MSCI - Earnings call transcript Q4 2019

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Operator

Good day, ladies and gentlemen, and welcome to the MSCI Fourth Quarter and Full Year 2019 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 one follow-up.

We will have further instructions for you at that time.

As a reminder, this conference call is being recorded.

to Investor call Relations like Schwartz, to now of Head and would turn over the Salli I Treasurer.

You may begin.

Salli Schwartz

Thank to the fourth quarter year day, release announcing and are quarter a website, for we Good call. full the results morning, conference year This press XXXX you, a presentation, and earnings press this issued under reference and our MSCI will operator. fourth we Earlier call Relations XXXX. release, and earnings tab. our full on fourth brief available the Investor update quarter which msci.com along welcome with on our our

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

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

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

call, in refer to During adjusted free also on to, not EBITDA including but EBITDA, rates, of measures, organic adjusted cash we addition limited basis and adjusted presented today's expenses, revenue GAAP, non-GAAP growth U.S. to EPS results operating flow. the

comparisons our core provide non-GAAP believe meaningful period-to-period measures performance. facilitate into We our insight and operating

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

any divestitures. will the impacts foreign which and impacts or excludes discuss of growth of on run-rate currency figures We changes the also organic acquisitions

be CEO; Financial out the and and today call morning would like Officer. are a Linda of may Henry Huber, in this on point and Baer our Pettit, President Chief mode. call COO; members media to On listen-only I also the our that Fernandez, our the Chairman

now let over turn to the Fernandez. Henry? that, call me With Henry

Henry Fernandez

joining you today. Hello Thank us thank you, everyone and for Salli.

I from remarks, reflections new you through would expect some like enter to my and as Before MSCI. prepared we should I go decade, we give what

know, you optimism. have categorically of of and you I am XX only me, Baer excited franchise this sure helm that than been. that many been I'm can on about I that And I more years, my optimistic today ever I've and the tell but at partners more Linda is almost As not share MSCI and here

franchise And us, pace. government world, to to on and in and solve the us of like Our for would to when from investment getting are talk helping the accelerated we opportunities, want help we from when and clients all learn problems what terms learn regulators bodies to do we them officials over to us, stronger about example change know from everyone MSCI industry. wants how industry

deeper because wider are the investment were ago, years the Our and than that XX industry. at more vastly strategic of choices MSCI play central global in role investment they we

is much internal existing rates more example. therefore, and for this resilient in is any return new index Our higher what diversified, new paybacks. returns. infrastructure normally clearly to built The top of on is upon is financial developed MSCI, significant ESG, only incremental do with an even that it's short base and case and medium more us yields things reason acceleration presenting is on investment with investments not and cost model for the an infrastructure opportunities rates but very and at of organic term and for of we on incremental that of higher This and payoff,

throughout this new positioning hopefully So to value we are this therefore take full accelerate shareholder advantage and ourselves of dynamic, decade. creation

adjusted XX% my the EBITDA, in performance and across year-over-year strong prepared XX% in now with our reflections, let fourth quarter, me go of EPS. $XXX high it's those strength in as In into equity franchise record delivered in quarter, ETFs markets the Well, increase fourth through XX% we growth to and see very In remarks. operating adjusted with the cash billion. dollar we billion third linked both and management healthy indices, indices. the MSCI linked under of ETFs to The inflows was by the MSCI revenues, $XXX quarter of driven from

to new start week, the indices. mark. equity of in to see we come $XXX the XX% lower investing great they of be to Since were MSCI to levels $X the should in so. record global end exceeded indices, of a New XXXX our Year, actually MSCI to franchise. the ETFs have achieve compared XXXX, saw close diversity ETF setting last to linked the demonstrating and linked equity although power, billion, AUM At throughout growth increase continued a Notably, trillion equity and ETFs our ETFs We the inflows to inflows

on told shared About a ago pillars at and and two, you update deeper Investor the therefore, opportunities three time, a in you with our business, year of opportunities, our fuel the turn, company our in core the we variety opportunities. to and Day, of executes And in-flight serve At give creation order will, clients you the one, progress. strategy. of this grow of growth capture new wave value. Today then, time and wire an shareholder I'm we excited to three, investment our we problems of

while promise capital. significant to produced our continued in areas changing interests. add to as growth as markets serving core to been and content we of the these on In growth have innovate and of delivering we stores response have client responsible in business, We your execute

like and in analytics multi-asset class You as our our well cap solutions can as performance equity risk our analytics. indices, our market risk equity see this evidence of progress continuous well-established

for billion, XXXX, our December reached a combined segments almost XX, index year-over-year. rate In run as we’ve fact, XX% of $X.X analytics of up

executed needs community accelerating opportunities growth the and our a to we meet core addition In more customers of on the number our have to business, of in-flight investment broadly.

me few you examples. a Let give

run our expanded the business, rate XX% compared strategic futures we over and derivative the to from partnerships grew First and options The options with and within exchanges prior year. in Europe. key our futures US

is risk respect essential climate an climate with acquisition segment to value business, provided ESG change intensely we're of the of the area change, Delta impact us of the October And a of Carbon clients. that is the of focused our case, franchise on capabilities course, Second franchise. climate our as for areas, on of in an portfolios ESG XXXX variety world focusing ESG our on of in

with very we our interest form, pleased progress that have and So efforts we've those level integration we of made the seen. the Delta Carbon already with are client

course, experience years fix index well launched our performance in capabilities, income, fixed Third, then recently in income leveraging of Factor risks and on as and in our income construction and leadership we’ve extensive MSCI and, ESG. in expertise XX as indices analytics ESG data our fix XX-plus state-of-the-art of the

in Finally, optimistic continue analytics, in growth that and we our gradually data and and segment real accelerate. grow expand to our estate, estate are real will of offering or this private

a growth. focus Finally, This strategic of a we through year in Day we into classes. in asset new our minority relationship a area have in decision ago. a our wave investment the significant invested Most private for opportunities of was significant provider leading an recently, tools drive Investor group, will investment entered future that purchase

looking solutions clients, to we're positioning expand private our Our increasingly both private that assets in supporting for is and assets. public critical

all Our of for classes tools other the investment use accelerate decision investors data analytics alliance support and with world. Burgiss expand private is intended and asset over in to

of More their edge this remain them at and tools our leading broadly, on modern the MSCI we providing committed challenges. opportunities enable believe with that new to clients puts to will investment capitalize significant We investing.

value As we decade, proud new we created our and the our have in enter tremendous turn, what of built, the for that and we're our clients, shareholders. employees have

him month of would has an mine his Baer on to I call this XXth being partner Before congratulate to and because Baer, MSCI the throughout partner the pass anniversary Mr. I time. a celebrated of my Pettit? like

Baer Pettit

years interesting very of and indeed XX Henry. ahead you, us. excitement doubtless more Thank

and I your with industry, the investments enabled move increasing enthusiasm and including more from Day. are shareholder growth to that transforming discussed flows; at many into ESG three share pillar and specifically, drive that to activity and value processes. clearly, change event, need incorporate strategy Henry forces about we globalization about that secular we you capital the MSCI. the the climate also At the investing, acceleration highlighted considerations of So the investment talked at index Investor to opportunities

MSCI continues that portfolios global modern this investors positioned help build to capitalize be will on transformation. well to

have our fourth segments to of in than Our total about sales more sales growth in we efforts reached quarter, year-over-year. led XX% of grew Gross record total run the quarter $XX of organic rate over million. each in fourth gross the and sales XX%

XX.X%. fourth fourth from but quarter, quarter retention in-line at down rate third The was the with year's last quarter's rate

for up given result a concentration decline, of As fourth we come in quarter. the contracts, seasonal of generally the a renewal

with and thinking solutions We're clients must such investing. analysis aim the have that embedded working become to products hard tools deliver processes, to in and their our about

Our we all quarter recurring subscription Asia percentage organic strength recorded notably run rate our and ninth across where double geographies, Pacific digit Europe. saw growth of in straight

run owners. subscription XX% each. recorded asset the grew level, comprise managers subscription growth XX% and grew strong client and asset rate and than rate, equity perspective, index owners, asset notably we collectively sales our class more in analytics multi-asset of thirds a which respectively. analytics, run to From two solutions, Within X%, and our segment At above recurring a

$XX for research Within our for million subscription real subscription of our our rate million rate. all run other milestones segments, run we and crossed $XXX ESG estate

Our dollars, approach. ability disciplined to achieve to on attractive capital our returns these validate investment and our results deliver allocation strong

few of more this. like build Our clients is a daily to I'd through focus portfolios. examples effectively efficiently recent help to you walk and

the XXXX, factor linked competitors, indexes in on inflows innovation key been cash one inflows the ETFs to equity First, was number in ETFs. and index to a within to our cash MSEI versus ESG MSEI based our has differentiator provider categories equity

and as and has client research ESG are across MSEI XXXX. the communicated, Second, space $XXX integration in various this have our use combined often index research nearly In run ESG million benefits content cases. we driven there integrating to significant rate investment

area helped growth. in where solutions were meaningfully in our received investments our our XXXX, our to categories Third, such innovative risk liquidity bolster in financial and modeling metrics new results. One continuous well is example contributed analytics has the of

customer client our global with services. Next, our important in an their us show real to to our satisfaction real indicate XXXX regards estate input our significant Further, interactions asset offerings are estate with owners decisions. investment major improvements and products and managers that surveys asset

to continue ability substantial week with delivering a last into the ESG we for global principles of heading investors momentum into investing. published we finally, prophecies Overall, make and we investment equip have our in integrate their sustainable to MSCI to sustainable clients. and confident the are And XXXX, investing towards our framework further shift

will guidance, to performance. you, over in Linda review This our which to addition financial going Over confidence Linda. underpins our

Linda Huber

with start XX% I'll Baer, everyone hello call. Thanks, from revenue prior reported the and to where in the we million up operating quarter, the on $XXX year.

of each at in Growth first, a Looking approximately contributor. meaningful operating asset our index, revenue business based-fees grew units, was in XX%.

In subscription addition, indexes. momentum market impact saw recurring modules driven subsequent revenue, by strength and of we developed in custom ESG in and continued

increased analytics nonrecurring and than growth recurring strong uptick other more as implementation from revenue. Second, as X% operating with an well continued revenue in and services subscription revenue

ESG of rather operating XX% revenue equity asset-based management basis ETFs grew was flows all for the and Finally, actually mix other the XX%, X.XX by grew than due broader average In to a strong increased indexes. It fee fee, revenues offers. Sequentially slightly ETF under This basis and rating and grew asset of was points. reverse ETF reversal to the to capturing driven context. year-over-year, reflecting MSCI our segments, XX%. revenue growth the screening average linked points across

revenue high assets our one by up revenue, was fee XX%, $X from year. products. higher options million contributions growth compared Non-ETFs finally, driven And to and areas, last approximately set of futures increased fund as

$XXX under December ETFs versus than of from As linked XXXX, versus the XX% XX% XX, prior quarter you were MSCI billion indexes prior year-end up and ending heard and the Henry, management assets more to up as equity end.

X.X market inflows those markets On exposures, outside with a U.S. geographic up into billion of indexes notably $XX associated across MSCI MSCI the basis, sequential developed

for accounted indices. inflows funds a Additionally, into equity of ETFs cash factors ESG our linked to third nearly in

market XX% basis, in growth from around coming $XXX of year-over-year inflows year-end appreciation. the was attributable On to assets under management billion cash at with balance

up of I'll fourth in lower expense. the to power earnings higher in remaining in earnings the shift growth share, on offset interest points adjusted growth proof strong expenses, was was by The focus operating than of share third from adjusted quarter, of excuse More EPS the the reduced operating franchise. revenue, tax year-over-year. was primarily higher per which and share EPS per driven by our adjusted Now the two-thirds $X.XX rate XX% me, partially count, of a net

capital proceeds $X.X $X $X.XX but the year debt we of of million billion ended our of fourth the and coupon shareholders, did Excuse approximately dividends of debt. with billion any debt. X% In coupon which and refinance to $XX a $X.X allocation, $XX due billion shares. and of to billion $XXX me, cash notes November, to of currently issued now Turning sheet we have balance $XXX in we of remaining. repurchase the million paid partially In in quarter not our its MSCI XXXX million at

Before materially and based turn differ actual and from equity of press current XXXX and for for a published particularly These assumptions like macroeconomics, guidance. trend the are I'd we year uncertainty subject Henry, guidance, share call elements assumptions our the the MSCI capital I related factors, to in back could to to results market. number XXXX of market release is our some to on morning.

For the adjusted year the expenditures the and range we capital currently of $XX $XXX expect XXXX, range in million $XXX in to million. expenses to million EBITDA full million of $XX

predict you revenue. know, we asset As fee base cannot

higher we invest revenues it levels will expenses coincide with in our capital intention as of is However, and levels back that higher growing our expenditures of higher operating businesses.

is two cash flow XXXX, expect we $XXX factors. million. in Free free flow range Finally, $XXX projected of to primarily the XXXX be to to cash due from decline to in million

is this at call. in absence our of in last available as our A msci.com. of second, year; list release to included the we our as First, to capital website increase stock-based of our full this guidance are benefits morning earnings published expenditures the earnings relations this compensation and related had section for presentation well tax in year. Both investor

to move over turn we to to Q&A, Henry. Before I'd the like call back

Henry Fernandez

been Investment Board that and to two this Paula increasing to Independent I’m of Volent Sandy serve U.S. year, new investment Sandy the appointed Board. you, February Paula to announce Chief Paula industry. Chief to XX have the Directors is College the have currently extensive Officer in Both best pleased experience one in we've XX directors. endowments our Investment Thank of the performance Linda. of U.S., in Man Directors the UK. added the effective as Bowdoin And XXth Officer the the currently our Rattray Sandy of is in and from Group

asset diverse provide their technological and perspectives, drawing including confident the from combined classes industry their experience emerging and and I’m innovation. trends, they valuable will global expertise across

with that, move Q&A. to over And we'll now

Operator

[Operator Toni Instructions] line Our first question comes from the of Kaplan with Morgan Stanley.

Toni Kaplan

there'll the decision the a on the be And that could changes have ESG? and big if ESG make with think model that you just all? new business standard And at about you for Thanks. of use continue ESG ratings, the about you providers then finally, talk in entering space, you to do name MSCI price lot was be Could competition I talk ratings of more available that ESG there. My the take is the have website? objective to the broaden free guess to

Baer Pettit

Toni, here. Hi, Baer

notion transparency in critical this investing. and sustainable broader that level. by shown to available chain, enormous ESG underlying relating companies, sustainable their go central activities. to is diversity Equally, activities, investing being to able investing the supply deep the of element is at making market have our the And look, both a we this of information commitment into and to to also So and clearly to information companies

it continue economic more behind that to transparency both the driver as to be very So shows on the model the headline our information, but putting act we're subscription confident ratings and our detailed to important market us. our for giving to by research this that the will website, commitment need

Toni Kaplan

think will And more be competitive? pricing you do

Baer Pettit

deal or mean, an you a changes of enormous dramatically years. We've great as have year that of it's the five let of I know, evidence don't alone even the that. within we stage, area is this growing investing At quickly. two, last seen last

and a lows so And that. judgment about make to forward-looking

continue robust very and to I and are think very results see you -- very strong be our can attractive.

we pricing of evidence any present, any sort have at of So strong pressure. don't

Toni Kaplan

quarter. to beyond And for by on my analytics this Thanks. just it. Got look update get follow-up, wanted an

clients – understand originally. you be that wanted so was of And the expected number any to of about future the cross-selling opportunities with And platform what just I had selling That'd great. that. above talk of sort adopting

Baer Pettit

Sure.

time having uptake. year the is. the and analytics think, during not for confident And And numbers. as analytics is material the a platform can course impact the beyond being contributor XXXX, we So the the the not about functionality will it client updated major a where on progresses, I We're on of keep you be to sales.

revenue from say for would material XXXX, but I a a beyond, not impact. with of path the have should accounting pure we're for point view it So confident

Operator

And our line from Barclays. Manav comes the of next with question Patnaik

Manav Patnaik

pipeline pretty you the so describe been in that deal just look sure I what Henry, the We and the thoughts could just on partnerships is if there's other so wondering that curious just like, I'm interesting. they've your Burgiss there, familiar of of looks plenty sounds on out Burgiss. these ones all context help what And weren't at was forth, like? with like? looking

Henry Fernandez

Yes.

me and browse partnerships. let with then forms Burgiss, of start to we Manav, So can other it

years, is one committed their So private serve and funds game on capital. about XX,XXX importantly, the private of the represented at of of They've in not X,XXX is technology provider a $X about leading, it's platform. strength data And the in this that bit analytics They by sort And integrated, of through totally. been not product it, asset at XX of clients class, But XX line unified Burgiss plus trillion countries. equity. for if leading about a years. XX is

X,XXX little about funds, $XXX of are a in those you give out XX,XXX over in seven. that trillion private in representing So the let breakdown, that, of equity, me XX,XXX

real trillion in assets, funds, natural real representing in $X.X trillion X,XXX to resources about infrastructure. a little are representing funds private. thousand Another dollars, close less, or so, is private And another estate, say close to

that can rapidly. a of building how risk is products database the to that much not take company of assets. And things all and are reasons an you a been product. and rich commercialize they've only we great lot secondly because to performance So we are various haven't at – databases incredibly about their time attribution that them this that been models more MSCI much Burgiss heard that's a deal models, one we held Burgiss build, of has commercialize all efforts we build for can help these these build the But and performance a of know lot then measurement our models, build that of private

So crossed this partnership our everything remember, about is so core -- we own will Burgiss, I are world, line. rate $X up extremely estate XX, about about of I trillion in $XX investment just product We is say private what properties million and said excited the just that haven’t and real countries the run real of properties. XX,XXX XX made in representing estate about worth

overlap, So XX% pretty which XX%, imagine databases, roughly in so speak, trillion entire of to have close of maybe is but we or the there's I to asset the classes XX% $X world. between tools, some of the would private universe

about So opportunity. very that exciting

of and ecosystems the in to which research, creating to basis get example, all speaking, new key order clients. one data, to partnerships of to build the is AI machine be broadly us and to us help partnerships that to partnerships. like. serving for Distribution partnerships, strategy more is MSCI for tenets academic And Now MSCI's build in partnerships be our ecosystem accelerate heart data for the models, technology of those of learning processes, hopefully, partnerships the

but two, doing about of very we accelerated the accelerated partnerships we've Obviously, we been ago. as forms partnerships. the always But have started three -- well. extensive years other client initiatives So this, partnership we we

a see going us a more lot more. you're to lot of So this, doing

relationship, partnerships in be may data, capabilities. Some exchanging just mutual exchanging a strategic

of minority maybe may investments. part type require Some them or either on any some investments control of our investments

Manav Patnaik

asking of one doubled of buybacks? XXX. terms this you just maybe, and Linda, in from should it. of reasons that capital we of Okay we're made we the stock got guess, the just the time help more allocation, you guess disclosed Because should guys How your that can see the last see you balance I is I And that here average these? nearly

how should that just think So we curious going of forward?

Henry Fernandez

Yes.

of very to organic all a in M&A on is then integrated for “external the objective an those share It buybacks, that addition of point just always talk goal. And have the not the we run there right, is something the company. are minimal the obviously, capital got obviously, to deploy say Linda capital process that And the ratios dividends, is amount attractive They and leverage capital -- reason. obviously, allocation capital approach, partnerships capital -- like. happens common These can in investments that the and which investments. do we're is time in company we how third at But capital or and And opportunistic. we've location”, any returns, that we're necessary distribute any and I within and external whatever internally later the allocation that -- the accelerating excess a So which we're Delta, will with focused to is focused organic then about this. have for on. sort done of Carbon the element the that's extremely company. internal

our doesn't it gets that whatever to returned paybacks of with rate shares. the in high get form in utilized of of proper opportunistic So the return good buybacks then on shareholders and of dividends a form the capital and

Linda Huber

Linda. it's Manav,

of But to do. as continue on pay repurchasing a to shares our we require our treatment. look at about. focus the do lower opportunistic do They which just million and the year a talked huge they at per another where we very we shares, continue don't cash, dividend price that and It's quarter dividends. a We'll Henry about usually accounting time work have helpful. outlay rates in $XX Partnerships The continues now. huge of take very modeled later about We'll take some to get million outlay is dividends. important, We are trading that. where focus our but on the frankly, require look at than that X.X on a buybacks, in we're

thinking for that's will about And over year, the you right we this evolve keep how we're now. if that So we posted.

Operator

of the with comes question from next Kramm Our Alex line UBS.

Alex Kramm

that to don't revenues of comment very about level ask Just But flow. and you the this drive the cash want would asset-based a make here. bit because little side. you obviously, you briefly spend asset cash more. guidance understand, better, that that guide I just you if there Linda And free clearly is operating clearly, flow made base is doing a

just So in of that can work business you So sense are better your favor? us pricing you think if budgeting we terms perhaps? performance, in of how actually have flows, spending market would the a accelerate help about you Thanks. markets side what when that for you of

Linda Huber

the Okay, about variables haven't we you're Alex, asking spoken all for to.

me I let way that can if with So see our help guidance. this follows you in a

ago. a of thought of for MSCI be helpful most and shareholders, just expense The recent of that. million with We months EBITDA the few more range for million, been up would grown started this were So ADS aware million at $XXX we because from talked we number XXXX matching we linked million. the $XXX which where about $XXX so was piece adjusted a just number The we you're started $XXX to a significant jump the within rapidly. ETFs has has to

taking view has just in moderate in And of growth our significantly, pretty, conservative Alex. number million growth, $XXX that in up at jumped of further we're expense number or of look last months. that for terms because a planning a it couple taking the we're So

of we're to want see fees very So hope have is that which helps And the stressed then end we that more. to much hat ABF additional those some in spend range, $XXX you. to to top the the increases going million, enable

increase spending. looking So at we're modest in

note, bonuses. we is it line, important but very note, earned keep us due end of would higher quarter have and earned take We you first may range, to the a to us If the payments for higher it. on tax we'll expenditure that toward the we and have posted. the If quarter top

this, So if in not second we it year. half of tilted of do first little likely third, toward a quite but much back and the quarter, more the the more as the perhaps come bit will

the achieve. would back had as what that to hope last Alex, we continuing Investor in you, Day helps to point guidance to given longer-term we're that So but you we targets try year

Alex Kramm

basically means from I that right? not you're that market, for the right? is that hear point, looking help a So Did

Linda Huber

We’re very from of because and very seen moderate thoughtful already. in the terms growth expecting what good we've we're market

Alex Kramm

Yeah, sales it regions up great? from. that seeing was coming but maybe you quickly, Is the Thank growth. about of I you more you. little you of expand customer a is be good. or where analytics it a And color the very think, Can you lot would sales? mean just I talk -- types receive think lot demand, of of gave a in bit terms maybe on I impressive, little can second a bit

Henry Fernandez

Sure.

there, So I'll comments make few Alex. a

of I first in think growth all, generally my across comments. So, a said strong we've analytics, as I had

said combination asset -- owners. for I would in recently been it's have not borrow in positive Having So that, distributed. say areas of one unevenly particularly

So if and with in the for and risk return a numbers to like Asia. you total analysis sort of of overweight portfolio an

serving, deals some kinds and cases But portfolio So those recent, we the, offering. pushing of will -- are that mentioned level of them, analytics average increasingly use very most liquidity, the total were would where I Asia but and there I comments quite numbers and have some specialized unique those not as The in strength persistent that we keep my -- continue. strong. to exceptional with of I were would did in want a in -- assume may say above the that's there. various about would We have they performances. one example say

we innovation. core to, And So specific good out and continued say that on. I would want some performance strengths, keep

Alex Kramm

much. you Thank Sounds very good.

Operator

Thank Bill And next the from Warmington of our Fargo. question line you. Wells comes with

Bill Warmington

and So that on the first and year-over-year talked we and was seasonal flat you how the question components. mostly driven had for you on by was retention the downtick basis, the that that index saw to sequential rate business,

rate, just that a class on Now, when retention anything if was the downtick also not it’s I XX% that's -- But high a of there and I'm know if do very to pick trying because to strong. question problem, going investors wanted they the leave? are behind where

Baer Pettit

news, is QX nothing Honestly, good the to number here. the so there much. see Bill, mean, was is really the I headline isn't, pretty Yeah,

company the index number. is the number right total, that's have But front have don't strong. numbers so total pretty me. index number The higher. So total the to of be flat. continued very in I The company -- much a was

there's really, the good have story we they -- -- conditions so there's fundamentally what We no there's news is being see And there. see been. that really

Bill Warmington

Got then -- of my analytics came there nonrecurring revenue that from you there question that it. a a was on implementation. And the mentioned on follow-up slug business,

in analytics to to wanted interpret acceleration forerunner that a or know that? Just of was if some the business how

Baer Pettit

Sure.

fact, So about talk a broadly. me in nonrecurring little sales let more

a So equity split analytics. in last was index roughly year, nonrecurring XX-XX there sales between and

licenses. third drivers products is are Henry So the in the of index, which are of strengthening which OTC, and continued has up derivatives in over-the-counter of called equity -- that pillar the of structured what equity main index made

the we to a think revenues point, continue come grow. and will the roughly there implementation X/X analytics, back services is basis. In to thing that nonrecurring, main there. drivers your X/X, on And that but So to are category those key are managed

which be but point just infrastructure all that -- is larger, to deals in types types helping we've etc., involved managers efficiency will category in up, should grow what we've which our more it will this there then with the discussed as go that increasingly getting asset reemphasize There it's also theme as final past it. The will we're those, lumpy. where you again, this to them we a service are continue analytics, services It of in data, of linked complex deals won't. said in the to managed the at certain up. attached that and grow in are past, which to about setting manage certain structurally So have

type And so thing. Q-on-Q lumpy should but directionally it's fairly a category, will grow, be of which

Bill Warmington

nonrecurring. a like to category Sounds Linda has create recurring of new and

Baer Pettit

in. money keep coming to try just We'll the

Operator

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

Joseph Foresi

evolving? ISG take lot Hi, sorry, could you wanted But I that, step yes, know second maybe ESG I'm going what ISG, guess. see I that it's for just now? frame too. move see that going then a how -- to -- them? But go I'll you how in it how you're where you head. back right are to you products But What been anything on ESG, the going? my you about And hot where's to side, short about term, price wording, think for red if us and competition back And in do of a a take It's the you think obviously space a to space.

Henry Fernandez

have what's world a this major world or trend so permanent investing the of of society. it all And Those are companies. look, So shrinking world, and which of information, in of institutions, just societies ESG think educational about those secular and is in a about for shrinking happening transparency as the around that transparency more their It's and the investors -- accountable connectivity, hold on is of -- the on terms by to a the basement, actions. a the not institutions societies in forth. political the this about are the lot what's a that, in lot real-time to like. investing communication, going media, information, world happening And more like sustainable driven basis in of -- religious, of access and dissemination institutions so

industry, in sustainable processes. investing have their that investment a have everything be -- because will that in years there sustainable do from investing category to don't will that the in So I called an of element people XX now, investing will think

the components wants tools from the far the be in to is to what the all MSCI that companies understand are. of transition and that research, world to by provider of necessary to get leading ESG to that point, So make and ESG

in they take in all income, other in ESG ESG to we wants and in that know in estate, equities, do account fixed ESG somebody indices a list So or that. like. the factors ESG all talking way, the into private models fixed also companies, risk of ratings, what real debt exclude all models come less And ESG in the types equities, and private the ratings and in about, say, risk with exclude income like. in By this, of and we're that, that

well range crossing positioned So product in just extremely already I be are described. to this, we are that MSCI at whole leader the we because the

We are already a a play central already multi-asset class firm, and industry. we the role in investment

area because quality position the the what our the and that be people, investments as we're and large in enormous that our do, -- we where another that. do do, field that's to only to there supplier competition the our vast And will combination around marketplace, that's can we things thing opposed will think for what very of enormous we're But into of all putting create for another So for here, gunning franchise. a moat it's I one or sure. one

it impact as around have eventually, climate next now, you maybe bigger ESG Now become change, than and subset itself. a the whole. bigger category and is its ESG Within itself in the than years, portfolios even that's investing investing, may may on a category of climate but ESG of few ESG a the put ESG, become own. into Right which change world, even they we

tools world in steps taking repricing of as climate be assets as the portfolios, asset provider they of they we're allocation of the So affect leading affect as to affect they and change investors.

Joseph Foresi

fixed Got income on it. And then the indexing.

talk the is entry from what different last Can data years, equal to under-penetrated from time? how the perspective? you a out on is think period penetration you about viable a converting of long do about over real of the of it couple and of heard to this people are what And that there. side opportunity going Is income fixed barriers points you Over indexing a now the is equities a that go how standpoint? we've product

Henry Fernandez

Yes.

to in risk business. me the we this a in MSCI. We're lot business. not the something We're not data let in say not in business. So inside the say that analytics the We're just not We're take index opportunity business.

that, We like private be be of combination helping build over build investors some part will be of to are now continue that to elements in which will other a portfolios. investors right integral asset the of but business of time happens better classes, combination of all all be portfolios, helping there that helping and -- better will of a portfolio

risk the way, income, is means sort fixed central no should income lot the the big risk a if the portfolio, launching And bigger of should get when think look an have world, central lines. incorporates more you that securities much or of income for we of hope an to fixed investors becomes interest the and ESG index more it of is the along in fixed reweighted model in we much along therefore, principal. income. And best in in fixed ESG equities, marketplace. is -- your need if income tool, invest are now to of factor a is Because that sake you a see to be think to to process. ESG do know, investment What it, you can for paid that for a therefore, become or we in back a we management process at throwing that if alpha-generating tool. a So as lines index it ESG management right you in fixed And here less looking another widget reweighted is in

all we all consultation use So that's want the cases with and these we solving of to over use for that. what of did it we're in And things. in world, that clients and the launch

Baer Pettit

positive just across clients leading We've different launch. -- number kind range slightly feedback talking their since to slightly these indexes one more following just to up from tactical types. client -- weeks a of been have of of launched been more strategic observation last Henry's view, the And in we've up and had very

short And our literally few more a had recently, I hope client to benchmark of these year, very give the MSCI run. to last I say numbers that we'll be from you wins, would we've will week, interactions, These product course launches positive be not reception. the indexes. the But last very related related to to able that so in weeks, material over the color

Operator

you. Thank

Huber next from the line Huber Our Research. question with of comes Craig

Craig Huber

I The X% questions. That's year highlight A expenses. top growth a you cost couple of of it incremental order, three to initiatives EBITDA the of question. or but X% first four a with guess, quickly incremental are what guidance, bunch of lot this this for the spend going Can internally? of is dollars toward? Thank for me my -- where in me toward you. touched for terms just for You've going rank, just new

Linda Huber

Craig. Sure,

all clients. thing with of the investments. technology deliver ensure first is pair technology investments to we investments our underpins can And The that product we those for our that

us. innovation well. of Some described XX%, as is growing also a futures things accomplishment. where doing very incredible are well. ESG, and length. good which really And is are close the areas Henry investment going Margin, Also, Analytics to at is business area options our income, has an Fixed rapidly. product Index very for is very

way it ABF major in the if So some end ones. areas would our and range, again, the of we the expense earn the of those with into investment good lot. be of growth high fortunes plenty for But toward only

Henry Fernandez

which our our investment, risk-adjusted high, of lot call or that the is investments think, not I allocation, obviously, are we return. are expenses, we Look, and there importantly, something accounting-wise to on crowns. want EBITDA investments, -- buy methodology a with high three very call crown triple obsessed and are a expenses. internal it we that I we One X%, capital importantly. and mean, focused course, rates X% more are which us, they These And is methodology, but Yes. investments internal flexing also of of between of extremely

areas better. the that is yielded those the is the And shorter highest. in EBITDA number investment that payback, the of multiple the Secondly, three, by

triple this, So all the huge there will got territory. do that that a crown but in of you've be to balance. is in emphasis Obviously,

Craig Huber

question, end and and can of each us year, And fixed would, you handy? the the rate, have you my segment if for at give future of options those guys, ESG the the next three you then income? Do numbers run annual

Henry Fernandez

we do. like Seems

Linda Huber

for we're look We that, it, give you do as not probably at the a looking anything view have Craig, on else? sure can that slides handy. and I'm

Craig Huber

of I assume appetite statement? billion balance the you've for you $X.X a the given fair enunciated sheet, a acquisition, earlier, fairly it's your on low The Is internal a you all growth on that for that sizable touched have know last so acquisition? this or I cash hour, here large initiatives but

Linda Huber

has matter We that's dry Yes, powder. We while fair, continue we in right One us very probably Burgiss. see, of Burgiss well. partnership have Craig. partnership, look reiterate will want code. the stake, financials I the that investing an we And not are. amount we're I served minority to think that, a in you're and way ZIP of is like housekeeping things as that consolidate the you do the where moving to of here, think some we for But on

that. Our share expense a of other to other on its line expressed and income, flow is to net will be in income going

So just look. we make you're as to are where you at to wanted with looking that where know sure Burgiss,

Henry Fernandez

with probably off-line you on it'll So Salli if up be your follows Craig, question. best,

Operator

comes question of Chien next line BMO. from with Henry you. Thank And our the

Henry Chien

driving question. just What's guess. of growth? in the index. kind morning, the that given from data in business. XX% just wanted simple good the about Pretty on of XX%, but the dynamic active everyone. not flows beyond ESG much I guess, And I pretty side Hey, stable factors that kind that beyond I are or separate to and more core ask index the X,

asset growth? adding you just pretty like, or simple question I'm driving or replacing a of or of continual products? just TAM available like curious owners in that frame kind whether like kind just managers that's new what's so Just could of just And if wealth providers

Henry Fernandez

Yes.

you product all products call IMI So broken structured So will family. matrix index But of -- Then we therefore, that purposes? You categorize for the which at And management that. of maybe an then we overlay. -- being into it sort passive third buckets, right? look being like we I it completely for index, they ACWI in if pillar, can future. you three market way, index product Is obviously, in when used all ESG cap four indices, the The products the benchmarking? this and the is purposes, the overlay. Or line bit the the factor that's or mean, it's use then haven't say split at have indices, management look a what the cases, -- a into you line, ESG which can indices it being an is, leg? used active a for as derivatives little have of you used are third is or i.e., out

breakdown but So of because the indices, and modules those the and then, market -- market on further obviously, market the there market cap if you the is and focus subscriptions have a cap cap, cap different emerging developed cycles. sales

cap the use is globalization the of the driving growth equity continued of indices, continued world, market an expansion cases the the markets of what's In inside organization.

of that growth is like high the do you cap driving and are a These a the We're vendors you is custom products. is also is of this? an go be -- bit a bundled there have new somebody So you has, if there. and say, use of were thing of we that market or XXX of indices this? to What more all growth businesses of professionals exclude market using -- Can But when now have number XXX the that you use traditionally people that. say, a another the businesses to commensurate by the they can to has indices, that you indices, moving to Can indices? is put amount organization exclude Can fees. charged that? professionals that So cap in XXX that want this? want by which happening let's to level little happening XXX

the to market continue course, ETF category, cap grow in indices well. of Now as

Obviously, and seen ETF. indices the higher ETF in and in growth factor ESG obviously, we've --

-- sort -- relative the against or of indices, to try new long-short given a are that little of So is but area the future we long-short now of there is things sorry, is management another of are that's funds right, a is that equity this, happening cap new you nonshort measured are that hedge can indices. new funds market funds, whole strategies. to I'm all obviously of discussions, people segments, being increasingly client in segment a that wealth hedge hedge client using lack maybe say, performance, are category -- landscape put a now performance These equity as measured nonleverage being of a

to forth. so need to the they information subscribe and on and so So

Henry Chien

Got makes sense. it. That

And just a follow-up so the on, specifically ES&G I guess, data.

us of I lot in a color help on it's framing this. understand. guess, good role to So just MSCI's

very products, sort do guess, with ESG, or unclear? the, it's investment or about, traditional of risk much or So How performance-driven, return in attribution. the measurement measurement given ESG guess, question of very market think is of impact of I cap you I

Henry Fernandez

time, the mean, that no, portfolio, a time, Well, have to things you ESG I do going you're in do normal all over over portfolio. an if you

how gas know oil say, the I you climate at of let the has driven, ESG, give performance? example an sector, change What all do to very You're been attribution me is measure on -- well, which we is underperformer. going as the energy particularly and

a know to degrees, obviously, be factors we not like, solar it's So are example. and So are outperformance do the and what industry when flip as that's value, to that of nuclear, to going and you is of been an gas from the oil with performance energies, have what any what parts part and thing not? quality the you your now same measure wind as you driver are etc.? side of momentum different, that certain, being and On attribution, this of kind on is all on driving performance growth again, and -- getting right alternative say, big to relative returns your has but done

portfolio performance and momentum getting those tools, stronger coming much all is versus basis lack that's to this my you that outperformance We franchise is performance and your the is So from and attribution? How analyze why on provide want stronger. of what of of value?

Operator

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

Chris Shutler

quick Hey ones. guys, Just two

there? Is Burgiss. you impact to the can can immaterial, say you else on that to around there EPS? at but going First, actual it's anything like else It this us give point be sounds anything

Henry Fernandez

So compared still going it's the hope Not to early days. really. us, company it's it's is grow that smaller lot, right? clearly a a I but to mean,

Linda Huber

Yes.

from picking Burgiss it's up But expenses Linda. expect some In fact, and particularly results this, immediately. we're see on we integration, to don't the significant

Chris Shutler

just then one is other And enough. fair on Okay, subscription business. just index the the

finer put you how what you And that, questions I pricing Going pricing ago. to back how came of expect much guess, couple to growth, To XXXX? -- much of come point on the XXXX? from characterize as from in in the a a do would

Linda Huber

and like one the we the things Chris, X/X price of new of for really the subscription to increases than less business, and say growth entirety Sure. about clients, of increases. of X/X the volume it's X/X existing on so price part

Chris Shutler

consistent? still Okay,

Linda Huber

Yes.

Operator

you. Thank

comes of line Your Research. the next question Keith with Housum from Northcoast

Keith Housum

Good elaborating just morning for you, question a Burgiss. on guys

data? partake a in You that through to their their can have they will have it, but interest so guess, exclusive guys your agreements? agreements operating in And I all structure is minority Burgiss, to no this or access guys else the data. be you going then -- one is with

Henry Fernandez

Yes.

cost and the them. divide and divide Jim that, Kocis. founder noticed, the now. worked we're are we talk always those usage -- owner sort a right up if as with So subject always the the product? with agreements if partnership of shareholder revenues we're negotiated We about company, and is -- those the on about hand, you data obviously, just of the we do partnerships one up joint working we goal in separate talk of investment all a by strategic How to things. and And to one The the investment hand two on the like, and and being are how the on

Keith Housum

will But those be exclusives.

their in one obtain so else, competitor there speak. come try no So and no to can to data,

Henry Fernandez

not but yes. totally, Largely,

Keith Housum

a comes is more And just correct? as me. one your Okay, question, follow-up quarter then just for it reminder a fees, When got that's a to this you. passive institutional delay,

Linda Huber

correct. is that Yes,

Operator

questions this Thank you. And I'm time. at further showing no

So call back with remarks. turn Fernandez, over closing that, to Henry CEO, the for I'll

Henry Fernandez

that trust of we us, in to given what Well, never much to how in great do and and recognize value, hope we And years that. can good opportunity in make XX like all the would put you last we of XX belief this our great anticipation years. I'd next the thank the sure in stewards like shareholders And again the of have I the performance. you all being of running disappoint confidence, to you capital. and franchise obviously, present we the for

So thank you very much.

Operator

thank This you for gentlemen, today’s and the participating program. in conference. Ladies does conclude

Everyone You wonderful have all disconnect. may a day.

MSCI (MSCI) 30 Jan 202019 Q4 Earnings call transcript