MSCI - Earnings call transcript Q3 2021

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Operator

Good day, ladies and gentlemen and welcome to the MSCI Third Quarter 2021 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the call over to Salli Schwartz, Head of Investor Relations and Treasurer.

You may begin.

Salli Schwartz

Thank you, operator. to third welcome conference XXXX and call. day the quarter MSCI earnings Good we release a for this issued Earlier morning, press quarter the XXXX. announcing third 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, our We of the expenses, measures, performance. adjusted comparisons operating and to presented adjusted operating provide to to, non-GAAP EBITDA, and During on we flow. facilitate but refer growth free today’s into U.S. believe core not limited meaningful our revenue EBITDA insight period-to-period non-GAAP EPS including, measures organic in basis also adjusted call, rates, addition cash

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

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

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

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

and President and our this our Baer our Chief Financial Wiechmann, are Officer. CEO; Henry Pettit, COO; call morning and Fernandez, the Chairman Andy On

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

Henry Fernandez

Thank the you, for Hello, years. today. for X and thank also done you for everything you have joining for last Salli MSCI and us everyone thank you

leading Our than organic are of revenue the more on, accelerating further a more earlier solutions those we we we of Investor time opportunities. already years I cannot In executed our seen broadly much and attractive XX% quarter that growth products seeing performance also It XX so at identified when excellent remember many across has evidence Day so including we this my MSCI. the investments MSCI, for and demand have and this year. have validates demand is

MSCI across and transform, investment and income, standards solutions assets. and to offer cap to managing are industry indices and and risk the and continues and turning analytics market tools products clients As climate data ratings factor both data, models, non-market equity fixed services, for ESG management cap and our insights private to create in

examples to to client navigate market see of that where every within discuss decarbonize. language and process. solutions the climate, as in largest class few markets across help In demand scale charts. interest and across asset industries you is me be Let every and we models investment capital solutions for of participants the base a climate. client Ultimately, just capital give economies MSCI’s common tools, data, our aspect our for to to history begin We global we the offerings exploding want want reallocation off climate use participants the

our continue invest heavily to You climate will in therefore offerings. to us see

global they insurance alliance the strategies climate help asset pursue to in next decarbonization a managers, a Collectively, asset see of companies world, owners, Mark for are the week. flagship recently hosted the which the to driver asset be institutions global reach participants about in key banks, have COPXX well-established focused deep Alliance. Zero Conference, a event. critical the Investing and the global is economy. a within leadership Providers September, have also establishing up on we I’d change. our XXXX. climate This Financial UN regarding global that You that give impacting year, other ESG climate, like In growing zero MSCI net already managers talk long-term, owners, companies, climate. us MSCI client world initiatives and focused asset other managers at and Glasgow the we To asset representative and and in the asset well-positioned with We policymakers will transition at would key We the information to conference Carney, owners, the need financial dialogue and the leading by discussion MSCI members Global strategic on in UN market role Net Services lead to to joined in ESG. from strategic involvement playing pivotal end, Conference relationships in MSCI’s separately the net-zero key

also sovereign course We including securities munis, MSCI markets included coverage across income, MSCI the the of equity developed well as in MSCI’s includes for comprehensive bonds, as especially invest ESG entire bonds. It This and derivatives. ACWI fixed universe to but equities, spans consisting corporate in and equity structured products for continue ratings. indices of emerging also

to also to more architecture data. with ESG enhancing our addition data we ESG ratings, and In models granular provide clients are

the not of see from the sales in creating to In ESG, their us in social to including part more needs will you and In process, investing invest and in carbon considerations Demand addition variety in is heavily we our area. hear broader and across client factors appreciation value. ESG also data this can organization have are on emissions to impact every truly or destroying justice fire continue metrics, order on and of ongoing in governance for these and serve issues shareholder having investment corporates social a advisers. we perhaps surprisingly service in given interest strong

is demand can universe, base weightings, custom area meet and to screening, this Another increase area custom then. for where hedging We area end made and other interest we Day our increasingly in in this direct investments indices. has MSCI the demand of accelerating offerings Investor choose investments already during clients custom-built of from Investors since characteristics. This indices, demand likely where even their will own see highlighted are this they indices. February to explode our accelerating and our looking we for our of been to indexing. has for relentless a number is

renewed is more Factors in our this than which demand quarter and topped $XXX area focus year-over-year. franchise, high million XX% of Another run-rate, up

expand continue environment our I our through We newer wider for to software office applications. workflows note distribution front enhance now in and partners and us. the provide operating a will innovate content, on quick

some turn never a political engaged. more optimistic in We opportunities see a With feeling attractive we I the we result to XX over all for that partner translating despite and our will about the MSCI this We set my They across demand of have that more Pettit, believe today. call higher Baer as business products are for COVID than we into clients of are hear that, and years. and and optimism services. had Baer? rates, geopolitical Our issue. even slowdown rising see of inflation, concerns, economic as potential continuing

Baer Pettit

my greetings Henry continued described everyone. our comments of the growth. you, as Triple-Crown fuel strong associated and like I’d opportunities well have investing enormous some Thank today, actions that to unpack In to as Henry the that

client and development product new to meet it technology of as pace Our been faster is has demand. ever we race than

First, last related and year. million footprint to category, on services products totals have climate over this double well that than $XX from a change, we our now run-rate our more in

MSCI of holistically measure combines first-in-kind and spoke issuers. visualization capabilities analytical Climate that it believe zero to in and recently about us Global portfolio launched data what with be. Lab, early is management MSCI We individual At franchise ultimately range very dashboard climate our need and Our risk offerings progress our Investing this investors a Conference, capabilities. the for corporate still can is their with days rapidly. portfolios in expanding net MSCI’s recent

investments issuers, have of understanding comprehensive a better basis of Scope serve on which comes the as data datasets chains. made of and X the of Scope X now to series will companies thousands build from supply X which We Scope their

Climate SFTR analysis offering portfolio Additionally, at-scale Lab in the the capabilities, platforms meet for powering reporting are TCFD is This our clients MSCI’s critical requirements. portfolio first analytics market. to and

decarbonization we and targets is create Our aligned a of set temperature allows to implied are available bringing zero rise The level. temperature a existing newly and net at derived climate specific that ITR comparison which goals. This estimate future measure from support climate portfolio to TCFD forward-looking team. transparency pledges is alignment the recommendations investors both for on the implied to nearly their company for activities and from alignment is given engagement XX,XXX way portfolio rise another company’s by issuers alignment goals. published the we common and launched metric is with risk

the equity for debt to equity debt funds, and a more We than also and and enables active based greenhouse on in just and and XX,XXX service their Burgiss data from GPs footprinting LPs monitor X,XXX carbon portfolio estimates offering emissions MSCI. launched of measure equity private private companies new over gas of This private funds.

enables franchise, ESG our a distinct in to climate. like opportunity speak I’d which success Next, enormous that our remains about

you the now and for XX% an now our index, ahead investment quantitative in offer to indexes ESG rapidly demand indicators. the service factors clients. strong continues thematics. to huge which of we such year-on-year keep and diversity category. ESG universe new Factors As can and we extremely metrics and and demand Besides it consumption as complex can address climate by categories from market firm-wide engine that the as increasing such rate ever-evolving and client in numbers, in segments of universe across growth data investments thesis corporate as cap for of as to as heavy I’d other our the as client also interfaces and an million, growth with sales franchise, is attractive driven continue our a $XXX as have business we resilience run-rate of demand continues MSCI. we and modernize collectively franchise, well expand need in which the issuers for think see this cover qualitative of across be cap client securities non-market at critical climate demand index. We governance for our globally, categories growth grow the various increasing our see well With to as Besides datasets we to like ESG numerous totals

the of manifestation investing management our traditional investment One in are based index manage barriers portfolios, the their opportunities in market business, But in set all MSCI’s active they this large investment standard the as investors and clients thesis thesis in robust custom to our in see. seeing of breakdown, this and methodologies. they on investment rules are is defining opportunity analyzing all view between where tailor indexes solutions of has index As in of create based innovation index construction. set framework established to with markets for and we expertise opportunity want demand types combining investment matching the kinds. MSCI search and

an the where special continue demand believe end This to thus run-rate subscription our strong continue and will invest. have is third year-over-year. us we of grown you see quarter, solutions, custom XX% to will of index growth As the have for and area

beta a launching be from subscribe web-based allows MSCI well design, that and indexes. franchise. directly Builder, as application clients I test soon and the wanted greater our custom further will brief control to of to Index deliver will indexes to MSCI Builder to a as version their users speed with comments fixed income modernize Index We related make experience a also our site. few to

bolster our of analytics analytics We enhance instrument data our offering. range and to income order portfolio to security have coverage made single meaningful fixed management investments in

creation quarter. are index a ESG, important totaled We $XX And during With Barclays were AUM our have franchise, product the from nearly clients with in albeit linked keeping income to indexes licensed in XXX% seeing very regard ETFs strength our billion, we up year-over-year. of third fixed a small base, year-over-year. number fixed to MSCI income attractive the growth, in for Bloomberg

RCA, turn our or recently update I’d I Andy, of provide Capital call acquisition over an Analytics, to closed. Before to like Real we on which the

view Commercial product As announcement RCA you component an real property strategy. from August, meaningfully real MSCI’s Private transaction estate may we have accelerating the estate values our already of recall in been of offerings. Asset as MSCI’s important

has feedback that pricing we asset client solutions. many of meaningfully other transaction data, key use a due and such has models, bolstered capabilities. front also acquisition been RCA’s diligence, sourcing extended into The integrate transaction real MSCI cases capabilities tools significantly models, flow can as quite office research has Early estate RCA we liquidity also rich wealth Now and as data. with see positive allocation and deal cash our

the confident future. am will well position capture opportunities I ahead, in we investments even making Looking are us greater the to today

We client context make continue and of to demand velocity Triple-Crown are of in capitalizing we the and our will the on volume our framework. offerings investments rigorous for

Let me over call turn now the Andy. Andy? to

Andy Wiechmann

sales sales demand quarter business. for total both hi translating and of parts about, ESG had for recurring Baer record on most that in climate and Thanks, and best the enormous Henry everyone. and subscription spoke across results which reflect both for net segments. index Baer recurring The new into our is the company-wide quarter and third our the We strength

non-recurring we tend retention also sales wins from sales both to would in performance prior as been segments derivatives sales growth usage rates. both has QX. with in by segments, strong non-recurring lumpy we in in data nature non-recurring index client and and with and licenses following packages. in saw organic these that newer I We associated QX from saw sales lower. Across to QX somewhat This quarter related periods, well expect driven improved to firm-wide would strong license be our a highlight as resilient or and established sales, and be client fees strength sales record by

index ESG segments. be which From nearly growth $X run-rate from a grew run-rate, subscription looking comprise And forward, now XX% collectively our of which particularly and owners, segment asset subscription and rate benefited products intensity together continue solutions, across classes was of client demand see client with firm-wide sales billion million Asset XX% to XX% run in tremendous organically. of RCA, asset the enormous across pipeline perspective, portfolio management quite all subscription run-rate tools. revenue respectively. underscore and growth, growth more and managers segments. revenue continue helping our recorded are that This well another in growth equity consecutive in and growth regions the and as and Within approximately to XX% we strength as about segments many fixed Private across healthy. and areas key of across areas and XX% and us Analytics engagement to particular Index organic other company, climate across of our wealth reporting climate run XXst approximately risk and capabilities in growth experienced investment of also analytics The climate, achieving in offerings. our had we’re ESG XX% which like excited run-rate rate. growing added in than year-over-year, Assets, run-rate double-digit run-rate It’s in $XX quarter modules, tools momentum index more the X% growth portfolio to as XX% of subscription year-over-year our across with fueled larger income fuel such than quarter, like thesis funds, X% higher strength outsized management growth. as is our important front hedge growth and addition continued indexes client within by witnessed the management growth opportunities and our which XX%, factor particularly

as to near-term When these integrate retention business, with well of employee expect with not opportunities, EBITDA from in existing together are combined closer continue margin see reallocation segment, Real the to Estate segment internal expenses asset-based adjusted to these the All EBITDA we be investments the that excluded the will to into some the healthy MSCI inflows which likely making Given ETFs equity business. as indexes, year. linked in lower for continuing mid-teens ETFs equity ESG we the Within investment The annualized a the offset investments, to indexes certain fees, next cash levels Other ESG this flows result of costs climate linked $XX drew basis saw on during higher-fee We these X.XX product of cash flows of quarter, flows. as share basis to over our based from quarter. our from and we majority billion indexes. and points saw market thesis indexes. standpoint, ex particularly into inflows strong points ETFs MSCI U.S. climate equity markets to period-end And market U.S. the nearly linked and developed to support ETF the global adjusted into in capture were products strong

Solid growth growth top offset EPS operating of quarter. third quarter interest the This performance year-over-year. revenue expense line rate strong as all last quarter adjusted and growth the higher drove was as a by this versus higher year’s tax well nearly notably in

to and and about be technology ended meet We segments offering sheet. in addition into funding executing position, coupon organization a indexes balance to our billion as and the as clients’ in focused $XXX quarter to This RCA better Assets. geographies, coverage million investment needs Henry on and $X.X underpins balance been continue a cash higher us our evolving tapping ability climate allows we after approximately serving hearing the business including in ESG as million client and the in Private redeeming $XXX to you in have other clients. to reinvesting Turning remain a area from that of continue newer custom, existing our infrastructure Baer, with our will acquisition, in priority. capital data that and strong also With notes. first this as an It thesis will be well notes

pursue to selectively with MP&A opportunistic share and repurchases returns shareholders. to maximizing continue towards also will We an eye

and actively recent We key at partnerships in pace faster areas growth potential both a acquisitions been in strategic pursuing past. have the than

Caissa, very bolt-on we we and acquisitions have both recently acquisition for made Burgiss strategic partnered in continue to and investments. and which RCA, of acquiring small MSCI, may is make to In addition and Burgiss the

cash that about cash balance cash cash total available note the operating balances. both and global of balances excess cost accessing given repurchases for currently would I half overseas is and minimum Additionally, the timing

to with our our RCA a addition $X few for transaction-related updated guidance both primarily includes we guidance amortization, metrics. this associated intangible of also increased million guidance, reflects associated EBITDA range million full now expenses $XX of dollars includes Turning nearly to incurred $XX The our QX. will which the estimated an million which expenses published adjusted we million This increased morning, an year $X.X in EBITDA adjusted earlier and expense XXXX, includes incremental exclude EBITDA incremental RCA estimated million excluded expenses operating from expenses. expenses adjusted that transaction-related not expenses in from for $XX of million of with of adjusted

narrowed Our rate rate prior discrete items are tax tax currently of quarter that fourth number than view latest in a and account in quarters. the two into a our the fact higher the range takes effective on we expecting

Our to to free million payments. all range attributable cash of in we lower reduce cash to tax the incremental which occur will quarter. tax what flow approximately is payments We accelerated future majority these to previously expect the in currently payments $XXX nearly tax expected make, fourth

collections performance underlying strong of does offerings our of summary, as demand across levels the both company. the Baer business. the In are Importantly, remain noted, we our very strong, as quite and seeing Henry for

the a excited ahead tremendous XXXX have us operating XXXX and environment finish we great opportunities for in of see beyond. We and to are

final be call be earnings Before November contribution MSCI, part enormous person day wanted it inquiries investor-related point and be XX. for will which, to and thank will up Salli her will This her we any After questions, [indiscernible] MSCI. as our open to for last questions. for her I of

been Salli us a initiatives many greatly so We over key last will she’s as leader on miss the years. few for

that, her future. see many her line open to forward with the sad in for please leave, I very but operator, watching And look successes questions. the We’re to

Operator

first Kramm Thank Instructions] from question Alex comes you. the UBS. Our with line [Operator of

Your line is now open.

Alex Kramm

morning, Yes. Hi, everyone. good

us can climate climate Or are dig bit more what color models a maybe of to would you quarter? – of further during it in kind core color sales side. you for where give and gave So side? wanted drove saw you seeing little sales down driving the ESG the how the lot the sales a strong Just in climate detail sales into the what’s you still Is more lot already, the on some the be the corporates? products? ESG helpful actually of but already a of any – Thanks. on Obviously, broke terms

Andy Wiechmann

nail where morning. area clearly, good it the Alex. an as spending across to time. lot research, board, would across the in yes, seeing we’re here. ESG a and And I thing say success the we’ve it’s seeing in climate core the so it’s is this to of Sure, to on is past, down one we’re But ratings addition success the products talked about where we’re side. success, tough

asset seeing success classes. that across We’re

So across for to we’ve strong solutions see in addition then on investing fixed and across to continuing traction investing, seen segments. the income client success the equity we’re

segments the we run we’ve strong then and into the the across to hedge in is strong north the growth And selling really have asset owners managers, asset like accelerated continue growth very XX% rate. established broker-dealers, That’s very success client geographically, both So of been success seen seen funds. like board. well, we’ve segments in where by

We are like the in as particular. strong but past, areas success we’ve seeing and talked growth U.S., we in outsized about in the Asia, seeing EMEA are, in

continue fuel it this the frontiers. That’s both front. continued underscores on invest I think really and to leadership the drive really and to to importance what’s all continuing growth growth of going it’s So these success, across to

Alex Kramm

in the the bit But seems there. Because Okay. general really Fair not highlight doing businesses peers of does just a focus little understand the great smaller some is environment that more maybe can I but anything there then this follow-up, would some as been board. lumpy, expected And you. on are analytics doing be and on enough. well, it on well, the quick sales a in if for is And like you’re mentioned it I but comparable wondering your to side, like on has I analytics just have side. know Henry operating a across analytics, this seem

Just here? have comments additional you if curious any

Andy Wiechmann

area growth, we But just below we’re Yes. target, where right is having to we’re seeing isn’t we long-term can success strong bit where what to focus in want where than it a you where drive growth areas tell our an this is little to the we’re based be. growth and areas it faster on continue And the now.

strong So on income portfolio tools, are business, the management on there and portfolio very growth, quite multi-asset fixed solutions, the in a where seeing growth. tends enterprise-wide portfolio been tools the do as equity healthy talked office It’s little there. we on lot slower. very past, class the management we’re what serving the on the where to management And front particular of be we’ve and both in lumpiness that has largely to front to growth be about complementary a tends we some across tools, the and

a is key Although of that components driver Indexes, our it, some strong analytics and the have, and other this important it growth underscoring traction underscore that doesn’t analytics that growth driven and and in underlying namely partnerships climate. reporting strategic like the but as capabilities forward also in solutions Factor in those areas strong of some driver we we in know, that we’re some numbers, our The traction seeing some some – in. in are have we be show risk and you business, to namely of analytics of ESG for areas and are would note going to in the that and are continued I broader having by up of solutions continues

Alex Kramm

much. very you Thank

Operator

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

is open. line Your

your line mute, If unmute line. on is please, your

comes line Toni question from with Morgan Stanley. next of Our Kaplan the

Your line is now open.

Toni Kaplan

more the Thank debt you of mentioned about the you and and the intersection footprinting to much. update. the funds, so ESG carbon Wanted talk with and climate PE

that significant solutions this the Is really and other opportunity else Just of wanted offered right or solution now? there is you near-term a unique market market. in the sort are in to being what competitive understand think if is this a

Baer Pettit

Hi, it’s here. Baer Toni,

we’re aware we’ve So we say to market world, that stage. a not in for competitors always tough it’s at because sure, competitive live of in look, what a brought but lot unique we this here – is space think this to of

come pretty we’re out initial Burgiss. I with So think with we’ve pleased working this product that

current also looking the private year and a lot markets We for into to plans of making progress in expand in that have ESG our to are ahead. rating infrastructure area forward

have complacent. both that we Equally, hope And a here private I analytics we generally say when climate areas where differentiated you the think of never be market ahead. components markets in of are is dramatically. at those will continue would I the and So and competition clearly look areas lot differentiated we’re and to are growing ESG,

leadership. intention have And But so. so see to maintain make we’re that it’s confident sure just our we’re we ahead, invest in committed we and investing do stay could both order and early develops to will very to it’s days, we how to market to because

Toni Kaplan

That’s great. investments to did And I want about ask versus margins.

like you’re the to opportunity think, I seen, you’ve you’re on most are mid-teens. You that margins what the talked you’ve other where point at seeing paraphrasing significant the of about I said feel closer a But on I’m being hand, way EBITDA for All year Other sort next the call.

Should you strong you level how is be Thanks. of more? ahead. think So tell me the about investment opportunity such when investing there about right

Andy Wiechmann

given Toni, in a important in to as upturn mode us. the see. continuing this strong an drive Yes. know, performance, you of the year, And talked we’ve the question we’ve you the that it’s Sure. past, for growth. gone and operating also about And as our we’re strong business environment importantly, to playbook in invest to

we the opportunities the demand talked do that’s remarks we to Baer their And that enormous Henry and and in continue about as will that so today. something prepared see

key the to that And so when growth you in invest, will look it’s at the for drivers we us areas areas are investing areas. where the we and continue are key strategic

segment, you EBITDA So climate; ESG outsized see can it by the and EBITDA expenses. in expenses, product you growth in index see

the broadly, it’s firm. are for across data the data; and platform new supporting index key you the product index; As investing across to of heavily teams, are the indexes, both and profits platform we’re investment then these we’re functional the at lay our where research for product ESG thesis it’s you supporting and lines and and into that’s know, teams technology the developing; the growth When into ESG continued drivers and revenue more particularly future. alluded index to, technology growth ESG look continuing – and areas, we that that opportunities investment Baer platform foundation and

On of is there. noise a there the line, All lot Other in

year. So And area – a to a is particularly you from I expect not the little it of made comment good margin that’s reflection as and the a for taking that’s and see the investment next ESG we reflection is climate Private of expenses, and expect EBITDA given where moving primarily. margin place, clearly, all pieces is standpoint of little is a transaction-related what given that us, the growth going a a indexes some the continues bit just area. and inorganic the across – That’s firm, this to necessarily an integration expense forward. Assets, for be big But us focus a

Henry Fernandez

me Let add if you to that, don’t mind.

of big make on As we for accelerated the – may in owners opportunities the be our shareholders the and significantly perspective products wanted We like the and should was They sold their to in see in that thought see remiss, answer since that wanted had gave saw have it which to invest Day, sure obviously ESG extensively us has demand tremendous a encourage in growth a coming. the have data, then. this which the be a resounding actually a that vote to you They they they our opportunities. to company areas sanity we given of those way. check. same hard irresponsible that would marketplace. remember, heavily the see worked us them Investor extensively be the more, to analyzed we few not added But and confidence on since on it doing the we what that what And we quite almost we then. And lead-up we be would we services,

– and and that of strong by So our majority part a strong confidence very of a vast was speaking indication shareholders. the of vote

year-out the of and that’s best, all earnings the very at of ours profitability our with and wishes, And ones over continued years. of need balance that, the we lose shareholders, when begin a and we concept problem. clearly, came therefore, So to financial expansion to those growth that’s few next margin we year-in up always and with discipline modest,

Toni Kaplan

XXX%. Thanks luck, good Salli. and

Operator

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

line open. Your is

Manav Patnaik

now? me hear you Can

Andy Wiechmann

Yes.

Manav Patnaik

Andy, it to pieces just just next the on one-time on this moving it’s flow, year. some Perfect. – year, for a the of first, impact like sounds cash

mentioned as I was for you a wanted with Other, that. benefit us if mid-teens just you that All number help clarify just it’s And I for well? gave XXXX you could going forward, that EBITDA to think

Andy Wiechmann

Yes.

the industry, of and because and free the like tax And potential the on tax a policies. regime up in Manav, free know, lot environment relates now – on the that’s changes cash I we to and tax primarily companies flow – most it where like and right as for So think shows as you many dynamic it we’re horizon monitoring very are globally. there notably,

taken accelerating tax that that with our this optimize than in are case, the that, of do are this into we payments anticipated And some to and operations the tax we actions originally. continue the importantly, QX and so income of we trying aligned And year higher dynamic ensure and footprint it’s we’ve against environment. and tax that company, as to QX are of

And year. lead $XXX so tax so in that And we’ve tax or coming years. will is expectation got this to in future elevated the of payments lower million payments

reason across continue flow place to very the why only growth our line. you really be that as guidance up Actually, in is and revenue free know, the free so strong. cash very And collections strong. DSO come is the the this And And cash flow strong business business. down. remain shows year has that’s

on accelerated the QX change side really, flow only cash in payments the free expecting those made mostly we is little reflect to tax bit so here. in QX and And that a

margin On is for XXXX. RCA, related the to comment that

will moving a combining So Estate trickle bit we little then expenses, combination which core year, next to the given the you wanted business related more of RCA. and color some the to the integration into of Real with businesses, our the provide two pieces all transaction-related to

annualized case fourth to clear. a so just And of range. the quarter be basis not margin this in we’re on for That’s the an year, year, next anticipating the mid-teens-type

Manav Patnaik

area, I looks opportunities just think to a class was had done just terms you get landscape in the or the and in you’ve one And Asset Understood. what Private then just But quickly inorganic mentioned hoping wear I that the of deals. obviously follow-up, off focus pipeline few like there?

Andy Wiechmann

Yes.

So more can – on provide I some on we’re to try on. yes, – a announced areas and let focused give color the activity mentioned, what we’ve what and color you me bit the a bit little color beyond that we more

We’ve a and heavily investments we Caissa, to asset recently. strategic the very made one the in the their very private in that space which we Burgiss highly year, supporting acquisition addition of partners. were throughout acquisition So in have closed on in, data also made small transaction involved RCA of couple small

relationships to investments, or value. and so datasets have who partnerships are unlock in either And have these case we’re do for of the using where unique the we important us have companies commercial create combining and that and

continue types we to those so are that the And going are things to do. of

going are talked very are we are for areas we and past, we areas where the MP&A on very value. We can focused the be and and But continue that to have space. and as disciplined we in confident critical strategically about create that us to ultimately growth will active be

to and where And speed-to-market are and where us. access like like for areas areas datasets These very having so are heavily are surprisingly, the climate, focused assets. unique competitive and areas datasets, advantages areas not we key private important are ESG unique are

will so to continue on we And MP&A areas. focus those around

Manav Patnaik

Alright. Thank you.

Operator

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

Your is open. line

Craig Huber

about you goal here there? your have What you. get on you from a you obviously, help growth rate to to first growth this analytics, Thank on an Obviously, do to do long-term bit digits. question business order the services is faster? that My little recent grew high-single accelerate analytics last to in X% enhance products or there have quarter, acceleration What do left years. Yes.

Henry Fernandez

Yes.

and to equity analytics; them which categories remember of of management what define a fixed categories. one that categories we the those always four So, into product of grouping into number analytics the sub-segments, other thing four first of I even think line each The which further front-end is is portfolio really risk analytics; class or enterprise risk call portfolio and managers. asset sort then many we income management owners management other analytics and the performance, equity internally portfolio central of are multi-asset enterprise a

the the So, do clearly equities, are of risk and our in is fixed in in performance. risk clients central and those of majority – serve trying the is to multi-asset to in rate income strategy needs needs side continuing And in class our the trying the to the are management the in function, addition we categories, last enterprise we risk pivot a which multi-asset run class. one, what towards four to portfolio management is in

so is working. The income XX% small And although strategy a double base, equity portfolio part in fixed grew this analytics our management And well. far, – the the last as grew part, from digits quarter.

but did that largely so the to prior from were And the multi-asset class, sales quarter. done the

to are clients. good is lot a offices. of the of And – solutions profit solutions a cost want which sell basically multi-asset the class our for in our the – ESG management that’s management selling We especially the because our pivoting centers, and the to to of risk risk to management front-end addition so the latter So, around. that risk offices is central portfolio revolve us activities lot index are where and that’s in climate centers

we So, in this to trying concept. that’s are the do process that

Craig Huber

you you. Thank best to and Salli, Great. all the

Operator

line next the Owen of with comes Our Oppenheimer. Lau from question

is now open. line Your

Owen Lau

futures? and the potential if other to any investors taking traction my partnership any is should would about Kong you more the you of new the Could be about you. think Stock How Index Connect Exchange opportunity products, China more Thank Hong And color helpful. Good there? thank for with please questions. morning talk launch the AXX there then opportunities

Henry Fernandez

as MSCI you or the back so Monday been trading last so. launched the know, Monday of Well, – of many we Hong last exchange futures – we Connect seven-or-so Kong it’s week, has – days AXX the

and Kong And futures billion so trading volume, the has interest trading in over that history. history and most exchange’s think million. Hong MSCI successful far, $X.X in period The approaching contract is launched the it I been $XXX open seven-day been has volume

success that So, of well contract. it for bodes the futures

assets $X to them addition And has the China launched gathered four – the last ETFs the In as same that, time, have in that managers billion. of night, MSCI in in their around total on AXX they of AXX both of asset been index. launches excess Mainland offer

an and very, have in that the clients structured that inside we ETF are those between also And China to done. futures ecosystem our do are ETFs build Kong inside the successful So, Mainland – therefore, is and trying Hong – what very and launches products. we

the are So, AXX. working product in this market the ETFs getting around also to hard Hong license clients now index Kong we for in the product developing and structural of

So, so so far, good.

few we we our we in not that launching other and Asia to the constantly else U.S. only have Now, can what in do do see ideas on, be in partners. Europe we with but a or so are working

that relationship index we another being the options, there. the of of announcement the on is with industry family saw obviously You made MSCI in about and expansion the Cboe Chicago launched

that lot putting we faith this also of of a development area that, will for us. are the So, continue

Owen Lau

should modeling price about think helpful. model one How question revenue? it. purchase Thank few we you. that And we next very adjustment then RCA. How and over deferred quarters? should Got it That’s for the the

Andy Wiechmann

Sure. Yes.

of material that’s as based the we and to don’t now, that anticipated are setting we following. So right have a activities really standard expect on it impact,

page. here we I so it’s are back on of the underscore these but know if We will pieces no I material a some as RCA there on in now, are finalizing same But more appropriate. take a I impact mentioned of number front. the remarks, bit a But more will Maybe color and assume moving impact the I just step of we update helpful the just exact little should prepared on right broadly. that as and you you provide

we was On added million of of September $X.X the rate about XXth. quarter. There run RCA side, the $XX in revenue of as third revenue from million

three side, about good the think will pieces, break down this way to I it. think expense I On is and it a into

adding also like are million million, expenses, in we that year. expenses within about million would And million areas a third $X.X incurred expense transaction-related that mainly of of highlight $XX About of EBITDA that front, in adjusted the there few the quarter. retention. this $XX On was is I

category deal And to associated about amortization intangible $XX million The of large a the from $X was with is that fees, are like purchase of expense that are in amortization adding adjusted amount intangible third accounting. was year, And on on in majority that and category of where professional the million the D&A, of is small $X third that last the this second areas quarter. And of quarter. we there OpEx. side the million the is about about we And EBITDA. excluded severance. is And these expenses another in million $X.X fees, have then transaction-related the in

the of just so $XX the And million you guidance about expenses $XX for – see when expense that $XX then expenses, the is you year, which top the million, to shifts gets if was. I transaction what then you to in the of we it layer And at of the excluded by of increase took guidance on look expense which the $XX million up million, adjusted can of you mirrors guidance D&A and million, million EBITDA OpEx mentioned. EBITDA $X $XX vicinity

And some RCA. shifts expenses. to as is underscore, of to related ongoing a the expense in number integration wholly going to continue moving so be And guidance were there I pieces,

a you mid-teens businesses basis on next And together, at for so are put combined year. closer the looking we annualized the when margin an to

Owen Lau

Thank you, Andy.

Operator

Our next Markets. with question of Sabadra Capital the line from RBC comes Ashish

is line now Your open.

Ashish Sabadra

Thanks for taking questions. my

the Investment a those analytics modular solutions the beyond as analytics from investment to provide wanted could management front, you Service, and that towards particularly more both Solutions if just well the data as away was more on Thanks. the a So, on I on fronts. shift wondering of on as progress the solution focus

Baer Pettit

Ashish. Sure. Hi

for delivery through delivery our going now are very the year. And those coming operating we pivot our plan look, sure, for towards the in platforms. is – the So much

that well also mentioned and all portfolio that infrastructure capabilities built index capabilities being on are analytics and out the existing as we that is some in our being out earlier, as So, new way. that aggregation Lab of Climate built

in are we as web we So are mentioned, the – the have on distribution solutions and this common putting data also previously infrastructure. that

that think the that solutions mean the all be user infrastructure. there will did coming it duplicating separate would much entirely I both new are overnight. that But we pretty it an will experience the developments that and years built be And also on So, we doesn’t efficiencies that common is in application in improvement we not means because way historically. I say this

I think So, we path. on are a good

We positive we as will keep will developments be ahead, think this continue continue in out and quarters to you the bring did to quarter and area. things I apprised will we of that what

Ashish Sabadra

helpful you quick think chance opportunity, a RCA. any to Thanks had the sell much at for was offerings as customer a into wondering, have that the And of have acquisition. just color. received you closely, a month very some that And look question from that cross-sell That’s closed feedback to even I base? opportunity initial MSCI that. been Thanks. over about also, since you customers? maybe on do the It’s you how the RCA more just business

Baer Pettit

all on very positive are so we those Look, fronts. Yes.

surprises have would MSCI a From of we I an all, in been view, there of the positive commitment client been sense. – response first from has both our clients RCA to say from investing in point extremely So, real shows and positive estate. – and no operational

are across of pretty path Real and So, both think There be a Estate going RCA. strong the common of a integration. data related is on we MSCI to I understanding and we the lot have – to

sure, is to who that our this And of days. early to we Research come person has for lot clearly, now have I was IPD RCA create via went new opportunities route. of it’s new a mean interesting But to progress. a making back So, former then Estate Real Head and MSCI products. then

in really new coming year. the we we I build. that that showing the capabilities can we common by be So, And of are will am things sure excited

Ashish Sabadra

That’s very helpful color. Thanks.

Operator

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

open. line Your is

Keith Housum

how guys the have guess pricing portfolio? was bit talk a the the and custom to client a these opportunity little the do indexes hoping opportunity And like client of in I indexes it of you within about terms Can compares guys. I to aligns morning Good the to tend to with on just then rest more unpack retention? perhaps maintained there. custom better and ability or be stickier the

Baer Pettit

Yes.

So for look, which I is years. think this is many area developed an

that increased, the So, the a but and for is and us, complexity huge not demand it’s of for a us. opportunity the demand new area has

have an optimizations, exclude even requests, sector asset we had a straightforward of or requests, classes So, which what or customization relatively combined, a whereas enormous historically, now you, country variety including different to going securities. be might we beyond have

some at mentioned we categories, looking clearly are as before. have We crypto

thing, is ensure would an need but of complexity, invest deliver look, demand. I can is for is is that to enormous we amount So, say increasing to there we I in good that. that is sense the different. upside in the have issue There case. we a And which the index think really the not is dramatically great real the that top retention custom indexes in don’t line retention any in growth. cross in The retention And

types. across types. or owners so investing we the whether all And for the that’s it asset goes coming from It’s whether those asset be it demand sell on And client for. it be – side, is client all managers, are what

on. opportunities, we to so have the deliver very make infrastructure we And to are that about and sure the we have excited

Keith Housum

Is sense quarter referenced a and it. terms from of the is. there sales, for little numbers? I that And then there, Great. in was has you quarter the a sales always business helped there And pulled made appreciate on forward as all you third that fourth lumpiness you following up some bit is obviously, there I regarding a any guys. just know Andy, great at quarter comment your

Andy Wiechmann

the was And of to few quarter, sales highest No. No, one-time sales. had lumpiness one-time – nature, ever. where pretty the the a strong comments quarter, this purely this quarters was of third recent now in have purely related we our most

a is have levels little be here, there expecting – the the to little in drop we of we see bit so of And QX in tends with the – likely line bit last a average are more just on pipeline of right seen couple we a off over now, years. based

Keith Housum

Great. Thanks Andy.

Operator

Thank you.

Kramm Our last line question Alex the UBS. with will come of from

is line open. Your now

Alex Kramm

hello. Hi, Yes.

a be already. But this seasonality, and ended there should million. are quick revenues very on which one-time predictor thinking sales, $XX any going just at run-rate, think side, forward, talked is anything follow-up in into And you any statement, – the Thanks. about how income between the there of I maybe or pretty on any modeling quarter? terms was can – rate Just run I is there is of good that RCA the following about a flows Andy,

Andy Wiechmann

Yes.

RCA probably revenue from RCA. is run of business, the rate a good coming pretty For the indicator

that’s As have real seasonality to the in business business, we where core chunk you the our good there tends of estate know, do to a be tied deliveries.

in And more side of it’s so model. But some that RCA, do we subscription get seasonality much the business. traditional for

expecting from it. are that rate we probably is run of so decent indicator And the a revenue

Alex Kramm

you. Thank Fantastic.

Operator

further now back questions. turn no Chairman Fernandez, CEO, and will the remarks. There are I call for closing Henry to

Henry Fernandez

you joining Thank us for today.

maintain will hear see the front continue and to we demand can us you meet have philosophy and triple-crown our leadership. and that investment And to the numbers of continue we our As opportunities from in MSCI. at clients enormous from commentary, our

obviously, thank see So, to support, and will call. you next you be questions attention quarter. your we your during take the And able and for

Operator

this Ladies today’s you concludes your conference Thank and call. participation. gentlemen, for

disconnect. now may You

MSCI (MSCI) 26 Oct 212021 Q3 Earnings call transcript