TMX Group Limited (X) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to the TMX Group to acquire VettaFi Conference Call. [Operator Instructions] This call is being recorded on Thursday, December 14, 2023. I would now like to turn the conference over to Mr. Amin Mousavian, VP of Investor Relations and Treasury.

Thank you, Laura, and good morning, everyone. Thanks for joining us today. As you know, last night, we announced an agreement to acquire VettaFi, and copies of our press release and investor presentation are available on tmx.com under Investor Relations. This morning, we have with us John McKenzie, our Chief Executive Officer; and David Arnold, our Chief Financial Officer. Following the opening remarks, we'll have a question-and-answer session. Before we begin, I would like to remind you that certain statements made during this call may relate to future events and expectations and constitute forward-looking information within the meaning of Canadian securities law. Actual results may differ materially from these expectations. Information factors that could cause actual results to differ from forward-looking information is contained in our press release and in the investor presentation. For today's call, I encourage you to refer to our investor presentation slides via the webcast link or under shareholder events on the Investor Relations section of tmx.com. Lastly, throughout today's call, the figures referenced will be in U.S. dollars and the Canadian dollar equivalent can be found in our investor presentation. And with that, I will turn the call over to John.

Well, thank you, Amin, and good morning, everyone. Thank you so much for joining our call this morning on short notice with us. As you can imagine, it's an exciting and historic day for TMX today. As you will have read by now and have seen from some of the notes that last night, we announced the deal to acquire approximately 78% or the remaining common units of VettaFi, a U.S.-based indexing, digital distribution and analytics and thought leadership company. And this follows on the strategic investments that we made earlier this year totaling approximately 22% of the common units. Now the acquisition of VettaFi fits squarely within TMX's long-term strategic financial and transformational objectives in important ways that David and I will articulate over the next few slides. But at the outset, I want to focus on why this is such an important landmark agreement for TMX and for VettaFi and a demonstrative step forward for our organizations. Firstly, this is a great deal for TMX and VettaFi clients in Canada, the U.S. and around the world. VettaFi brings a leading platform in a large and growing market to GSIA, TMX's fast and growing operating segment. And most importantly, we're adding a talented team with proven deep expertise and an innovative spirit to our organization. We've gone to know VettaFi very well since our initial investment in January, and we're very encouraged by the results of the collaborative work the TMX Datalinx and VettaFi teams have done to date. Jay Rajarathinam, TMX's Chief Operating Officer and I have had the pleasure of serving on the VettaFi Board of Directors this year, and a great vantage point to learn about the company, the high-quality work they do and the high-quality people. TMX is also an innovation story with a proven track record and a proud 170-plus year history at the forefront of industry progress. Smart, dedicated people working together with a purpose to make markets better and empower bold ideas. And we are continuing our efforts to build TMX even stronger, more capable, more innovative and more resilient to continue to deliver innovative solutions and a clear path for the success of our clients and stakeholders across the markets we serve around the world, long into the future. Now VettaFi has a very different origin story from TMX's. In fact, VettaFi came together in May of last year in a merger of complementary business teams who shared a common vision for client success, the value of relationships and the importance of data. And despite our age gap, the shared vision and priorities fit seamlessly within TMX's vision and purpose. And like TMX, this is a growing business, and we expect this deal to be accretive year 1. Going forward, we are focused on exploring new ways to unlock further potential in this powerful combination to accelerate growth into the future. Now this deal accelerates TMX's long-term growth strategy as well as our financial and transformational objectives. The addition of VettaFi brings a dynamic new component to GSIA by increasing the depth and value of data-driven insights we provide to clients, expanding our digital capabilities and enriching our industry-leading support for ETF issuers. Benchmarks and indices are a core information requirement for our increasingly global client base. And this acquisition brings key benchmark and index functions in-house including an index calculation engine, select underlying data sets and product development and operational capabilities. And the ETF industry is near and dear to our hearts at TMX. Toronto Stock Exchange invented the first exchange-traded index-linked product, the prototype to the ETF in 1990. And we have remained at the forefront of progress, while the ETF industry evolved over the last 33 years, working in close partnerships with providers and launching the first fixed income ETF, and in 2021, the world's first bitcoin ETF. Today, we have almost 1,000 ETFs listed on Toronto Stock Exchange, including 114 new ETFs joining the market this year alone. Canada's premier ETF markets include ETFs from 40 providers representing more than $380 billion in assets under management and growing rapidly. This acquisition bolsters our ability to serve the evolving needs of this important ecosystem even better into the future. Now VettaFi has key capabilities in indexing, digital distribution and analytics, all of which complement and bolster TMX's breadth and depth of information services. They provide full-service solutions from index ideation to post-launch distribution support and analytics, making VettaFi the one-stop shop partner for asset managers. VettaFi's clients include ETF issuers, mutual fund managers, structured product providers and ecosystem service providers globally. And of the 30 largest ETF issuers, 29 are VettaFi clients today. VettaFi has a strong financial profile, underpinned by strong recurring revenue base and high operating leverage, which is aligned with and advances TMX's long-term transitional objectives to grow recurring revenue, revenue from outside Canada and to increase the percentage of revenue from GSIA. Revenue has grown by an approximate 16% compound annual growth rate between 2020 and 2023, and 80% of that revenue is recurring. And by 2024 estimates, the adjusted EBITDA margin is about 60%. Now with this acquisition, TMX is deepening our investment in a large and growing market segment. Secular trends, including the growth of passive investing in ETFs, the internalization of portfolio management, the integration of ESG factors into the investment process are creating benchmark and index opportunities. The value of indexing of the indexing market is approximately USD 5 billion today, and with an expected growth rate of 13% to 18% through 2027. And ETF as a percent of total fund assets are expected to increase from 17% today to 24% in 2027, with thematic ETF asset growth driven by the adoption of AI, robotics and ESG. And the market for distribution is growing as well as intensifying competition drives more demand for more efficient tools with measurable impact, USD 29 billion of total spend on distribution by asset managers and a 7-plus percent market growth in this space. And analytics on top represent a market-sized opportunity of approximately USD 260 million. AUM with registered investment advisers are expected to grow at a CAGR of 14% through 2026. And growing RIA footprint increases demand for VettaFi's content, which in turn leads to more behavior data and enables unique predictive analytic products. Now the integration of VettaFi into our GSIA segment will enable TMX to continue our global ETF leadership. Benchmarks and indices are a core information requirement for our clients who operate and invest globally. We are now bringing in-house full-scale index capabilities, including the ability to deliver a comprehensive suite of investable indices for Canadian international markets to our clients, the opportunity to white label indices for structured products, broadening access to large indexing and digital distribution markets with favorable secular growth dynamics, and enhancing portfolio of proprietary behavioral insights and analytic solutions to drive index distribution, and global equity coverage for index data used in risk management and performance measurement. Now as mentioned in yesterday's press release and detailed on this slide, the acquisition of VettaFi marks a major step forward in the evolution of TMX. This deal is a growth accelerator and meets all of the primary criteria in pursuit of TMX's long-term strategic, financial and transformational objectives. On a pro forma basis, in addition to accelerating our growth rate, the addition of VettaFi will increase the share of overall -- TMX's overall revenue derived from recurring sources to approximately 56%; increase the share of overall revenue from outside of Canada to approximately 46%; increase the size of our Global Solutions, Insights and Analytics segment from just over 1/3 of TMX's total revenue to 41%. Now in deep dive there, GSIA is TMX's fastest growing segment. In our last quarterly results, we reported double-digit growth year-over-year. It is also our fastest evolving area as well. The information business has expanded over time, adapting to meet the needs of clients across the modern marketplace, and as the slide shows, pro forma financials for GSIA, it demonstrates the strength in the combined businesses of Trayport, TMX Datalinx and VettaFi. And with that, let me turn the presentation over to David.

Thank you very much, John, and good morning, everyone. Before I take a closer look at the transaction details, I want to echo John's sentiment and say that this is really an exciting day for TMX. Our businesses complement each other well and our vision, values and culture are well aligned, allowing us to accelerate our growth and serve our clients better. Now as John said a few minutes ago, we're acquiring the remaining 78% of VettaFi for USD 848 million, which brings our total paid for 100% of the common units to slightly over $1 billion at exactly USD 1.03 billion when we include the strategic investments we made earlier this year. Now as part of this acquisition, we're expecting a tax benefit with a net present value of approximately $170 million, primarily related to the amortization of acquired goodwill and intangibles. Now the implied total valuation, net of expected tax benefit is 15.4x 2024 estimated adjusted EBITDA. We expect that the transaction will be accretive to adjusted EPS in our first year before any synergies. The transaction will be funded through a series of term loans ranging 12 to 24 months, and we will assume approximately $100 million of VettaFi's debt, which we plan to retire using the funds made available under the new term loan. VettaFi has grown double digits over the last 3 years, and we expect to include them as one of our high-growth businesses alongside TSX Trust, Derivatives Trading and Clearing and Trayport. We're expecting VettaFi to be included in our 2024 financials with the closing in early January. Regulatory review has already been obtained, and this is now only subject to the usual closing conditions being met. Now as I mentioned earlier, the transaction will be funded through a series of term loans ranging from 12 to 24 months, and we have obtained up to USD 1 billion of free committed financing at this time and expect to fund the full transaction through a series of term loans with 3 tenors, namely USD 600 million due in 12 months, up to USD 200 million due in 18 months and up to USD 200 million due in 24 months post close. We plan to convert the 12-month term loan of approximately USD 600 million to longer-term debt, most likely by issuing debentures in the Canadian debt capital market within the first half of 2024, subject to market conditions and customary quiet periods related to reporting cycles. Morningstar DBRS issued a ratings action report last night following our press release, which confirmed our AA low credit rating and updated the trend from stable to negative. According to the press release, this trend would likely change to stable when sufficient progress deleveraging to the top end of the credit rating category range is made and the short-term loans have been successfully converted to long-term debt. Now as many of you recall, we have demonstrated the ability to quickly delever following transactions. We first did this after closing the Maple transaction over a decade ago. And more recently, in 2017, when we acquired Trayport. Our leverage at the time was a debt-to-adjusted EBITDA ratio of 3.7x, which was quickly reduced to 2.4x after the first year and has steadily decreased in subsequent years. Our pro forma debt to adjusted EBITDA ratio at closing after repayment of VettaFi's debt is expected to be 3.5x. We have a plan to quickly delever just as we have done in the past, and we are confident in our ability to be within our targeted leverage range of 1.5x to 2.5x two years post close, while at the same time, executing on our normal course capital allocation activities. Specifically, we expect to pay out between 40% to 50% of adjusted earnings per share. Now as I explained at each quarterly call, we hold a significant amount of cash on hand in excess of that, which we hold for regulatory purposes. If one were to factor all or some of our excess cash into our leverage ratio as our banking lending covenants do, our net leverage ratio would be even lower. On the heels of the VettaFi acquisition and with the significant progress we have made in executing our growth plans across all of our businesses, we think it makes good sense to bring our stakeholders together for an Investor Day here in Toronto. It's been a little over 5 years since our last full-scale investor event, and it's time for a comprehensive session on our evolving enterprise strategy. We are planning to host our 2024 TMX Investor Day mid next year in our market center. We hope many of you will be able to come to the session in person, but for those that cannot, we will ensure the day is live streamed. Please stay tuned for further details, which we will post to investors.tmx.com under our Investor Relations, News & Events section early in the new year. With that, I'd like to turn the call back to John for closing remarks.

Thank you very much, David. So closing today, I want to summarize some of the considerable benefits of this powerful new combination. As we've talked out through the year, 2023 has been a landmark year for GSIA, our Information Services business, marked by high performance and definitive steps forward in our strategy to boost our capabilities, expand our data sets and delivering modern solutions to our clients. The acquisition of VettaFi will add a dynamic new component to GSIA with an exciting set of capabilities and a visionary innovative team committed to client success. Ultimately, for TMX, information is the key to our long-term global growth strategy. It's a vital strategic enabler, propelling us into the next phase of our evolution. And we're confident that this powerful new combination will help build TMX into an even more formidable global force to the benefit of our clients and employees around the world and our shareholders. Now I'd like to take a moment to send some thanks out. My thanks first go to Leland, to Tom and the rest of the VettaFi management team, it has been a fantastic year working together, and this announcement sets the stage for an exciting future. It's not often in a transaction where you actually get to test drive how you work together for a year before you actually consummate a deal. On behalf of all of TMX's senior leadership team and our employees, I want to extend our best wishes for the holiday season to all of our dear friends at VettaFi, and we look forward to welcoming you, your talented team, to our talented team in the new year. And before I turn the call back to Amin, I also want to take a moment here to do a shout out and extend our thanks and gratitude to Andrew Feller and the team of Aretex Capital for partnering with us on this deal and throughout the year. I'd like to acknowledge their vision and great work in helping to build the VettaFi business over the past few years. With that, we will happy to you to take your questions. Amin?

Thank you, John. Laura, would you please outline the process for the Q&A session?

[Operator Instructions] We have our first question coming from the line of Ben Budish from Barclays.

I was wondering if you could talk a little bit more about VettaFi's revenue mix. You indicated that it's about 80% recurring, 20% nonrecurring. How much of that has been directly linked AUM? How much of that comes from sort of subscription and services type revenues? And maybe can you talk a little bit about what's in that 20% that you would consider nonrecurring?

Yes, happy to. And I'm going to give you some general metrics because we're not showing that level of detail yet, but we will do more actually post close. But generally, a little over half or half the revenue, it would be index-linked revenues on the various indices. As I mentioned, there is approximately $30-ish billion of indices that -- or products and assets under management that tracks VettaFi's indices. So that is the lion's share of the revenue and the related analytics, digital distribution, other products and programs like that would be kind of the other kind of 1/3 of the revenue base. Now in the 80%, that's generally the pieces that track asset under management, things that are analytics and distribution that are under subscription, the other components are actually things like the exchange conference. So VettaFi operates the most impressive and well attended ETF conference in the industry. We'll actually be looking forward to hosting that jointly together in February next year down in Florida. So it's things like that, which are also great facilitators for new business building of really integrating and meeting ETF manufacturers of sharing ideas, sharing capabilities. So as much as it is a conference, it's also a really a business development and sales-generation opportunity for the business. So that gives you kind of a construct of some of the key pieces of the business. And as we go forward and we get post closing, we'll work with the team to find a way to give you a bit more of that breakdown going forward.

Really helpful. And maybe just one follow-up on the same kind of topic. Just in terms of like the mid-teens growth you've seen over the last several years, how much of that is market growth from the indexes themselves, new products, kind of expansion of distribution? What are the kind of key drivers you're seeing -- you've seen over the past few years?

Yes. So it's absolutely the combination. So there's a lot of growth that's actually coming from the new product pieces that's coming into that. And there's been growth in the last year around the index piece but also new indices coming on. So you've got some legacy products in there that are really strong and have well and good market potential, like the AMLP pieces. But you've got new products as well that have been added in, in terms of like AI and robotics indices and some new pieces that came through small acquisitions throughout the year. So it really is a combination. And when we look going forward, we see the potential across all those pieces. But given the size, you'd expect that the subscription base, the digital distribution, the analytics is actually even a higher growth rate business because it's starting from a smaller base.

We have our next question coming from the line of Etienne Ricard from BMO Capital Markets.

Congrats on the transaction. Could you please share more details as to what led TMX to have increased confidence since you first acquired a 20% ownership roughly a year ago to now acquire the entire company?

That is such a good question. So thanks. It's almost like I gave you that question to ask me. I appreciate that, Etienne. I mean -- we mentioned this a little bit before, but even a year ago, when we talked about the transaction and the partnership with VettaFi, it was very much both an investment and partnership. And so the investment, the 21% and then 22% has the opportunity been there at the time for us to take an even larger position, we likely would have. That would be our normal course for a business of this size. But what it allowed us to do by stepping in as a minority partner and actually building a business relationship around our business arrangement in terms of the partnership between TMX, Datalinx and VettaFi is we actually basically at the last 9 to 12 months, to do that kind of diligence you would do around revenue opportunities together that you normally don't get to do in a transaction. So our teams have been working together throughout the past year. We've identified new index opportunities, new distribution opportunities, new joint sales opportunities. So it gave us tremendous confidence not only in what we could do together to accelerate each other's businesses, but also gets to know what is the actual management team like in both companies and this one I can't overemphasize. The culture, the values in VettaFi are so symbiotic with the rest of TMX that we really see this is going to be a partnership that works really, really well. And normally in a transaction, you really don't get to do that, really get to get that understanding it was like to work with the team. So both Jay and I and the rest of the senior management team at TMX, we can't wait to work with this team, and we know that it's going to be synergistic across all parts of the TMX franchise.

Okay. Great. And from a distribution standpoint, how do you expect to integrate teams across VettaFi and Datalinx? And what do you see as the potential for better outreach to ETF issuers?

Yes. I'm only going to give you a light touch on that today because we want to be respectful of the teams. We know we don't close until early January. We wanted the teams to have a chance to sit down together and actually do that type of planning in terms of what the integration model looks like. But we do expect to operate this in an integrated way with TMX, Datalinx and look for those shared opportunities around product, around marketing, around sales and distribution. And where we can use the capabilities of TMX as a larger organization to actually make the VettaFi business more streamlined and operate faster, even things like finance or accounting capabilities or HR systems, things like that, we're going to look to do that early on and to make the experience seamless for all the employees of the 2 organizations. But we'll share more in terms of kind of leadership and design in post closing when we talk again in the New Year.

We have our next question coming from the line of Geoff Kwan from RBC Capital Markets.

My first question was just what sort of penetration does VettaFi have within the existing issuer base? Just want to get a sense as to how to size up the opportunity within the TMX's own issuer base and clientele?

Very early stage. So while I mentioned in the notes that VettaFi has relationships with about 29 of the largest global ETF manufacturers, in terms of ETFs in the Canadian market that are linked to VettaFi indices, that's still very early stage. So the opportunity for growth is substantial.

Just my second question was the tax benefit that you referenced in the press release, how long -- because it's a present value computation, like how long until you kind of realize the full benefit? And then also just in any transaction you do, is there also not typically a tax benefit from that amortization of acquired goodwill intangibles? Or is there something specific about this deal as to why you flagged and quantified this benefit?

Appreciate the question, Geoff. So that was a 2-parter, so I'll do it piece by piece. The first one was about the duration. It's long term, right? So you think 10 to 15 years. The second reason is why we've isolated like many other transactions have done is because it's such a material component, not just the acquisition that we're making, but the acquisitions that VettaFi itself has made, right? So there is a large tax benefit just in terms of the tax deductibility of the delta between net asset value and purchase prices.

Yes. My only additive point is, keep in mind, Geoff, because it is U.S.-based, that does make it different than being Canadian based in terms of the deductibility of the goodwill, and any business that's largely IP and doesn't have a lot of fixed assets, you do create a lot of goodwill, and that drives that taxable benefit.

We have our next question coming from the line of Rasib Bhanji from TD Securities.

First thing would be now that you would own 100% of the business versus 22% before, does that impact your ability to drive growth, synergies or margins in any way?

I'll go first, John. So yes, I mean the -- as a minority shareholder, one's ability to effectively manage VettaFi is limited because we have a commercial arrangement with them and a minority stake. But upon closing with us being 100% common equity owner, obviously, the ability for us to partner in even more strength and accelerate our growth prospects is made a lot easier. John, do you want to add anything?

I will. I mean we've already had feedback from some of our ETF partners on the back of the announcement that when you have clients that are excited about a transaction, that shows you some of the positive leverage in terms of what the synergistic impact in it. So we do believe that jointly we can accelerate both the growth with VettaFi, but the growth of other parts of TMX as well in terms of not just ETF creation, ETF listing, trading around those. And because we actually operate that full suite of market opportunities, then we can also create options on ETFs and new index-linked securities and futures on the Montreal Exchange. So it really is something that's going to have holistic opportunities all through that. The piece I'll add to you because you asked about both revenue margins, all of those things, it was yes, yes and yes. But this is not a margin expansion play for VettaFi. This is a very good margin business. And because we are looking to drive continued growth in there, it's an area where we will continue to invest behind it as well, very much as we have done with Trayport over the last 5, 6 years we've been in there. So it is very analogous in terms of the experience we've had with Trayport over the last 5 years.

Okay. Appreciate the color. I had a quick follow-up on the revenue mix, 2-part question actually. David, I think you mentioned high growth. This would be classified as a high-growth business. So I just wanted to confirm that is indeed high single digits to double digits is what the target would be over there? And then second part on VettaFi's historical revenue CAGR of 16%. Would you be able to break out how much of that was organic and inclusive of acquisitions as well?

Rasib, so yes, the first question is you're correct. As we define in both the investor and our MD&A, it would be in our high-growth category alongside of trust derivatives trading and clearing in Trayport, which is all high single to double digits. And we anticipate this being a strong contributor into that 4-business grouping. In terms of the historicals, we obviously don't have that kind of disclosure to give at this time. But needless to say, as John said earlier on, digital distribution and analytics is the fastest-growing segment within the business. So I look forward future disclosures once we close and report in Q1 and so on and so forth. That's about as much as I can give you now. John, is there anything you would like to add?

The only piece I'll add is why it's difficult to separate in organic and inorganic because there is a lot of this business that's come together over the last few years. So when you have a piece come in and then it is part of the growth story afterwards, that becomes part of the organic growth rate. And so the organic piece alone, and we've done this work is the -- it is the majority of that growth. So very much in line with the guidance we've given for how we talk about high-growth businesses. But I like how you picked it, that was kind of high single, low double and I'll lead you to the low double.

We have our next question coming from the line of Nik Priebe from CIBC Capital Markets.

Okay. Does the cost structure of VettaFi, does that also resemble your other business units in the sense that we should expect the vast majority of OpEx will be fixed in nature? Or is there a variable component that we should be cognizant of? I'm just trying to understand the degree of operating leverage in that business a bit better.

No, that's a good question, Nick. I mean the short answer is yes. It's very, very similar to the cost structure you would find in other parts of our data franchise.

Okay. And then you've had the benefit of owning a minority interest in VettaFi prior to announcing the full acquisition of the entity. You've had Board seats and privileged access. Has that helped you obtain comfort that the company hasn't underinvested in its business to position for sale? Like what's your read on the adequacy of current staffing levels in the business?

Yes. We think it's really good. There are things that we can do together to even go faster. But that's been exactly -- that's the benefit of being there, is not only the understanding the adequacy of the team and there are resource gaps that need to be filled all the time in a growing business. That's normal, and it's the same as other parts of our franchise, but we've got to see and meet and understand and know some of the talent. So not only do we see the talent in terms of what they can deliver within VettaFi, but where there's also potential and possibility for people to take on even broader roles within the TMX. So as much as there is a capabilities acquisition here, it's a talent acquisition, too.

[Operator Instructions] We have our next question coming from the line of Phil Hardie from Scotiabank.

Congratulations on the transaction. I guess my first question relates to talent. And maybe you can just describe kind of the strategy to observe that entrepreneurial culture at VettaFi. And really what you have in place and kind of long-term incentives for the senior leaders and teams on that platform?

Yes. I'm only going to be able to share a little here because we have to share it with them first before we share it with you, Phil. So I hope you get that. But this is actually -- one of the things that actually has helped with our experience of bringing in a high-growth organization like Trayport into this is we've actually tackled some of these pieces in terms of how do you do the right degree of integration that is not overengineered, that preserves also the independence of the key individuals that are driving product and sales and marketing and client interactions and building incentives around the growth of the unique business. So you should expect us to do things like that. There are folks in there that have got incentives that are based on the historical piece of the business, and we're building new ones in going forward. And at the same time, ensuring that senior folks are also getting incented on the overall performance of TMX so that we've got the equal drive to grow the total franchise because we want to drive both VettaFi and TMX at the same time.

Excellent. And I guess kind of the next question, changing gears. You hit quite a bit on -- obviously, this is under clearly kind of a data analytics play. I just want to dig in a little bit on the derivative side, which you hinted on. And maybe first point of clarification, the it -- idea is that VettaFi continues to own the intellectual property on the indices, and that would give you, I'll call it, exclusivity on direct or kind of developing derivatives products with that. Is that the way to think about that?

Yes. I mean, VettaFi always owned VIP. Now whether or not it's being done directly for a client, if that client could be us, but often is an ETF manufacturer, they might have the unique rights as well. Because what VettaFi can do so well in their capabilities is a very efficient way to make bespoke indices for any type of user, be it an ETF manufacturer, an asset manager or, like we were talking about, like a derivative to base a future on in the MX. So it would really depend on the arrangement and some things can be more open and some things are going to be more related to a specific clients.

And then digging in a little bit, I guess, again, on the recurring revenue nature of that. I think you talked a little bit about subscription business. If you can just give us some color in terms of, I'll call it, subscription terms and renewals? And then I think you talked about maybe half of that coming from the indices. And again, that kind of comes back to my question on intellectual property and maybe kind of bring a model with that. Can you just give a bit of color on those questions?

Yes, a little bit of color, but I want to be careful because some of this is proprietary as well, so I don't want to be giving away proprietary pieces. But like in any structured ETF product, and you can see this and you look in the perspective of an ETF, you can look to see what are the providers? What is the index benchmark that's being used? Those are done through a subscription agreement, often related to assets under management with some basis around that. So it has the ability to also grow with the growth of the fund product. And so you've got that subscription nature of the recurring component, but the potential for growing with the market at the same time. The other parts of the business are more pure data type subscriptions or service-type subscriptions, which would be annual or otherwise in nature. And we'll share more of those as that gets developed.

There are no further questions at this time. I'd now like to turn the call back over to Mr. Mousavian for final closing comments.

Thank you, everyone, for listening in today. If you have any further questions, contact information for Investor Relations as well as media as in our press release, and we would be happy to get back to you. I wish you all a joyful holiday season and a fantastic New Year. Until next time, goodbye.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines. Have a lovely day.