MSCI - Earnings call transcript Q3 2020

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Operator

Good day, ladies and gentlemen, and welcome to the MSCI Third Quarter 2020 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 Investor well with our quarterly brief update to the conference available on day, along an results for and quarter will announcing quarter release press a Good morning, presentation press earnings we XXXX. third on a this call. you, XXXX Earlier our issued as reference release msci.com the MSCI Operator. Relations under the third we website, This earnings this tab. call, as are welcome

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

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

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

results today's into of to During core measures to the we EPS, non-GAAP adjusted operating not revenue but measures organic in period-to-period flow. GAAP, meaningful EBITDA, and refer limited comparisons operating basis cash expenses, believe growth We U.S. call to and adjusted insight EBITDA including, facilitate our rates, non-GAAP addition presented adjusted provide on free performance. also our

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

agreements our months, that adjustments a recurring revenues exclusions time, we of which for We client will the filings. annualized a the and detail discuss value estimates particular at our XX variety of in subject next the in SEC rate, run to also under point

We to or we result of rate. revenue. the realize forecast run differ rate over reliance to will XX revenues amount exclusions, a recurring estimate from months actual caution run place those undue therefore you on will following As of not the and adjustments recurring

will currency we discuss growth organic acquisitions figures, in the rate the foreign which of and run any exclude changes divestitures. Additionally, impact impact of or

today Officer. and our On are Strategy and President CFO Chief call the Fernandez, Baer our Andy CEO; Wiechmann, and and Pettit, Henry our COO; Chairman

like out call I morning listen-only the mode. in to Henry media on Finally, that, now call point members be that to may turn over of this With would let Henry? me Fernandez. the the a

Henry Fernandez

hope Salli. families thank for you, healthy. joining today. Hello Thank everyone, are safe I us and you your My colleagues you and remaining and and

for our portfolios MSCI third better continues earnings performance adjusted During to helping better growth growth the for clients, the growth of financial of X%, play build XX%. of role had share per nearly including adjusted environment total strong revenue of investors quarter, and challenging growth central XX%, world. rate and despite XX%, EBITDA a MSCI run a

areas, mission managers, opportunities executing derivatives. key cap models and index portfolios, from needs portfolio listed options, to are and futures can Across client and and portfolios. essential ways, products and enormous. to restructured trend overlays, ingredients indices two for thematic for and build new these equip capabilities. ingredients that interrelated The and vast a income, components incredible we These screenings, equities indices and cases, as for and replication and active fixed include mega client construction used our OTC essential risk clients to optimized very and to underline a opportunities client tools number in managers, this from of spectrum cover ratings value have market expand trends. metrics climate area ESG ESG, underlying for wide indices segments, and equipping weighted for our the exposures. factor Consequently, offerings, include Indices construct underlying components We are to creating our own benchmarks optimized clients portfolios their films them our of or interrelated indices components two product in business serve as new with client our thematic portfolios underlying and see our models, from performance and for risk their new therefore tools factor, to climate mega own our that as

include climate product income, areas New fixed the remedies name and a ESG to and few.

fixed include offerings. ESG insurance corporates New or segments and client management, income wealth offerings, companies for

areas, that product segments support investing in wide of four income in for a new product I liquidity, comment fixed the client focus will and new areas the our focus strategic comments strategic capabilities In on New technology different MSCI. of and with include and areas I'll will variety new today, different I partnerships areas and and climate, our In we're with on the enabling future opportunities franchise. including entities. my climate calls, of ESG thematic ESG start and in derivatives. and all looking

has of and it climate quarter over rate growing Approximately this rate million This year-on-year. reached to $XXX at year-on-year. relates run $XX of nearly XXX% grown run XX% million,

deliver in workplace, and this massive other is the solutions and to firmly large will of inclusion believe assets environmental, Climate economy, repricing capital few the where the move governance invested. MSCI uniquely financial social capital next impact scale is low continue We change, reallocation carbon deeply positioned be shifts. to and over shifts years. diversity there the will to of a and to a navigate

of the ESG management the of under we launch ETFs to third XXX% quarter, climate see an new have the the linked ETF continue in Specifically end in this billion. incredible indices. $XX MSCI assets to year-on-year, equity reaching marketplace, grown At and ETFs

supercharge at our We classes, including for multiple helped across asset Our investors. acquisition capabilities. investors risk climate most real of estate Carbon recently for ago also value Delta a climate offer now to year has us

our capabilities ESG can build leadership in to aggressively and climate, our you space. expanding see, continue this As in we're we'll and established on

Barclays, ended more quarter than linked ESG nearly from ESG income fixed enabled climate third that continued Bloomberg MSCI, us $XX in ago. franchise income grow capture AUMs position a billion to our as indices doubling quarter opportunities. year strong ETFs to a more Our and to fixed this and are the

offer With climate During fixed XX factor we climate, proprietary ESG, indices this ESG launch, one's including MSCI a income proprietary across indices. we and the quarter, of income launched waited. the MSCI now total each indices equity market XX change eight and

fixed well to As and strategy our launch have you seen fixed other providers and iBoxx, been our liquidity clients partner ad third growing already effect with and the regulations to in Europe manage others help indices that for analytics. to with and great investors can We understand fixed This proprietary including went liquidity IHS are In see, that is regulatory our positioned meet in indices. delivering support also market most our index progress ESMA risk. solutions and income our liquidity income, partner we Bloomberg, MSCI has has been Barclays, critical to iTraxx investors quarter. with income own into requirements.

the Looking help liquidity jurisdictions forward, in around to potential favorably requirements with clients reporting we're others also world. positioned

Another trends. is of focus mega or for on in experts product indices thematic area investing. Ark These of disruptive specializing generated changes thematic strategic and have has a relationships MSCI investing. long-term number and us with built structural other invest, partnerships innovation focus

used structure across products, We excellent to cases range Baer licensing ETF of discuss. will which a are traction from seeing

derivatives. on comment I Finally, will

active trend We own this We're with for a This in it and futures of continue our and opportunity MSCI index most both index drive is success growth experiencing global massive multi-country, of options reinforce derivatives. prominent its index but the with world's will to great of franchise partnerships this the this investing. right, multi-currency strong also some exchanges. in the

virtuous for over the ecosystem and exchange banks seeing license traded indices to our tremendous creation These opportunity to derivatives dealers OTC broker we're products. Additionally, reinforce products. and the structured efforts of MSCI

over significant forward look Before that to next planning the you open opportunities secular We in I We'll to to additional year. Day MSCI has weeks. coming needs tremendous clients event opportunities many Please globally strong the hold over that create a very shareholder a am Baer, industries you grow details us. morning trends real turn underlying and Investor the times, for February event we're with for the our your for with to serve sharing I excited announce investment call value on much to calendars. XX have virtual

dialogue listening doors. active and views will to on will out we to of to with We look optimize make as We to client significant surveys, potential. complete all you To of our in to about and segments through including investors, the need franchise forward talk shareholder and MSCI this as achieve continue your and can build value. our we hearing possible, continue we expansion on even plans event products our capitalize our the the greater MSCI capabilities all how

now turn me to Baer. over call Let the

Baer Pettit

weighted tool for climate highlighted. through this in Henry within in it our examples some that disclosures. to and we XX We which milestone transparency launched United both across and exciting to our exposures by content Goals. product for standardization reached the investors In evaluate of needs. give areas few to products number time. in Leveraging achieve contribute uses the Nations defined a first MSCI the and start you, greetings indexes. we September, Across to an once ESG alignment more and everyone. portfolio different enabled for produce address segment find Sustainable Index multiple continue our billion a MSCI, to a that their ESG I'll areas noting client Development and rate cap I'll of to further new Henry established run product the content $X help like broad has many and Thank discussed, growth Henry opportunities market

real innovative An has calculations estate for investors. estate during related this is our combines gained the light. real in and climate climate immediate real estate estate many new new of our create quarter. that new a several clients MSCI climate to with This view with value estate now of real data VaR VaR sales change real Our added launch to service traction benefit

to ESG MSCI These income opportunities climate a As indexes and existing risks a that our which associated institutional Change allow to build more Climate this the strategies lower Fixed transition leverage carbon a launched example, enable economy. we apply also them of benchmarks. fixed credit They data investors implement in to to Income resilient suite second climate portfolios. ongoing and with consider and new Indexes, quarter investors

we calls listed and for product OTC relicensing and of products. existing indexes the frequently have these area Another creation referenced MSCI is of on structured derivatives the

in growth emerging clients space form our dealer new swaps new Leaders strong. indexes. for the on an OTC MSCI in of As the on in-listed ESG return this saw ESG derivative example, from futures. establishment soon total very the believe further derivatives we our followed of was potential ESG This the activity creation is positions markets product by broker Leaders quarter We

robotics. and this is important Another mentioned year, of on in a partner a great with thematic areas I derivatives working on growth area of thematics. innovation were for genomics the series focused Earlier we indexes

we European the is this drive the to related structured new on an circular swap issuance product to and in economy of OTC opportunity. During linked MSCI expected want region, the license thematic for quarter, This based the with MSCI is renewable a good derivatives and another example index Bank swap to energy.

exchange of for believe potential the linked $XX significant options in over MSCI As this years rate third of could opportunity We revenue several growing year-on-year. traded run the represent of millions futures from million the hundreds and see and was end now. quarter indexes contracts XX% of to space

In are on an leveraging that our Earlier of Bloomberg are MSCI rate contributions benefit subscription client drove result MSCI’s Emerging rate our second XXX the base, sequentially and variety to this open major content use month ESG rate sales, quarter retention which established increasing but quarter improving multiple quickly distributor approach and retention basis provided ESG pursuing has a third existing ratings also including the was Analytics across processes. our cases, overall incorporate actively ongoing introduced channels. to we strong client the Clients company, This both remote as mechanism into push retention and through working the architecture Terminals, not index a we virtual run have for basis points to XX.X%, a XX notable improvement now just to content strategy had clients XXX basis points investment well portfolio distribution ready ratings growth. compared the business. we're Just MSCI MSCI centric already over approximately quarter. adapted were analysis for MSCI’s their Client and and to model. across to our points segments. reflected another of of year-over-year. third engagement XX% from the to is data.

team's clients dedication global ongoing to been and solving has to evolve Our models critical engagement as creativity problems during continue pandemic. for the

executives programs represent manager MSCI’s key We And account XX% run the C-suite you power XX% have I'm that quarter, our those to focused to clients growth and milestones rate look with previously demonstrating retention collectively level spoken the progress account with our for updated largest key clearly the senior in by clients to was These rate. manager forward total of about engage the we and approach. our continue and these on you over our as client areas. encouraged make integrated of clients. keeping

turn will performance, of me over financial to Let now over quarterly to the you call who the our discuss of specifics more Andy. Andy aspects

Andy Wiechmann

everyone Thank you, Baer, morning. on and hello call to the this

our I As CFO reengage value and further especially deliver excited community. I'm the I’ll analyst shareholders. finance step with to clients, even finance to and be talented and and employees focused our our our role, into shareholder aligning lead our on organization to strategy greater

rate grew of solid the business. and run another was revenues As have over Henry XX%, across nearly strong MSCI. and execution X% Baer quarter for subscription third Operating grew recurring reflecting performance the noted quarter

trend market flows MSCI the exposure have of the share in year. management where under which strong flows factor billion. U.S. exposures, to nearly billion inflows inflows MSCI quarter Approximately of of of strong a at to billion Over of ETFs all XX% allocated the products. were the is linked funds the with continue ETFs international into $X capture we reflects reversal indexes across exposures $XX we in half went first and these This during quarter. the continued saw inflows driven to into funds, third Assets of ESG ended by the on equity cash $XXX linked geographic

during ETFs to indexes MSCI cash equity quarter. $XX.X Climate and fact, billion experienced inflows In linked the of ESG

quarter. Additionally AUM the in equity from supported levels market levels improvements were $XX second of of billion by appreciation with the end

revenue $XXX as since improvement assets the across nearly our and to quarter were October under approximately non-ETF an of review now MSCI year-on-year asset-based billion. improved up from including in XX, the to further linked billion the futures which I'll products and As reflecting board, results, have fee this fee update indexes equity to level. Sequentially, management quarterly indexes ETF results AUM ETFs, funds X.X% basis $XXX third higher options. mix fees and and higher unchanged asset-based average in quarter. support indexes at products international equity average versus basis X.XX the proportionally to remained point in on levels The points. linked AUM MSCI quarter-over-quarter from driving exposure provided of equity second linked to MSCI XX% aided A ETFs higher ETFs maintain ETFs

futures now options received Underlying reflecting relatively to in our revenue adjusted and improvement expenses. our and nearly sequentially, increased results EPS. asset-based of included from growth $X.XX in drove both share improvements per business Additionally, growth fees turn adjusted with economics from we exchange This operating year-over-year year-over-year. performance I'll earnings flat partners. half our

The The a and largely as As year-to-date in from and third initiatives. balance of expense well in controls our driven change relating improvement benefits the in tax in to was investment the adjusted repurchases XXXX by were expenses to the primarily lower earlier continued put as year, primarily as place the lower quarter quarter we in of travel that rate released regulations our entertainment reform. EPS was ongoing tax due rate tax lower estimates, MSCI shares. offset

to we and Client continue have have Turning confidence capital sheet, our strong in balance been to collections position healthy. our liquidity.

opportunistic affords position to in continue seen strong pursuing allocation investors strategy, continue for in be we've critical from past. our mission to tools. capital the us you've liquidity This As to flexibility turn as to results, MSCI our the done highly

our returned in XX, through quarter, shares. over $XXX million the our we quarter of an we've additional Since shareholders. the nearly completed $XX of million repurchases million dividends and of the repurchased October During and share end to $XX

I our Q&A, changes which range to million of to be move to outlook full full highlight earnings we announced we $XXX EBITDA for to will expect in our some lower adjusted in XXXX million. the now year XXXX, We the of release for year today. expenses Before earlier $XXX

and entertainment, that Triple-Crown in expenses the stabilizes. as like areas investments impact well reflects pursuing the outlook the we of are as continuation lower expense travel Our of as environment

couple to these the expenses an in Triple-Crown result in uptick last in investment continued relative quarters. Our could opportunities

lower XX.X% expect effective also rate range We a for in of XX.X%. to XXXX the tax

flow, now expected free million. range should rate has approximately percentage $XXX for CapEx And to it be expenses higher in rate million. collections. than run tax $XXX approximately tax year-to-date of reflecting will range cash to adjusted now one as we year $XX stronger point in to quarter. through the expect Our interest effective to the be $XXX $XX third our still the million be million, of primarily cash Full million

stand ongoing operator, on of drive focused well algorithms on environment foreseeable to In in growth also unpredictable. the environment Nonetheless, will global remain backdrop for similar quarter all given ultimately and therefore dynamic. creating sales operating remains pointed out we couple any before forward we compounding today, case, at that the the line future. client continuing to And as business markets for quarterly for We questions. to levels rate With the up strong and elections is of ongoing before hold and days drive where earned be remains range to-date. balances a U.S. you model value client robust we this engagement operating interest the However, weather our all subscription-based please support and as durable remain From remains likely we've you. of the MSCI’s cautious Thanks. open income innovate go to cash it to with well pipeline low the remains environment to as just that outcomes continue the our has as broad. to pandemic, the believe

Operator

from comes Manav question first Patnaik [Operator with Instructions] Our Barclays.

question. proceed You with may your

Manav Patnaik

should to guess that's wave happen thinking talked lot a guys least at wanted about think be just of to also you press understand consolidation this could how or they starting the we were or take the I new we us managers should ask large how to just I about as announced? And you with was your how hoping, or clients. know, get in asset these big help you I of some

Baer Pettit

morning. good Hi, Manav. Yes, Baer here. It's

that, in So this the certainly mixed as look, our experience think might cover. I on it is somewhat negative look and as not

this consolidation been not that So all, the first of large has far.

And it. some related an have we index seen as to so cancellations notably far

grow typically As but a company have we sometimes a general negative a ways. able very we're over to firms when in little then bit combined consolidate, rule healthy of company, time initially hit, larger the

today, not a and the general impact a of been as significant seeing over pretty positive we're have So as historically outcomes rule, time.

Manav Patnaik

And are the if ask response hold levels I when the lockdowns, how April today, in in to going how about back, space these curious through are investments you're and they coming could back thinking around in some potentially March, pandemic, guys the just that investments? guess obviously I COVID doing cut those they investments you are just on conflict still and further with of some

Henry Fernandez

opportunities changes some have in trend trends of are reflected in structural investing putting and things and that clients pandemic. significant. in the the actually So note pandemic also and order start the create like that in investing income, thematic the indices the the And is have it's significant of way Obviously, since as of and that mega as models it very well the to but these ESG problems those the that. very emphasis economic to thematic Manav mega created the increased to we thing the important can likes we problems get example, solve that first structure, point shifts we're has largely industries and and is that for obviously set business dislocations to of on an can fixed in

So of the has opportunity number increased.

the have this stood rebasing and a few three like products up of in where for start increased everyone investments the the base we stepped on seeing we else, a our of we or financials felt later, company two, program. pandemic say the renewal at reigned and we the the that in investment of and therefore months we months outlook were services, comfortable Now, had very we later, of bit that with the demand

in but did the expenses decline by hiring marketing due of a a increased third in and quarter, investment the entertainment, lockdown, pickup that travel offset the lot on to increased and we is see that. reflected and obviously of EBITDA Some and of expenses in things

segments, opportunities an capabilities the a of new need see because we environment this to likely that lot will with products and to on be the and presenting of capitalized increased us, operating XXXX, in the fourth feel up is company. number in that in lot quarter of pick a We clients and new that significant new

that increasing we this at yes wanted a it where below percentage investment But it. few So is it on - up is point. the continues plan we're to stepping points significantly be

Operator

from Our Alex with Kramm next UBS. comes question

may with question. your proceed You

Alex Kramm

the basis, on still Just on as cancels I quickly still quarter-over-quarter, pickup think are you retention But rates, think bit I little nice hoped I a a think had for. elevated. year-over-year

would So think this confidence around - M&A, from interested just continue to is us lower as related, give anything management out a soon too comments it's you made a pandemic will hear little to that that be for else But comments, here. I that. cancels some particularly obviously some

Baer Pettit

Yes. question think Baer we're of so simplest continue quarter. answer guidance sort the is your Yes, Alex the from here. to last Hi, way I

doing service everything are can our to We we clients.

client and in events. be there can can noisy that mentioned. environment still certain clients bit Manav choppy an There be a some segments, in some various is are We as specific consolidation

as clearly is directionally, to little as going in to a our rate may do and pressure. with keep So where happening market the trying we're are possible. what this But put quarter. strong to keep We're can retention we to we happened pleased the what best clients circumstances the

the what balance So be and working all hopefully, good that of get we'll that's outcomes we'll some towards. in

Alex Kramm

asset the fees. on here one quick based also one second then And

You was a delayed bit side guess, of obviously see numbers about pick a think and two little bad more talk fund you charging But kind self-explanatory. mutual think I I the quarter-over-quarter? - to up index the other a pretty surprised XQ are can that on I like usually on know, quarter. the ETF components that's

any be the of options? And tick there see there that futures to much quarter-over-quarter. sort on fees quarter again not related recurring futures Hong surprised because maybe online, So up Exchange coming may wondering options, on time and Kong the an were was outsized to one here and then how anything that

Andy Wiechmann

Andy. optimistic excited rate, in noted to tick and continue about options would well Maybe though, which showing our futures we up seeing the counter we opportunities to I we be Alex. run our on volume benefiting side. very prior from and more derivatives the non-recurring highlight Good big with in recurring as the market, broader slightly Hi, derivatives versus the morning. exchange from saw It’s we economics in Asia question both over we the second revenue that remarks, most index opportunity. start first listed as quarter-over-quarter, in are are partners, the market, notably the as is quarter, Even that improved and down the

we On revenue. is the see of than the Actually, funds. we non-ETF there revenue passive a what path front, from I call component would just highlight meaningful coming it's based more of institutional mutual index

more just you the And dynamic seeing broadly. might more trends that so index it's than be mutual fund

those sometimes a depend If on where levels usually, but a quarter us can recognize you us we our clients levels. to revenue And than AUM generally more on we lag, to tend average report be highlight, a we reported quarter. AUM to to on it quarter, get

kind direct if correlation you And so not will. it's quarter a lag of

pass we see institutional we growth where like of mandates custom can those ESG in the in big of price of areas where types might many for indexes. The it's highlight very indexes other equation have or positive thing movements or in attractive instances some indexes indexes, factor more in I economics some dynamic would particularly is a

is is moves AUM more in that. say much winded equation, it's related there to complex but prior to relationship very that it the quarter, long way a So dynamic some than

Operator

Kaplan Our comes next Stanley. question Morgan with from Toni

proceed with question. your may You

Toni Kaplan

I think you your Thank that The one you there. broad mover MSCI you. markets and how and just number how I ESG growing try those? really more grew first what a talk nicely, view as as been be space. the wanted quarter rate your is, keep a and competitors XX% grow most differentiators to on build continue question climate question Could the run this ask been you to about at to Henry, to I can lot able you've on get important the in the position ESG.

you just to your add talk what the there? side if could anything on about so, index And Thanks. you want relationships, capabilities differentiates data

Henry Fernandez

have the in Toni, on and multiple of climate now competitive significant, up obviously, of a competitive step that tools advantages So ESG advantages. we change number lot major are a

we we take indicated my in When our I captured As MSCI at by trends, which lot form capabilities from essential ingredients, portfolios, clients to hand, them to a prepared big, interrelated the and On ingredients, in our on the of for underlying right. other themselves of portfolios. remarks, what one build put gets components hand provide all the from, so scratch speak. two into do all and indices,

So all for largest rating capabilities in world the we the think ESG. agency have, are we on about ESG, the

provide investment-by-investment amount So an we or huge on ratings basis. instrument see in

in So all the border equity, cross of gets we're largest so, then provider the that equity index world.

we're the putting indices. get of information the ratings models that, we So equity now ESG with the largest risk models, which of in that we can into world. the risk equity ESG the combine all We're provider

that are world income and in the - income, So which fixed we the all we around the put together the can monetize that in fixed all in on into we our there space, income fixed ratings on light. take it on instruments putting of the

other to that of of equity client to of the any side, and side to that, compared to single factor our in options and structure another one fits So information models index, on ecosystem products, fixed from are broad some other we and security a And futures have on indices, all to income. on competitors. whole we the of about ratings

from is is Not client highest point us Our or investor, are client world. demand And where highest therefore, the we tools this and issuers, like people at sector, corporates in base on corporate investors, corporate that, entities. advantage for investors. capitalize side the ESG positioned few the there the a of to from having these But corporate on ratings said the ESG investor well on of to to into the sectorial basis provide - are we're lot a our a lot to very that. expanding

they from figure get to order at and out provide improve can provide look the better how that they people us. it So information in disclosures ratings, that and like to

So arrows, mover that's for huge to lastly, whole that have business. this a is in, that anybody advantage be quiver going the And first hard in of break very in we moat know, is a we have to you multiple world a right.

Toni Kaplan

your you, role. be on strategy, of That's just been that one since there'll in not leadership congrats great. And dramatic next I'm now. team a for expecting new part you've especially while for the Andy change

could expansion what about per thinking digits or potential double year expansion given you X operating points basis be you're of needs, further from think should the leverage, kind do but maybe of you about low Just Just potential EBITDA investment margins, thinking here about about or when we margin of framework the Thanks. a over of sort business? you time? growth think how talk also for and for and

Andy Wiechmann

my if role said Thanks, change given with and my experience appreciate Toni real strategy previously major the remarks. anything. particularly and I as no, you the And company in strategy,

as with for all of strategy opportunities a us even combination aspects faced right our now opportunities - company. I think create creates value are and of across we more - the where to company is finance enormous

are value the placing opportunities. incremental where of creation prioritizing incremental where our to those chase our going we leg we're to investments debts be really next for the placing is company and so, And

will and algorithm. being about really proactive here. capturing significantly just we ESG changing Henry this say is say you so, not point, focus on other talked to at the continuing with investment these to sure intense in than an markets very As attractive we're differentiate - financial have and I'd ourselves making if

first Going higher back was this to Henry's would in margin current comments to the the what question, like. quarter than we

expenses think I and reflection the and masking marketing. some earlier some of we and investments of reduced the are that's those fees professional the making. of areas took a we’re of the, some in accelerations activities like T&E like, But year in

our most on upturn opportunities make to our we Triple-Crown we highest investments payback, playbook, shortest as going and continue framework, continue return. where to to those go those are and intensely are have we're in are we invest the and us so, investing those in And focused to attractive and opportunities. these valuable that shareholders we to The our accelerations

quarter. pickup in likely year, see year and will a through I And trickle you where through an the will think next in you'll expense growth. the I next fourth expenses that So and see continue to investment higher acceleration think,

of long-term shift so, driving for than the And you'd going more on is imagine it's about other this here. if us. dramatic talk And the not that's core And say probably we'll February. think value emphasis Investor I be to Day to source investment a really in at

Operator

with question next from Blair. Shutler Our comes William Chris

question. your proceed with may You

Chris Shutler

Question on ESG.

then of are multiple as which managers initial an in feeds asset more into they proprietary screen, of providers using a ESG large many So that ESG put data kind place analyses in-house.

amongst subjective that Just some ESG time? ESG? providers or to much be is, ESG can the over are work So fairly asset multiple do desire on given that cap using and to ratings see on of any remains is think several that providers And how the spend business you same changing different the do do time? places at willing fragmented think how the managers kind with you the you asset providers question how the with managers of

Henry Fernandez

is to we're trying clients on through and clients to we it's what everything want opportunities. close that to by investment In let analyzed, me some at really try a how to their the ourselves position we our decisions we problems view definitely, capitalize it. give So of as to is - thought their as already to do therefore, already explain And And to solutions MSCI made good possible. do question.

and do sufficient a need plans indices, not clearly the you are and in research you that, all do. all is to for it's the equity uniquely ESG research positioned classes sufficient creating income, not at into on that data, in ratings, fixed but do look and that those it income in with in achieve that underlying And necessary and we of need but success. it’s associated underlying the condition, the all the to that, screenings that, models, exclusion order starting indices. to fixed ESG ratings, of to ESG And to set private So, we're in - equities we risk well. the as asset order develop

lot like And very clients to They're is for better to the therefore, So competition, on people that derived various us. fine space. are the data. that in a in perfectly And investment people that going decision needs that a in it’s order But - see you see is position to from provision on and where where prominent data data, help providing for ultimately, But of our competition many tools tool underlying be some our in decision. with providing too make the to subscribing us, of underlying leading sources us. into we'll are data derive are the it’s translated in very sure. be an for we not data investment

Chris Shutler

term a that, as other with mean Henry, kind see around combines tool third-party yours some think you it would solution? quick franchise? a data just you ESG follow-up be ESG a on you I yourselves of and Do integrates all the longer developing as that

Henry Fernandez

climate want for definitely in to - with very working Delta do smaller partner as that this in is MSCI up definitely ESG this partnership that value-at-risk with climate started is that that of the clients. strategy. with We're wants it acquisition the serve on of the We could order the which with spirit money in world partnering all us happen. are core but We was our partnerships that product. and providing in us Carbon be our and up already that everyone make a strategic of to that to happened. win data. of this that the Definitely, with everyone data. are to Carbon metrics And moment, will to Delta in that to And definitely create example the at case not joint An and institutions provide in

like close and not Carbon that join decided and Delta That a was we the have we didn't team very but would became was happen, the As to another shareholders forces that us. partnership, example it with develop to partnership. an very, management of one few that us better that - the information to with want well. But obviously that. And would as they providers do we And to But competitors, it bigger those. those have more our as is to that. intent a do ESG may we of and may view they do of they

Operator

comes with Our from Craig Huber Huber next Research. question

You proceed question. may your with

Craig Huber

just the couple I I and for your about within bit in that both a questions. itself. please, Can from follow-up? able have growth analytics subscription speaks pricing this can I talk environment One, also talk a price - within mean your about you perspective have the revenue you you're area get environment to little index

Henry Fernandez

Yes seeing hi, environment pricing. any unusual my look in Yes, simple Craig. or pressure in call headline would stability fundamental I really present. We're great any, is at it the changes not pricing so

could So, in now, to has change the any that future, been affected look right nothing power way. in that our suggest pricing material but

Craig Huber

your example? a can of then your basis or as index secondly, revenues indices direct And including scenario, be to the guess AUM area us institutional you percent sighs it products for passive I whether for within

Andy Wiechmann

it's Craig, Yes Andy.

is market. passive fees the pricing So generally the big AUM it to I the ETF, ETFs. past. on out the larger These nature levels that can of just we that than and are we tend assets, say than in the institutional lower AUM get be haven't put the

of But how earlier. those or I is opportunity You've directly many obviously institutional to help is particularly indexes to that you increasing institutions the into revenue instances, investing alluded passive this front that to seen achieve them so big an their the the We're the revenue kind mention index. can we And a are on customized in us. significant put out, objectives.

considerations. increasingly involve many overlays, things overlays, factor times And so those ESG will like thematic type

very that opportunity. we're so, about excited And

the indexing client different very a base. for but similar, think I opportunity, to alluded You it's direct

So indexing direct in unique very of we are with rise wealth particularly position the in to. a channels like the channel,

Henry the use remarks in client in directly the to index to that directly As the about client. suited manager his wealth the index was can that opening that ingredients that's an provide talking or create either provide can invest

to both And on think so, opportunities. capitalize very we well positioned we're

Operator

with question comes Lau next Oppenheimer. Our from Owen

You may question. proceed with your

Owen Lau

on update us Burgiss. thank give with please you Yes, you taking for an partnership question. your Could my

you So what are Thank longer-term? think can the pipeline, the the products maybe move which needle new in and you. product

Henry Fernandez

Yes for line. our as with And risk this time equity Burgiss so, investment and performance beginning we for amount the the we prior announced the in enterprise in working example at spent meaningful databases to year risk you in know multi-asset of product equity, the a Burgiss. models had create private class, of years

range But lot So, slowed other in a needs, can capture summer, in the equity from strategically. on down first that investors have And the now earnest many of with the in a into we we now of wide or we LP of which the about in level in disruptions can institutional the a where examples started use clients. through got analytics in we so, a back it data. their the on to data it's second and the investment heels We the launched investment, in partner of discussion quarter. with areas quarter And of month discussions in quarter, the on down track, pie the slowed and last say second in significant the that partner and on that senior of very the very them pandemic. bigger ways held with have them up help and that or half and investment biggest alternative opportunities because managers

monetized. dialogue the have So that has the likes. not level, most at yet for of and that do senior is sure, high the to interest But levels we extreme this,

management his named as Jay for and longtime marketing in And of build a know, people people and all other thing is, terms and President product and and consultants saw who of organization of to you McNamara, managers happened that. that coverage was a Burgiss. was commercial executive client MSCI, at Burgiss mandate relationship you state-of-the-art is The - sales

world. around closely Jay have So, that front the that work significantly with MSCI to building organization in is that. to the a office organization very the state And is MSCI and the coordinate clients penetration Burgiss in the with expand in sales coverage and order client at much in going very higher busy

kind do the or the penetration of data and and of evaluated to side either areas or the light. there one expansion products they're pricing sets of joint clients in two on collaboration, sales risk second with product the is models So or the trying

Owen Lau

then help penetration you increase you for by the here? indexes. MSCI Could a driven products is linked please same base the or a volatility new product. mentioned understand growth for broker OTC you Thank the the and a little more which can from derivatives mainly with us example think And But demand bit dealer I actually to for - here? structured one growth the that, And was you. client

Henry Fernandez

sure. Yes,

it's - it's like much these Clearly, more licensed segment more But of in more service in mode them. a strategic doesn't would So, we this look volatility much sale so and customization. existing our relationship. we're much a Today shift. product if I with historically, say a back typically that on just was market hurt. really I to take more Today, our indexes of involved think clients. type approach We're

involving analytics on is customization our that new a methodologies. our of as tools Some also as and indexes of variety well

and be to shift based really able continue focus, attractive growth the to a we significant to think in it's hope that. servicing, I on segment from step-up pretty pretty see a So, in

Operator

next Keith comes Our from with Northcoast Research. Housum question

You question. may proceed with your

Keith Housum

say sales say a the I it I looks how with on all color fine. without environment now to work was give able But of same? mean versus to hoping home sales the you are doing are some you certainly I might be it would normalized compares still from terms geographies any able of even - environment? in start sell provide your like you're to constraints your issue

Henry Fernandez

say I effort and pleasant say in a is I would been must has surprise. large both answer a it yes. short - The it's

attendance first ensuring We've with that everything teams technology, view. events our the focus, of on managerial together, we focus example, in for than point found attendance all, keeping cetera keeping that And instances, online. motivated more physical of for did of from days. we so right enabled purely we them in the we pretty et in that actually all enormous can put we've teams of the of that do many just client terms demos we have the done sort products, So, be can have much a

things pretty in really that in think, it. been mechanics I where sales having think that that's decent I of would of sales And I pretty, in view we've the the are So the terms process, well, of say reflected going circumstances.

Keith Housum

line, at more then of statement, the it about talk sold If of just but we investment is most or that flexes? you look where R&D goods income here, little cost And see the as Andy of the made? the investment investments you geography can in have guys that that we going kind

Andy Wiechmann

spread the across Yes, board. it's kind of

there. So of clearly, R&D, and selling growth modest an that some seen there goes well. you But is element that is element into an shows cost there up sales marketing also in and and as

compensation and investments nature And of case it's well. as mainly bulk that's are when our these investments, you the for of think headcount about So costs the the related.

that's opportunities. and sales researchers, technologists go hiring new to it's these its So after hiring hiring people

roles, mainly so, across spread those buckets exact depending on see in income And the those you'll statement. three the

Keith Housum

Appreciate it. thanks. Yes,

Henry Fernandez

own significant that Azure you're centers. would I savings going that, is with we'll of a those we of and a is our scalability amount as goes which CapEx terms the a amount our in we you years, will by, announcement apprised mentioned add change And associated the production What of summer significant - see in the they data to go also changes. that which expenses own two, EBITDA terms over therefore, depreciation from next to and Cloud, time on expenses keep geography of our more from a the also environment. and the move And of in investment of CapEx into three environment, and therefore Microsoft see production lot the in our of a

EBITDA what's expenses. there of terms that confusion is the no So in happening to

Operator

Our next question comes from Henry BMO. Chien with

may your question. with You proceed

Henry Chien

little wanted of in I - I this it just to terms understand terms more a ask seems how I how just terms each some of should could little it metric? products, it's of we of these about if the model, a is with significant that and seems well? a or that through about sounds but developed service guess guess bit index, It most Andy like in the the with trying like of Henry strategy that, think it a a new is new track and where morning in how lot assuming being going a see think it that just call, of we is and partnerships? bit, And of more in Good more or do it's the especially license like should you it's it model. solutions Thanks. the with as to in change of we strategy. there role. on congratulations about partnerships. new Yes, a explain is I'm to

Henry Fernandez

how options. opportunities as serve is which products provide or that it first of a index can of for and baskets there, derivatives, to concepts quantum It for in we on on but underlying the of - a all which is all futures could it's and the change the for every as a indices jump guide, could indices a will of an strategy the obviously we in is portfolios, definitely - pretty any be you capitalize the could immense not the strategy, a and areas have that portfolio as or the and kind that passive benchmark structural operating in much in replication, or on two evolution be big these the types I definitely it because do there think think of I remarks, mentioned in for world for OTC prepared are creation is is of

the - some and market there of them ESG, asset are cap, they income, shelf, will be ways. climate, some some the what that's some them of trends the thematic product are big be it them could customized, ingredients, of fixed all them the eventually used them world, some are are some and could of a classes terms of be then off in variety in So them can and mega are in of equities, are factors, are be of of that

more a of big playing industry, and bigger we're that become role this role the that by the even can of also - how in So mindset. I is think having recognition a investment that's

to The part use indices. ourselves the second ingredients those is build ingredient, obviously those that we

well So ingredients all client that. to base those have the you might available on

it. of one So therefore, part that's

to when cases, companies it buying be just some especially acquisitions The a smaller But with the want we be we want work of sell in don't like we firms joint opportunities. firms those buying I partner that all would is in a of lower don't execution we the accelerate have of with that an as that, returns to we those in prices, say, orders be described. and will and process second risks a competitive many that why firms, up partnered part high a to capabilities, we that of companies, all with number that, there outright themselves, for all more very - those bolt-on lot acquisition of are what should to over, up organic we in say, of us buying sometimes, many create will should don't be in see cases, bidding those lot lot tools,

So partnership clients. partnership for we have made central, that

that not biotechnology us that that. that we're gave the for those we investing up course, have give Of and us like expertise we investing knowledge biotechnology, with why and themes us firm? partnership don't world's and underlying we all to thematic people in that let's create partnerships indices done we biotechnology, underlying distribution, can those have, always in But don't data partner have, the that. not experts may gives of sets partnership with portfolios, say a that So we ability

do the with So central to company answer we we to We're world. have limited a resources. what don't own whole our is small to

and order don't of with to why the we jointly serve partner people So wins. up our clients needs everyone in

Andy Wiechmann

Maybe or just to add, Henry for touched on tuck-in acquisitions bolt-on potential M&A the acquisitions. and

shares, discipline, we disciplined, year-to-date, we're that over highlight the capital and than $XXX share also we to the per get extremely the can we financially million are $XXX returns protective across And I Henry you we strategically today prices, but that you repurchase on And can average points As at on very repurchase see, look of its share. know, disciplined made. our capital - less our where front uses. would of as all at disciplined

always it's capital. of the in trade-off our a of so And terms uses

Henry Chien

Yes, okay.

[indiscernible]. Okay. sense. Makes Like a Yes.

So quick just I guess a follow-up.

stakes what guess that? that we and strategy, or how know by So that or when what the should taking you mean. what I mean guess, Is how finance think I it you just to about partnerships mention don’t combining like minority do like I

Henry Fernandez

actually Yes. question. And mainly a probably the concept. It's on a organic fair focused But prospects. novel it's

to And the drive so make for when over of the a going some as going have to about think to have important value next company are we several we've us. about wealth here, trade-offs is opportunities the years, we in most of what there front we're talked

have so and robust think element dollar. I'll to incremental to is going is for that strategic efficiencies. we And an on incremental be over it to strategic we the investment be capital an be use, focus to of And what us where dollar long-term. crown about call to so framework the place And return on There most best we like our is every triple extremely that going framework important going of need very also what's intense efficiency.

standpoint, advantage going about process can the to from turn the into from thinking how standpoint position do we we for scale and really what infrastructure create an a technological competitive company So a forward. standpoint, company from a

Operator

Jake comes Fargo. Our next from Wells with question Williams

You may question. your proceed with

Jake Williams

I what ESG you is this based, question can appreciate provided, out is the color break within follow-up on we directionally? asset is had at indexes revenue, one based subscription the what ESG and

Henry Fernandez

within other in Jake rating. is and our all So research be up reporting the that clear, just shows just purely ESG ESG to research which segments,

All that's the asset So indexes, is that is asset reported from tool revenue base our base fee that index within screening like running our is things segment. is fee through no ESG There segment. which ratings. or coming

seen, base component, show is that rate which integrated broken coming which rate run we a a at run this when figure, out contain ESG ESG rate, asset the index, does the run detail portion fee so Now but from not index we the you've stage. have

Jake Williams

assume section it's Is half it based? rate that weighted towards index within half heavily or it run that more that Is to for? subscription asset and fair ESG

Henry Fernandez

rate right you is Hopefully imagine is the growing which at growing. management now we have grown rate highlight and point the growth other growing index But that a there. don't component see I factor growth at the very in we the can base detail assets on within dimension can I just are that linked can more to both within to they're say at give robust meaningful, to can the looking they you ESG future. indexes, year-over-year, of XXX% it than see highlight fee ESG in And other asset want reference And both XX%. you under growth modules. our run in subscription is do our the would slides, ETFs

as there competing is dynamics at well. components ESG. rate factors you there Now, tell can between in growing healthy subscription But the a very growth

Operator

to any like I'm over would the turn not time. And call further you. for this Henry to I remarks. questions Fernandez further at any now back Thank showing

Henry Fernandez

everyone to to advantage with, provide hesitate well. don't of you surveys please and not directly the much will February feedback, reach, very ourselves year, out the we that reach as tour you and people thank that and you couple to do call, how you opinions of our take be reaching up you to us we Investor So encourage in in like listening out optimize we'll In earlier we for as either many our for or work run said if even of to next franchise. us in some full attending. reaching of ideas, Day directly environments, with the of be to on get best We to

best thoughts, company, our as to we the safe. stay to much Thank thinking into and and what well opportunities, we're during our that ideas describe can them our them very you you we If Day. [Virtual] doing, have all our way welcome that Investor investments put and

Operator

and gentlemen, you. concludes Thank today's for this Thank conference you Ladies call. participating.

may disconnect. now You

MSCI (MSCI) 27 Oct 202020 Q3 Earnings call transcript