MSCI - Earnings call transcript Q1 2021

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Operator

Good day, ladies and gentlemen, and welcome to the MSCI First Quarter 2021 Earnings Conference Call. [Operator Instructions]. I would now like to turn the call over to Salli Schwartz, Head of Investor Relations and Treasurer.

You may begin.

Sallilyn Schwartz

Thank you, operator. to First welcome Conference XXXX and Call. day, the Quarter MSCI Earnings Good we release a for this issued Earlier morning, press quarter the XXXX. announcing first results our on earnings This quarterly brief Relations available msci.com, we with tab. release, website, are as an our the press will as along update reference under this on a call well presentation Investor

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

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

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

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

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

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

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

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

our now the President Baer and our Financial are Henry Instructions]. me Henry? Wiechmann, to On our Chief over Chairman [Operator COO; Henry Officer. turn today and Andy call Fernandez, let the and Pettit, CEO; Fernandez. call that, With

Henry Fernandez

Hello, XX-plus Salli. we today. standards our you, portfolios record better the our Investor spoke I to year you investors transforming joining continued us Thank role enable for building remains Day better track mission investment and a build in at pointed and global of world. world. in When everyone, February, for our to thank MSCI's

Our have investments our capabilities. segments client quarter and the the the our disciplined and performance excellent in first and experience benefits and solutions in demonstrates made of we mission, financial strategic our in ongoing client

total the XX%. adjusted per and growth quarter, revenue earnings of EBITDA XX%, growth For achieved we share XX%, growth adjusted of of

corporates, our for and This MSCI. models, continue interest personalized MSCI's in on the platforms. growing Staying including XX optimization portfolio creating leverage and corporate MSCI's client and needs signing capabilities. corporate generated where touch index We me to I criteria, newest million, and serve doubling colleagues XX to areas. of drive differentiated tools segment, digitalization, these demand an toward Within distribution within the where clients, trends segment, wealth would management industry capabilities, portfolios, various clients, like process opportunities ESG from adviser our like to management significant with direct cash to free highlight would X we on highly offerings. let data the each also support spoke strategy of wealth is for recent of and the emphasize my also of issuers, At sustainability investment selected incorporated I model in MSCI's entities now franchise, entire segments best-in-class Investor across about client supported solutions, I by $XXX year-over-year. flow solutions indexing A climate data. technology Day, advancements

to the and Corporate needs ratings benchmarking to and planet for I impacts offerings. interest corporate major and like that our deepening climate as against to strong our ESG highlight see our risk. and a simply, underlying to financings. climate continue reconstruction and range investment expanding reduce our committed would by pledge standards. Scope carbon of of the to and sustainability-link X data became high progress X Scope integrated ESG solutions possible. and supporter portfolios, our shareholder greener urge revolution. in This portfolio climate believe and management to avoidable channeling an TCFD. Put We from and decarbonize by with recently will new official capital emissions into effect as climate our ESG to investment and to to internal reduce the I Sustainable now investment benchmarks related the to a the emissions and in climate commitment critical to will threat fundamental zero opportunities an have a licensing is reflect to our we to drive to of and holding economy of and missed and operations and support increasingly to companies an UN ourselves a that industrial X call This to We change, company, global voting our markets path a week, related largest global X. also reallocation require on and addressing same world Development from force which before of recognized the result quickly intermediaries XX%, banks reach past We're a participants. asset change the emissions forth risk of from net a we the XX%. to to risks our planet decarbonizing net on net These XXXX. through all losses. existential capital a the by to Scope change by asset Goals. join owners, responsibility actions in prior is quarter, considered owners funds are since effective the to change all users Failure companies. also net transition climate asset in policy Last essential by to XXXX, participants We actions Capital put revolution. range their asset investments transition and opportunities to zero zero investment innovation, the to their identify risks colleagues managers managers decarbonized impact community my engagement action our by Providers, commitment economy and journey and as announced our framework MSCI, to as addition the

makes data, managers it climate opportunity industry a have capital franchise, action, investment net to all Conference encouraged Triple-Crown Supporting year. our and priority. to the help paradigm As to of later enormous accelerate we leading transformation. adapt significant are At MSCI, shift investing a our Regulators, zero critical COPXX all to is especially act all this market time we in participants call and to technology necessary models societies before be owners adopt asset in this a provider economic said the and targets, now. emissions and as the investment the undertakes an enormous this

will a the innovation breakthrough the sciences critical royalties would expertise and Royalty index classification announced the will biopharmaceutical transformative various week, Together, strategic me provide to for capabilities, technologies treatments. assist biotech development. turn largest highlight funder across MSCI I clinical and develop expertise where on strategic recent now MSCI trials, we a Last conditions, buyer Pharma we industry. of the Let our design indices medical lead leading medical and with with life like and This megatrend. methodologies. plc, that of thematic of Pharma a knowledge to and a framework Royalty in to therapies, biopharma will may in collaboration

weighted in indices, market and a strong become standard as now are megatrend indices, cap has indices capturing ESG, Just world. including the major MSCI climate a building indices, nonmarket we the in factor in cap and weighted opportunities thematic brand

market weighted so And we broader you see indices we and sizable have of built excited about quickly the consider opportunities. the for range larger. cap nonmarket these why you can are cap in If business, applications indices, significantly

You for climate potential the and already have sense factor indices. for a ESG,

therefore, minute is believe describe me, we take with Let indexes. a to thematic possible what

provide we The investors tech, for of have for increasing are both and societal indexes high Royalty have identified megatrends have with Invest; way therefore, ARK which an Pharma; made MSCI. partnered megatrends Biotech, for most and area significant energy, we we investors into new tap which already partnership now focus and for thematic this with opportunities. clean include X to that creating disruption Our

we us You will partnerships access continue to ensure see subject expertise. to have best-in-class build matter to and areas in others these

associated trends I with the starting call health global the the hope over Andy, risks moments economic pandemic, take on Notwithstanding for secular Before opportunities positioned We ahead pent-up us. continue unprecedented significant well observations this in few a turn that collective to MSCI from I'll opportunity continued our to Many MSCI this vaccines we MSCI's Baer will in ongoing markets our already accelerating and the capitalize scale very unleash the activity appropriately environment. to U.S. need provides of reflecting to addition rollout these the operating on expectation. and our describe financial to benefit ensure are to to of set. are is

responsibly business. remain the established in continue order on to Triple-Crown committed investing and we in XXXX, As our leverage through build of we opportunities to deeply scale

like Baer. Baer? stakeholders. We With will value over are long-term I the our to now that, confident we can create to for all of continue to turn various call

Baer Pettit

high. MSCI which Henry's quarter sales strong and reached echo Total Thank across the with started you, the Henry, greetings, first year. we've for momentum I'll record everyone. enthusiasm subscription a

rate. also surpassing milestone, fees Asset-based a $XXX million in run achieved

as more rate. MSCI's versus double-digit quarter increase analytics, noted ESG loyalty, our year-over-year. the Day presentation, total our to quarter run subscription Net XXXX rate central Henry expanded in $XX first during XX% assets. recurring financial of efforts were ESG software to survey, sales and nearly and with relations services, XXXX points, retention well or Accordingly, XXXX, climate's commercial the average run global leading MSCI's and index's basis a as a MSCI's driven growth remarkable subscription net new XX.X%, as deep In Investor as are in retention $XX increase, nearly points scores well index indicator included million for a rate up million private the client and model. up industries. first year. was highlighted than very XX $XX run subscription I rate and above the XX% million, $XXX compared our Score, points growing our In As and client XX% million, X successful wealth client This XXX year-on-year enterprise to nearly in SaaS of climate managers. by or the prior our across increased Promoter

one client of As you $XX managers, up is end quarter, a had the year-over-year. of XX% wealth million first but we are from very promising run this rate our aware, newer At the segments.

and to client in continue also momentum see continued growth segments. We strong established more our

year-over-year. from which managers XX% asset run total of run asset X/X rate subscription and were about example, rate, owners, For comprise together subscription up

about new regaining point observations new driven Americas, APAC, few in the pandemic. subscription a year-over-year In success strong across this quarter make the rate Business ESG run and growth grew the growing subscription and to rate the regional run year-over-year activity to in me In Total growth XX% EMEA, Conference, the reporting need from was In forthcoming view. with climate, created MSCI are by X% client is APAC liquidity. subsequent regions, activity. X% Japan, particular strong TCFD segments, sales strong in across EMEA, Let product XX%, quarter. alignment first and regulations respectively. momentum on generated and as normal COPXX subscription zero XX% and a the of returning were growth, increases net opportunities in but significant spurred the for by

of to levels across regions the both On pipeline global products a well healthy start last as sales remains and above the our of year. as year, back great

contributor growing enrich to the climate pipeline climate of attention suite noted, and well To rapidly a as end, is our Henry recognized. significant data, risk continue technology. has to to that models MSCI's As sales we expertise our been

Let provide examples. few me a

including climate risk, MSCI models, climate developing value new at of introduction we are including income. for successful our fixed climate Following analysis models asset classes, scenario

enrich We our reporting our X TCFD sets, including to and also continue data emissions strengthen solutions. to for Scope

indexes alignment launched portfolio-level projects Paris some for our recently the indexes. Climate prominent MSCI world's asset from reporting launches Paris most TCFD to MSCI Aligned temperature institutions, equity fixed MSCI Climate risk We climate fixed We of successful benchmarks. comparisons income and to have reporting owners ranging Aligned of indexes, income and climate following completed

efforts leverages Finally, MSCI to offering and that plan as connection with cloud to models solutions broader risk-focused data. and in climate introduce application This climate AI coming soon, native and service. tools technology investment showcases a Microsoft we deliver our

the capture potential in and climate over future. As Henry from tests. have in stress climate now like addressable in totals investing million $XX MSCI's to we the on to the Both to rate the referenced, franchise. are capitalize sizable banks, climate, across opportunities needs including requirements corporate stress become areas testing mandatory run Overall,

of help in part expect address continue and climate to grow We evaluate, to risk we this as manage the investors rapidly portfolios. business their

move run rate our on progress but I'll update off income. portfolio management analytics, growing In brief nearly small in provide I Before very XX% rapidly a fixed a income solutions, our has from on base. fixed expanded

have in our ETFs traction gaining also improve the workflows MSCI quarter We're we upon developing more our applications physical new of models. to usability assets and growing solutions that Bloomberg climate bringing tool, single $XX quality than Value-at-Risk of more risk fixed benefiting solutions. In market reached municipal of of improve are MSCI models, scores factor the climate, fresh for We're models for to first from indexes. investments linked and our to index, AUM We building income and the in Barclays at the including we've also over bonds. than made sovereign performance In continue we're years clients ESG and by those billion to attract for security year-over-year. U.S. ETFs XXX% XXXX, analytics, Climate end legacy seen bonds. the

can providing strength. specific As to toward in see, of is our products play by strategy that ourselves fixed income you differentiate areas high-quality

within enhance to to MSCI. architecture asset capabilities turn zero integrate classes, risk we and such experience to to goals. also clients client be climate MSCI's support asset now enhancing integration ESG ESG platform, we to hedge our solutions. also integrated open position-level the our climate Recently, owner across franchise approach and in that on We're continues income and Across platform for into to offerings fixed important provide holdings, factor and products the ability an allowing differentiating Our we calculated research data funds can MSCI further driver management continue flexibility MSCI data, metrics net prioritize across an to analytics. for hedge

momentum strong and areas of climate, ESG client with pace this Given income year, growth private to key our the the which technology research, markets coverage. enhance data, have as and accelerated our begun investments in we fixed we've such and

will framework. our As context Triple-Crown the make in these always, of rigorous investments we

He Over now our our will me to review Let the call you, turn his as further Andy. outlook discuss Andy. recent more over financial of as speak of part guidance to performance. to as our well

Andrew Wiechmann

hi, and Baer, Thanks, everyone.

in are recorded distribute of backdrop, level, have economic In start the a improvement we analytics, of momentum developed growth delivery. and noted, market rate subscription and a nice engines, consecutive segments climate, across ESG rate mission-critical nearly ESG climate seeing private and fairly excited And our As strong ETFs rate And segments. further and run rate our encouraged and entertainment Furthermore, in during our revamped we in we revenue, noted, index and as in are leverage revenue Henry which $XXX fee we XX% other components, separate helping outpaced enterprise quarter. estate, marking travel our In estate products environment. all XX% growth analytics across presented year-over-year, solid consists grew across in our asset-based growth. exceptional flexible traction analytics run of real fueled continued lower now ESG XX% growth with quarter linked favorable of the we million. Baer healthy other we and double-digit modeling We're first This We leading in are Run showed retention the run Baer and we all assets, all climate as franchise rate. all growth, index, by enabler year currently benefiting client we surpassed and reportable in performance growing build the to and nature offering real business. and tools Europe. XX%, fee In business, by strong ranging by to and from quarter a private to from XX% and seeing of asset-based Within XXth in assets at expenses the index, private in spending. the to flat with calculation record saw the and assets, and expenses. acceleration be growth to content a by key continues a experienced in our and indexes. we investment and the the relatively underscoring was analytics savings integrated solutions. operating had climate ESG the saw revenue

cash both reached further quarter a with exposures, than XX% of level more U.S. continued market inflows approximately the climate than representing $X.XX linked last linked indexes product markets Thursday. and respectively. ETF and to growth of climate was strength ETFs outside captured end $XX trillion inflows developed billion all in more Assets quarter, indexes our inflows inflows and $X.X level, ETFs linked and of a at to flows. to On as XX% in ESG of quarter, under all market ETFs equity and trillion nearly global of the emerging record a and record quarter during of representing by of nearly of management MSCI, ETFs the cash during exceptional experienced AUM the ESG equity equity $XX MSCI driven XX% indexes, equity billion into during share where XX% The into cash we all

offset factor inflows of to adoption pleased factor than which the see are our to products. linked volatility We into with the objectives minimum value $XX saw indexes, broader we flows out of and momentum billion ETFs of more

commercial into and quarter financial during strong Our strong results. the top line translated success

repurchases share per by revenue attractive year-over-year additional share growth at with primarily and significant leverage the from adjusted driven earnings XX% operating was Our benefits growth prices.

had at balance mid-April, we used billion notes after $XXX to issuing on In to middle ended the coupon want the with of all of of balance monitor the raise of $X.X EBITDA X.XX%. million billion our XXXX about additional sheet. an proceeds We range had ratio our total a we of I may debt targeted coupon in of within X.X continue cash a of to to our $X.XX offering for highlight of cash we X.XX%. that markets to range, XXXX notes due along that with million quarter see a X.Xx, redemption, the forma $XXX hand and X.Xx. cash adjusted leverage our we redeem approximately Turning Pro of targeted leverage opportunity. the if a and debt our With attractive to

to allocation and focused our in and confident a We be strong We as highly returns position not priority, remain have shareholders. capital the continue reinvesting EPS MP&A first to share repurchases with our on capital and business opportunistic truly a focus changed. priorities with in adjusted growing dividends on maximizing

we more dividends returned This at turn an through now of shareholders million per I'll repurchases well quarter, our as to price guidance. share average to as than share $XXX.XX. $XXX

Investor at on and market based for quarter based initial strong the year-to-date More last nearly us Day, expense with XX% mentioned guidance specifically, to as with AUM playbook. our of may of highlighted our trajectory trajectory assumption the was the favorable pace flat confidence on activate relatively The we our flex the that we up gives up As down of year. upturn of Thursday or levels fees. investment our last outlook together asset-based

growth. our expense intent in increased therefore, to to have, reflecting Triple-Crown support to future range, investments continue guidance We our invest

positive leverage us. operating top know, remains modest in a the remain committed Triple-Crown and to continued expansion. At priority margin areas you time, same As for we investment

their the In number MSCI than by operating first strong flow uniquely has asset-based benefit of as and We compensation our part And view vesting fees also positioned discrete the well driven primarily overall the free industry our in needs. been the our quarters. quarter, it reflect guidance healthier cash account in within stock-based of windfall our increased as in a most items. collections large mission-critical environment of in summary, to into help guidance, to the low on tax reduced from investment many parts first current rate investors quarter. taking is across recent rate remains a We the

strong to very The for start was first MSCI. XXXX a quarter

volatile, the the industry. environment and model, is we and our we that, all-weather the believe While attractive standards for operator, laser-focused for positioned longer-term solidifying please the somewhat investment are line With open well to likely remain for approach questions. on with client-centric business establishing

Operator

Instructions]. [Operator

Manav from Barclays. comes question Patnaik first Our with

Manav Patnaik

Henry, that Can just I on you should of how for comments we how really? help the on think thematic was you big size priorities. about potential guys? your hoping, the just perhaps is there, side And your

Henry Fernandez

back It's of eventually factors to can about equities, all and fixed And every and great indices we and build have is together indices fairly large, translate in and balanced and at combination every the of with fixed the the cap and ranging opportunity investor and a you indices, we for all that business in and portfolio, to that sort. cap look all Manav. think we And of and equities look nonmarket translate when equity in built portfolio massive. the were we and some that that, if then of what thematics market income to is sit has at from needs ESG income climate we an index goal of ultimate

much bigger for it bigger for So we be should that indices, the cap for than for have should market market the much be created. that nonmarket we've opportunity cap built the in than opportunity cap we opportunity what believe indices indices

Manav Patnaik

capital for was Got It like is like, just I just it. of to moment. - curious, obviously, of helpful. remain you sounds the a in just allocation, on to priorities partnerships, outright much one, continue That's even focus or that MSCI how then obviously, at M&A, investments the right? the Okay. guys. terms like, Triple-Crown And pipeline that be

Henry Fernandez

continue to investment extremely on So focused organic opportunities. we be

of higher and honestly. deeper we investment that a have range seen, have We ever opportunities wide, very

with in ESG to the and nonmarket we et opportunities of we in climate do fixed ESG indices to set cap to do to all data, income cetera. from especially accelerating the think what aspects can of climate, I are technology more what to

organic investment We is partnerships. of together. on do organic focused very, it So cannot clearly and the investment, the all accelerator very

that for with have people that look have technology, we data, models, have that et distribution, cetera. So have that partnership

some Some of in traditionally investment those been case, open our may we we're the That may, but their part on hasn't to that. partnerships involve capital structure.

Now large the continue that, we it, to obviously, companies. strategy do duty small landscape. one of Always, And it's acquisitions. it, with sort analyze remain of organic overall we we both very to on focused a but at we MSCI on reviewed selected investments M&A fiduciary and look our bolt-on building

Operator

Our next question UBS. Kramm comes Alex from with

Alexander Kramm

Do color to think this you very have a be I regulatory comply? people already, the but But the more strength same can You, this may So As, addressed ESG get a it really have flesh and some that's for I the you maybe ESG comes Was it more in think obviously, that mentioned of Europe, you have isolate they ready out some helpful. and those? bit is bit big sales? like changes just climate can near seems would more? the sales, just little a benefited. term? also more in sustainable of contributor? little guess, to it you Or when to of

Baer Pettit

Sure, Alex.

climate we the are of look, acceleration an really that #X is ESG, think, in and on that that everything concern What asset previously owners' owners. in asset was had and last in actually were the ESG North and quarter. the U.S. it's the Canada striking the - an survey So of these And America discussed I it of calls. terms we've - is

the important I context mentioned, that's addition the happening for cetera. adjusted portfolios, cetera. in clearly clients risk, the you is climate with in X.X-degree of that we've regulatory things of other interaction thing transition acceleration an So to increasing change the related or I climate And et say, climate and sure, had ESG Europe, the in alignment, would weight extraordinary mix think is, to amount et

So are the is more ESG and related trend the in and continuous. conversations up client going climate interest dramatically to is tandem. even the strong And

Alexander Kramm

the cap me tech in economics and coming All here. effect, areas, don't really network the like pharma guess to the you like, retail-ish, new is secondarily, some talked network And little network maybe good establishing curious you bit seems and market great right. a pricing it effect. to why indices this quarter. there thematic, do. made in that it that and actually those the of you're Great. about things like weighted very I'm what tech you also or a indices, But back have and on you've be one And job, and factor areas those thematic competed and different I'm it's approach that great of points that's obviously, ESG, it then wonder And effect I XX some and easy may gets stuff like kind really pharma taking to like just that of there. establishing I seems of establish I is as more away about, institutional. done But extract wrong know, if indices of nobody high XX cares how they

just in think a a like those I areas. special talk why you that to So you sauce would guess, bit have more little

Henry Fernandez

note to in normally is market I we XX, cap first universe that investment areas. question on is are years would maybe Yes. ask the that And that changes that there in reflected indices, institutional global large that there global example. or has over No, significant going that's - compared ourselves are a the very not are and good economy question, XX for ago totally in structural investor interest way these been because to thing and the over again. there that Alex, explain The same so,

of all be new energy market and the the high tech areas they're asset that invest So at clean allocation and the MSCI, their to that because are will investor in portfolios. cap biotech institutional But a traditional indices those index reflected yet way those benchmarked not for and of more on equity example, comp. on of

of what amount going institutional future. of sort their segregated in we of the in to those and is themes are come into assets So investors those what a put to lot is to areas seeing anticipate a are looking those order

to necessarily not therefore, we can of their is for that biased that taking in the ESG investors climate parts or part that and portfolio climate, indices a but and of lot we to So area a similar well, biased effect travel. lot because as portfolios are investors. institutional effect direction the this to what network relates a of investment And large products with portfolio associated allocating retail we'll doing our it's that's ESG of believe with Hopefully, largely their investors, do institutional that. - investors taking as it network of and get we're are for build

can the that we build board. this powerful franchise So - we to continue think across

is in of the and weighted always discussion partners and community with The the respect other Now do and part climate of active with banking for with development the ESG about exchange indices. over-the-counter thematic chart. options whether build swaps of listed it's cap structured today community broker-dealer it's and and to dialogue construction our the market majority the is past, indices, the hiring is thematic of the off then for or listed benchmark we're the whether that it's indices. and how community options ESG about and the products investment and in also It's the ecosystem and futures passive, the derivative and been, products indices, we climate

Operator

Our Toni Morgan Stanley. Kaplan question comes next from with

Toni Kaplan

a Hopefully, too a this a the Henry, at shift. paradigm But you we're - prior repeat of looking much climate, isn't mentioned of question. with

just you expand on of sort And playing out. so how maybe this see can you

you is the something a what couple next on can as if thinking understand like how this is to that, couple this integrate ESG just sustainable solutions of and time, years this like this spurt? climate year into of keep or just building new significant their do massive bump is in Or you investing? people growth a is and So trying best, over

Henry Fernandez

We then classes. It look in analytics Point not talked indices course, on portfolios, loaded. for Well, do analytics. or context XX, clearly do climate about that this of it's years be of but of real the cuts ESG is our climate in repositioning all segment fairly We're the front cost of climate going in how of about private big cities next And and way, decarbonize, everything front all peters a affects the the as to slows two it is XX out we in estate from change one. - it at in across lot - point a impact that the loaded how We're and talking down. we it for reporting to asset we and risk that. well. properties climate and and climate the do

been place. leading it issuers do. provider it of which expand also And not has market, global whole. the forms them where of an transition of to is will we and help were issuer the opportunity decade in climate have as we on into that opportunity a corporates we have whole is to investment this the be traditionally And will with leading going place in solutions as largest you years a to MSCI industry MSCI So climate. this been to to or across significantly think take And the and position next - the what we incredible everything cuts other or of #X for a want therefore, X, a few that if provider

like dated, a dialogue for going And So back seeing ended, back not not like this it's it's now, it's you're on. massive the is is us. and that opportunity

very now. massive obviously, momentum to our from, small seeing opportunity sales a base, for You're it's a us and be in going but the is

Toni Kaplan

for That's great. this Andy, maybe, you. And might be

second. the at for a guide looking Just

was, cash at that the midpoint X% XQ You year. about raised by flow guessing what for the I'm free know but better. came don't your XQ I full expectation in

the reflection why continue XQ year? guide Like higher do the for trends a of saw the is that rest just you weren't So in well the beat? of really the

Andrew Wiechmann

Toni. Yes. Thanks, Yes.

the extrapolate the I can maybe answer QX to and I full question year. performance, then a and strong on about spend So second your can

flow As a fronts. very across us. we to, very was growth performance One, the for the The strong story strong did you two, in around cash really performance alluded have so on X quarter. also stronger, collection collections us very business. for But growth was first business strong

the throughout point, shifts stronger just some financings payments, the the which The collections biggest affected the impact by The in was we've growth, is done quarter normalize year, guide. up full impact from normalize year. first which but to I did quarter-to-quarter, we the the will interest the is your activity growth, in we really the that recent reflect business but those picked also bigger to tried business think, for full will that benefit

Operator

Our from Huber next comes Partners. with question Huber Research Craig

Craig Huber

- north My of new touch your XX% of with for to there it? competitors, for like Henry, first this lot this. exchanges, because additional should maybe I smaller, of there, heck we there? one get moving Futures as What's options, to there. on if - plan looking major and expect you gets a guys' you question, forward, revenues you what can Are example, update terms from view in can area you us is opportunity obviously, an an a involved revenue more just but give would, you going of the and game of area get this much it's your please,

Henry Fernandez

Yes.

expansion Andy you give financials. can our some commentary the of world. answer, This the MSCI with me area exchange around and let So in is on business then significant the an partners provide all of

most market listed And before, in cases, single-country, when noted futures futures futures. a is have and the we of and As currency it's single it's in world, the for some multi-country, index single-currency options. it options

partnership all the obviously, which and an in prime Exchange We this and markets. for Colombian expansion world. of had the with creativity, like. the what for partners now So certain partnerships Exchange, innovation, And increasingly is with for also area partnership We've in our of doing prime our exchange regions announced, we're with we're example. a the emerging Saudi is doing

So something that innovate. that's we'll and continue

to the that the of is that other said that indices to how While from broker banks my ESG to in partners, exchange and all of with lot and which index, is comments, the swaps, for talking and an we're index are for and We and significantly. also tech of structured dealers would related options in an that, derivatives. in prior we're activities process - to their options. market in licensing listed the and recently of and example be And I all also And of over-the-counter expanding do that's launched in thematic as our have prior a into futures a the thing cap exchange futures China expansion we options of products, thematic. go that to weighted now the example, we activity

We do basket to becoming of products. indices a building are basket large trading - then banks over-the-counter for their for provider broker them dealers and structured

ecosystem whole financials? a building. on Andy, that it's So the we're

Andrew Wiechmann

Yes.

and us underscored, So the very just opportunity term both over-the-counter bullish Henry in be Craig, the talked about to past here. and In about quarter, for some the continue points as listed longer there flag in current we've to as derivatives. was

Importantly, comp. the comp, it's a tough

derivative that quarter result, at So when period was highest in the as first you of highest traded. last a year, of look and volatility contracts a volume

do last and just is this based year-over-year see partners. the the up, we noticed. and you when worth noting, of volumes could that that It's the drop get pick of paid so repricings revenues the given impact of our on a some a run probably exchange there quarter you That rate is agreements which And in we as you was was will comparison, result noting benefit. It where with worth will the contract that receive. that that price volume

as of that baked So last QX of year. in was

franchise will volumes you and So would one you're it's in where up, see contract rate won't more that the seeing highlight to but where But Hong going benefit I volumes. area pick it's the Kong be Kong bit today. pricing exchanges. is and a that much our run from specifically, little volumes tied still forward, relative contract complex exchanges transition to SGX, start up. were on to lighter the to seeing behind SGX Hong We're build the

comparisons, in start is long see we through and over that to area, look revenue translate subscription when will fee of only component, the we to you bit to asset-based but lower. continue bullish the a term, index which so well, help the this volumes as drive historical will And to some But do not the also over-the-counter be very piece. where

Craig Huber

guys, opportunity that how products you, your indexing, in view could maybe you is now? also, Europe, revenues? institutional the if the into size an Then a ask percent that you And big versus that for of evolving direct us plan passive is of U.S.? just game How as I can right

Andrew Wiechmann

the to a to within market this in the last the and fees and see actually Yes. you certain can generally. direct comprised nonmarket ETF, in It's I really products which X volatility. revenue a of up where cap quarters resilient will we seeing rate, indexing, more There's strong the the also line growth passive, mean which we tend area what mandates area. fees. We're bit in areas, more and that Relative And or areas, growth get extremely actually, little the see past, despite the like are passive. launches of which each volatility. call fewer actually areas non-ETF which and double-digit have mentioned resilient non-ETF of growth redemptions stream. seen fees show nonmarket periods that's it's increasingly, as mutual higher it, And funds, passive we by which then in outflows could and tremendous index-based the as show call we be during we've institutional few been an up growth retail-oriented, cap been non-ETF we've in quite resilient, there,

trillion for opportunities a and here us, transition an And in linked rate the it we now climate. area for regions. run a assets focus really it's just is the to to of for of us, $X.X dimension funds and And our management for focus And to the indexes. to non-ETF by about one you Just strong ESG across index - can enormous big continues be all big there's growth you, see under increasing tell us. drivers

climate AUM growth indexes. bucket we're in non-ETF and so tremendous seeing in the And ESG

should for overall area we're So continue to on grow focused and us.

Operator

question from Owen with Oppenheimer. Lau comes next Our

Owen Lau

specific prepared So on Could you MSCI you continues and driving some outlook? what mentioned to also there products growth remarks. numbers the the traction corporate. gain Henry, talk about the please in

Henry Fernandez

Yes.

data there industry what far are lot so sector the selling of underlying corporate. organized along we're which, a as know, doing and is ratings, you the lines, lines, to So

in information So underlying participants a in example, compare reports underlying cross - you and know want the if sectoral to to what to the you in do if then your getting. the sort and of want rating for industry, you're that corporation, you're sector, that's you comparisons, and rating your want your other and what to is

corporate the themselves. that's So

the need a information that increasingly, consulting trying are Now ESG to and sell be the could that investment make, we also, net zero advisers by, firms, how obviously, as et strategy specialized out firms, could they deal advisers. their to help noted, cetera, and disclosures, That be their entities banks, all could ratings with corporate as the be capabilities be et those time accounting to to goes data pledges I ESG figure could their cetera.

for is very ground us. fertile a this So

know, on there very just of the X,XXX calling are therefore, XX small, X,XXX you - in or ACWI having out penetration. a and IMI, companies As small is

referring to models, what these data there Now analytics, but that to to top with increasingly, entities - we're also that with of yet, through that projections many their their to we're respect not what going we're to position Microsoft. corporate we're help also should going data, think was should respect be be, Baer begin building platform climate, emissions but be what with on was of to on

for growth So us. again, another area of fertile

Owen Lau

growth adjusted maybe expense reopening guidance, line $XX and Andy, economy that guidance helpful. Could the million higher of T&E driven of please you driven talk like is how to cost? And for the was the by around then health about and you million. by raised of top very how much $XX EBITDA That's care by the much that

Andrew Wiechmann

that and Well, the you by Yes. in as of are driven two notably our the growth tremendous in key in our related. in line by index was AUM parts can in as the to acceleration and definitely ESG, there. we're climate ETFs growth linked success see top accelerations as well It most rate the business-like having ETF

market markets bullish have we improved flat set we the reminder, the thus a year. assumption the year, Clearly, Just pretty the based feel our year, on of guidance was the balance of beginning that this relatively levels. at when of about we as for far and said outlook the

of into those calculus our much our upturn to to two feed how inputs go want playbook. so in terms And we

and business, in seeing outlook broadly. guidance in momentum see increase we we're in our more the the so clients, reflecting is the bullish And economy that but our more and the really markets also the

to And the our the so about and areas the are growth. to Triple-Crown in we've we playbook past areas turning in our invest talked are driving upturn that

nonmarket are like technology to weighted well like supports areas ESG and in company. for as in continue and going climate both engines indexes, and it's these cap go-to-market that areas help that data areas to of the them research So as the like fuel growth

do would it. really, itself to we lends the we're opportunity we see to and And as do we when the as and so accelerating our done it. And said said we've we past, in think investments this environment

Operator

Clinch from comes question Equity. with Simon next Our Atlantic

Simon Clinch

was from side. I opportunity customer the wondering I could the if follow-on on corporate

of entering of kind curious Just in business to with coming sort as are to how terms you this how of think size. about those customers

opportunity a are you coming the customers? keep they Is is of ultimate that much well new that customer, present real So to they a spend the on take when And that very opportunity today? of and number well. for as the individual just spend in? multiples follow-on what And customer growing have you I for as as to corporate

Henry Fernandez

Yes.

the covering what those that about the of at would industry success, to in are industries. be of revenues I of into goes - there, can the and go ratings offerings, and us. that on information the area expanding that, and we're have that we getting reinvest On top world as we products people as into that our lot a a to run step one opportunities we and handful systematic talking significant the and force climate, going client a our around there and in established specialized to approach And yet. go this we of momentum of do there to to but fairly sales And we're sales more that. more other a to across we're obviously, was build sales sure that. not to their we coverage of are provide of rapid the incremental make ratings since have a is as are run corporate and and clearly, and trying this is and out data but we in We're such sales comparison in expansion a a multiples anticipate ESG that ratings that our the to a I the the - segment narrow with multiples, client there of we services that direct report rate will expand and new which So and coming companies particular revenue the of large for and that of quarters. We're set products and our a start rate force, force on value-added our others very all new trying time the with

Simon Clinch

you given That's viewing the talk expand as and great. existing you're entities as are the without And you limitations customers, sets you're follow-on customer as well? advisory distribution faster to the mean to when that. the those selling separate that those well about just corporate you view corporate to your new sales much direct of targeting as force? Or them effectively platforms, that to do with I completely opportunities customers

Baer Pettit

right? No, when I So wealth advisory we as overwhelmingly. think to you separate, that's segment, the those firms, in refer the view clearly

what corporate And it's the segment. we us. believe a If discrete meant it's the... by from that's really So large pretty that's a - you for opportunity

Simon Clinch

it. makes So Yes, that missed must have All yes. I right. sense.

Henry Fernandez

clarify. me Let just

mind. don't if you me clarify, Let just

the CEO, that firm, and of companies data to the companies you cetera. all those made the to to, the and ratings, they CFO, the the such landscape, investment as the is, what - of cetera, of advisers such et their need disclosures, comment the such understand Directors referring ESG, their as are Board what that, provide, advisers the think et that were and their to there - to Treasurer trying is accounting I as which banks, are I to

provide things to So that the or what disclosures enhance tools and their corporates. in enhance categories, sales a them we is force to companies as with and And like augmenting to into secondly, to advising the view them ratings is the position that. the what to this to the we're do corporate not X be advice in our category the advisory entity for data

about type advisers therefore, - them we're of financial right? we be and different advisers the and using hopefully, relying and have So that's companies data adviser we're corporate what segment, talking the the in providing companies to to channel as advisory a it's augmenting the as We're the do investment like to in both categories. whatever what and with to advisers doing, networks the on and ratings, advice them to the

Operator

[Operator Instructions].

next Housum Our question comes with from Keith Northcoast.

Keith Housum

Andy, additional expenses. the the to just trying a to playbook to $XX million unpack bit $XX and little upturn more million understand trying

more you the how think And should that environment, was consideration, I As taking return guess, the I a grow? how any? terms rest work to a percentage original to, what does plan guess, what I your normalized is in year, guess, compare then about of, also of if

Andrew Wiechmann

Yes.

XX% is AUM to So the assumption ETF to guidance up I the dimension on it relatively that, flat passive as nearly levels. the mentioned rally year. to strongly, - and based just market expect continue and original before, up said is strongly. we was on we've Non-ETF of

just the strong year. so set at kind some X of driving when the and above the are alone then those we beginning our And revenue like line assumption items ESG climate. in we're guidance that back of seeing And in baseline growth areas pickup

going that guidance, scheme for in growth, in look million, modest relatively impact on point, the that's expense us. grand expense to growth is so the about $XX up the at the And midpoint when pickup an increase of your in which X.X%, of increase you the the revenue in rate ABF has

to Obviously, was benefits. continue about do normalization, to the investment it's continue the benefits continue starts To million but assumption and return as to first strong in able ago, a were positive we these highlight we these some where Triple-Crown away the but future return. not about But to pre-COVID in drive that question firm return year for expense a well. engines kind from to leverage benefit drive go second world, so, have we your of getting full a to really And there to quarter, a about those be a opportunities. would quarters $X COVID-related key growth accelerate in operating I

you to give to just numbers So dimension that. some

Keith Housum

you. then $XX upturn the coming increase Got million And to playbook. back in that

or data your new at future are operating of expenses, in you expenses look much products? growth new operating As currently centers solutions, if how the your invested it's

Andrew Wiechmann

base to change about of expenses, Yes. our total it our our to and pool. this plus $XXX Investor expenditure at so talked CapEx. about is that's million we I broaden our and portfolio investment define Day, We which against - expense or business the expenditures

these kind of areas, the of total in call $XXX pool, So it be change to these that business Triple-Crown that accelerating. and about we're are million the is areas really going

Henry Fernandez

areas and return investment ESG talk business rates is therefore, What all to modest the as And have have maintain expansion context plan the valuation. Triple-Crown with not add pointed very growth the in rapidly you that very is it's Triple high, to types. so more in game growing is this index fast therefore, as our leverage know operating business EBITDA just this, I of time order more high growth of business. money expenses - right, leverage just or like much areas large of of Crown into we that increasingly investment And also would you expense the is to right, of numbers relatively existing of the that but muted. And our And I'd to be paybacks usual, expenses the climate to sometimes continuing high in of investment - in multiples business and running hopefully, investment about in in running of operating and that plan and know, investment and margin expenses. is of in majority the want than the squeeze expenses one transfer expansion, I high incremental overall more the are are the clarify clearly like the more the

Operator

Bank. next question Sameer from Kalucha Deutsche Our comes with

Sameer Kalucha

that X solutions I you was The were to there going announced Day, that launched to get investment as services announced color wanted Analyst in you on the XXXX. thing service were initiative some the on be

pricing two, solutions any be they versus and different customers Just in was That's wondering would contracts have there a track. on any if the use as number Would when regular difference that be your And right launch the pricing service margins? now? one.

Henry Fernandez

is a and service, do. data solutions new a a So data some some of what service, And cases, management Investment it's we extent, of of as service. new product service. to a that as relabeling in a currently some

of is we're major service a expansion what to trying do. data as So for example, a definitely ESG

to the lead to #X products, on. products and the right? the Investor products our the to expose And ratings would up consider and as know, climate category During expansion. data the for as be would was discussions and with you So we a Day, had number us way analysts of what shareholders to work an us index ESG that beyond and screening and like they

the points. expansion We're pain to their our in one Another as area management many is service very data of internal at clients, workflow management of that. good of to a data our our including is - in biggest analytics clients, which

capability services as only a our of but that we performance to and that, products risk to analytics, not basis. do selling So also expanding standalone are analytics, and support like on a

an So expansion. that would be

So be will as pricing definitely think that about a we what new a what Obviously, about looking you the is pricing totality, of before. at relabeling. service, a same when will the And is that. new be

colloquially category talked before, this right? people want of kitchen right? great We at kitchen in have kitchen, expose to what that well, experience. something great had creates call we All food, great falls went is of as a that about that We into the to which we the MSCI,

Operator

with question next Paribas. Greg from BNP Simpson Our comes

Gregory Simpson

said working you've Burgiss? if have any been think possible and out got it products quite solutions you you've the partnership on find on. a Is few I with updates to you've

on had any color So you around line any if the time I'm launches. more wondering

seems trend market it the now. to be As industry seems towards right private really intensifying

Baer Pettit

Sure.

mentioned think he optimizing been working as running before, - is just at I to new focusing used on McNamara, be thing with So at there's their same and Burgiss, the we've Jay Burgiss we've business President day-to-day. on We a MSCI.

of lot a every week. as every partner working day, with a as grow the So business just to is them emphasis our

path their this working together our we've different a in related lot has on data that to work a both private Additionally, quarter, of it working both on plans been for we platform, those estate, on ESG doing span and strategy. of in market Burgiss. avenues which real MSCI areas across and assets climate such for private that future have and companies our as And variety at in

the of of lot doing coming So out we're more year and we'll out coming half come that likely work of products on work that have there's present. second during at the a there, the

Gregory Simpson

it on how quickly, just then geography, and [indiscernible] I on firm-wide million. some by possible? run color $XXX to Is think, if rate, now And the is climate have ESG which, splits this

Andrew Wiechmann

the to breakdown I'm not by to that on Yes. X to question. now - I'm we'll the provide going exact follow-up components. right going have

of strong imagine, the you the a U.S. is which, place you side, funds, attractively, is lot exposure and his had emphasis climate U.S. products. on we nice into and capturing mentioned exposure a there I'd on into Baer market geographies component at of at and that haven't to side And be a clip. EMEA Americas. on clip. driver very flows rate And As across index is is but But historically the share it run on that - rate growing been know, is a heavy an fee-related lot products. a Overall, tends spread a well a as U.S.-listed as EMEA presence, where growing say research would prepared us they're pretty has a with remarks, heavy run all of asset-based that to continues in be flows the incredible

Operator

Patrick from with Raymond James. O'Shaughnessy comes question next Our

Patrick O'Shaughnessy

crypto energy decision-making opportunity develop the And from solutions? on the there indices an question Is how one and MSCI crypto Just consumption of that for massive other me. your economy might to crypto front? impact

Henry Fernandez

Yes.

and currencies. if the well, house, X studying thing and been Bank are have deeply top that, as and that. of the the top there are, we're is types China, on of currencies. of more of of And And would cryptocurrency, you the know, the is is there we which So type little pack the investigating assets, all digital is for pricing at they financial Central of There obviously, like which example. of the evaluating the be that And is then what a a gold impact there, leading investing.

And definitely we what into looking importantly. with role a up yes, right there. So in the of because second we're - right We're see to climate indices. that the products or impact yet analyzing change energy haven't the cryptocurrencies consumption play have that the part, to come

into cryptocurrency that's is change. how So of of another topic the we're that area climate topic looking with we do combine the

more come future. the to on in So that

Operator

Fernandez over to There back turn further like for closing Henry the remarks. questions. are to I'd no call

Henry Fernandez

listening. everyone, thank you, for Well,

front you us. see, As in enormous have can of we opportunities

We we'll having the as And up are on very and some expansion. bullish environment. the margin same our pace that to of at relatively modest step investing time therefore, continue operating do

So to your forward very and comments much, question, we Salli look team. to thank the you your also and

Operator

conclude Ladies gentlemen, the this conference. and does

great now may day. a have You disconnect. Everyone,

MSCI (MSCI) 27 Apr 212021 Q1 Earnings call transcript