State Street Corporation

Q2 2021 Earnings Conference Call


spk_0: good morning and welcome to state street corporations second quarter twenty twenty one earnings conference call and webcast today's discussion is being broadcasted live on the streets website and ancestors that state street dot com this prompted calls also be recorded for replay should be conference call is copyrighted and all rights reserved seats or may not be recorded for rebroadcast or distribution in whole or in part without the express written authorization from street corporations the only authorized broadcast of the call will be housed on the state street website now i like to introduce i lean says or bueller global had of investor relations as the street
spk_1: good morning and thank you for joining us on our call today our ceo renault hamlet will speak first son eric our was our csl will take is your second quarter twenty twenty one earning slide presentation which is available for download the investor relations section of our website and bastards that state street dot com afterwards we'll be happy to take questions during the two and a please limit yourself to two questions and then riccio before we get started i would like to remind you that today presentation will include results presented on a basis that excludes or just one or more items from got reconciliation for these non gaap measures to the most directly comparable gap array of a tory measure are available in the appendix
spk_2: or slide presentation
spk_1: in addition say it's presentation will contain forward looking statements actual results may differ materially from those statements due to a variety of important factors such as those factors referenced in our discussion today and an r s e c filings including the risk factors in our form ten k afford looking statements speak only as today and we the flame any obligation trusted some even if our views change now let me turn it over to run
spk_3: thank you i leave a good morning everyone earlier this morning we really strong second quarter financial results which demonstrate the meaningful progress we're making towards achieving our medium term targets as we continue to execute on the multiyear strategic pivot or business to that of an enterprise outsource solutions provider i am particularly pleased with our results as quarterly totally see revenue exceeded two point five billion for the first time in the company's history we delivered a fourth consecutive quarter of servicing see growth with service fees at the highest level in three years propelled by both strong equity markets impact of our actions to strengthen relationship management and sales effectiveness we continue to differentiate states through throw unique product and operational capabilities as well as through delivering and have clients service quality or pipeline continues to deliver as evidenced by another strong another quarter of strong servicing an alpha client mandates which i will discuss short list additionally we continue to invest in our business and innovate across the franchise to drive growth and enduring shareholder value creation for example we announced the formation state street digital in the second quarter a new division focused on addressing the industry's evolving shift to digital finance both product offerings and as a business model this is just one example in a long history of innovation the state street has and is continuing to drive with in our industry we also continue to develop state street alpha or front to back offering this unique capabilities has created and unattractive value proposition that is resonating with both new and existing clients as well as contributor to client retention and growth opportunities which i will also discuss shortly thirty to slide three hour reviewer a second quarter highlights before handing the call over to iraq will take you through the quarter more detail second quarter gps was odd to oh seven or one ninety seven excluding notable items despite the impact of art of of interest rates and our and ice earnings per share x notables reach the highest level since for to nineteen when quarterly and i was notably hire more than two thirty five percent more than it was in two to twenty one relative to the year ago period quarterly total revenue exceeded two point five billion for the first time increasing six percent year over year driven by solid servicing and management see growth which increased ten percent and forty prosper percent year over year respectively this was better security can answer results the strong performance was partially offset by the year over year impact on total revenues from lower software processing fees continued moderation of fx market volatility an ongoing interest rate headwinds even with record quarterly see revenue expenses were well controlled or second quarter total expenses were up one percent relative to the year ago period they were down almost half a percentage point year over year excluding notable items and currency translation as our productivity improvements continue to yield results the have created a culture of expense discipline over the last two and a half years and we remain confident no ability to effectively manage core operating costs over the remainder of twenty twenty one are strong see revenue performance coupled with continued cause discipline delivered a two hundred basis point improvement or pretax margin year over year which reached nearly thirty percent in the second quarter excluding notable items further return on equity was twelve point six percent or eleven point nine percent excluding notable items in the second quarter a you see a increased to a record forty two point six trillion a quarter and supported by higher period and equity market levels and new business on boardings new asset servicing wins increased to one point two trillion for the quarter including the large alpha mandate with invesco announced in april we reported to new alpha wins in the second quarter taking the total number of alpha clients to fifteen after the second quarter close we also entered into an alpha mandate with legal in general well invesco as an example of how alpha is helping to expand and deep in existing client relationships the legal in general when demonstrates how the alpha strategy is also helping a scorched new client relationships with the world's most sophisticated investors our experience to take gives of confidence that alpha relationships will drive stronger retention rates for existing clients while also allowing us to broaden and deeper most relationships as we add additional products and services to these existing mandates additionally we are signing alpha clients that are new to state street demonstrating that alphas enabling us to reach new clients and deliver front middle of back off the services in a shade and matter we also create a new relationships to help drive revenue growth of course across clients segments regions for example earlier this week we announced a new strategic alliance with first abu dhabi bank the alliance will create a full service enterprise offering for institutional investors in the middle east and north africa region it will proc provide investors with extensive reach into more than one hundred markets around the world clients will have access to states reads full suite of front middle and back office capabilities in addition to our extensive data management and mental analytics solutions which seamlessly integrate with first of a banks regional suite of security services products local expertise and regional direct custody network let's see our d n a recurring revenue increased eleven percent year over year to two hundred thirty million and we remain pleased with how the businesses performing while also enabling you propelling or alpha strategy global advisors continued to demonstrate strong performance am increased to three point nine trillion and management fees increase to five hundred form million both records benefiting from strong second quarter flows of eighty three billion across the eighty of institutional in cash business as as we continue the leverage to leverage the strength of our asset management franchise any to apps are low cost and sector funds as well as r e s p a commodity products continue and to enjoy good market share with low cost eighty of expanding share in the second quarter and an institutional are salesforce relationship management realignments coupled with a strong products that led to go
spk_4: revenue growth
spk_3: turning to our balance sheet and capital we returned over six hundred million of capital to our shareholders during the second quarter inclusive a four hundred twenty five million of common share repurchases consistent with a limit limits set by the federal reserve i am pleased with yet another strong performance under this year's annual stress test the new sep framework provides us with additional flexibility to manage her capital place as examples yesterday we announced that our board of directors has approved a ten percent increase of our third quarter comment evident to fifty seven cents per se share an authorized a common share repurchase program of up to three billion during the third quarter of twenty twenty one through the fourth quarter of twenty twenty two to conclude we're very strong quarter business momentum is building and we have demonstrating meaningful progress towards er medium term financial targets as i look ahead to support our strategic decisions and help us achieve those targets we are continuing to prioritize improvement or fee revenue growth while controlling costs by transforming the way we work and building a higher performing organization for the future and that let me turn it over to eric to take you through the quarter more detail
spk_5: thank you ron and good morning everyone i'll begin my review of our second quarter results implied for we reported dps of two dollars it's two dollars and seven cents for a dollar ninety seven excluding the tenth and positive impact of notable items which was driven by previously announced sales a majority stake in a legacy business on a left panel the slide you can see strong results as we continue to drive see revenue growth while controlling expenses we delivered pretax martin expansion and solid earnings growth as a result of the weaker dollar rob for the year ago period we continue sure you're near results excluding the impact currency translation in the right column we also show results excluding not of items on the bottom of a fine turning to five five you'll see our business volume growth period and a you see a increased twenty seven percent year on year and six percent quarter on quarter to a record forty two point six trillion oh the year on year and quarter on quarter increases were largely driven by higher period and market levels net new business growth and climb flows and global advisors a you i'm increased twenty eight percent year on year and nine percent quarter on quarter to three point nine trillion also a record the year on year and quarter on quarter increases were both primarily driven by higher period and market levels coupled with net inflows
spk_3: turning to slide sex you can see another quarter of strong business momentum
spk_5: second quarter servicing fees increase ten percent year on year including currency translation which was worth approximately three percentage points year on year the increase reflects higher average market levels positive net new business on board and and climb flows only partially offset by normal pricing headwinds and the absence of elevated prior year klein activity
spk_3: hey you see a win win total of one point two trillion in the second quarter substantial substantially up for me some quarters primarily as a result of the large alpha client mandate announced last april that john just had that runs as mentioned
spk_5: a c a one but yet to be installed also amounted to one point two trillion a quarter and as we smoothly on board it over four hundred billion of klein assets this past quarter we remain focus on reigniting business growth across both klein segments and regions this quarter of we had strong growth in the emir region aided by our tenth coverage efforts which now extend to approximately three hundred and fifty over all of our top clients
spk_3: we continue to estimate that we need at least one point five trillion and growth are you see a wins annually in order to offset typical klein attrition and normal pricing headwinds and with quickly exceeded that far this year i will remind you that inflation typically occur in phases and overtime and deals will vary by fee and product max at this time we expect the current one by gets be installed a you see a will be converted over the coming twelve to twenty four month time period for the associated revenue benefits beginning and twenty twenty two and the majority occurring and twenty twenty three
spk_5: as we said in june we're pleased for their pipeline and or momentum
spk_3: turning to slide seven second quarter management fees rates are record five hundred and four million up fourteen percent year on year inclusive a to percentage point impact from currency translation and were up to percent quarter on quarter result is investment management pretax margin approaching thirty five percent both a year on year and quarter on quarter of man fancy performance benefited from higher average equity market levels and strong each yeah flows these benefits were only partially offset by the run rate impact from the previously reported idiosyncratic and to sell klein the reallocation as well as about twenty five million of money market fee waivers this order
spk_6: while we previously estimated that money market fee waivers on our management fees could be approximately thirty five million per quarter as a result of the recent improvement in short and raid falling the june epilepsy meeting we now expect that they will be about twenty to twenty five million per quarter for the rest of the year which is about a third lower than we had proof
spk_7: as expected
spk_5: global advisors recorded solid flows across institutional ctf and cash for the quarter with thought the total amount amounting to eighty three billion we have taken a number of actions deliver growth and our long term institutional need your franchises which are driving this month and has you can see on the bottom right of the fine trying to fly day when we discuss the other important the revenue lines and more detail with an fx writing services were pleased that we can tune to generate strong climb volumes would remain above pre pandemic levels in the second quarter well to to a strong second quarter and twenty twenty fx revenue fell twelve percent you're on your as declining fx market volatility compared to the corporate environment last year more than offset higher client volumes
spk_3: a tax revenue with down seventeen percent quarter on quarter turn by moderation climb all humans from index rebalances experience in the first quarter and lower market volatility
spk_5: our security finance business recorded strong revenue growth with these increasing eighteen percent year on year and ten percent poor ancora mainly as a result the fire and hands custody and agency bounces as client leverage rebounded
spk_3: finally second quarter software and processing fees or down twelve percent year on year largely due to the absence of prior year positive mark to market adjustments
spk_5: software and processing fees increased twenty four percent quarter on quarter mainly as a result of higher crd revenues moving to slide nine i'd like to provide some further updates on our crd and alpha performance we delivered strong standalone thirty result in the quarter primarily reflecting higher climb renewals an episodic the revenue
spk_7: the more durable sas and professional services revenues continue to grow nicely and were up ten percent year on year resulting in an increase in standalone analyze recurring revenue to two hundred and thirty million
spk_5: this quarter martha three year anniversary since announcing the year the acquisition and we're very pleased and how the business has performed are winning in part thanks to state streets branded reputation and the benefit the clients of are integrated alpha offering
spk_7: on the bottom right of the slide we showed some the second quarter highlights from states read out for mandates we reported to new alpha manage during the second quarter as the value proposition continues to resume well with klein's notably since inception three second quarter we now have five alpha climb mandates that our lives
spk_5: hello alpha deals usually takes a lot longer implement given the size and scope the pay off outweigh the longer implementation period as we are able to further expand share of wallet to generate attractive revenue growth rates and increase the contract length which can be up to ten years in length for alpha services that span the front and middle office
spk_3: turning to slide ten second quarter and i declined sixteen percent you on your mainly a result of the effects of lower and state environmental and that's in porto yields and sponsored member repo products these impacts are partially offset by bouncy expansion driven by higher balances
spk_5: relative to the first quarter however and i was flat has lower investment portfolio yields and the impact of stored and rates were offset by further expansion the investment portfolio and lending activity
spk_3: on the right side of the side we sell a growth or average bouncy during the second quarter total average deposits increased by sixteen billion in the second quarter for an increase of seven percent quarter on quarter reflecting the continued impact of the federal reserve's expansionary monetary policy
spk_5: while we consider main mindful those high risk in the current rate environment we tactically added about five billion quarter on quarter to investment portfolio few months ago before the recent downdraft and rates we also increase or average loan balances by practically five percent quarter on quarter tell her twenty nine billion turn by higher utilization by out the managers and private equity capital call clients we also have a number of initiatives and flight to reverse and reduce the streets and departed uptake that we saw during the quarter turning a slight eleven second quarter expenses excluding notable items increase to percent year on year mainly driven by the weaker dollar excluding the impact notable items and currency translation total expenses were down nearly half a percentage point you're near as productivity savings for the quarter more than offset higher revenue related expenses and targeted investments and klein on board and costs compare to two to twenty on a line item basis and excluding notified i'm from the impact of currency translation compensation employee benefit cause was flat as we reduced hi consultation headcount which has had higher medical costs as claims began to normalize to pre pandemic levels information systems and communications were up five percent due to continued investment in our technology states
spk_3: and action processing was up ten percent primarily driven by higher remy related expenses for sub custody balances and market data costs
spk_5: occupancy was down thirteen percent reflecting benefit from our footprint optimization efforts and some timing benefits
spk_3: and other expenses were down eleven percent primarily driven by lower than usual professional services fees
spk_5: route to the first quarter spent for primarily impacted by the absence of seasonal and deferred compensation reported in the first quarter
spk_3: so overall we are pleased with our country inability to demonstrate expense disciplined as we have a family man so expenses x notables and currency down here on year in the second quarter while driving strong total fee revenue growth
spk_5: moving to side twelve on the right as a fly we saw our capital highlight their are pleased with our performance on or this year see car with a calculated risk capital buffer well below the two point five percent minimum resulting in a preliminary s c b have that floor the new se be flamer provides us with additional flexibility the player capsaicin a number of different ways including that's an opportunist dividends and buybacks for example yesterday we announced a ten percent increase to a third quarter common dividends to fifty seven cents per share and our board has authorized the common share repurchase program of up to three billion dollars from the third quarter of twenty twenty one through year and twenty twenty two in addition were also please of the federal reserve has provided say treatment one additional year until january first twenty twenty four to retain it's current teeth absurd charge of one percent to the left the slide we show the evolution of our c t one and tier one leverage ratio as you can see we continue to navigate the operating environment withdrawn capital levels and access to the requirements
spk_3: as a quarter and are standardized the eighty one ratio improved by forty basis points quarter on quarter to eleven point two percent as we had expected and sits above the upper end of our ten to eleven percent c t one target range
spk_5: the improvement was driven by solid capital appreciation and we also manage down our to be ways despite balance sheet growth our tier one leverage ratio remains well above the regulatory minimum but declined by twenty basis points koran quarter to five point two percent primarily as a result of the further increase in average klein bounces has the feds quantitative easing continues we can see to think that a tier one leverage ratio in the fives as appropriate for business model and we can operate the lower end of this range for number of quarters or we consciously limit and reduce client deposit and offer them a range of liquidity alternatives burning to slide thirteen in summary are clearly performance demonstrates solid doesn't momentum on our top line and the scale we're driving within our operating model total fee revenue was up almost six percent year on year and exceeded two point five billion for the first time the double digit growth and servicing and management fees despite the you're on your head when from the strong fx rating services result he had in the second quarter of last year during college our expenses remain well controlled as a result for productivity program as a result we are able to drive pretax margin and are we close to our medium term targets notwithstanding the low rate environment next i'd like to update you on our economic outlook for the remainder the year and provider current thinking regarding the third quarter outlook at a macro level or a few probably alliance that current solar great curve and assume that you're then rates remain low in there is some modest deepening the yield curve
spk_3: we're also seemingly like the markets will be relatively flat to quarter and for the rest of the year as well as can see normalization that x market activity
spk_5: in terms of the third quarter of twenty twenty one we expect overall see revenue to be up to seventy eight percent year over year with servicing and management fees eat expected to be up seven to nine percent year over year this means for your fee guidance is likely be better than the upper end of the full year reign we previously provided
spk_6: regarding and ice despite the recent flattening the yield curve we have seen increase in short and market rates and we now expect a modestly improved corley and i range of four hundred and sixty four hundred and seventy million per quarter for the rest of the year
spk_5: assuming race do not deteriorate and premium amortization continues to attenuate turning to expenses we remain confident in our ability to effectively manage core operating costs we expect a third quarter expenses x notable items will be flattish potter minus half a percentage point year over year and three que d c and expense guides for three que include approximately a point of currency translation year over year on taxes we expected three kids twenty one taxes when the middle of our for your range of seventeen to nineteen percent
spk_3: and with that on me hand the call back to on
spk_0: thank york and with that operator we can now of them a call for questions i think at this time it is like an audio question has star saw that the number one on your telephone keypad again at a star one for questions
spk_8: shit as that secret sexist morgan stanley
spk_9: hi good morning thanks very much
spk_10: i've got sick ah i just started wanted to start off by talking lot of that about the see died that you just once rail on did you just give us a sense as to the major drivers i mean i realize it throughout the call you were talking about pipeline top you've got a reinvigorated or sales effort going on
spk_3: is that what's driving this so quickly or is there something else it's happening that tom lazy to the see guy race thanks thirty one or i'd start americans are comment i mean at some i wouldn't describe it as is so quickly me what years what you're seeing here is the product of on a lot of months and years of work that serve no coming together and in started to bear fruit so
spk_8: and not that we we're done we have more work to do but i think really is about some the things that we told him the powers that we've been up to that are coming together and and and an arm and starting to have the him to divert impact here
spk_10: okay thanks and then maybe you could just refresh how you're thinking about the asset management business and where you would like to lean and to grow slut pockets you're looking to invest in
spk_3: and his stats by geography to that be helpful yeah i mean the we think of the business is having three core or elements to at the eat he up his institution business and the cash business and both are well established franchises the areas that we'd like to lean into or the institutional business first and i'll come back to eat your business puts the institutional business has very strong client relationships around the world but a limited products of so what you know we spent a lot of time thinking about is how do we take those relationships in that distribution channel and leverage in in some way through or enhancing our product capabilities on the t side of we have been on a long path to developing are the products up there as well as deepening our presence in geography is outside the u s you seen a lot of of pay off map particularly in a mia will continue to grow that areas of growth include yes to which for of continues to do very nicely as well as just continuing to emphasize the advantages of our corporate accept it was and it's some institutionally design products that if have a lot of liquidity through it and of liquidity is important to many investors so it's it's emphasizing or what we have their land the cash business is obviously it's it's a function of interest rates
spk_11: a but we have a very sophisticated cash business that works and different interest rate environments and will continue to
spk_0: to present had to both existing asset management enough that service and clients as well as clients classes todd don't have either of those relationships with us
spk_12: thanks for on things are
spk_13: your next question consider the line aspirin and talking with you bs
spk_14: i've run out the morning
spk_13: hey how are you run a check
spk_14: so a not a follow up on the updated outlook
spk_13: hum i noticed eric said mean a huge you said we're going to be above the upper end of the range for the four years which does it doesn't seem that challenging given how strong things were here in the second quarter and given how good three to looks at this point i is it is it possible to narrow that full year see revenue outlook to something more specific than just a greater than sign
spk_5: how how are you thinking about it and how should we think about it and then also
spk_7: what are your assumptions for balance sheet size embedded in the updated and i our
spk_5: thanks sure bread it's eric let me let let me add this private said this i think we're saying i'm sorry good performance across a number of our businesses i'm in addition to some of the cat when you get from equity markets and i think it's a combination of both agree markets were up globally you know quarter on quarter or you know five percent like is us another of the a step up for service the and management fee businesses but in addition i think what we are seeing his strength in net new business our revenues you know last quarter i said we were relatively neutral on that you business and servicing fees that this quarter of work nicely positive on that front
spk_6: on the server think the side ah in management fees you know we'd
spk_5: invoking a couple of quarters here in a row of very nice inflows they'd come with the analyze net new revenues you know that our odds on cetera i'm solidly car positive and create a tailwind as well and then you saw you know if we've had good performance across our vilsack lending franchise on crt had another good quarter and so were were for a couple with a her hire a guide i think i gave you primarily third quarter
spk_13: information and then maybe just as a try to answer the question directly the full year fy god if you're a call or was taken up last quarter to two and a half to four percent year over year amber that includes lapping ourselves from that covert bomb from fx a year ago so our guy had had been to a
spk_6: a half to four percent for total see growth and i think now you can count on around five percent of gross gonna go from that range too about another point up over the top end of that range for the time being given given what we know today
spk_5: okay great that's fair and saw the the balance sheet size piece of the and i yeah the balance sheets always has some as has put and takes and ins and outs in this environment of quantitative easing and when you've seen as do is we've try to put some of the additional deposits to worth between us take advantage of the
spk_6: increase in iowa we are at hand
spk_5: the other the feds ill floor on the on repo rate for that's been constructive we do need to manage all for the five the balance sheet because as we are compressed the balance sheet that frees up leverage ratio capacity and than that you know feeds back into our ability to return capital and so yeah we are pretty serious about
spk_13: out about compressing kill some of those deposits we had more of an uptick in may and june in l a pool is kind of in roughly in line with the first quarter and solar star into a chip away at that and we see a path to do that i don't think that i'll have much of an effect on an eye member at these low rates your deposits you know when yeah
spk_15: the only the minimum deposit is it is worth a little bit but not a lot but it'll be the right way to manage the balance of an i
spk_13: yeah which had the country said in that new range that we provided fall so freeing up know space for cap will return which is important priority for us great states hurt thanks for providing that clarification eric
spk_14: you you also you're prepared remarks mention that see rates vary on when you think about their nice uptick in your one that not funded
spk_5: mandates here
spk_6: what did those see dynamics look like how should we say when we're starting to think about model is building those out from here are those is does the success of alpha that you've had a and charles river which we saw in the results today says that helps support the see rates for the businesses that you're looking for is the competition just still so intense that in a that's that's just too
spk_5: too optimistic actually think about those the fees their oncoming thank you sure brennan's earth can it's there's a real range here
spk_6: what you tend to get it's it's not whether it's alpha deals are you know classic in accounting deals
spk_5: tom it's it's really the size of the deals tenth to comment different fee rates and so you know we we saw some water deals this this quarter and the cause it's the denominator of assets is is larger will come out a little lighter and in terms of ce raid on the other hand first quarter we had a set of wins that were ah well above are hard traditional fee raid and so on
spk_6: if you can have a number of combinations and won't where are we still on his honor
spk_16: profitability basis and or anna anna anna
spk_0: you know incremental days is always making sure that as we ad revenues lead do it at the healthy margins we use it as a way to control costs and be disciplined and so i think fee rates will bounce around for me a wins in one quarter versus the next but ratchet quite pleased with the fee raid for the for
spk_17: a half of the year is your well in line with our overall few rate for the company and
spk_18: yeah that does that may have said that bodes well as we are like into and implement some of these says i'm visa a new ones great thanks to that our turf
spk_3: your next question comes to mind as can instance
spk_5: the jeffries
spk_19: thanks morning out of after enron just wanted to ask a little bit more on the capital return know just in terms of how you land on
spk_5: on the three billion number visa be your arms
spk_6: bouncy potential uses and also your capital ratio targets arms are you are you aiming for a total return pay out how are you in on the u s e b l how are you are you kind of land on that number and and how should be thinking about you know whether there's would be potentially no more room or depending on awesome as other factors thanks
spk_5: any terrorist you know they're always facts and circumstances on individual i kept will return any as
spk_3: a time and place the let me let me give you the kind of the
spk_5: the on below been how we think about it from from our standpoint about what's possible and what we'd like to do you know knowing that there's always a
spk_6: that they always have the to to manage to the you know individually you know said the quarters of the as he be does give us some flexibility so let me let me do it in the following way
spk_5: one of the things we start with is what is rct one ratio and you saw we present eleven point two percent yeah that first the you can do is compare that to what's the target range ten to eleven percent you can say look first step is how to we flown down that that ratio to the midpoint of that range and that
spk_20: revived know seven hundred and eight hundred million dollars of tablet or return capacity so that's that's one piece on secondly
spk_18: if you go through earnings you know earnings next quarter of a quarter after you guys all have projections of earnings and yeah where we do with those earnings as they had a week he vows earnings back to shareholders in the form of couple return so one part that is the dividend and then the balance of the earnings you know can often be return
spk_21: and that fly buybacks note that says that's an intention we we often have so you can add those buybacks that cover the difference between earnings and dividends for the although the next you know two three four five six quarters good we gave you a kind of a six point of view and then finally the one thing a half the
spk_5: keep in mind is the balance sheet always grows the bed no not at the same intensity that that the lending oriented bank does for a balance sheet my grow risk weighted assets by you know five percent so there's kind of us there's always a bit of cap for attention that sensory just have fun you know on our hundred and twenty billion dollars marta be way you know pipes and jozy to you know retain maybe six hundred million typically and a year of thought of capital to a to huh all weekends that so if you go through those pieces it's literally the down the the the floating down it's the what earnings can support he netted the dividend goes into buybacks and then it's the modest amount of retention you need for some good underlying roads which i think the a pencil vowed to that up to the or three oh and dollars range try to thanks like our second question just on near and ice guide and the range of dementia that premium am would continue to attenuate was wondering you can if you can help us understand how much or attenuation would you expect and where was the third quarter of your versus somebody of other factors that are kind of working against it to kentucky person the
spk_7: zones thanks yep pretty amortization actually the is it is a bit dumb sound people from one quarter of the next has given kind of where you are with individual bonds and so forth but what's happening is you've got the grind on the investment portfolio which can be in the you know
spk_5: fifteen to twenty five million dollar range and then print memorization can work in the opposite direction you know in the upcoming quarter as we're we're we're thinking it's in the
spk_7: you know fifteen million dollar range but it'll bounce around and so you kind of have this
spk_18: the had when of rates just floating through programmers a single on the other way
spk_0: but it can bounce around the ah plus minus else by my box easily from one quarter the next and that's the kind of thing we we just want to be careful of what is nice is worth trying to get to us leveling off of the dead yields on the portfolios roll off or sunday get better matched with roll role
spk_22: i think that's a good word to use roll off and roll on of bar of have a barn and so you saw that we printed net yield of the investment portfolio without a one point out one point one one one point one two percent were pretty close to the bottom of that high yield and that's what gives us comfort that were you know in this range of for the time being though as you as you could see from my prepared remarks you know we took the that that the upper end of that range up a bit just be cause of the ya the improvement in front and rates
spk_3: on or said okay thanks er sure
spk_6: your next question comes the line as glitch shore with before i die
spk_5: hello there i won
spk_23: so smith's hello guess it's it's good to see the margins back to the thirty percent range and it i listened
spk_3: to carefully idea that market synergetic sales better commentary about fees and i and fee waivers and continue to control it's that's the south is the question is is is the thirty percent is march here to stay for now the because it's it's downsides edit things moving in the right direction i think tagline it's eric i think you know here to stay there pretty definitive a term i think what you can see is a solid progression over time in our margin and while you know one quarter doesn't make us
spk_22: a year doesn't the isn't the you know was as easy as the intention that we have at the you could see progress that the can see progress over quarters you can see progress over years i think there was a time when you know we would have taken the equity markets that tell when then you know years ago yeah you would have seen expenses creep up a lot more than they did this quarter and so i think you're seeing a discipline that's that's pushing march in the right direction and can i think we're we're pleased with our performance we'd like to do it again and again but the that's that's the i think that focus on the intensity we have
spk_24: we we we bring but damn feel good result i think right direction and you know we as as wrong said and as on his remarks he ah this is taken yale quarter than years to get to this point but we need we need to keep at it to to consistently deliver
spk_3: this is kind of results
spk_24: the aclu but i would add to his his his you know
spk_3: margin is part of our medium term targets we've laid out those targets that a time when there was a very different and i picture so it's are taking longer than we would have liked but it's very much part of what we said we're going to deliver it's built into management compensation from i think said you should expect as much intensity around it
spk_22: tomorrow is you've seen her up to know
spk_3: appreciate that is one quick shower thought options to abu dhabi
spk_22: as one understands it states this eventually a thing outsourcing global had touched the in the legion it is a bought a man that i wonder i wonder if you to the extent of what yeah that's their whole that it's with yeah so i mean we've talked in the past about or or intensified efforts in the middle east me weep
spk_0: been there for a while but we for
spk_25: we've taken a number of steps to on to augment our presence there in we've got to licenses are got license known saudi arabia of think of first of a derby is doing two things one we become our the global custodian for their clients says or to they become our sub custodian or in regions where as in parts of our that region where we don't have local conflicts over replace on other top custodians in our room and our network
spk_5: how quickly can that happen and success it's finances i'm minutes it's starting now i mean we'll we'll start over to their contracts to move and things like that but it'll it'll happen pretty quickly know over or them months and a couple of quarters not yours excellent thank you for that for chance
spk_6: your next question concerns a line of alex my see with goldman sachs
spk_5: hi good morning everybody on friday and was hoping to get a couple of questions on on c or d i guess one can we get an update on the uninstall revenue backlog or ninety three million dollars what what's the typical time frame of those installations and when it comes to new bookings the night email
spk_7: and bucks and any color you guys could provide around klein types and service types that are embedded within eighteen or would be helpful
spk_26: and i guess just just in america question i'm sure if i missed that are did you guys mention the episodic benefit how much that contributed to the quarter
spk_6: enter into yard you specifically sir alex it's our economy our me as touch funny to those because we're still play for the crt performance both in terms of
spk_5: this quarter's your when the backlog i think the at the momentum and and and obviously how it contributes to the a broader state street whole arm just said to take through the new bulking ninety million dollars for the quarter was the five quarter hi some of that i think he can
spk_6: easily of ascribe to the invesco when with you know with front office middle office back office
spk_5: as the containers turn to expand our relationship and you'd have with in the nineteen the front office piece of that of that when i'm on the i'm for backlog the ninety three it's a mix of installations they come over here six months twelve month eighteen months in some cases twenty four months on i will remind us that the longer installations tend to come with professional ha
spk_6: professional services fees
spk_25: ah as you as you as you prepare and and and and do those implementations you know the classic in in a classic software sense of those get those get reimbursed and and paid as part of many of the contracts and till you get to the go live period which in some cases a short for smaller installations and other
spk_5: cases takes takes longer to have given the size and complexity of while we're on boarding i'm and then i think finally asked about the total revenues the on premise revenues you know we're
spk_27: here they are high of and her a high just like a year ago when family of that sixty three million you know some of that was the classic car yeah reappearing of installations
spk_5: and you know that that renew from three year old contract five year old contracts that kind of stuff i think some of them are most episodic ah ha items in they're probably in the you know twenty to twenty five million dollar range so it i i just encourage you guys to take an average of quarters over you know five quarters nine quarters back kind of thing and i'll give you a better sense for was typical ah in in that that the on premise line but that maybe that's enough to want to start with get them except on and then just a quick follow around capital to power to cats question earlier the a the fact that you guys are a little bit below your the low end of your target until on average and sounds like there's room to manage those deposits out over time how does that inform just a piece of by back from here are the three billion dollars you guys get authorized last night
spk_6: to think of that evenly spread out through you know the and of twenty two or a little bit more back and as you guys work through the voucher dynamics
spk_28: yeah that's a fair question is we're we've got up your balance a number of different factors i tell ya until when my bridge weren't comfortable operating in the fives and the yeah this is the third right way risk if you think of how did we gotta influx of deposits they're they're they're held at the safest place and
spk_0: the world or the sad in the central banks on and so we're not particularly exercise said you know bumper that to bumping ad or even down a bit from the from the lower end of that range of yeah that's that's fine as long as we have plans over time that we're
spk_29: the weekend
spk_30: that that we can execute and we do have those plants that's what we do for a living arm and as i mentioned you know we've got we've got actions and play some of those deposits came in a little heavier in may and june you know we've gotta set for example of ongoing klein discussions of up a mix of commitments and ongoing discussions for example around ten billion of those that are literally happening you know that have happened the last week this we you know and so they're they're a way for us to chip away at that i'm in terms of the buyback patterning our wallets always depended on yelp facts and circumstances and exactly you know what's going on at any point in time we we don't have an interest in back loading buybacks necessarily like we'd rather do them relatively smoothly again you will have all else the equal arm and you know we think we have plenty of capacity given our are higher levels of capital ratios and our our strengths and that constantly have on our the man been efforts to what deliver those an ideal relatively consistent way and the in a way i think that shareholders would appreciate awesome thanks very much
spk_31: your next question from the line of brain the down to ensure bank
spk_5: i get my folks second the come back to the balance you can earn money time on in terms of the and how your man to man on earth and or up unless they're time for the says it for sixty two four seventy quarterly guide your your your arm what's embedded in the sides of the bounty getting married if it's like up and second quarter of that's is if your expectations for that the moderate and in an hour longer term over the next six quarters in conjunction with the three billion by back he mentions out if we keep keeping capital for balance sheet sets it's immediately kids give some thoughts around whether your plan is within that buyback expectation to continue to grow the balance sheet on a on a year over year basis arm and have a contrast with their comments about some trying to reduce the excess deposits on the you
spk_7: right it's eric their couple of of factors in there
spk_30: that about get at at total balance sheet and then the risk weighted asset content found she has was a distinguished us to let me just start tackling your questions and water on the and i range of four hundred and sixty to four hundred said seventy million per quarter of the next couple quarter that that that fully takes into account somewhere deposit management efforts remember the incremental yeah ten dollars a positive and a half the time that these days and though you know that been know that's been factored in to let her to that range and the the underlying reason i range of put up a little that is the front and rates of the have ah have picked up which was gratifying i'm in terms of balance sheet growth you know we we need to contain the size of the palm see the the balance sheet in terms of size color leverage assets right that that's what we need to contain on and
spk_32: the surface there's always yield some amount of healthy growth hand he responded assets right because as we
spk_3: support appliance me affects business or in the sec landing business or by lending to them you know we have to expand those modestly now it on our balance sheet were a capital like business we got us in iowa we have heart of the ways on our balance sheets that are ah in the i yell hundred and twenty billion dollar range you know one another there's a range of what those can grow but they're not gonna ten percent a year there they may be gone five eight percent a year plus minus a couple points ah and so it's a it's kind of that level and and and when you grow heart of the ways you know that amount you're not really adding to those leverage bounty to leverage balance sheet which connects the gym or one leveraged had driven primarily deposits and that separable from the the r w a kind of growth typically can get it that that clear and then dismissed respect of it's the abu dhabi relationship and as soon as you said runs as you expected to start i'm
spk_30: losing pretty pretty quickly
spk_0: each we think about any impact to a cia a search for state street and and and and as it services she's a related to that or is it done
spk_33: he is it less material he up front i would say that of
spk_18: and clearly of would wreck fictitious will drive a you see a thicket of it will be a modest amount at the beginning it will also help us to continue to contain and manage are some custody cause
spk_5: and most importantly over the medium term are given the relationships there are it will help further are penetration in the region so that's probably the most important reason to be doing it or they're just a terrific partner
spk_7: the the i think it's it's it's a challenge that we also have arms
spk_5: and others have to him flipped out there can be times when you've got sucked custodians and and you're like i'm but you're competing with them in certain instances in this case we the we're now have a sort of sodium that we're not competing with
spk_6: right right against the make sense to get a good your next question consuming line and steven she that with for research i your morning
spk_26: morning show want to start off on eric maybe with the question on securities gross and are more specifically i guess related sorry for the lcr on are you had strong deposit growth as you know the lcr ratios running a little bit tight as a hundred forty percent versus one hundred percent minimum of so be it is devices
spk_5: sense philosophically how your magic chelsea artist strands and just given the poor curiosity i liquidity tree made up to be relayed deposit growth has an impact your ability to deploy at higher yields and or even just growth security guards are book incrementally for here
spk_7: your as steve it's eric of the lcr has some anomalies all how remind you of and the calculation between the
spk_5: the
spk_34: all in court lcr and the bank and and that the best i can describe it is what most pertinent to us
spk_6: as a institutions a bank holding company is actually the bank lcr the bank lcr that one hundred and thirty one percent so it's extremely flush and it's got plenty of room on what happens at the corp is that the
spk_5: the the additional deposits get hair cut just because of transfer ability which is ah which is fine and what happens in the calculation because of how the numerator is factored in for that and the denominator i'm happy to us
spk_7: for you in touch with our our i our team to share with you some the scenario is that as we become more flush at the bank which is a good thing
spk_5: yeah have this this is this odd result that the corporate hold call where the lcr goes down what's ironic is that if we were to begin to reduce deposits what happens mathematically is that the bank lcr starts to float down from this you're very
spk_6: elevated hundred and thirty one percent and the corporate lcr actually float up and i think it's best to fry have someone to work through the at the algebra with yes it's just how the how the rules are configured they're they're fine but were actually quite flush with lcr and are rob and and are operating quite a quite comfortably
spk_5: now they say that choleric saw and the follow up i hadn't just on expenses and you're done a great job or a stance are really into two or three to guide reinforces similar trend but there is some growing concern amongst and gushers is giving many the other large bags are tied a higher right expenses party that accelerating investments and i was hoping that you can like the ah to give us some contact somewhat know the full year expand might look like for this year and even toxic a through like the growth algorithm i look like heading into next year whether you might need to step up investments to keep us off his refusal to smelling
spk_6: or as eva me let me start harm you know expenses than of have focus for several years in a row now we've we've gotten in expenses down you know x notable when adjusted for currency
spk_5: odds down have two percent than one and a half percent last year and this year
spk_6: what we've said is that on a nominal basis we expect expenses on a full year basis to be to be flattish you know plus or minus you know half of basis point range arm and that's normally and on a on an adjusted for currency basis and notables it would be a down by about by about a point obviously with a range around that arm and obviously the biggest thing that we wrestle through this year in particular is that their revenue related costs that come through its we've mentioned of custody cause or are are often as you see a based market data costs are you see a or a you and base and so you know those are those are well we're working through and why we have a range of there and we're stuck with our were squirt with woodstock in are sticking with that route range given given what we want we know today i think that if i stepped back to the hallmark of our approach to costs is that he's got a systematically
spk_33: we have productivity programs in place that actually save now a little bit but save a good amount of cause right and and i think we show you'd typically you know when we do our us era january call the in the year that for are looking to take you know for for
spk_0: five percentage points of the expense paid off set of a product the programs
spk_35: week and that know on a basis feel eight billion yen for five points is that that's that's significant amounts of the hundreds of millions of dollars of revenue but we're a scale business that's what we should be doing and as the same time what we're doing is reinvesting a portion of that not all that but a portion of that in the
spk_36: the wine business and sometimes we invest by expanding coverage and sales forces sometimes to reinvest by expanding and you know product feature functionality sometimes we invest or as we on board clients right we have though we have some marginal costs that we have that had and were usually happy to do that
spk_22: because it comes with revenues on the other side of it and so are are programatic approaches to save sufficiently
spk_34: so that we can reinvest and will continue to do that now how those balance out you know we've given year censor how that balances out to to down expenses you know we're in
spk_22: and nineteen and twenty twenty it was down and this year we expect to be down as well again adjusted for notables and currency tremblay city or how that plays out will that i will keep working through it's the lawyer talk about next year but i think you can tell we're we're pretty focus on on this harm
spk_34: but obviously we do need to factor in you know revenue related costs and as you know equity markets
spk_19: continue to take up words that are we have a factor that and and that's a little more of a feature of this year and maybe even
spk_6: you know upcoming time periods and it has been and so that is something that we we we have to work through belly fat the broad approach
spk_5: let's great color they so much for take my classes
spk_6: are your next question comes from the line and to ride cassidy rbc the morning earth moon run or towards eric i
spk_5: eric kinda a think sit on the call in and tried to get the transcripts the extreme game
spk_7: okay so i apologize has asked this question i think using on the college new business wins this quarter contributed to positively i think it's sydney beings vs last quarter it was neat rules for so could you clarify if it was earnings per second
spk_5: what was the changing dynamics between the two quarters enable this could have to be a positive numbers vs last quarter is is neutral your artist sorry see as as i think you've got some you got the good good
spk_37: memory and some rain let me just as specific as part of my prepared remarks on servicing fees
spk_22: friday i was clear that part of the increase on a year on year basis and servicing fees came from
spk_34: positive net new business so more wins install than the usual modest amount of the of the of attrition that we get and that is in contrast if you you remember correctly last quarter i said you know
spk_3: new business net new business was neutral and i said we were not as please as we'd like to be we like to be positive and it's important for to be positive and part of what you're seeing is i think that over the last couple of quarters we've accelerated har har wins and win rate is he a local that and a is he a but it's bouncy right arm you've seen off of of put in place and install business quickly in some cases so member custody can get installed quickly one it's one and so we've had some focus on some of those kinds of went in those have come through and the other eat the intention here is how he continued tests to sell and expand share wallet with clients you know not just with the top six years we've talked about but the next
spk_38: you know the next hundred and the next two hundred and five people were sinuses some the effects of the are some of the results of that more intense coverage process on which we presented as one of the conferences back in june
spk_3: is starting to take root in a more i'll say more consistent way that doesn't mean it'll happen every quarter but we're as in quite quite pleased with this quarter and we see how that it's been building as been in a building near the momentum and building and this with our very good and then the fundamental question is on the offers product and you're having obviously since excess now when a younger new customers i guess with in that area what percentage of your customers you just reference or the top sixty for example what percentage of your customers are own you think would be interested in the out from products and seconds when you talk to your customers events taking on house or one are similar challenges you family to convince him that it's really their best interest to do with it rotted trumpeter i take that a minute and in theory for both would say i of hundred percent of them are are eligible a starting point really matters here the the clients that have been most if you know we've now got experience under our belts on steve through the end of the second quarter of whole lot more current conversations underway are typically there's some kind of trigger points like a aging technology are in effect over excessively costly operation stack or that said that triggers this the obstacles to it are several fold right armpit these are big change programs and typically the institutions that are going forward with it it's not about you know as deputy head of operations has decided to come hire us it's almost always at least
spk_22: driven from the cia oh and the ceo meaning the chief investment officer in the chief operating officer and often times it's on the ceos agenda so when there's that kind of focus on it
spk_5: that's when these things tend to happen now just given
spk_6: what's going on and some of the trends in the asset management industry i'm in industries buoyant now with some the underlying trends in terms of aging technology
spk_5: real challenges around data management and know how to you
spk_7: how effectively use the data you have these on
spk_39: these issues are on the agenda of most ceos so
spk_0: it's very few instances where there's not a conversation going on how it plays out will be different which is why we built the model the way it is meaning it's interoperability
spk_40: you know with
spk_41: we had different winds were in fact we're into operating with other front office systems to the extent we need to such as aladdin
spk_25: and so oh we we've tried to build this recognizing that is a very large to the clients long histories
spk_34: lots of kind of software in their stocks and we want to make this work across a broad variety of clients
spk_3: very good just a quick follow up on on the sure wallet did you just referenced earlier eric abuse has found yet with the our for customers that you're having better success and expanding the sure wallet once you get them on board is nothing really than a traditional customers just you the targets exactly the result that were around were saying because white were finding is not only do we expand up the up and down the value chain you know we had the front office the middle office in many cases and the back office but as you do that it's much more natural to begin to do you know say if you're going to add mill office and back office to begin to consolidate the custody for example ah in the relationship or to connect with see some the trading activity that we have because i'm the trading activity can plug for example directly entered into charles river so that's a that's the underlying up santa fe as the expand it's share of wallet south supplemented by these the come even secure relationship sees for come true partners ships as opposed to yell as as a service arrangements great thank you your next question comes from the line attempt nacho with seaport research hey good morning you noted that while you want to lean into the us last american business and this quarter was one of the best slow quarters and five years so canoe i guess one describe in more detail what you're doing on the sales and distribution side to drive the improve growth and i get secondly when you talk about adding products and capabilities know what areas would you look to add is that an organic effort to set it to be acquisition just some
spk_4: help on that thanks
spk_3: yeah i mean of with with what we've done is over the course of know a couple years taken a arm
spk_42: a very good sales in relation to manage from for some made her
spk_43: we have the benefit in most of our instances because of the core passive products were if we're in a client we tend to be if not the largest manager
spk_3: one of the largest which by definition gives you a seat at their table is they think about asset allocation those kinds of thing so it's a very systematically the out and upgrading our our our capability to have those conversations and provide those products and to us and to you don't have an increase share of of of their wallet he has jay has been it was providing some real tailwind here we've got a long history and it because a strong reputation in it
spk_44: and we've been able to
spk_0: both have those conversations and shape a lot of asset allocation there
spk_45: terms of products
spk_46: i mean it's
spk_34: if you think about it it's word we tend to dominate one end of heartfelt so issue look out across the rest of the barbell
spk_30: i'm almost anything would be eligible or focuses on now
spk_3: multi a products and building some of those ourselves off or creating them bespoke from for from very large clients through or and through product capabilities that we already have but the way we're thinking about a conceptually is that we have a distinctive strength or in terms of our institutional fails and client management capabilities and words are thinking about how to do that we think there's organic opportunities in terms of inorganic i mean that those they're hard to engineer right so his arms you know if if something comes from one make sense for for our clients and for shareholders will certainly look out of there's been plenty of energy out of organic that we've been able to do or that you know seeing in the results our great the top of thanks next sentence and the line of my nails that last part of securities i am and like twenty eight kenya around forty thousand employees now yeah thirty nine thousand employees sounds just wondering
spk_47: you're i a more revenues without adding headcounts to what role has technology played into that and what are your expectations sign for it and the big picture question is yeah what's the state of your your cat facts on on terms of
spk_3: yeah how much are you on the clouds father clouds had a cloud in the see it's fact remains are almost a decade later after state street first implemented sad a cloud it didn't go great last decade seems like it's going better now so kind of us an update on that again time that back to had cats yeah mike it from here it's in terms of your your your point about the leverage were getting out of the earth of the employee base had make a couple point zero that that the composition of that also has changed to and we we are continuing to leverage and utilize lower cost location so you'd find that the mix of changed over that period but you're raising actually the more important point which is which is technology and listen service productivity and as such as the service and the such as this from service productivity is an elusive
spk_34: for a long time now and i think we and i suspect others are getting around around it a lot of it is automation a lot of it is taking and automation and services
spk_3: it's not the quite same thing same thing is you envision an automobile assembly line with lots of moving mechanical arms it tends to be you're taking on many many task the constitute a job and automating no such that was remaining in the job is higher value added in those things where you need judgment we're getting paid erm better instituting that we also my curves and we've talked about this and other contexts we're spending a lot of time on measuring productivity again manufacturers the good ones that had this down for a long time service companies as much newer we've got a significant percentage for a company now or that's covered by productivity much
spk_48: rick's and sometimes odd it's not an old hawthorne effect right you just now that there's a measure and you're saying hey there's a difference between this group and that group and they're pretty similar situation to enough to in the same thing what can we learn from that and that is starting to drive some of their productivity
spk_3: on the technology sorts ice i stand by the team that we have odds an outstanding team it's making a lot of progress is you know in technology it's it's some that is about pure investment in new stuff and new capabilities and that's part of the investments or that were making a lot of it is around in a continuing to up
spk_46: our resilience
spk_34: this is an ongoing
spk_3: issue for the industry optically and cyber his arms his books as the cost to deal with that goes up in up and up and you know it's just that the we have we need to be at the lead and we want to be at the lead there but i think we're making very good progress it's showing up in the numbers again it's the result not just of things that we do
spk_49: the last quarter but are things that we've done now for
spk_50: many quarters and approaching years and they're starting to pay off and you see more pay off in the future
spk_0: and just i'll tell that very interesting the analogy gave with the auto assembly line so when you automate a services business how much of that can you automate leaving that's the value added parts at the end send me again unless the headcount question it a
spk_51: maybe don't want to answer that one or maybe don't know yet says he's going had those who follow up space
spk_52: yeah i mean the if you're asking the question or and the first part of that next question you've asked which is how far can we go and and we don't know that yeah we did so there's a lot more we can do that we thought i mean think about the striking of a nap
spk_22: have a net assets you minutes as a lot that goes into that and then there's a lot of reconciliation tracking that comes into that
spk_31: we are again as we talked about another forums are we putting a lot of a i am to that's right to to make sat nav calculation not be this flurry at the end of the day that begins to for and hopefully is done by five fifteen for an impact is starting to soon as trading story
spk_6: such that what you're doing at the end is really that final checking where you do need human intervention
spk_7: sona in with my course your questions people i a questions or yeah just as not i guess try to make the next next next or three technology and had gotten easier for snacks and action by know your had cancer flat your revenues you look like they're going higher you talk about the out of backlogs installation intense coverage process
spk_6: as to expect had cats to start going up again they have given those initiatives and the back i think what shoot should expect to see from us is or a breaking of the relationship that occurred in the past which is that
spk_5: had cows and compensation related costs one up kind of at the same level as rabbit to do with is really is about is just getting more scale and scale effect on out of our system
spk_6: and you know in the past some of our challenge has been that in a we tend to deal with the most sophisticated clients clients demanding say that they pass a lot of money so their demands are justified or but we've gotten much better about getting scale even out of those relationships and those operations and you should expect of the country
spk_7: you to do that
spk_6: sad it said yes your next question comes from the line as robert wild with autonomous research
spk_19: money as
spk_53: hi rob
spk_3: as just another question on crt as the shove highlighting some of the drivers of this quarter's results i'm wondering if you to comment on the trajectory of the software enabled and professional services teaches you think that the ten percent growth that we saw this quarter is sustainable brava terrorists as said certainly a sustainable i think that are will we'd actually like to do and you seen in different quarter that we go back last you are earnings release as as that that combination professional services and software unable to revenues actually colon nicely in a double digits not the help in some cases here a fifteen percent and ah because what's happening is at two things one is he thought take up in the market for a new installations i think we've described in the past year the number of sas client for example is off the also have us over time conversion from on premise to sas up because clients are realizing the value of us cloud offering a more standardized offering it still has to connect with their the rest of their a state where they can then get upgrades and he knows the new feature functionality that we roll out on a regular basis of
spk_22: that's us know that component of the of the of the that that fashioned services thought for naples
spk_5: his hair was set of revenues and charles river i think are going to be in the made dead the of the air in that in that double digit teens are typically it'll just bounce around while there with professional services up but that's a real love of that's that's the the the as the future the franchises
spk_7: his his the know those areas
spk_6: rob what i would add to that is
spk_5: much of the investment that we've won the key investments we put into the he was in fact
spk_6: or enhancing does not overhauling the cloud offerings
spk_7: we've farm
spk_6: right right it's odd that to the microsoft as or platform
spk_54: it's now being installed and clients are it gives a whole a combination of more standardization desert noted more flexibility or for clients that have unique needs a particularly if you get outside the united states there's very particular to die
spk_3: ayers on where the data is located ah and azores giving have that ability to basically be flexible on that in terms of data location
spk_24: which is should propose it's basically a room a more robust south's offering them charles river have when we bought it
spk_3: gotta maybe related way i did when i asked about a possibility can see id do you say you're starting to see signs or stay on that isn't this and then what do you think about that a longer term profitability or margin profound sadness near going forward
spk_34: profits or a cat yeah we are getting to that point i think we fought said charles river as for years ago as we sadly the announced the deal and in the first year to we needed to
spk_0: we invest now in the platform that was part of our young deal modeling was part of
spk_55: while we thought flood left revenue will ya top line revenue from he awoke was
spk_56: single digits and to the low double digits on average we've sad and so we didn't need to reinvest last year
spk_55: twenty nineteen twenty twenty and this year but i think we're are starting to get to the point where it's gods now at the scale and the functionality it should have where it can now where we can really deliver ah earnings growth over time and take advantage of see the that the momentum power and the take up that we've seen in this business
spk_57: robin there's been too
spk_3: i categorize the investments and charles river in too broad categories one is what you would have expected us to do or for that matter probably any other buyer which was okay we're going to enhance the for your for charles river and it's historic establish core business the second category of investment has been related to the whole alpha platform and making charles river an integral part of that enabling the kind of connectivity are that eric was talking about earlier connectivity to other parts of states free conductivity if you think about charles river is the front to the middle in the back and that's going on there's been a lot of investment there are and also lot of development has come out about him it's not like nothing has popped out some of this been quite a bit that's been completed and implemented and the we think work out candidates and that the the peak of that and that that should start to flatten them and decline gotta thank you guys and you next question concerning line as as a teenager jp morgan
spk_55: sigh a couple of questions are full of but he'll run an earth
spk_3: for sleep around you mention that either you ever have as a wider field he talks about the products and the asset management side
spk_55: where does active stand in equities stand in your mind given the that has been stuck for the last four quarters hasn't really no despite the strong markets is that still something you wanna be in a and i you exit what's your thinking there i know it's small sizes but given a comment about you but a wide windows it's it's it's small and much of our over her active equity also tends to be in the now his face
spk_58: right which is you know backers
spk_3: not yet seen it's are enduring damn son but we do believe that active of will play a part in should play a part in portfolios we actually think that the that's a move to activity else will help propel them it it world provided different vehicle to construct portfolios with so review this institutional relationship management channel is once again given the nature of the people in the nature of relationships as one that can accommodate abroad sell products including our including act of excellence and the dutch really need an acquisition to them as a sort of make a material im impact on that us again work we're focused with with the organic agendas pretty full are in terms of products at this point and that's where our focus will be i just hate to speculate about arms in organic because that's all it would be would be speculation again to the extent to which something came along that made sense for our clients and for our shareholders with certainly take a close look at it unless completely separate questions i made them either them the big when let someone like in the skull
spk_55: seuss existing client already what is given that they're already a large clients what is it incremental services and that for the into level see revenue from that the note said the trillion sounds big cicada how should we think about
spk_0: given that they are an existing clients five heroes that did you add medal office and front office i'm going to give us some perspective of some meaningful that says that stuff
spk_3: so kind of awareness
spk_0: it it's it is a large client

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