MSCI - Earnings call transcript Q1 2018

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Operator

Good day, ladies and gentlemen, and welcome to the MSCI First Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session where we will limit participants to one question and a follow-up.

As a reminder, this conference call is being recorded. I would like to turn the call over to Andrew Wiechmann, Head of Investor Relations, Strategy and Corporate Development.

begin. may You

Andrew Wiechmann

first Good for quarter Brian. tab. we welcome the at presentation the for to a release under of Thank the msci.com call and earnings day may conference first slide the results our XXXX release we've morning, Relations A call. MSCI copy press the prepared you, that announcing and quarter. this Earlier Investor issued viewed this be

me forward-looking Let you statements. call that contain may remind this

reliance are on presentation. of the undue statements the You're which which as cautioned place of not on only forward-looking the they speak to today's language slide second are governed on date made and by

a factors our XX-K For see and risks statements please SEC recent uncertainties, the and filings. Form of other risk discussion in additional and forward-looking our most

call, cash meaningful measures limited EBITDA, to non-GAAP evolution GAAP also results, During addition for baseline adjusted We adjusted free of non-GAAP and flow. to believe not results. the we facilitate EPS, measures, but today's period-to-period refer in comparisons and provide including a expenses, adjusted EBITDA to our

in You'll measures the measures presentation. as this to of as to meaningful reconciliation earnings materials of of we equivalent the information be GAAP an on deem uses management pages find these how well why and XX a earnings explanation XX the

the our the today Financial turn With to Chief over Winters, our Officer. Fernandez, now are and our Henry President; Chairman let Mr. On Kathleen call Henry? call Pettit, and CEO; Henry Baer that, Fernandez. me

Henry A. Fernandez

and day Thanks, us. everyone, to thank you Andy. joining for Good

the been revenue rate increase growth, We this to posted am XX% X% driven XXXX, last exceptional thrilled in we from improving MSCI XX% XX,XXX years We expanded clients. the on excluding the our acceleration well-embraced. factor our world pool, run several and presentation about quarter record EPS. include help integrating We to significant back to issuers, years the in focus This over and see thousand released has X slide and develop rate the our fairly foreign a significant liquidity new global importantly, over indices, Box of factor and, that in financial continued our our quarter suite multi-country, in core this that incorporated our options. and multi-currency work building. by we adjusted more invest X% and, have of trading of recently, the and enhancing, we added dramatically very several One around futures we growth, ago, that our themes. and effectively exchange partners Factor our with can the morning, you EBITDA franchise. have quarter. in double-digit shown a growth on a on our with index been adjusted momentum models, delivered class growth a and the exchange, been delivered most classification run multi-asset insights we period, deepened and first and indices additional results to during As expanding factor subscription standard set the see our in QX I acceleration community of strategies coverage have to Over specific through clients a highlights We a for broader ESG deepened five-year market, specific ESG richer enhanced five the

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the allow investors to the of invest our quarter, broad new also launched this in range later a China China in we A-share of Over the effectively indices to global indices inclusion more in market advance month.

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do strategy to turn In about beginning and us committed growth innovation for importantly, and will of a disciplined million study consistent focused of of that illustrates our across approach total call in $XXX X.X additional and capital and and the investment mix. focused continued ability very million of overview on now base sustain extremely focus remain year. our to over provide area average the soft a by recent our Baer well shares to for an a a to investment also, investment market to case on key we color an volatile process. I the $XXX Lastly, about repurchased very the we capital capital to since terms optimization and at price the value our of of environment,

C. D. Baer Pettit

the at I've ongoing to Thank been MSCI, XX In transformation you, proud Henry. in participate my the of company. years

our flexible decisions we applications, the strategy, to content, and As highlighted differentiated believe make better actionable empowering services and X, on investment clients slide have right focused through technology on and we solutions.

dissimilar we and decade evaluate we and how with attractive systems, inorganic right adoption, and organic growth ago. leading too growth talent processes this with have a highlights a not of strategy we from investment investment. our on we increasingly X, we one we within through trajectory done result consideration growth continue core over ESG want product new investment and evolution attractive Through confident demands, clients continued fuel and see of the a showcase aligned an potential and as we these combination many high franchise our And important to markets. in-depth We of what Consequently, opportunity developing with of societal to and expansion have an path On a and that identify, well area can execute on areas industry that index embarked opportunities. through slide to a long-term return are ESG our interactions identified of franchise. grown our as investor long

as investors much alpha. help index of we to a can natural Over developed by owners for our greatly for as allocations, with a are screening investors transforming and including selected as ESG tool ratings deepening government-related provides equities, ESG of Similarly, risk a which our equity exclude set a for well be entities, are research objectives. exposures, ESG by for fixed objectives. to objectives, achieve asset approach a issuers, methodology, being offering that certain to we this have industry, generate plus increasingly identify foundation and years, the ESG we purposes, suite XX,XXX companies ESG benchmarking broadening expanded creating and offering identify income, offerings have on the clients and used in indexes, information a our with ETFs achieve broader ratings construct used exposures certain systematic coverage portfolios increasingly have framework of and ESG giving consistent from creation ESG product help and companies. Today, mandates By their and systematic within increasingly active institutional passive ESG coverage and change to drive into

of of ETFs March ETFs in $XX equity XX, a which of indexes, over XX% there As ESG is the year for billion market our and XX% equity ESG up to represents from were total ago. about linked AUM

have and Target to integrated by fixed further ESG Bloomberg. provide opportunities are traction be Factor with with increased Additionally, as indexes, ratings, as is we Most of of we in discussing income we them Indexes. enabled income ratings This investing ESG seeing adoption ESG investors well increased use targeted we in been seen our ESG among which have portfolios. clients create fixed allows with partnership for our factor which highly recently, to gaining

order many client segments. This been see to significant capabilities more other broader productivity data and technology new investment further opportunities have to of area new and continued continue language in the With our to production turn content In segment of adoption expansion for incorporate amount The and to extraction We Kathleen? the a enabled has ahead automate in and that, this the data. capital offering use results, Kathleen of points environment. ESG detail. guidance is of the unstructured that discuss leverage activity natural to to of we by intelligence apply product within drive financial our I'll the operating technologies. cases non-standardized to a improved processing ESG range and utilizes attractive over a our leverage, call begun results, to artificial year in to

Kathleen A. Winters

everyone our take to the start financial hello through call. slide on and performance. Baer, on you and X Thanks, I'll

delivered the analytics strong slight QX driven XXXX, financial the share rate. subscription recurring nearly our from double-digit indexes strong a delivered last for market billion and market both equity revenue index up appreciation driven very continued by growth XX% quarter in and was on momentum We strong of ABF strong by Following QX, year, strength XX% acceleration and to linked $XXX revenues. and ESG capture. we and results which was in from in subscription the for QX growth, X% ETFs driven XXXX Average AUM by

strong the EPS be and cash with over slide these leverage, during our half to stock-based attributable and On out a Of higher rate. the quarterly can and from attractive improvements fund investments operating by our in ongoing of very complemented making you XXX% to quarter about We investments. many operations focused compensation adjusted strong driving efficiencies X, organic of executed opportunities and by favorability. driving adjusted We XX% and growth build year-over-year highest drivers positive and the growth The reform growth the sharply to growth cash cash tax was represented collections. in the improvement from benefited focused ever and windfall continue The achieved the on same respectively productivity on tax see $X.XX operating free tax EPS and while see are attributable well in to from increase benefits maintaining organic growth to EPS time capabilities. international operating XX% We to at half profits XXX% growth. flow MSCI. diluted tax, growth flow

FX higher slightly and In QX, million, the depreciating U.S. dollar Hungarian a EBITDA the of experienced we net unfavorable headwind. by $X.X appreciation pound. driven was Additionally, the euro, forint, of impact by mainly the the

turn product let's Index commodity $X options and non-ETF are very investing the that lower growth. areas run divestiture the Analytics products. segment, and growth the and of our Analytics, we divestiture which on growth of recurring product segment impact XX. us acceleration management of revenue of X traction in strong year, growth on client do to was rate. slide Overall passive base successfully exchange-traded strong last Analytics booked FEA, non-core the April revenue, converting wealth revenue in to a with the broker expect and new continued was executed was banks Within we're not driven like a a growth and in on results core meaningful to for the seeing strong as revenue FEA of futures and modules by In growth ETF-related segments benefit and We revenue, was which sales served Index companies. also we million in subscription focus Now equity given energy expense now drive further represented a growth. our our result approximately into dealers. the

XX Slide of was growth driven mainly continues All by where a segment. segment strong our the ESG as growth in Baer accelerate, highlighted Other to provides by metrics earlier. summary operating key Finally, our

was XX% was XX% growth from by benefit performance rate QX run versus asset-based operating of run driven rate, Our prior the in the largely year. AUM growth fee continues which experienced growth year. our in sales momentum to up strong over and last Index

a impacted wealth the dealers XX%, selling ESG, broker continue specialized and banks respectively. success to in segments with factor, run gain like of XX%, modules, sales Index traction and had off funds, net our consolidation. X% custom rate rate locations recurring is year-over-year We level reductions XXXX and XX% QX we've as focus index by were by very as Within factor with Analytics, new modestly growth and low QX client hedge and cancels rate growth. into Cancels management, at up growth and offering, were The primarily analytics continued investing. XX.X%. events driven factors remained strong office retention driven growing continued with such there and was in year-over-year, success on up run

saw up overall timing up strength segments, XX%; cancels asset broker product and multiple notably new X%. cancels owners in management Despite elevated net Analytics also asset our across areas. this and most to up of the during down dealers XX%; We client and due smaller momentum, some and banks was the quarter of sales in

cancels. we high reminder, a had in QX, As very with coinciding low very sales

and performance This in we're becoming in canceled and strong that this new more seeing what net we the is deals net as QX. so and is very more typically lumpy. I complex sizable earnings pipeline, prior the on sales increasingly in deals segment this saw is activity mentioned Following call,

solid pipeline, XX%. at retention Our remains however, remains and strong

We confident and roadmap be their demands our help continue improved efficiently their clients more meet objectives. across achieve growth their to opportunities to partner effectively about segment. investment to We needs. significant to We're this well-positioned and see executing continue evolve with to to product growing deliver them to continue and meet our

for All segment driven run the by rate ESG. growth was Our largely Other

on specialized to provide XX, in On up Index Institutional sales its to detail franchise. our active highest as fueled segments ESG, asset a established record. on at As owners managers Baer these Index to of is such accelerate we prior we and grow subscription asset XX% our modules Slides momentum and client segment. XX and ESG continued and highlighted XX versus demonstrate continue the factor, growth additional upsells by despite The rate continue slide headwinds on custom earlier, how QX year, healthy continued some grow continues management. modules. were newer

increasingly these and adoption clients coverage way objective. products content an within been help and services segments achieve and objectives. is as client efficient to We've their wealth there on are using dealers, such how investment their achieve increasingly our clients we're accelerating investing management and these and to index Additionally, as banks focus of our indexes segments these to funds Index as more broker them cover resources a can understand time dedicating hedge help

represents it these or client of index-based markets, from creates they investing as further an As part passive index-based demand and increasingly in develop types large global strategies products. trade-in create index-based

be the our revenue to ongoing continue excited subscription by of business. index We prospects

across show to Turning seeing XX, exceptional index-linked the we're revenue growth on details of and all The asset-based slide our components products. asset-based fees. highlights we across all investment fee chart additional upper-left

based than MSCI number all other of any quarter, first based to licensed indexes, new the more we benchmarked which X,XXX, factor indexes and to provider. markets the were as flows on ETFs, ETFs ETFs, our XX% our both to markets, XX the on of families, outside indexes into ESG bringing There total index strong were categories, During and new Appendix of XX to into page most equity net represents and equity index equity flagship developed XX. which and ETFs in of on highlighted emerging inflows with particularly U.S. our across the linked ETFs

intent of AUM we fees. rate with to products, our increase share inflows and As equity structuring to with long-term continue to in asset-based and execute providers strategy market growth seek index capture providers with agreements licensing our drive lower ETF fee additional our our run the

based basis higher to our during level. and as growth share futures capture of to products a point flows we quarter. their continued continued Exchange fee a due our and, traded on a volume fee decline exceptional the and indexes, result, benefited lower average trading new volatility expect from expect options, disproportionate the in We market

liquidity trading and options expand futures our we index community the As the with to indexes, and based expect indexes, futures index for the grow. our number our global educate and exchanges on our we products for of trading on community options engage

year. Future Emerging based globally MSCI During XX on index options The and indexes, ICE futures XX% interest. was largest contracts Index quarter, we saw the based Market future the traded U.S. versus on prior the fourth up million on traded MSCI globally open

you Analytics, the trajectory over the an margin provides with rate on years. several to the and slide Turning update XX run last

run Over XXXX. the to see improvement quarters, the growth current improve X%. last throughout gradual back few in of level to sales the beginning of rate we've strong seen the revenue growth We're on

them analytics understand to and focus performance of as risk on to see EBITDA acceleration clients and within asset multi-asset achieving core long-term to them efficiently and our margin equity help achieve executing time. class and continue further the particularly into targeted want expansion of offerings We XX% drive of analytics, adjusted revenue our areas in growth managers the range effectively owners strength with in focused help We're will analytics these more asset their to our objectives. and XX% that over increasingly factor and strategy drivers and

XX, the and On provide our and update XX we balance indicators. slide next capital, to Turning liquidity XX, provide key an sheet section, our XXXX guidance. XX, slide our on

Our to the position for is gross be leverage a and market options, windows. X.X the at of has long-term X and times and to our monitor leverage the any as to we financing the or range our drop the cash may can although potential potential below conditions authorized after execute leverage target. opportunistically company continue a And, range timing there financing a increase certainty directors and financing may assurance market subject transaction. the end financing. at no other above market The X.X conditions. cash needs board explore of range is to We'll excess stated And The of to low of our similarly, is our times. range depending times, at on leverage our target at times near-term

Now, to XX. let's slide turn

returns As our we the efficient the capital striving structure past, shareholders. said in for maximize most to we're constantly for

Our consistent. strategy is

excess a view We'll in of our to low a as part deployed of our Year-to-date, strategy, have to the already there in X.X $XXX more strategy. more markets of X, of repurchases is million of and repurchases shares and all central total and through balances. stock. we'll is We've shares when for fewer cash when May capital XXXX, shares continue when lower deployed softness volatility We have this repurchase opportunistically. our demonstrating million shares repurchase continue to return repurchase we cash than we and cash excess volatility commitment and to we

average weighted quarter, total diluted this our million a as to from of Lastly, past quarter XX.X are result to increased awards share from up employee return. during the as count of dilution additional slightly unit that tied million stock QX XX.X XXXX shareholder

In year. a very as lines slide summary, our we With excited on in the your areas, see with take and exercise financial growth our opportunities XXXX about strategy keeping our assumes in XXXX all questions. our progress. disciplined which we'll including We open to balance forward on on we're against start we to execute for and million fronts guidance beyond, much to very continued the Lastly, XX, look of remain and additional that, the you at solid QX, maintaining updated financing. expense you to no for $XXX all management interest

Operator

Thank you. Patnaik line come first Barclays. Manav question And from our of with will the

now open. is line Your

Manav Patnaik

to opposed that U.S. study more whether break the I Good was geographically? viewed trend as Europe-centric? My in flavor you there there a first the out historically in of way to guess, Hi. trying that ESG we've the to becoming as Just what, get question prevalent you. showcased guys is Thank case more is a afternoon.

Henry A. Fernandez

Yeah.

those Europe. managers are owners prevalent advanced of area. Nordic started in because, merely with significantly has among line asset and and that in now product particularly to on some the compete market need Canadian more owners American focused expanded obviously, owners European asset it U.S. to the large they this a But more of countries this extent and the mandates for Europe, in asset asset the the U.S. some So was

these we the excellent U.S., that processes. spot integrate sweet with into think their big for a been have So, in helping they because and senior educating them has, relationship have asset a ESG managers and, ratings been us lot therefore, through investment them of very how therefore,

the So, a for managers. asset therefore, meaningful there U.S. growth has in the with us been very

pension the of We are also educating the deal many and time of are the the other owners, in the lagging U.S. funds, Europeans. Nordics a spending great the who Canadians asset and mostly

then we that's optimism leg coming integration So, base the lastly, And sales Asia. a then, the small Asia a process out trend predominance in of us But, into on small that Asia but part, of time. that ESG quarter, coming another a but from benefit. is lot had are that significantly that our of catch to of revenue the in points second, outside beginning revenues the will also with for optimism of which now, to larger lot particular a increase U.S., of from Europe the investment is base from this and over

Manav Patnaik

on Got the there my areas? is it. puzzle And are more similar there That's follow-up way to guess of pieces of equation. the any that areas? there Are slower-growing the there? helpful. faster-growing Like Is different question characterize side a analytics I as

C. D. Baer Pettit

Yeah. Sure.

Kathleen A. Winters

Go ahead, Baer.

ahead You I'll... can go and

C. D. Baer Pettit

then Kathleen. some and to Yeah. make it over I'll Okay. broad turn observation

maybe simplest factor business it: the the core our and risk we at clearly, core areas. less buckets, three some distinguish to look way our between equity-related of So, analytics,

this numbers in mentioned, quarters. that the analytics, or on so clients looking So, clearly action, rate which core analytics you're And had area at. it FEA prompted at the slower low-teens and had call low-teens, is growing particular example, risk that growth we've equity core we've our in of posted. last in the quarter has high-single-digits for less with the with had take areas that The some the core we've generally to depending area us Kathleen

trying risk have analytics strengthening continue a factors we we core we in solve to on have issues. just And equity to view our core small product story market the is and clients. our a with will focus broadly the with So, continual, in steady that improvement

broadly I'd it. how that's characterize So,

Kathleen A. Winters

Yeah.

add you then a of just client just of about of where Manav, me color, growth, we're more the all, But little well, give both terms bit you terms the let it step some if will. seeing to of and I'll content, in let's numbers, talk in back. first stronger So, segments and

the with in FX. seeing trajectory, talked asset in about, segment, X% That's terms being But mentioned, XX%; where this as X% You're increasing rate of that X% X%; particular, quarter. up year-over-year. run or bank I rate and as right, we've to up then up manager segments growth is up driven, our segment client factor analytics run

So, that's where we're strength. seeing the positive

Manav Patnaik

it. guys. a lot, Got Thanks

Operator

Thank next William the our come of Blair. Shutler will line And you. Chris question with from

is line Your now open.

Chris Charles Shutler

Hey, morning. guys. Good

Kathleen A. Winters

morning. Good

Chris Charles Shutler

times? Can do and you to at point debt likely debt rationale increase share potential talk is about this the reasonable a to the on X.X is considering a just the M&A? the or repurchase more think – EBITDA be is potential and usage dividends or (XX:XX) for level increasing you for for in What of there

Henry A. Fernandez

more can down we make. and and organically remarks, indicated that in it base what our focused are investments on the is in can equity what that we slimmed are achieve, debt and my I best the highest is return internally, balance between the obsessively Kathleen as capital what mentioned So, investment plans we

lot on we single are as are of and is we'll to high a advantage So, that demand in possible the our time deleveraging, by increase, Every yield is of generator. capital, Xs We we generate an is opportune terms beginning numerator this, of look There the and end the of the tighten like therefore, and looking very bonds capital the are the to slimming always capital? in leverage, the we maximum of capital, all this possible large denominator, our look interest MSCI in everything up it terms to at context of in increase volatility much existed abilities in So, the trading. then down proceeds in particularly of gross taking that. do very of our simply, demand as take increasingly definitely we how of and, levels. hasn't out appealing obviously way that and And businesses, are of to the out been the very, unless to people right therefore, valuations at as return way at something tripping likely and, a expect comes There the in the over of that that, ways And year, how are exists do has to advantage price of at are appealing we and and these whether market. that use the return we stayed terms been of anything to our get of the levels the the And that in M&A high. return as or we softness strategically be of capital. the rates and has mix the year, terms single quarter, along is very every recently. strategically highest stay denominator we of very something

market view footing on a should I to forth. the on in at so fiscal and a company trying view say be at terms market. find policy. People last you've buybacks so time The to choppy, doing their find geopolitical going that of their over level. the for you on of And and policy be excess and to very a therefore, financing it the thing would take that will up deployed if opportunistic expect add in point, some So, it's in got we we end cash is, are and elections will volatile, monetary midterm a U.S. trying footing They're on the lot the risk be to to reasons. will and

target-rich opportunistic in materialize. buying a back to think environment will be it it shares, So, does we be if

Chris Charles Shutler

one integration analytics weren't into surprised just follow-up Henry. Thomson It like definite then a integrated And you there. positive. Thanks, right. of All the and the on Frankly, I'm risk Eikon. seems on already comment

talk on effort in sales have impact near just the and about could to medium-term. that it maybe So, any

Henry A. Fernandez

are terms in may Eikon of fixed model content: class attribution our up algorithms executing that of the if them strong we income we be helps of and the look it some you workflow these a things But, as risk some that model that, a analytical the content. content. work analytics product data, libraries look, the the right? on of slower. the So, of algorithm, MSCI performance as client think And like partnerships at of importantly, prepayment and these like equity and can risk philosophy risk the use increasingly the have data, things well divide content multi-asset line, Value-at-Risk or more piece, of that and last lot at application takes time, RiskManager And between – enable forcefully our very and of you models that then that think that and BarraOne the all data, model

like either use use use can that third-party architecture to anyhow, applications choice. FactSet They So, application. it our they in we we so like content in the exists their that in like has an content applications. They own in a have client own or that the others that in Eikon open world every put or proprietary application or with would other can which can our it

like where the of for to look at So, if in units unit we for every world to the in is XX matter units that really – matter and every unit five sell of what order no content way no at the to of the content, client. we choice sell

increasingly going you're this. to So do more of see us

Chris Charles Shutler

Thank right. you. All

Operator

the Morgan Stanley. Toni you. our of with question line come will next Kaplan Thank from And

open. Your line is now

Toni M. Kaplan

Good Hi. morning.

on times to indices. of income class slide calls multi-asset regard with benchmarking, the you've on fixed fixed income noticed few made analytics X the ESG a and over number past And side. and highlighted strides You've I

income on category? of next So hoping products I fixed just sort you us was your in in that and update benchmarking could what's capabilities

C. D. Baer Pettit

brief few a make I'll observations. Sure.

benchmarking is income fixed on in innovation. focus our So

So and them. have around of in strategies we're consulting we been at a clients investment with fixed looking range income

have questions income you as income So, fixed are critical turn, solve to opportunities broader analytics. noted, our a And part able analytics fixed portfolio our to or analytics of class believe income central construction that that in is clients opportunity. being we help fixed multi-asset

as that And focused One we're this more see tied broader our fixed is answer progress income class multi-asset short the and and we more fixed it's on with MSCI strategy. year. in So income of analytics you'll broadly strategies,

Toni M. Kaplan

data, Could the Okay. just it also ESG Great. wanted update like, asset as I give buying product landscape And That talk terms in And the you well about the there sets, the the us be performance would ratings? managers on really of else? ESG strong it quarter. are just given reports, is ask an research to you this you. competitive ESG? something could in is just Thank Is or helpful. about

C. D. Baer Pettit

Sure.

Yeah. sure. Okay,

into specific process or integrate content in research their even So, well manifests they're asset individual feeds they research compliant in buying opportunities. which are type are ES&G to of those either on ratings investment that certain to aware portfolios managers data both and criteria ensure companies their the on which risks them that written as various with itself or of other reports primarily as

mandates ES&G setting increasingly public indexes. have finally, who a those are And, driver owners we've actors, And The main So, particularly global with that attractive that's type pension face, using funds, asset amounts ES&G as and wealth, is the additional enormous very there. both driver we time cetera. active growth of such the indexed ETFs. in et large seen of spend those sovereign very

view there's So, that dramatic my while enormous there. category, modest, relatively in very, pace. earlier, still it And in a comments referenced we see size, at that very, very I of growing its upside is

Toni M. Kaplan

anyone in compete ESG? you And does with

C. D. Baer Pettit

Oh yes. I'm sorry. Yeah.

I ES&G. localized mostly are range of would – in competitors a that have say, still our we So,

there EMEA So, of both whether a in U.S. are number or in players the

ES&G I landscape are for market fairly pretty leader are to bigger say the a think Bloomberg, names as fair it's starting area. fragmented is that role as in clear. where now, a such clearly our Some well-known operate But to it's

Toni M. Kaplan

Thank you.

Operator

of you. And line with Fitzgerald. question Cantor Foresi from next Joseph will the our Thank come

open. is Your now line

Joseph Foresi

long-term quarter. quickly some improvement you Hi. this can again Analytics Can remind get there? the of think targets us said good I XX% and how financial to XX% margins saw there? you you

Kathleen A. Winters

over range at Yes. think take calls right, on question. Joe. of yet. as approaching little long-term the bit for Thanks the to margin That's as shown We've we've the I last each that you good And of looking about time XX% talked several really years a a we've here. making some and We're progress target XX%. of it in been will

again, XX in But bounces years, XX be and range. it another to down think bit a I'd to And, I probably think I solidly months another in X.X range. in get up X.X least at months should it that quarter-to-quarter. to being years X years will consistently that and say, X, we take, little

Joseph Foresi

was product then and ask relationships clarification. for And And I up, expanding. IQ? is with it it. follow downturn. I Capital point my Got volatility S&P sounds do just Thanks. Do you suite because I think a then like are wondering how you also have you your of cushioned from or guess FactSet market

Henry A. Fernandez

think, coming a in lied environment. upstream the the from our environment subscription the So, majority of look, revenues that in a or either downturn revenues lied I are in huge

environments case pretty from environments it's fees passive obviously, you of we're Then ETF know. from over our bullish or obviously or And as fees. insulated therefore, either time. minority in various institutional big coming of sticky are pretty or So, either asset-based or the transaction-based revenues

secular active significant know that they in downturn, equity it's time, be periods don't the trends market market rather all don't happen passive be going and will withdraw secular Now, if the that into obviously, that equitized, to other One is that want inflows but on volatility, I observed meaning trend. thing given approaches owners market asset lot to from of of also there a areas depreciation, approaches. we take is sometimes there years, the strong there that than market, when are very this over in but these have a there's going

significant there retail not the from a that there. investors I bet And are in to with are markets. market institutional extent that a where investors would also have there comfortable make. will market both that investment better we're we outflow corrections very of and think lot depreciation of But I So, or we downturn scenarios a be a huge

levers not profits it, We company. to have expense or of reduce the some to some, the tighten of lot protect ensure in that the our company all of but quite maybe base a we of

Kathleen A. Winters

Yeah.

we that the if lot will if scenario do to is there what of analyzed are Henry's and identified point, and we do downside sort discretionary playbook to – compensation-related of but Joe, act, of to I the a of variable, call prioritized we and And So, how have and upside in we our do. do about costs, and And these we a things to a downturn we timing it things, analysis we've expenses. list we to say, do that materializes. the of that got of, normal think terms set and prioritized conditions would costs levers have other what And downturn you we sort various scenario of if go to. environment, it's say planning both

of day, planning So, by do of daily we day scenario the the situation. and lot monitoring a

Henry A. Fernandez

So, we what this hedged more that all would of be to MSCI. add I to love is at philosophically

people call Americas, we it hedge call the in it in bet diversification. Asia, Some and to which I in Europe. want have

So, if not one region the that well. going that markets, is to and great, of region is the the world of market developed world U.S. want between hedged doing ex-U.S. do to market. other We emerging be

the there, not a go our weak, stock there. to goes a the on is stock is down, price price doing We If lot markets, we dollar If If upside in market emerging we but good. gets developed strong, price we the have win. and the goes market and up, buy win. Asia feel currencies, the stock U.S. so dollar we right. doing very lot back great hedged of If likewise. we If be shares. well, gets U.S. doing of we – want the is Sometimes Europe well,

if are investing fixed so of bigger, great, fixed becomes so a and So have values similarly, If we income, income and equity equity we're in on that's when lot offering. forth.

and make markets weakness going continue do more, matter is the do is we you're the well world, we to direction is action doesn't And that to good in philosophically the markets. So where sure and that and and bad how in the it that see MSCI where more is.

Joseph Foresi

you. Thank

Operator

next And our with you. Hamzah Macquarie. the come will question of Mazari Thank from line

Capital Mazari is Your morning. Good now line Thank Hamzah - Macquarie open. you. (USA), Inc.

incentive talked was could introduced The a coverage plan metrics senior us bit first sales force previously. the integrated you about that. little strategy I QX. you at talked on question a had that maybe I update manager Any about account is you update I it know selling productivity. on program. and Any you hoping know on

Henry A. Fernandez

on that yeah, huge that done still a have lot upside So, area, that. and we have quite a we in

and in we're of the in the integrated meaningfully of senior the happy than good we rate have top run base of rate in of lower to client. in client, rate company is report the having growth rate manager which company. and And of the first higher is is that dialog most effort of into that the retention the at C-level retention that to are the cancelation that – the is selling run The we rest the higher growth meaningfully than rate the than thing retention rate product salespeople our have retention integrate our largest clients that put obviously XXX-plus the addition client the that relationship all company – meaningfully the XXX,

relationships. incentivized proof in going that has approach those a keep and in that deepening So, very to us is strong

Secondly, we salespeople opportunities. identify to and working increasingly product are our training

big sort integrate for helping consultant ratings So, opportunity analytics of of the on York make and a that lot front. to the to that client brought ESG interested be and able saw in were and and team in one will was of New sale in example, a the the and indices account, that analytics ESG we that the do client large all

So, at don't One selling related that direction, we or and C-suite indices I costs, We up increasingly want equity level. class only just models help own we or of help and We're is are ratings user level. scale used generate the And operations. a go meaning to going or second, think set is the things. two ESG at multi-asset to to because equity this solutions is the want their really comprehensive way lower risk risks. to revenues, that widgets, then to sell solve sell clients it's them

(USA), Inc. set a Capital client. Hamzah ahead. big what part a a the Macquarie Mazari or That's is Great. go we're into product all very solutions to of our So, that combine to of – outcomes of sorry, a - lines trying of for achieve, set

Kathleen A. Winters

Yeah.

Just to to add some that. data

higher spend call them SAM couple a a As - approach be higher. to Hamzah Henry on rate, Thank so how are client you That's Mazari you internal points retention the could growth talk the (USA), very risk strong selling. X on effective market management? a about run is be accounts, be that seems that rates maybe follow-up piece. And SAM on Specifically, upside could you. not we turn Could it over. how risk you the retention And these you. (XX:XX) it just Capital rate said, accounts, about for think and much question. management and is Inc. a yet full (XX:XX) particular really Thank to The points rates. the unvended potentially these, helpful. I'll really there outsourced Macquarie in

Henry A. Fernandez

strong on the approach suppliers used particularly years. Yeah. view getting that still and all XXXXs a in things and to Look, they similar This is in spent all investment going that. of the is is in of sets, of sustainably built technology, to so, very data is in-house And in distributors that do the Japanese industry, able happened be reliance management money by models, investment they majority that and which which hit cleaning an the started those of sets do then Industrial a of had adding next for – building vast our the data not industry, that. to lot to the and the a America ecosystem

of can is to models, that on that way, that So, profit cost to beginning analytics, of kind, to equities, that sure do in et it's the all private their capitalize on of is big industry public therefore, analytics, them process areas and they go run bond, similarly make a public margin. client whether And their it's of through kind don't platform equities, they think like analytics allocation asset lower want sorts investment for any a to a management investment big, that, to (XX:XX) analytics maintain of we is analytics, to very they sorts data, construction of their part all if of data what for platform, scale all going cetera. operations clients And, in and bonds, to a and private analytics, want to models operations demand performance or all efficient lower buy portfolio the their that. of it equity, have investment own by up sorts any risk

to well, - we Thanks our do in terms where of and, and call building (USA), That's we're the we of way. much. that discussions infrastructure terms Mazari Hamzah that of runway MSCI. the achieve So, of Inc. where client Capital that's amount Macquarie identifying CEO kind a making big If is there's organizations the CIOs having demand, runway that in investments achieve analytics huge so of on. it what to that, the therefore, and gradually are Great. analytics in line to gradually with a we where in the product at be that we're able

Operator

our And Vincent question Hung with line Autonomous. next the come from of you. will Thank

line is now open. Your

Vincent Hung

Hi.

it and So, merely significant is open so you opportunity just at into for plugged Reuters, it to analytics Thomson have not coming now is where Eikon back you distribution the are of how incremental? or a architecture,

C. D. Baer Pettit

Sure.

primary the we've that is FactSet, other that had over largest time. had we've the of which is distributor one So, historically sort scale

and to it taking now philosophy content we I is the work easier are us. of So, open make with that open happening we sort for alluded that think what's platform and to third-parties significantly Henry will

range been entirely cetera databases, XXXX. that's that the our all feed, But different have that open the et types that over we've from to because integrate. broad bought very So, easy business, for philosophically say of we clients of since I had often I platform would Barra of we think not been in

making aspect operations strategy data has cetera. streamlining one a progress enhancing So, been et of our critical significantly on APIs, One including our and of MSCI and lot

we this but ourselves significantly the and distinguish with surface having a let's So, with by how the three to ways. much work look that forward we a we'll if in to of us even we say, more look And central forward XX to and five-year to not being this will if work to months, we become I excellence the category. think more clearly operate. just see in next But scratching XX we're platform to, to more hope flexible beyond a in accelerate. really period, our content technology range And third-parties by enabling also merely flexible of whole user-friendly this

scalable. that in say this would really it at I the strategy terms we're of making So, of beginning

Vincent Hung

MeToo any Have ESG. because Okay. equality a you demand of movement? seen incrementally whole the And or of follow-up gender increased focus ESG sort on on

C. D. Baer Pettit

growth Look, broader think that. what it can in emblematic don't of we link to clearly the it's any But is, context. specific sales I

across the been there has I whole these. there's topic as a clearly very focus litany globe. of are United on the huge range gun visible a States in the environment and there of such So, the mean, topics ongoing

retirees certain invest ETFs So, a putting is let's what not individuals instruments large categories active taking certain officially public equally pension are that to pressure say, through in of happening categories. funds, body of essence, choices through, not who in is either are company or exposure, like a them on to in invest

and is years going themselves people that to being we number that it of these away ultimately allocate reflect out to play pressures point have And a don't capital. think continue in the that's of times ahead. for So, how will societal that various all quite

Vincent Hung

Great. Thanks.

Operator

with question our line will the of James. from Thank next O'Shaughnessy come Patrick you. And Raymond

is line now open. Your

Patrick J. O'Shaughnessy

afternoon. Good Hey.

take X support can financing leverage business ratio earnings board What the today talked current authorized that your are to up. and options May release, at model the on the release press your the this leverage how thoughts So, your about company on the explore point? potentially

Henry A. Fernandez

that believe to a of the particularly leverage terms right the We as the gross equity. in is on times believed analysis to of extensive one. of sort few last we continue the did X of a in have We lot years that return X.X

If or if than these range, higher don't we that equity? and the I impact within all. maybe range the will range, on lower we the maybe if had think a on therefore, ratio or events. are that a than at So, things that changed financing return return – has you than And, to do valuation what that that, higher that's drop And want I we that issue access significantly the discrete will think the from is we that market. it

a do way You continuously a it within you obviously remain specified cannot range, very that very, right. in

Patrick J. O'Shaughnessy

Great. Thank very much. you

Operator

our gentlemen, concludes and for question-and-answer session Ladies you. Thank this today.

hand to closing pleasure Development, comments my Mr. of Relations, back Investor is Head remarks. the it So, and to over Andrew Wiechmann, some or Corporate conference for Strategy

Andrew Wiechmann

joining for We Thank appreciate us you continued your support. today.

additional we feel progress. questions As follow-up or always, forward look with free you, keeping reach And you any to on clarifications. out Thank again. to posted our

Operator

the conclude your Ladies wonderful This on and may have participation Everybody, a program. thank gentlemen, And conference. disconnect. you today's all day. for does we

Andrew Wiechmann	MSCI, Inc.
Henry A. Fernandez	MSCI, Inc.
C. D. Baer Pettit	MSCI, Inc.
Kathleen A. Winters	MSCI, Inc.
Manav Patnaik	Barclays Capital, Inc.
Chris Charles Shutler	William Blair & Co. LLC
Toni M. Kaplan	Morgan Stanley & Co. LLC
Joseph Foresi	Cantor Fitzgerald Securities
Hamzah Mazari	Macquarie Capital (NYSE:USA), Inc.
Vincent Hung	Autonomous Research US LP
Patrick J. O'Shaughnessy	Raymond James & Associates, Inc.

MSCI (MSCI) 3 May 182018 Q1 Earnings call transcript