unique role in the financial industry, bringing companies, copper 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 decline the business going forward.
Now, I'll turn it over to Michael to review the financial details.
Thank you, Tina, and good morning, everyone. Let me run through the financial details. NASDAQ is paying $705,000,000 in cash per eVestment subject to HSR considerations that expect the acquisition to close in the Q4 of 2017. The valuation on this asset reflects strong core economic fundamentals, including the steep revenue growth trajectory that has been above public infoservices tiers, 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 $5,000,000 to $9,000,000 annually, and we take this into account when evaluating the business. Upon closing, Nasdaq's reported revenues will be impacted in the short term by purchase accounting breakdown of eVestment's preferred revenues under ASC 805. We expect that the investment will impact 20172018 revenues. It will not impact cash flows or medium to longer term reported revenues. While the deferred revenues or the account will result in some earnings dilution in the near term, the transaction is expected to be accretive in 2019 2020.
Investment 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 curtails with our organic initiatives to better serve the investment management industry. 2nd, it is expected to add to the cash flows and earnings growth of our core business and as such shows how Nasdaq can reinvest its considerable free cash flow generation to expand our business and profitability over time. 3rd, we expect eVestment to generate attractive returns on invested capital over the medium term with further upside in the longer term. And lastly, we believe the positive impact that Houston has on valuation sensitive fundamentals and its organic growth profile, the way it increases the contribution of 1 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 broker 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 percent range as previously communicated, though we now expect to reach such level in early 2019 versus our prior expectation of mid-twenty 18. Turning to capital allocation priorities over the near term. We'll prioritize key 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 KeyStable share count.
With that, I'll turn it back to the operator to open up the line for Q and A. Thank
The first question is from Kyle Voigt of Q2. 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 Thompson IR, Marketwired and Born Vantage more recently obviously. And then on the market services side with ISE and Chives Canada, I guess looking forward, is this kind of a pivot in terms of acquisitions for NASDAQ for the last two deals with the cybernetics and eVestment deal?
And can we expect this to be an emphasis for data leaking going forward?
Thanks, Kyle. I think that it is a good indication that we do see investments into our market technology and information services business as 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. And 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 footprint and data footprint, we will be focusing
next The next question is from Rich Repetto of Sandler O'Neill. Your line is open.
Good morning, Adena. Good morning, Michael. I guess, first, just can we give a little bit more detail on the mix of debt and equity, what you're targeting, I guess? And then it appears the margins were right around 40%. Is that correct?
And then anything on breakup fees here in the deal? Right.
So I'm going to let I'll start the
call over to Michael to answer most of that.
Okay. So with respect to debt and equity, it's all going to be financed with cash on hand, an increase in the term loan and the CP program. So debt, there won't be any equity issued as part of the transaction. With respect to the margins, so the GAAP margin was about 25%. But you're correct with the 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 in the service directly, but around that number.
And then the third part and third question you had was?
The breakup fee.
The breakup fee, yes. There is no breakup fee. This is a private transaction. And we expect that, as we mentioned, closing in the Q4, so there won't be any breakup fee.
Okay. And then one follow-up. Well, I think what you said is that the cash EBITDA margin is around 40%. Is that what you said? And the last part would be is Jim Minnick sticking around?
Yes. So, Jim is definitely will be part of the team and he and the founders of investment will be reporting to Bjorn Seiburn who runs our information services business.
And with respect to the cash EBITDA, so the cash EBITDA is a reflection of the deferred revenue increase each year because it has been growing so quickly. So as we said in the releases, dollars 5,000,000 to $9,000,000 of additional revenue that is on a cash basis that you catch up with in the future years. So you add that $5,000,000 to $9,000,000 on top of that 25% debt to EBITDA and you can get the margin. So you think of what that fluctuation is.
Got it. Thank you.
Thank you. The next question is from Michael Carrier of Bank of America Merrill Lynch. Your line is open.
Thanks a lot. Just with investment, I just wanted to understand when you guys look at the revenue generation, just how is that actually like generated or calculated? And 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. So it is a subscription based service and all users of the system really pay investment for the service. So in other words, 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. And so they pay to contribute the data and then get analytics out of it that help them understand their competitive position in the marketplace. And then 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.
And so, they are the recipients of the output. It's a very deep database. As we said, it has 2,800 different data points that we collect. And so 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. But all of that is paid on a subscription basis.
It's not related to AUM or market events. Okay.
That's helpful. And then just as a follow-up, maybe on the strategic review. So when you think about the different segments that you guys have now, whether it's information services, market tech, corporate or the market services. Is there it definitely sounds like market tech, information services that continues to be a focus for growth. I guess when you look at the corporate solutions in the market services, any change there when we think about capital or expenses being allocated?
Any meaningful shift when we think over the next 1 to 3 years?
I think it's important to note that our market services business and 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. And so 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 strength 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 growth dynamics are within each of the products we offer to understand how much we might invest in them over the long term. So that's really the continued efforts that we have underway to make sure that we really are gearing our investment towards those things that we think number 1 are strategic to customers and number in their interaction with us and number 2 where we see them growing.
But the fact of the matter is our XB's engine, our options engine, our Nordic engine, these are all really critical in core to who we are. So we will continue to invest in those appropriately.
Okay. Thanks a lot.
Thank you. The next question is from Ben Herbert of Citi. Your line is open.
Hi, good morning. Thanks for taking the question.
Sure. Good morning.
I just had a question on
the revenue synergies. And could you speak to that against, I guess, customer overlap and then also geographic mix of investments current business?
Sure. So what we do lay out on Slide 11 are the areas that we see opportunity to interact with divestment and integrate with divestment to find new revenue opportunities. So the first thing is just looking at the fact that NASDAQ itself has a very sizable and scaled index business. And when you look at using our indexes as benchmarks within the investment, 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.
And so as investment 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 investment to use more advanced data analysis to find ways to serve both the asset managers and the asset owners with deeper intelligence. And then we do also hope to bring the analytics hub capabilities that we built and use those to serve new 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. It 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 25,000 or 35,000 different outlets.
That's been a service we have for a long time. That's an obvious integration opportunity because it serves the same community. And so 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, we 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.
And then lastly on the corporate prescription side, that's not really 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' 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.
But altogether, I would say that really is a combination of all at least first four things that we see is generating the $8,000,000 to $10,000,000 It's not anything that's like one that's dominant over another. We definitely see that. And by the way, I mean, that 8% to 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 Alex 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 9, it looks like revenue growth slowed a little bit over recent years. Can you just you guys provide a little bit of color on the driver behind decline recently?
And I
guess more importantly help us bridge
the gap between kind of recent revenue trends versus the double digit growth that you guys expected? And then just a quick, I guess, clarification. If you guys could provide just a chunking off point for 2018 revenue net of the write down, that would be helpful. Thank you.
So we aren't going to be providing any forward looking revenue number, but I can say that when we look at the core revenue growth of the business, they have their core business that really has served a very broad asset management industry. And then a couple of years ago, they bought a particular business that was geared towards the hedge fund industry. And 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. So 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.
And the hedge fund platform itself, I think that has gotten to a point of stability, but it definitely had a downward trend over the last couple of years that has hurt the overall growth trajectory. So as we look forward, we think that 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. And so that's why we feel confident in saying that it will continue to grow at that double digit rate.
Just the over the last couple of quarters, the GAAP revenue was around $21,000,000 So again, as Adena said, we're not giving the forward looking numbers, but it gives you something to think about.
Got it. Thank you.
Thank you. The next question is from Ken 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. Maybe to what extent does NASDAQ interact with the same parts of the asset management organization? And maybe help me better understand how the cross sell works where investment talks to one part of the asset manager organization and NASDAQ talks to another?
Yes. No, it's a great question, Ken. So I think historically that has been the case where investment has the parts of the organization are contributing the data are in that sales and marketing part of the organization. But 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. So 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 investments becoming more sophisticated in helping them understand where they stand competitively and understanding kind of their overall position.
So that's more of an executive level, part of the platform. And 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. And we think that can actually be a dovetail into where investment has taken their platform from the users of the information.
Okay, great. Thank you. And 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? And I think you mentioned that it's more of subscription based model rather than AUM model.
So does consolidation create some constraints on the growth outlook?
So, I think a couple of things. First is that the way that they're paid is on number of users and number of strategies, not necessarily on an enterprise level for a particular asset management group. So 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. And even when they do merge, they often will maintain their strategies because otherwise they can create some disruption for their investors and specific funds. And so we don't really see like first of all, we also see the general 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.
And 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 nearly as much risk in the way that they get paid as compared to kind of an enterprise like fee. And then lastly, they are growing in the private equity space in particular. That's a real area of growth for them. And they are really sort of 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. So 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. And 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 eVestimates major competitors are and whether this industry is fragmented or concentrated?
Sure. Well, when we look at the core competitors to investments, they don't have a direct peer competitor that really serves the institutional asset owners. So, Morningstar obviously provides mutual fund information and performance information at a fund level out to a retail audience. And so I call it an open closed community
where those mutual funds
and other asset managers are 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. And that itself is a unique asset. They so 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 that the network effect that they've created is a huge asset to them. Some consultants do maintain their own databases, but actually, Gessmann is a contributor into those databases. And so there are consultants who see themselves as providing very deep insights and comparative information to other asset owners.
But in a way, they're kind of, essentially, Vestman is one of the providers of data into those consultants so they can make those types of recommendations. So it's not really a direct competitor either. So that's one of the benefits we see is that investment has done a great job of building a trusting relationship across the entire ecosystem within Investment Management and therefore, they've kind of they've created a great network effect there.
Okay, great. That's helpful. And then 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. And so wondering if you guys could help us maybe by providing what the accretion would do without that adjustment?
And then 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.
Yes. This is something that we can't adjust for from the standpoint of a non GAAP adjustment because of the nature of the revenue. So it is an adjustment that we do need to make and it is going to flow through. As we said on the call as we said in the remarks, so 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. So 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.
So that's one of the factors there with respect to what's affecting it. But as we said, in 20 19, we do expect the in 2020, we do expect it to be accretive.
Thank you. The next question is from Patrick Osterholm of Raymond James. Your line is open.
Hey, good morning. Curious about what the historical pricing power has been at Evestnet and what your expectations are going forward?
Sure. I think that they've been focused on a lot of ways to grow the revenue. So they grow the revenue through a combination of providing new products and services to their existing clients and 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, also grown through some level of pricing increases over time. I don't they have been relatively modest in the way that they approach that, but they do have the ability to increase price as they add new features and as they continue to provide more value to the clients and they do do that.
Great. Thanks. And then for
a follow-up, on Slide 5,
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. So we don't have any details to share right now. But 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 at this time. I'll turn the call back over to Adena for closing remarks.
Great. Thank you very much. Well, thank you very much for joining on such short notice. We do appreciate all the questions. We are very excited about the investment 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. And we're really, really excited about the scale business that allows us to really establish great relationships with the entire ecosystem. So 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 day.