Earnings call transcript Q2 2023

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Operator

Good day, ladies and gentlemen and welcome to the MSCI Second Quarter 2023 Earnings Conference Call.

As a reminder, this call is being recorded. [Operator Instructions] I would now like to turn the call over to Jeremy Ulan, Head of Investor Relations and Treasurer.

You may begin.

Jeremy Ulan

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

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

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

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

of foreign or changes We which will and the of impact acquisitions discuss figures, currency divestitures. in any the organic impact exclude growth also

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

item, at beginning will call housekeeping for coverage in final larger question third Q&A a quarter, earnings our reflect order time in call growth portion our a the the the on participation. allow As ask and next our brokerage request during to to we analysts of

be back the questions ask analysts queue. is more And goal welcome to earnings the to more to of adding themselves Q&A will our by always, As call to segment. our devote

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

Henry Fernandez

you, morning, Thank Jeremy. and us thank Good for today. you everyone, joining

another organic growth achieved XX%. growth solid During environment. the subscription a and We EPS performance fluid delivered rate of adjusted XX% growth run second revenue organic XX%, quarter, market of MSCI against of

We also maintain our laser demonstrating focus management. rigorous financial capital on profitability, and

Our capital changed. allocation framework not has

will million. shares MSCI have and million close buy dividend $XXX shares, keep opportunistically XXXX, policy our nearly acquisitions. of strategy XX% of nearly end our our outstanding our the second notably, quarter and totaled or has through we share back to focus support of to and repurchased bolt-on beginning shares same the discipline. We the total XX repurchases from accelerate the since Most intend

the of durability of strength confirms our All this and business.

that down, benefit MSCI market of franchise. through and significantly More up flexible the diversified expenses adjusting is MSCI depending turmoil. can differentiators consistent be broadly, profitability periods and integrated our This our environment. of One continues our stabilize operating to and globally nimble helped on in from

double-digit subscription in index. we run quarter, rate XXth growth second consecutive the delivered In our of quarter

portfolio in Analytics, rate a second over quarter highest had growth of quarter management. net ever in XX% and our equity recurring strong posting new sales of We XX% also retention

XX%. delivered In rate addition, growth rate XX% retention run we a over across our product lines, climate climate with along of

Climate clients from XX%, This grew our priority. resilient ESG continue Climate shows that tightening run at and Our our and the and rate despite firmwide XX%. remain budgets, top retention ESG product a to ESG rate make growth segment

my recent of discuss. popular Middle trips clients ESG U.S., the to most Europe wanted parts During topic the East, Western the client was to and Asia,

IBM that our their them strategy. For risks now investment for Value ESG the belief executives central across when industries, said reinforces XX business risks matter, opportunities. Business is that This opportunities corporate Institute to recently ESG and and XX% are of surveyed

is of accelerate all in working With that our and launches. mind, Climate MSCI ESG to product

and our what a across solutions drive call climate us growth larger our we gets and to one segments. point. MSCI through to other build our of momentum industry helped open Our and architecture The value ecosystem, role We innovation continue connector our parties This product those company, can the line, they a client across through integration efficiency have setter, and for increase as and hub. benefits and MSCI's outside dramatically clients for clients. further standard interoperability amplify

our this the position our represents and segments. range of highlights competitive as unique advantage All of It our industry, a greatest of company. unique client mix our unique in capabilities

include Indeed, investments MSCI index construction; adoption the of allocations the continued shift major and investing; demand algorithm-oriented, to solutions; climate technology-driven is of now rules-based and and Those capitalize industry. trends the growing increased shaping portfolio acceleration rise in regulation; sustainable placed assets. for of to well to the private trends on the the the in role

committed will strategy As our high they profitability. always strategy past, in evolves have our in stay anchoring the commitments future. capture will continue our to the to anchored and which new financial require discipline investments, opportunities, MSCI Those strategy new firmly will and

And with over me that, to call let Baer. turn the

Baer Pettit

will Thank technology provide continued performance MSCI's an comments you, on today update and My and Henry, our business also transformation. everyone. cover greetings,

We onetime deals subscription future segment facilitate which including float engagement deep nearly data gross XX% $X while million another launched products, from entry Asia primarily sales. creating These clients record sales. Our milestone, with recently flagship our index delivered for rate XX% in with run subscription sales growth Pacific. in points achieved growth drove recurring

were Climate for were on on in We which sales ETF there newly based of the also quarter ESG Globally, second during quarter, XX net and new MSCI available new products results and achieved index. record XX MSCI recurring based indexes index.

by ETF sponsored were to into and of indexes. managers linked quarter, industry European the During MSCI fund XX% products domiciled inflows

All construction. and portfolio growing role investing, the trading of this confirms and segment our index plays global critical that in

segment. ESG We our of delivered our nearly to retention reporting while rate and run rate was XX%, Turning growth XX%. overall Climate

As I client remains from quarter, regulatory for meetings fueled ESG solutions. MSCI's during comprehensive by for by demand my products data, and high-quality transparency pressure can high, our the our provided confirm coverage the

of collectively. of approximately the represented June, in hedge at on We and the management MSCI AUM end insurance, with billion products Looking rate XX% AUM. based at run of growth funds and XX% growth indexes owners which and share on wealth Climate Meanwhile, rate asset basis both asset subscription $XX banks, XX% specifically. managers ETF totaled run delivered climate with over over market

As with continue demand for to ESG, advanced both government regulations and tools. voluntary climate disclosures drive

now turn me Analytics to Let segment. our

run growth of XX% in subscription Analytics, achieved equity MSCI quarter, fund second growth X.X% segment. portfolio management with the hedge including the rate in in notable During strength

our to Sustainable access This as our additional net ever Analytics, XX.X% workflows million at portfolios. us and client for By the risk and sales reporting Regulation. in Climate Analytics. We including and Disclosure in deliver second also helps quarter we performance about retention turn of ESG for posted innovative solutions, new regulatory $XX Finance connectivity deep develop and in highest providing investment services, such

fact, reporting reports total our during by more than the climate of enabled MSCI XX,XXX Analytics In XXXX, first engines. delivered half

Assets X% Shifting challenging growth of activity. estate a and global posted rate Pacific, Real to low Assets environment commercial In with achieved tough Real environment, growth in Regionally, real historically also overall Americas Real close growth the in rate X% It to growth XX%. a in Asia our our run segment. FX and that a Assets excluding segment retention XX% quarter was we EMEA. of run XX% rate in

raw large our a MSCI new to decade We've part As and language language with models processing are Generative now investment content. into for big of ways explores continue that. and data forward insights, using to a moving actionable transformation. AI technology been our enhance AI turn natural we

data our is second expertise this Given in and MSCI. nature to modeling deep analysis,

ESG In X,XXX more AI corporate million from sources, than points than month for with and websites more XXX helps X,XXX alternative research, and inputs X more sources, XX,XXX issuers. per news from us submissions data than corporate update analyze example, data

We inputs regulatory data capabilities. and used identify, to EU help Xx EU taxonomy and data LLM reporting. also crucial have These us faster validate previous our generative represent for AI extract than

client as finance to to In and functions continue and systematic AI testing help more learning mechanism. similar evolving models automate examine our in identify efficiently. cases. operate to quality and audit securities MSCI are language quantitative to use support such natural use data invoice. characteristics, and is contract experience with also generative deep leveraging investment we our to extract alpha information In processing, processing we embracing the deploying particular, enhance to corporate our and review, emerging Analytics, AI in We're industries and AI process

client AI integrate MSCI actionable to to working In platform for addition, we deliver insights are our ONE into proactively portfolios.

commercial clients technology and supports our strategy. to focused central MSCI disciplined able challenges. are will Combining our for operations I'm our our those Investments staying external our to be and to financial investments and strong by long-term focus data amid deliver performance that management, in and in solid confident ability with shareholders. deliver our

me that, turn Andy. with And Andy? call let the over to

Andrew Wiechmann

Thanks, Baer, and everyone. hi,

retention of the revenue some see run fees. And with nonrecurring and some top revenue, very opportunities despite rate it rate offset in our our included line encouraging of diversity double-digit growth. which This market of the we was During streams of stable asset-based lingering more breadth impacts solid cyclical driving than pressures. quarter, saw the to parts remarkably of subscription delivered strong growth solid the a we

ESG modules, our custom factor demand run In subproduct of subscription offerings. for was all modules double-digit with Index, modules, Climate market rate and broad-based and areas, including client index cap growth

respectively. run asset rate XX% run XX% was these our XX%, owners asset client of and index about with segments Collectively, subscription Our represent managers growth rate. and

end of we've in rebound levels have $XX.X ETFs to driven equity billion in into market of which net U.S. by to with inflows. strong ETFs, AUM-linked with gradual $X.X combined inflows ETFs $XX outside of into March, with which MSCI-linked fees market billion by revenues, billion a exposures over AUM by were There supported geographic swung Asset-based to Since into inflows emerging $XX.X MSCI-linked growth markets rebound and of were the appreciation market MSCI-linked has the a increase inflows billion. both exposures. developed driven balances and positive seen

of to factor. ESG lens, while inflows billion strong by product indexes, $X.X there fueled billion flows inflows MSCI a quality indexes went From ETFs ETFs into into the $X.X MSCI to were linked Climate linked factor to and of

equity year saw trillion what Volumes ago. we to balance to indexes lower This would $X.X In fact, were ETFs the and futures the indexes year-over-year relative linked greater rebound. volatility was balances environment we MSCI XXth. expect high with linked when AUM of a to consistent to as options MSCI July listed of than is AUM from see

quarter rely scale incredibly investors another very growth tools, mission-critical environment. at strategic our this a factor model capabilities our to testament had Analytics, subscription day to levels rate fuel analytics clients, our us our portfolio challenging daily XXX to underscores behalf turn June, areas. the strong most which for factors We strong to of is run now on up in In process us XX% important growth clients dynamic We nature firm, on across the help particularly per we delivered the In times. in the these December. for security roughly across are clients holdings in rate market continue understand XX,XXX And reports decisions. retention was X%. product to their which daily Analytics, sales as of over our equity helping from Analytics and risk million average for liquidity of in And

our Although, our as The levels. deals grew longer In clients. Analytics. and although XX% quarter record our XX% rate quarter-to-quarter we improved the ESG purchasing with year, run Net sales were lumpy growth from before, quarter Climate last ESG to expect continue second large first quarter, from decisions but down recurring sales has down to still meaningfully new XX% and reflecting in and ticket in Climate. cycles since last year's improved cancels last a be we've from segment, in mentioned and from measured volume growth of new more reportable XX% sales

in mid-to We given of our opportunities targets numerous layers secular have long-term and growth the conviction the of continue to powerful drivers. high-XX%

and durable As ESG Henry and Climate. remain for and opportunities both Baer mentioned, our long-term attractive

Real drove In we rate organic Assets, growth. run X%

cyclically retention portfolio with as and remain data products and As the organic our are reduced while were real correlated transactions. market double-digit commercial benchmarking of offerings transaction more sales and estate insights indicated, growth, strong of with our muted they Baer volume

mortgage We continue debt for and intel road on to our real are product execute we map, offering. our seeing asset encouraging like and products demand early

drive of helped very Helping we index business in operating had the strong growth strong sales the across results fuel revenue benefiting nonrecurring solid These quarter. from in XX% float free second in the product. the quarter, adjusted growth, EPS our to

revenues nonrecurring growth OTC products analytics and demand derivatives, data in of to are as licenses for healthy well many fluctuate meaningfully such unique as these continue While see sets the quarter-to-quarter, often as history underlying implementations. other we nonrecurring, will index products data that sold as the for

door subscriptions. to balance the the repurchases remain open us of on nearly year-over-year we and convert free balance quarter noting Share the to for positioned conversion the our our worth these us were collections strength. broader approach June allowed a million, activity cash $X.XX ended cash and reasonably $XXX for into cautious continue Importantly, to continue often although can remain of enabling We recurring flow collection the strong that year. for increase sales It's in capitalize of drove as somewhat consistent on to with attractive opportunities. conversations

some which XXXX would like for year. relatively on I Finally, to the of mostly and the remains market color levels unchanged flat assumes provide balance our guidance, remain

our unchanged. We have expense guidance left ranges

Although increase to we capitalized costs. guidance or the further, transforming We posted excited by our opportunities, increased modestly long-term levels remain keeping employees industry. across and the we On CapEx, stable we and development our our top aligned expense We at look investment capitalize be ranges. of continue to you engagement have we remain to pace are closely towards of current be our forward reflecting half progress. if client numerous market encouraged increased growth on on trends mainly with range, software the levels could strong the seeing

operator, open that, with for please And the line questions.

Operator

Instructions] [Operator

question Kaplan first Stanley. from We'll Morgan Toni our with take

Toni Kaplan

how you wanted there needed? I Thank a impacting are Europe. to guess with in now, the see it I way your do would you that And it much. ask structural reads rules? as the new you proposal recent about already regulatory Or in are business? so comply operating changes ESG

Baer Pettit

here. Baer Toni, Hi,

So look, a few observations.

make believe So inherent think of will hit to the our that you we're regulation, that, the certain is which, but we this do standards first There of those will ways suggested, transition positioned and environment. aspects there be meeting. operating inevitably regulatory to competitors. to all to I as one well the are some new we're new also But

is we regulation we, a Europe. for we standards. creates in level we in be regulation. is regulatory in playing the how leader parallel with then is opportunity as broadly, our a that clients' in a So regard. critical in agenda And overall, it's our that field more turn, what And And meeting And significant believe that that reflects sustainability index, us. in can

Toni Kaplan

about structurally period the ask the indices forward itself, you guess, of you Great. number over the at when business there? slowdown ESG ESG business, years? sustainability had about just Wanted also in the what indices on going just similar to over to index the strong maybe long growth embedded I seen we you a impact all the side we've first, any index or success very time. see changes do could of given in start last see quarters think environment of and still also is revenue to And within of

Henry Fernandez

in for So on years ourself come. first begun, continue that the our will and discussions to and portfolios, believe among that context And are of opportunity, portfolio of becomes and the on then mentioned tools underlying that index of strongly our basis more this information clients' and for are the to selection, index, it's of about an trend more we security strategy based securities plan is and it's of decades predicated only global indices view build comprehensive portfolio. terms underlying which of all, meetings that. need the the our in view It's organization basis portfolios. the indices And the

very, also continue our much which then grow. thematic saw We're moved very indices, very have phase. on ESG we market indices, continues this index So into with now to accelerating to the become moved trend to exposures We're and We indices. then cap climate factor market on indices. We popular on which unabated.

So we clients. if cap and -- on are are call thesis are which on an by indices, exposures it, you market moving addition think we indices, built demand in nonmarket indices cap to simple what demand to market, we're about which investment for into

these variable, ways extremely become and a world are So people again, or who factor of are the variable, whatever, it's those for of the valuable variables. whether variables, organizing an certain securities a industry according climate, portfolios across to building they thematic, a

launch whether have they a information that, listed concept, all basket an derivatives, whether in same want securities. they -- lot one, To active structured want achieve products launch organized of to to you the a securities launch want which they to is ways. different a then basket large those need of management product, or it's underlying passive Whether to a about

climate know to profile, about have profile. You ESG everything profile, their thematic factor profile, their their their

the equity organize try So going in use business, index as now that shareholder the waiting people cases. so We we direct it's them turning our everywhere are the witnessing come in characteristics indexing more will customized the this into efficient individual to to on of all portfolios. the a to go And can MSCI personalized, research We're think shop to we business to accelerate the think to build drop in make well way. years giant base, that and opposite. the securities it is for understand we is shoe that revolution

ESG, we're it's what are. is That's see up And not I risk. from respect clients. big investment And the we. see ESG to ground believers the so think that anyhow, So from our that and we where what we we is with That's like.

of cannot is part be ESG securities. analysis us, It ESG avoided. telling the of investment risk. are clients fundamental is Our

all or unabated screening, importantly, building but will in of the So foundational indices. in continue whether therefore, it's aspects, research that element ratings or

Operator

We'll take Financial. next question our UBS Kramm with from Alex

Alex Kramm

Hey, question A good on and ESG quick Climate. morning, everyone.

I to when today's markedly positive compare last sentiment sentiment. more think I guys from relative and quarter, there's you tone a

lot the you long Now quarter, if is political In don't were the a because about that focus term. regulatory on know talking quarter, last I more will you and paralysis. this

feel the long do understandable, near talk little quarter-over-quarter, And term? was the on tone. you then just a more why that importantly, So a maybe still of uncertainty. there but about you is given the which focus bit today, lot more slight Very can clearly term about improvement positive how

Henry Fernandez

the Manav, feel exactly ago the today. So, we into issues or it same it Maybe message. is or and we we therefore, feel go a on reality problem the call, we that, us. quarter a can in up that political And that's that the mess this blame

communicating overriding and same. look, fundamentally therefore, idealogue. In not the the by [inaudible], And we're way, we're terms of not not feel message we philosophers, we're the is,

what the central them see clients to through all us to We grounded alternative continue are is to there review investment talk going that extensively. the our and believe people, will we we process. no process. to path business that, and be are We ESG And and among but in of that investment

products, of, the investment the said of the analysis It that they all issues? are the What Henry, that. motivations? about was the environmental never on is view part this and ours company. social the what XX be workings are focused and company. how of And who client workings that, is are internal competition market, What fundamental of should governance years They is time, of of security do a process. issues the The internal issues the ESG partly simple. me one the of of look, and focus all on to very What

anybody the talking world. not So that it was look, for incorporate We to account the all and argue and is of big on talk that think honestly, wants therefore, take at look, clients do from picture was to we Look, know day world the that. talk my when we in because can process. what day. investment me in six I the road into answer all ground months just And Alex, to over the not the just picture, they ESG But everyone I can this do in that, in single I about political of long. considerations creation want view, up, doesn't the the every all speaking, the is this

that I pension teams in states a of that that it's holding to world take from repricing places going would that I to us do, if last think, on those telling perspective, they investment lot the in of say to rest of And the abandon the get account. the into to is where political to ESG looking do cannot are they them the lead those One -- thing the is is the want of caught bag. going even U.S. people plan at, they securities. pressure And there don't the because

the is what to opportunity, trying is that it day and reality telling it is I'm for on talk account to can continue long are on-the-ground it is to it generations we people look, what have about going but all whether, fundamental description And to bottom-up, is as to the into happens. So that decades come. process. to the is it investment investment take risk, And investment you

Alex Kramm

cetera. strong And All Analytics that. then Noted, enough. the obviously, on the right. quickly new Thanks sales, et Fair just switching performance, very gears side. for

little you've been a I environment, more given think the inflationary bit on also, price. strong

differentiate you you inflationary logos feel So to that just little about how growth or new And bit, pricing sustainability in much relative a the is Analytics. from can just environment wondering how new core sales. given of maybe the came softening probably

Andrew Wiechmann

Yes. Andy. Sure. it's Alex,

just more increases. maybe So price on broadly touching

which with company continue been the like price years. overall relatively rolling overall we've have out last have to to contribution The in rolling traction quarters, higher to, contribution than the recurring of as sales mid-XX% get seen rest new in higher the Analytics, increases to sales. company, consistent alluded couple increases. out, to recurring be what recent We you across of sales, continues is new the we we

value the and heavily the use we the tools. of to our client, probably on are the the more point, the the of health say most we that that adding And are measured as that's being product, of service we're the clients' I'd continued delivering that overall our We and usage strategic. as value important well the focus adding. we're Although, more product

I an here. it on for lever continue us, I think think it's is something focus important and we'll to

monitor considerations think pricing adding do the important that the But we environment. more overall side. broader in around are I the Obviously, probably value the we're usage on Analytics client

Operator

We'll from next with take question Patnaik our Manav Barclays.

Manav Patnaik

ESG follow Yes, hi. could I If up segment. on just the

Just I kind of looking into to figure net business guess, half, some second out the couple it's new a little out over in bit last seasonality years. number that the hard of

help could to especially the going of, you If context expect start impacting half mentioned products Henry, Climate. the acceleration you an of I half, that just and in ESG us the you think, Is second what in new with second already? in

Henry Fernandez

if misspoke accent Manav, I I sorry accent. didn't the earlier. German So recognize Indian I'm versus the

pretty Sorry about pretty and solid. the mean that. remains say. I to But pipeline look, good it's hard

a In a process risk They not. the they can accelerate to better they of on that. may for granularity coverage to of regulatory They and to some pieces ESG, us and on regs we context in so have now compliance of asking sure ESG there respects. how looking the want forth. are the that the and campaign. we what people whole significant funds, on things. coming a climate us They in want ESG marketing an more data. way But same issues. our higher have to because so ESG. a more clients want it they for incorporating want they're methodologies of the to reality, be, the the in more. consolidation organize -- In changes information. U.S., want trying comply a want analyze to They to process to They of things to the issuers lot going They universe they expansion make classify us on some their for is in raised the are things put more of going clearly this from They want Some and all into update describing Europe, that we're ESG

noise for will there's been logical. regulatory have been ESG, do. and years for of Europe Right running cyclical a of because more now. in neck translate that the changes in into that. And political there are a they and to we're day, the on granular, in and that to of the that's what We've how to at people more even expand now all even a And we is a the of looking So And in focused this U.S. soft going fashion end prescriptive, environment sales. over at we lot why on environment been time, But more have continue even are demand it's in in integrate now, the course, break period going on. comprehensive all that. in pace we're

beyond time, stocks, have So going and these cyclical our to increase are over increase. our to investment sales will

Manav Patnaik

it. Got

you which I pretty And the market, M&A quarter, buyback the went into Okay. stock made guess the about And then stock last -- buyback with you into proactively. sense. pullback, talked

updates on that any So pipeline? just M&A

Andrew Wiechmann

Yes.

touch and to I M&A. So it can just broaden approach allocation, on to Manav, maybe our I'll then capital

So approach this remarks, remains unchanged mentioned the underscore, prepared we and consistent. capital to in and that our I really would allocation

We pursuing focused on consistent are buybacks a opportunistic and continually bolt-on delivering strategic dividend, M&A. increasing share focused and on

have tend three you we more we the we conviction. to and approach And in where those repurchases repurchase we we when see volatility more has to took in lined remained up see quarter, more quarter, share And so as prices when factors we more and when where the so consistent, cash, our saw have advantage.

number On of opportunities. the explore actively M&A listen, to point, continue a we

for that we conversations to hoping many early-stage for companies due in unique increase harder an can environment capital seen we the have disciplined. remain find are raising And but We us. be opportunities, we some for would strategic

M&A price strategic we're going nature, their to And and so is continue opportunistic. fit. very And to disciplined on remain by

And there's focus but our no so M&A of for around bolt-on remains part strategy. it, and certainty a key us

Operator

Alexander We'll next question Hess with our JPMorgan. take from

Alexander Hess

and the map you ESG have XXXX had already and then? the some changed maybe been Yes, to Day, and the your out and product of up as sort in that your since momentum on for Climate Climate If back plan ambitions announced. the today. was you ESG Investor two of back versus questions following burner? most year or your -- laid plan hi. And the has compare your pushed what next guys back to asked portfolio Briefly product seen guys where road to has what What I maybe

Baer Pettit

of Investor we said. but don't to be look, presentation my I exact head, Day honest, Well, in I have what good the pretty sense have a

we're with think very the of we in broad much indicated I direction overall, So line there. what

distinction I a think changed time. than et ESG that climate thought that ESG. cetera, is the from has needs, the and become its at we specific greater framework, that topics, element distinct Climate has own has between agenda to degree regulatory the And

isn't any than climate enhanced. being basis. kind that of be It's for also course, company at overlap And climate regards, I significant private that managers, in some even asset larger of distinct the the in are, say them for to doubtless year, So that forward while we ESG banks, as and that look in I mean increasingly, of it is there coverage that role become we would range time. of viewing as the needs, think the expected that terms a product say opportunity. would the regulatory just remains, way And pipeline of significant between solutions next two, on-demand doesn't on more whether has we I growing

Alexander Hess

you M&A then to follow maybe asked. much, Baer. on just question up Thank And the Great. so

see might you some ESG other Climate and opportunities in could desire catalyze business parts consolidation If dimensionalize recent ESG overall? what the you and degree in to of versus regulations for maybe where in

Andrew Wiechmann

Yes. Sure.

most a ESG confident is is the on activity believe differentiators. this players strategic for our creates little a spend where it And M&A tougher the where differentiators to is be say and Asset and that capabilities To will point, developed compete. that are at of more be spend I'd of where something dynamics focus have market Private us say, our side. Assets Climate side the bit your data so I areas catalyzing opportunities. not can now, for the could to we long like areas are probably tail regulation on get stage. potentially would smaller And more players But right consolidated recent access and many where are that Climate both can critical distribution, on in small we areas unique there's have, over we product our horizon. that or probably the time, ESG as listen, the and is capabilities well lend think an and to, most we're time but initiatives there unique players, unique we be really areas and data can of strategic that, although enhance to sets, need as new the pipeline Baer road So of capabilities those rich are it. like launches Private there, accelerating access it to get And be. accelerant access and we where And areas a we on or as areas most without And map. M&A doesn't even we can datapoints organic just our was alluding time. to very to M&A

Operator

question Lau from Oppenheimer. Owen our next with take We'll

Owen Lau

thank you And for morning. my taking questions. Good

now baked full bit So I the and in year the there's or color guidance half. helpful. second just wondering your flow investment down year your be do free think conservatism Thanks. the much in But into any first half? Any for more second would in how your half. market I'm half cash recover in plan up you change this quite have is a earlier was then the assumption market first the

Andrew Wiechmann

Sure.

So prior to year. to have this, guidance underlying assumption market was the in the your Needless back question, know in that our levels. you know levels half market slightly of those you been rebound will drop if quarters, but above levels and then say, I remember Owen, the assumed running

And spending stay if level levels so these of levels our and recalibrate as investment current expenses likely mentioned on levels. will in the a half our we prepared to remarks, higher or be as at in the result, top as I AUM those range AUM guidance we of increase,

guidance are there I help that swing performance. can billings factors given even it. beyond Clearly, are something things on that are other there, performance number range cash but that don't and wide free too business want comment that to that business and a there can flow a up specifically of of down swing

we monitor hopefully of can invest And AUMs so if front. And and one listen, continue I the advantages to our markets our capitalize more. cash our think reiterate of financially flow spending. And all continue the to the through is we free calibrate guidance it's pace But and are manage on we higher, of model business environments. our ability to

Owen Lau

be pricing, map if driven you rate growth subscription remind Thanks. the also on penetration. your of could of which run your And it new then by how logos And the the color index is can also, growth more add rate, it. will and also subscription please run it great much index driver is further you us quarter? second in of Got

Andrew Wiechmann

Yes.

call subscription the Henry the thing one There's has alluded I As us. franchise the for out overall to, quite in index solid that driving performance been would not quarter.

growth we types. of growth and we've We've all client geographic major As mentioned, XX% all seen double-digit or module growth across seen all we've also segments. across double-digit higher seen regions, across

is construction. just of say We so a but got index on the that success portfolio I'd indexation, of alluded that our from in broad-based. growing the data content value both nonrecurring float mention free is the on our indexes as to, and of the also around And side. product, overall benefit this utility we benefited and performance our recurring side launched trend growing the the Henry ecosystem and subscription did newly nice us reflective

I on recent mentioned that algorithm, in remains with listen, the price would consistent quarters. I've the from Just within say what index relatively contribution

is higher little or sales so, in out contributing price just That's given a new around rolling a are recurring index. than XX% bit give or higher take bit, past we So within it's been price years to increases.

us. In of new to smallest then that, addition selling clients. more is to new sales us And clients biggest the is the for component source for

Operator

from We'll question Sabadra Ashish RBC Markets. take with Capital our next

Ashish Sabadra

ESG for standards. disclosure IFRS thanks Does that competitive it sustainability improve announced the does the newly forward. focus on taking value question. change the to for value ratings? proposition going does Wanted And Hi, change the my environment? how proposition how The question it was there

Baer Pettit

ongoing where regulatory And is the Look, we changes are positive. think for I significantly ESG. there view them significant context and numerous as one

change that of is regulated changes certainly, this don't think I the continue, And It's that important occurring. which the is topic how to all So us be. earlier, the sign being which was sum are there that of a regulators material. likelihood this mentioned is particular consider that those including will

distinction should I to Americas just regulation to that the discard back come the the Europe, the going simple we the So not political noise U.S. think and and that, between statement make has yet.

the an I is would distinction any other put so And that on at than more emphasis topic. rather what

regulation, also So a not across but is types, overall, the and growth merely Climate our client very which continued ESG business. in it is engine significant all in for

Ashish Sabadra

I the to there how sustainability the very if sustainability-themed of been funds, funds was fund are value And again, follow for color. important does Those more relatively there proposition launches. wondering for That's for up particularly Thanks. new ESG the how But a is helpful revenues. And -- ESG vanilla overall within is has can funds. ESG, muted. I also launches on shift fund from MSCI? that, improve

Baer Pettit

Sure.

few a maybe topic. just this observations on So

year, the is before, both the over. As regarding fund and it's, likely with at X we're over, And largest clients we involved the of alluded have discussions classification in X. I those the changes but and would very particularly environment regulators. regulatory types not and was this there say and in the beginning of is been element to That

would I temporary the a environment of us, what again, that's a blip, just regulatory in for right? administrative but very positive context So to call reiterate,

to that to trend also has terms steady type think on the the clients. more include investment for a and launches then see depending a obvious the we'll launches, those variety goals your and of fund component. wide So been climate I I observation client a And geography, in cetera, continue fund of of think regarding the there type, ESG of funds et

it's So diversified and pretty a I landscape. think broad

Henry Fernandez

negative add get positive. shareholders oftentimes, just regulation because context this Let for It's me the a that MSCI. is and something how analysts a underlying from huge is here questions in we

operate without -- our competitive love regulations. at compared I a advantages this, to people of the once rather because once strong than adjustment, don't you a with very with it's people life. for comply regulatory lot the And Now would we more tailwind more comes more secondly, make regulation not to because lot incredible the disadvantage puts of a clients it more becomes it extensive, clients regulation, regulation it the that. love us. mean framework, a as us and go but don't we a like or need information And more reality other granular, creates

positive go again, adjustment a us. we don't when it people don't to after and regulators, for that asking it So becomes we But comes. we made; period of like it very

Operator

our take next Sachs. from question We'll Tong George with Goldman

George Tong

Can morning. or are good thanks, And trends step excluding there been Has subscription and the Climate stabilization, past specifically quarter? recurring a the you're seeing sales takes? discuss Hi, back? you new for improvement what over puts ESG

Andrew Wiechmann

what say continue this would and I impacts with how competitors, in Americas I'd cycles. Yes, integrating EMEA. measured in a the growth pace we and differentiate slower continues sales reasonably take the last the dynamics externally. relative ESG, investors we is relative are some longer investors earlier, be And their say to many U.S., investment more of seeing market U.S. I'd say consistent Sure. there. saw and dynamics to quarter. that ESG overall the to they to they how are themselves similar how We're to on managers objective, really themselves about the are driving position thinking how they alluded

a taking there is place. so And maturation

ESG cycles, see longer continue sales most front. so on to in the notably And Americas the we

have with that maturation journey. on them to very is alluded the we continue and thing Henry that as services can dialogue to, tools and them. But on we the help And encouraging the rich a that have

Operator

Autonomous. We'll take Zhu from our next question with Kelsey

Kelsey Zhu

question. taking for thanks Hey,

lot you bit your So I Day. BlackRock fixed us a during there its the a recently income opportunities the about about growth ETFs if Investor wondering little can revenue more talked the was tell has potential of investments and kind in fixed income in space.

Baer Pettit

question. that for you Thank Great.

two things. So distinguish I would just

on Bloomberg notably providers, with fixed have ESG. have with So income been which clearly, successful, we very partnerships various

so are So indexes, which ago create to lot are are -- own we for long ESG, to launched products. of element. And which very indexes focused angle tradable in we importantly, either differentiated income liquid a one fixed see that's more on see where more continue and products on that. also really Equally, not very suited looking upsides our we climate

very stages we're early the in So of this.

very, we're from We've MSCI top. And this targets. very,- year, pipeline exceeded got a investments, feeding general clearly, going which we're some from a the our but internal a as, approach. likely a not but We're great over is we're start, for modest

small do And we move growth opportunity. year and material. the through into that become go a I we much as So a case, from believe it think end that, for of our this hopefully, but is something in base, is to year, really this to next more our plan start

Kelsey Zhu

need Is to more Just that. improve? then again? that rate stabilize question it this. one view hear happen to Is needs on new macro to subscription cost? U.S.? the political ESG. needs the Is just reaccelerate Appreciate for maybe to curious on your What sales conditions And to dynamic the growth in it it

Henry Fernandez

Yes.

our kind accelerate after small a differentiation in us, ingredients Europe to we to that an area. all, of speaks investment do lot the the European classifying to understanding regulation, people also are preface, like. also okay, beyond need in in a at a are of not pace and going of first the that period to So the that this sustainable fact of and funds they're say, to not sales that. immediately, kind these request is that, Notice That's order go but a funds, rates be it different ramp what before. to of now? They're beginning market going What retention necessarily from that. product what a to beginning as increase of to already up beginning launches, all of I beginning in and And understanding data a lot as to they of of all high the it's beginning alluded to clients hopefully, abandoned level funds are

So Europe. the in that's

the markets. minor of psychology equity look, U.S., what Yes, last people. the on the U.S. we U.S. play we I talking not political will But the spoke remember, everyone global, about. have environment global think about which talked it effect? some is in does play that the in lot quarter or of may a only because is because effect that affects We the is more In the in that's it equity going in market. But what we

in the concerned markets war the So in immune. equity were past opening in or lack effect Europe opening global Europe People the the of recession were and the or whatever. China, what about and the of

that tightening well. our with And equity global of of their lot budgets more were clients therefore, of respect process. ESG part is global is a So ESG to equity investing as part investing.

forward a saw of we we a of Chinese creates the last statements the the maybe in slowdown momentum. see reopening So more about on days couple of that as reopening, some government better begin China, to some maybe

little seeing are But lot We bit momentum Europe the get in there. will obviously a is hopefully, economic as a well. process stuck Japan. the markets Europe better of in in

of of all type to think it particular. sales that will U.S. to every asset relates everything, for then in but ESG as well I managers bode higher

is asset investors, American manage U.S. investors only not mind in that keep to money for European managers thing manage too. other The the they for money

So demand to the those recovery for be of investments the need sustainable of people part also in Europe.

from a we see well. there So to hope recovery as

Operator

Bank. Deutsche with Alwy Faiza from question next our take We'll

Faiza Alwy

talk noticed some a expansion. I And line to Thank about while didn't really level strong, on lot could Andy, hi. perspective Yes, that index of you. hoping I margin you top margins. was see give growth I was segment we wanted margins.

product. there's something index? around relates the to within Or investments nonrecurring any as other if it curious color So new

margins then Private a on were And basis margins were Analytics, year-over-year declined up as then and Assets. ESG

So any segments? those perspective any curious on of on

Andrew Wiechmann

heavily given the on generally, Yes. margins segment more on the Sure. not margin overall. would or overly I not any focus segment say company period. I would are margins we focused in And any in

are we pace input of we're into over really on EPS opportunities margins would an by driving on But I Our segment our The overall, is time. primary investment into focused EPS growth is spend is growth. that. say driving an have. of that input and focus that, attractive margin strong product that

is highest a byproduct primary opportunities, for the for those going And our so on are return directing to is And fastest valuable, the to margin us. which focus payback, the and most that. strategic be of most spend the us

other segment The are can allocations. that cause fluctuations into factor some margins period-to-period feeds which

And so FX. costs allocated we to do that have a chunk well as segments get our centralized as of

too And would focus are not all much quarter-to-quarter reasons, so I margins on. the for those something

Operator

our from Seth We'll take question Fargo. Weber Wells next with

Seth Weber

AI. the opportunity color you. Or this you and anything or of risks risks generative you morning. just you good like disintermediation AI whether can do that? I Very the company? as Thank an Maybe touch see there, for on any more appreciate see on

Baer Pettit

as I about Look, and So opportunity, an the it never would is disintermediation, think, I we're view think right? twofold. it we, the complacent we opportunity, is say way I definitely

We from range very of like modeling more data, have enormous an analysis for and clients, can which make greater interesting cetera. et indexes, ever we our things can insights, more that feed

we're So -- that's key a I think so point.

create then an under of modeling us related et is amount And that as teams this. the beyond modeling is or get and I is to second efficiencies have in well. think outputs. in added them who value great enormous for big to we trained precisely are are more that, generally, these cetera, there research, opportunities technologies, The order true not thing over the And specifying to to

we be be to these say as us new want complacent we would some new competitive complacent. about I to can items. And opportunities way we're able give and is it businesses to the we fast start to some create We think So up can, of not not who this people move to advantages. need we as invest, start or that may want

Operator

Balsky next our take We'll of from of America. question Heather Bank

Heather Balsky

so the back how talk do revenues of transition so. able pace I'm can sort and could revenues you some my when to time. in call happens, question. convert convert to I to index Hi. you being the of kind nonrecurring about you curious taking for about over wanted of if you're you go much to spoke Thank earlier able that of how the those which

Andrew Wiechmann

can I revenues, touch prior we to quite a did high to Specific on to say the would also question, your quarter. periods. which related set. float onetime client maybe of broaden some and it purchases unique appreciate data the I are broaden free strategy. have that And in Yes. going other fees benefited just we to sets a healthy be them ongoing data the our that Sure. very onetime from Oftentimes, a contribution we data conversation can why their to were help contribution from large have that nonrecurring with to from integral of license

set data we broaden into And want they of it, sale sale that use will to is of sale. see so updated get subscription time, a data a initial over oftentimes, and converts and an the then a onetime

it's helpful a feeder So for us.

most dynamics, more healthy where and areas expect we recurring demand index are where to these type if frequent of that to there in over-the-counter is, sometimes over-the-counter believe I could over there which our where repeat from demand would And probably derivatives license become notably seen. they to lead over sales lumpy, can it products quarters. time. in nature of revenue of things area instruments long-term those there by for strong a kind nonrecurring number a as say are a its But a would seen user license well, nonrecurring recent switch content. a of quite be and to be time We do like revert you've levels areas we structured have another

hopefully we nonrecurring repeatedly, that lines, which many more clients create use what a this, cases will it and stability components products along those And just of line, reflect call will quarter-to-quarter. use

Operator

next Research Huber take from with question Huber Craig We'll our Partners.

Craig Huber

up I'm here? but loosening data, the in Obviously, your you numbers, clients But U.S., that various mission-critical, discussions with given budget in of tools your how speak from a tone budget your you ago? out themselves a positive versus months of has talked your are it's X like you you Europe or analytical clients their with about from stuff, up are you. mean, feeling earlier some Thank and very the numbers there loosening business constraints standpoint, standpoint, thinking X were your all maybe for sort do as way. I budget and feel curious, obviously,

Henry Fernandez

they basis. to exceptions all, first budgetary on set and that be processes annual pretty all flexible of that Well, remain our of are clients management extremely And they up an don't run much. the way There be of to down the much the need our clients. senior will

and the is lot in and case war the that a what in back global to soft was this So seeing are energy Japan, U.S., are sure still December Ukraine positive havoc; the to there. the in in do create year and to in crisis grow landing; the and hopefully, slightly case for January. and is set of obviously, the trying not for order of case economy trying out obviously, the a government over what the the in we're figure this to they're of inflate Europe, going tone will we of that more in -- to faster; China, economy the we that more the budget worst But is

to more growth that own from something with time. on therefore, allocating not. of end maybe we than lot That is money immediately they et be budgets to spend the and It's them higher sell is positivism. us compared a over to amount there cutting-edge. is reason that less what able normally into will in but other clients, of So small demand that up more is our slightly us because mission-critical, their their will And the And clients translate is sales spend cetera. of areas

for staying quarter very hard world. people were of positivism inflation landing, there yes, cetera, a were two talking people on little time, or in a et going in high which maybe more period a long about is the a to ago, compared So talking

Operator

with Quelch last take Russell question Redburn. We'll our from

Russell Quelch

you Appreciate there. me squeezing gents. Yes, in

appreciate growth part acquiring of and to S&P market So obviously fixed the iBoxx chosen income have your grow indices I CDX the earlier as their IHS around inorganically, in comments acquisition. indices.

in accelerate your acquisition of growth might an to opportunity as step global yields, income So up Or asset consider a given of in result selective will organic approach? rise continue and and to here multi you indices? your the sort be in the the you in fixed

Henry Fernandez

a acquisition buy We different our always reasons. lot at to the to assets areas an expand other create unfortunately, And space and value only medium will the We price that in buy shareholder that long consider assets, for creates term. maybe want people we in shareholder right the in short, value. of

us. very areas So disciplined to that strategic even financially very we're in are

right the it always we consider So at prices. will

a at looked not have out We lot there's and there. everything obviously,

So that in purposely growth what have have path chosen we a is organic we of competitive areas significant advantages.

there income, cap for of market So example, in in the a lingo businesses, issuance-weighted issuance-weighted fixed lot the world. indices are of indices

our going a to lot to value within indices. add So all out we're deploying of of go and not capital launch family issuance by of

to on the competitive capital most and are advantages. of repricing of I significant we're with ESG climate that and is in going portfolios, be corporate pushing our believe and loan climate, in places one capital that, players under investment by and probably experts capital that the recosting assets reason of than way, we asset companies, are bond and believe have of the their and portfolios, is the that into the we respect climate area fixed that is and to And fixed is significant in And early income their insurance like. corporate significant those the we The to factors. income therefore, areas equities in reallocation will be of pressure than in their more largest other their probably regulatory the more lower mortgage risk banks portfolios space, in classes. the

fast, have and to to big and a to to that's add soon going lead they're repricing. And going

analytics or climate, is indices the strongly on we're and of income climate the like. and of it's the that therefore, areas it's targeting So fixed whether really one and whether income fixed intersection

advantage create we competitive So that's an part to places on value. where our of example see

Operator

that for conclude would question-and-answer CEO, to and closing And over Chairman remarks. to the the does like session. back Henry I turn Fernandez, floor

Henry Fernandez

reach Well, our the for you. happy Enjoy out at time, thank answer your rest for more to to be questions any questions. you of We'll the day. any very We're your your us. time, Thank other so available than perspective. much share to of

Operator

you does Thank presentation. you That participation. your today's you. for disconnect. Thank conclude now And may

MSCI (MSCI) 25 Jul 232023 Q2 Earnings call transcript