MSCI - Earnings call transcript Q1 2024

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Operator

Good day, ladies and gentlemen, and welcome to the MSCI First Quarter 2024 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 Investors Relations and Treasurer.

You may begin.

Jeremy Ulan

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

statements, the me of second Let forward-looking today's you by governed presentation. this that are remind slide the contains call which language on

undue on You as reliance they not are statements. place on only based date from to which and are are and of statements, made, and subject the expectations forward-looking to actual cause the differ current which results may conditions forward-looking are materially speak anticipated current results risks these cautioned on that to uncertainties economic in

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

presented non-GAAP addition today's of to refer results call, U.S. in also on During measures. the we basis to GAAP,

You reconciliation of the measures in GAAP non-GAAP will find equivalent the of presentation. earnings a to measures appendix the our

operating such We discuss retention metrics also as and run rate. will rate

available Important the run rate are such information earnings of as our retention rate presentation. regarding metrics and use operating in

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

call. one As queue. by a our the final encourage ask at do a question our ask yourselves during housekeeping to time Q&A adding to want to more item, of We I you analysts back the portion remind questions to

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

Henry Fernandez

MSCI the our growth to of us. day, for Good our business results durable that profitable everyone, demonstrate you Jeremy. resilience joining Thank financial In maintain by trends. quarter, the first solid thank secular delivered supported and ability you, and

year's cancels meaningfully on key of some segment elevated budgets and and concentrated areas. the and flat sales recurring were some But were from client metrics effect market operating milestones. pressures new levels included last reflect Our product lagging in

share XX% XX%, side, Meanwhile, consider On free growth index-linked both a flow of the AUM linked cash powered achieved of of financial by growth organic we in revenue million to delivered decade MSCI XX%. products record and by revenue per client in levels and balances highest sales in grew of AUM as conditions. MSCI earnings ETFs improving MSCI our at leading in $XX ABF adjusted indices. XX%, a non-listed We our [ indicator QX recurring ]. analytics products Operationally, growth

of $XX of ever best owners, funds double-digit quarter Our QX analytics. million. growth XX% of nearly recurring index subscription among sales run driven And another rate asset at hedge and by among

sales pressures witnessed $XX which million affected in Roughly came events. unusual historic cancels merger a X banks At elevated equity cancels reflected and were of the ESG from active us $X our investment show first XX%. client and impact Notably, Europe expectations Analytics. managers. single lingering Index, worth a event, and same on a quarter of global across that of of client million up especially interest results in major concentration rate of Nonrecurring market time, MSCI firms, financial changes volatility, the

some While continue. to do continue, of level not cancels pressures expect this client high may we

asset organic segments X% to Among subscription for rate us, and greatly managers, among continue owners, and levels engagement environment delivered operating our asset we were growth redemption, with fund organic segment. rate fee wealth able encouraged the run remain weigh of corporates. deliver on funds, managers, that run across subscription geographies. managers but pressures growth to cash client we fact, by Despite In QX high all all tough we and double-digit outflow

XX%, offset our XX% our expenses the revenue across APAC APAC and amid growth financial helped EMEA by EMEA in regions. helped continued of product climate achieved stabilize at tailwinds rate Americas. dollar, our non-dollar and U.S. our Meanwhile, In amid strong FX-related Likewise, a run supports driven MSCI's growth addition, benefits franchise headwinds. we resilience. run lines, the rate ESG all-weather

clients, of the in first difficult we in helped stabilize and performance diverse as environments products geographies Our our quarter. mix experienced

markets the reshaping Looking the biggest AUM indexation, should an levels on growth ahead focused to balances keenly certain spending the that private that of the portfolio [indiscernible] and assets industry weighed revolution. such liquidity allocations mitigate capitalizing customization on products. supportive We on our remain and client equity remain high and pressures MSCI secular have and to global trends sustainability increasing on as

will while of providing custom for This give last provider back London-based simulation us intermediaries. and the acquisition technology index we indices Just to for the new testing of institutional and creation closed a Foxberry. platform accelerate investors week, our production index capabilities

to solutions Turning has acquisitions, with recent combining other and the segment. MSCI enhanced indices, the capabilities factor and for platform models, ESG and our climate risk our Fabric dramatically data wealth

and solutions existing Finally, engagement and team, such institutional expanded carbon with corporates, Trove beyond the prospective clients deepened MSCI as trading has Research desks climate and banks. markets investors, our our formerly

and lagging to revenue faced Considering such we and [ external profitability and maintain our clients withstand the ], effect expect our challenges confident the growth MSCI all-weather can the high client This levels as market beyond. in us in that we MSCI franchise are saw makes events XXXX volatility of of QX. to continue

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

C. Pettit

quarter Thank today, key In both the segment you, broader everyone. will and strength strategic while levels first my perspective. putting our of product of in remarks sources I discuss some results results and a greetings, at in our the Henry,

about our First, I cancels. Henry's expand like to would on a bit comments elevated

closures such first consolidation, events majority vast cost kind fund the quarter and cancels noted, you pressures, industry reorganization. as stem from our of As

run our of is client . Clients rate bank who account single was from multiple subscription product The MSCI the total our XX% on rate. XX%. QX QX XX% lines clients or across event retention Excluding retention merger, those a use average of MSCI higher. for

and our product to Turning segment results.

in push to as MSCI remains linked Indexes also for products of management assets to competitive AUM products. ecosystem of hit quarter, trillion, As product a a customized first ETF especially advantage, indexes In record linked the investors to linked demand Index $X.XX high MSCI under and in $X.XX new continues Investments MSCI the products non-listed more equity indexes to for a while grow, trillion. record more set

growth The XX% We subscription run growth rate primarily also our growth special funds across recent Asia and client-centric rate hedge growth all new of in run XX% X.X%, index Meanwhile, Float delivered product our cuts index sales. towards greater index customization custom XX% and hedge index solutions run including enhance of among index experience. and will and by and Pacific a Data segments. lines The of custom further XX%. subscription custom acquisition was was driven growth among range Foxberry our provide wide MSCI's client rate funds. trend Product in interactive

For increasingly client has our boosted of part and to is portfolio Fabric clients whose their serve want Combined acquisition the extremely segment been Fabric wealth managers platform our advanced has to example, using technology platforms. of analytics portfolios MSCI our wealth ability motivated That now what total from platform with positive. already customize the offering. the is toolkit, feedback

all the The generative specialized attribution insights including and for closely surpassed has related wealth over to supported shift analytics have but Our content, performance us by in technology, deeply $XXX AI. they space. year-on-year. risk integrated on XX% run growing rate depended leading-edge for is Clients always push want and million, highly tools now customization managers another among now

Our products on and factor analytics our massive models, platform as Azure. our team such multi-asset our ] Microsoft insights [ solutions manager has built demand and through risk class ONE risk MSCI

the XX% offering. among RiskManager can At a with by first tool these strategic revenue become pressures among seen, a asset recurring As we and level, our major the sales market sales decade highest At asset even tools of of Analytics QX Analytics Risk level, achieved large recently sales. facilitated quarter, in hedge a recurring and owners. alternative have product posted XX% and of cyclical volatility, our segment win were growth Insights banks, relevant XX% up uncertainty. XX% manager by amid new among funds global the geopolitical growth recurring In XX% more for our and included

specialized we intersects it. doubled on client sustainability our for for and This capture attractive to represents efforts demand needs an with tools have Rising regulatory solutions. down opportunity and MSCI, analytics highly growing climate for

run while developing regulation Solutions we To our XX%. was on solution enhanced this first finance build new sustainable growth quarter have momentum, Corporate Regulatory disclosure rate or EU a for Sustainability CSRD. ESG solutions Our Directive, with for the Reporting

wins continue In MSCI over will exploring the ESG Solutions, Burgiss' opportunities client in for we retention we Capital EMEA, addition, in and year growth rate run to achieved over achieved the Private In performance XX% rate run prior quarter. we period same in early We a APAC, growth where rate of the acquisition XX% of had first the untapped accounted in in which momentum of a half product segment. close new to XX%. last

products drive private as data to new of continue We management. recurring transparency key and such portfolio total plan existing sales capital

making remains strategy MSCI competitive trends. on near-term and over me also harnessing including laser our secular our integrated focused Andy. with data In for And summary, let leveraging product on turn the while into that, We're LPs evaluated GPs, map, call pricing and road models progress advantages research. translating Andy? long-term MSCI's delivery to and

Andrew Wiechmann

non-ETF well and revenue linked to In revenue XX% headwinds asset-based XX% We EPS metrics. Thanks, organic highlights driven indexes. adjusted the revenue and we first XX% our EBITDA Baer, by record even the of hi, balances the face record quarter, in ETF solid organic in MSCI performance products double-digit everyone. adjusted and growth. growth of financial delivered growth, model, business delivered fee as our as in operating AUM growth The resilience reflected

a top with of of in quarter are muted have active provide to seasonally more To business quarter, concentration As a climate. cancels typically on impacts the a cycles. the cycle and quarter and of color, first what the we flows client we X is the lengthening sales resulted segments events index our we And biggest prolonged product of have ESG of strategies as a for bit compare equity of mentioned into this XXXX, a previously, us. were the softer slow-moving in seeing period increases if

including increase cancels of come large came through climate, a bank level of $X million in nearly XX% majority occurred event. and events, in bank large although could million related be the completed. million global including higher from of is some of cancels or future merger to increase mentioned in that higher $X.X this the integration the previously corporate quarters entirety events. the items and or roughly corporate client merger. $X Within [indiscernible] Similarly, broker-dealer segments, ESG large global segment index, bank to cancels $X fund increase year-over-year within the million roughly of increase hedge the nearly the From from within the contribution a came and QX, of index, in merger The there $X.X related client in million from the smaller global a as

all retention and rate segments, Across and managers with the asset ] XX%, respectively. asset XX% owners product was [

While expect rates coming events the expect term, we near level the year. do do to in see in and cancels retention client to continue through expect to levels some elevated we the at continue not this we rebound of quarters,

solid we indexes run and X% sales pipeline packages. special opportunities. modules Additionally, cap Index, market growth growth our weighted have a of rate had custom In and subscription XX% in we new in

linked in in far billion. a of of were inflows to emerging level so QX the billion our were ETF from over related of $XX and ABF XX% of flows markets together large large about which revenue. item of cash billion had indexes, unusually XXXX reminder, last in ETFs outside a drove to MSCI $XX developed revenues year-over-year, benefiting which year, of with usage nonrecurring equity appreciation were nonrecurring markets indexes. $XX and we U.S. MSCI-linked up products, Most about As an an the unlicensed market revenue

and X%, the our In offering. to made across Analytics, and rate as These was the Insights growth run strong client drive investments which have enterprise models in the organic our and benefits segments. multi-asset from innovations sales subscription such helped risk we've us reflects models next-gen class

which revenue wins related several to in contribution Analytics implementations. a large analytics. had income this client much included revenue large of catch-up items, client also from quarter fixed We

reflect growth growth excludes which $X.X rate XX%, and was Trove In organic reportable the and our of million for growth nearly reportable segment ESG Asia, was sales Americas from with close lower run Climate run subdued to run in was ESG X%. to net Europe rate estate the of the other and rate real and In X% impact XX% segment, FX new activity while and run Climate pressures. assets, within growth about rate commercial and real was about subscription transaction continuing XX%

a on segment. over Burgiss, nearly revenue is the with XX% at reminder, which, the We Private segment continue to of reportable within as all and Solutions progress private integration our assets our quarter. Retention for was of pleased other Capital The referred be $XX million strong to the as operating contributed

and U.S. of to continue at of was vigilant have balance disciplined over on readily available focus March a including end in the million, the our $XXX We over capital allocation $XXX million. cash cash

on potential tied achievement closed The we payments for for of of $XX the upfront week, the Last milestones. million the Foxberry consideration. has to transaction of also performance-related approximately key additional acquisition

vested the guidance benefited XXXX the excess tax higher of unchanged Our that in in slightly favorable year. first note all recognized that in benefits of items XX.X% declines across and rebounds would tax rate the and AUM on comp I quarter categories period. and QX remains our assumes discrete effective second gradually from stock-based half

the to and items. our look rate we each client posted our us position tax keeping investments forward before multiyear progress. quarter quarterly growth to the we expect effective throughout XXXX, drive XX% any of For discrete the XX% you well to centricity remainder and of year, Overall, on

With questions. that, please for line operator, the open

Operator

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

Toni Kaplan

segment the talk closures. giving client for event. the to about large wanted for you breakout I Thank the

in it but maybe to sounded going to just the me event, non sounds in now more. numbers, isn't it like closures asset be more you that like of the And like is more that were quarter. confirm that wanted just managers to Just in there around general there the saw I

year? that expect So the do improve throughout to you

Andrew Wiechmann

Andy. it's Toni, Sure.

merger, occurred QX On bank later through year, as merger could mentioned, be in the some as have previous trickle but And be in . integration in the global related anywhere here. we some the continues there saw small what smaller of cancels to in that don't to items the QX. we large close We we that did to bulk quarters. expect large the it items

rates color remain on Just addition in and elevation XX% mentioned managers maybe asset here. more more QX saw and to among provide generally, cancels remarks owners in little I would And the respectively. underscore that a on what XX%, at that so asset can prepared retention I bit the we I healthy, and

the that merger. $X to, global or of increase the client we So index, to $X.X from corporate we this majority alluded million $X so in million events that million, came that these saw of attributable of large bank events

fund-related see did we that, Beyond hedge a concentration of events.

in I So saw was team the the events, increase bank including corporate we've that merger level came departures And ESG Similarly, and higher that other changes, of XX% where year-over-year to. closures, came quarter first together million alluding strategy area global all here. $X.X as of the an we mentioned, been from increase year-over-year in cancels from climate.

continue expect during there And alluded to going forward? so the really here. acute cancels And we that of quarter this occurred first bunching as was events we don't level to, of this

Operator

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

Alex Kramm

wondering what thing, largest a to mean asset struggle and comes smaller that things asking almost like guys better, I I risk time, set, managers, particular, set well confidence and with your you're you're largest you same the getting to really and of historically gives asset environment. at indicator. with a the but is what end client think be But just the the it market, the which really, leading that management sounds said continues getting doing should there's have are the kind seems it that still same overall are better? like what in that really At you flows markets of seeing it as

challenged of a that, and the comes you it that of end management why then not asset clients structurally time. is guess to could mean and smaller I the talked hit market worried all back. question the you you is, are I structurally So the lot

So just wondering what you're hearing.

Andrew Wiechmann

Sure. Yes.

mentioned we've this for a environment. before, year so it were as budgets when was year set And tough Alex, last

the buying top for overall And sales soft the typically in decisions seasonally so cycles, quarter QX. on of and what a us impacts seeing we of tighter on budgets is selling environment are

on we which alluded we among where engagement them we them. are are seeing asset we've managers, and focused more helping As to, selling to means can, strong

a custom special we've outsized types, across continue the a in have them they and packages, for asset and so moving of the the when look some attractive as to growth of business growth you see the managers. got X% towards. see managers that in growth as our for like where models and reposition we And that opportunity to continue elevated And we key you in can at we in view the steady future, so area asset key are us their key growth areas areas module these with

highlight would But we equity you something momentum positive markets to behavior. to And time be will to, would solutions be I to segments. continues with alluded new been constructive hope through. some as moving to well. factor as buying demand take and it expect, will we I that work and a we that and existing sustained But see see has growing to a build other this large slow across and continue in So that and be we also solutions, cycle, that think

Operator

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

Manav Patnaik

question my visibility. is broadly I guess on

So maybe just X-parter. a

all how guys lot ahead, new I looking similarly, was them you when, elevated also typically guess, sales lengthening you notice? much client first about a do the cancellations they happen. cycles. but quarter, know that like talked in then did business, of First, Like then these selling in going engagement, you that And talked give occurred advance about you to

numbers. So could maybe engagements a bookings see to when we pickup thoughts convert show just these the on your in and

Andrew Wiechmann

Yes.

visibility overall activity. about point have listen, the visibility, into level some first of the on So do we

from some And in we we've been from exact past, elevated an we've the don't they seeing contribution client know. our occur, events. pressure been levels the of of as clients. so expecting But alluded elevated And timing when to we've always

client this the of as this to in don't expect cancels do we result, first continue quarter bunching here. expect We we year through that to a move we towards the up the some towards move of cancels ended this did we last And forward. of are the of rates so we elevated here year altogether. And concentration occurring level not type expect we year. had but going expecting just rebound level what as more activity saw and this given environment, retention part latter of

of as the I visibility sales do outlook pipeline. we listen, mentioned, the a into longer-term terms side on pipeline, and In have solid

solid the at got clients. longer We've just sales from constraints. And engagement cycles and these seeing time, same are we budget

And a the last pressures begin I And the in do that talking we're that into, through we as for just opportunities of not translate newer in so extent question, but should products, to think, little growth exposed are segments of core that our many the some have alluded we alleviate dynamics and these to about. see cyclical encouraging less the as it's to well when in in that us. solutions client as to I

Operator

line comes JPMorgan. Your from question of next with Alexander Hess the

Alexander EM Hess

the growth you what the if wins? index then break sort subscription wondering cross-sell, expect line was could as on in And I of year-on-year pricing comments down new some those run for business progresses. rate you items maybe year into upsell,

Andrew Wiechmann

Sure. Sure. Alex.

subscription continue in with front, It contribution to we value percentage the well amount sales. important we level is highlight to as factor on overall make sure that delivering lower important that pricing on our an we're a within that It's from environment clients, we I health. that for pricing we are the in the had and capturing as to would underscore a past, client we we've want measured dollar to do and us, we, price new lever and do alluded increases to a on be this the So but increases. very

our to to increase call or solutions we and year. new And a of upselling, was so bulk more growth is believe going cross-selling we to little delivering sales relative more key to so existing quarter, modest in the was largely contribution a balance we the what from would saw subscription last the clients bit forward. related price sales that of what The

is engagement believe more we strong that with continue to do we so And sell to clients can them. because encouraging

very hedge here, As among to growth and we've X% down see cap and owners packages. to within saw our continue managers growth that the growth funds fund some of special bunching, We custom segments components growth saw continue alluded break well. hedge growth, this to, And despite as modules. asset XX% we bunching with growth we outsized wealth across and when growth outsized saw in we strong you events of despite strong client see market

growth drivers multifaceted, the I and many is So of long-term the of think opportunity.

Operator

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

Ashish Sabadra

of new politicization drill demand I down I ESG products on the talk for help Climate forward. about on you in the should influence any incremental seen going lastly, how have if further CSRD could in Europe, segment. the of just the how the potentially and we of you wondering think ESG to particularly growth wanted also, the the regulations momentum But could side, climate there. was about headwinds U.S.? some And

C. Pettit

[indiscernible] and And us list very on other it but notably in in which important focused affect a are important tailwind and very where the regulator clients ESG is But for there's notably, being through is about variety of a this broadest climate. jurisdictions, very is also laundry our in, been growth. but I driver for disclosure and Australia of EMEA. the continued many news jurisdictions, go coming won't it's a in directors a

add sure, in is new for we can away, lot but and with different value there. it not of going And jurisdictions, see convinced a appearing we're merely not increasing it we regulations that

financial confident on communication value type with year we United be this and sales The lot as our to these and of a second to which that great market. a insights. we central rest can in thing with clients going And And we we're to bring political we're ESG, in notably to our a of we're in the issue. States, this go marketing investors into bringing with the is, our want not the materiality is that emphasis focused put of

both my materiality are back ESG those So want focus where started. to our regulation bring to that and observations, the related way it we to financial

Operator

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

Kwun Sum Lau

it percentage? So subscribing going or back or for of talk please mentioned to product that XX% this run and you multiple together the X, about Slide thank subscription lines. pattern this going you historical to putting slide. for It rate Could with Also, let's to does Has up product been line than to, one increase what more down engagement flat. clients from your one? the increase to product say, the take relatively it

Andrew Wiechmann

Yes. seen Owen, to products. have our clients that I strategy with those has been our years. as say, are would that we well of for strategy historically as It's outsized part key largest a multiple part key retention of many clients our subscribing and a

you're managers probably accounts, had the strategic we and call have key we more aware, across account these what we with effort have As a account managers large we senior selling where organization agree.

We holistically with them. engage

those them to and about engaging it that also are can And MSCI but talking not to so and leads time, leads higher opportunities. organizations of them objectives C at to achieve their engagement retention rates over And what levels typically these how the selling objectives. additional help we're only

and where our and help ratings the more so indexes integrated over clients our investment their are run And them on solutions ESG operate can the MSCI framework models time help research same and risk as our an and objectives these efficiently. of built effectively beauty We more so interoperable. we is, are franchise our achieve

can has by to this X the retention the you driving figures so that as growth on organizations level Slide integral globe. among continued see we strategic it's that. larger And effort and these here, And of around been critical higher to put that selling

Operator

Kelsey the Your Research. from with line of question comes Zhu next Autonomous

Kelsey Zhu

second. talk about to want a products for I index custom

segment product if kind around So run for growth really I a your medium-term total run the market saw this strong was of wondering rate and segment. growth XX%. addressable of for can this this get rate we thoughts

C. Pettit

descriptions of the don't me But very I an is number an would range asset for be their in who in fund it's endowment. or insurance ranges owners for on company or total could for customization from now. depending say turn, pension Yes. I what whether client And the is of market that right use various benchmarks front different customized different addressable require cases broad. very those have exact It type, an of portfolios. a

a which of linked then, mandates wealth both segment is products funds. very our large in institutional market asset course, links for to It strategy. turn structured is for to managers those and mutual There for

it's So banks products products distribution. wealth structured really the are investment where the for building

And but also across of demand cases, underlying we driven look customization sort different so ingredients. when ecosystem client types, by for use different this the is different entire by

that of quality accelerate us which We're And so as a relatively and great we here. will different faster. on there's have different very think reputation more is market sort of strategies, very excited by help and types software new different ESG bring nimble content, large our components, great such climate by building to to going upside even industry us our Foxberry, which this as asset classes, types a of will and of we addition a help with be product and interface, our modest-sized acquisition

Operator

comes the of with Sachs. Tong question from next George Goldman Your line

Keen Fai Tong

strong you specifically, you're This growth to investment reinvestments long-term Henry, initiatives for how potential support entering fuel question new margins? the cycle can to is pursuit near-term discuss could be near-term a do Henry. balancing margin with at expense growth MSCI strategically that you of will of what initiatives believe performance, new extent

Henry Fernandez

How act of the high the do with for to levels year. continued shareholders growth are we future. every play we definitely balance that balancing key investments in profitability our That's drive at MSCI going that significant revenue

of that high to that the George, even and headwinds, do, efficiency try point, -- our more to despite any we expenses compensation level investment we that thing the keep some hitting creating do is thing we keep we first within the that by of every is first at do investment So year to the and try level year.

in that the us. of double rate, feed The year-over-year growth a increase opportunities we at of company continue on try growth level thing the funding to that so to second we do we investment of have of that ] [ say, expenses the ahead basis of is significant a that noninvestment rate we

to The investment do, return we short be year so whole profitability continue short-term term, more helps than we company us positive, having that maintaining third levels what much a a sure term focus much term is of not shorter currently year, what thing efficiently within or not the that highest mobilizing believe do we making going do to higher a within meaning pressures are on is, paying and on discipline ones is and few that investing because and of quarters in, productively. actually it we we're but having negative the long off currently or do the a that what more rather to a

that's of the balancing kind So act.

So [ I given Growth, to mandate, employment almost that, a if it's change little that. dramatically you that's right? dual were is fed a and of like think inflation going don't the bit ],

to dual profitability growth. high a We have maintain short-term mandate levels of versus long-term

we Now there possibilities outside have discarded. are that

currently going at And flows there in on higher the company the all the to going equity we P&L a the unless EBITDA our indexing that levels because significantly higher incredible amount lower products. the not margins of run of through is hand, that in we're values not We're to margin meaningfully the other money of have.

that's objective we that the So far. so have

Operator

comes from question of Balsky America. of Heather with Bank next Your the line

Heather Balsky

and just last investment areas term, longer focused? you products, of the just areas growth What you'd where most accelerate your business? you as of investment and think to segments of what like wanted about to I where are drive question type you, piggyback to ask on

Henry Fernandez

very potential. everything MSCI a number incredible that. and areas. fortunate that much are tail about We're a this of long-term back at mean, has do in I There pretty we

some things a maybe going quarters, a short term materialize take in are years to things materialize big few faster a in and way. the Now some few to

thing cap structured possibilities in think all futures wave The first is that. that customize because wealth benchmarking, it's indices the thematic, of growth an derivative or index a scalable rather equity growth so ] managers focus options, we growth with [indiscernible] non-market pace is we new way continued is the expansion and than enormous managers, both indices passive investing, products, our basically this is ESG, listed, portfolio what see despite for [indiscernible] have of [ And that of from of management, in about coming of active ability which index active individual whether now always indexation, of products on management. an in in in we with the enormous climate, direct a factors in to potential and people

And a that, part. we that indexation. of top equity of top the potential income that's see And fixed on in -- lot on of

concentrated On which management world. part of also but of So levels all active the that systematic one, in important which management, in asset very the this high like is things obviously investing is hand, the is barbell is index the private of and investment high other portfolios of investing most levels one part and part that. is

where company. that's we're So in the positioned

will next So which and we start sustainability with the think definitely look index. continue grow. climate, at sustainability obviously, we to but Then ESG is we level, within ESG,

not to fabric is investment as how the in all risk investing it philosophy, financial whatever of market to of you're political opportunity. say, these factors a part is respect people politicizes not with what factors and portfolio -- other going matter factors. addition the to is is the ESG what or No to and people manage investment

situation the but to in Asia. reset the Europe, we're on the growth So regulations in down see beginning obviously of that that of cycle in significant U.S., we're given political that in given

that's So second a component.

The transparency now performance of private and the be and positioning ability asset The assets. risk in cetera, ourselves third indices to et sheet insurance sheet tools enormously balance banks and allocation, in a world balance a of fund private component, is credit. of and to now the going right balance revolution on the provider from and on going structure. which our we're large benchmark sheet-driven is companies It's things, biggest

So need they're wealth if that structure fund it's has in credit individual in to tools. investor, a into an a institutional management it, investor whether transparency revolution or private going

be this into we're even in to in will providing understand come tools and our portfolio portfolios in. are focused one, is of risk and that, that, obviously, which management role climate are company, on than a other is within that They're fixed on. going lot all the a risk a example, to different the we have or performance and an role for where insurance more bank areas big of insights, and balance X sheet Those analytics, areas our big to income There analytics.

broad product basically on So side. on, are the those focusing the we're areas that

that of all course, areas beyond that side we're Of the has active a corollary the huge of expanding into managers. client

hedge and the bank, forth. on the see hear non-asset opportunities management side, before, the was As growth the so and asset the quite owners, in it the Those client we corporates, funds, so you'll are on sheet often balance enormous segment. of said

little So overview. an of that's bit a

Operator

Your Wurtzel of the next line Research. Scott Wolfe question comes from with

Scott Wurtzel

segment over few should market be touch last of Just forward? fee the the we should point about quarters. the aware decline mix within relates environment? be that basis current basis of to seeing wanted there going point as And to there that thinking Index Are the any and fees dynamics how on we kind it steadily

Andrew Wiechmann

Yes. Sure.

So fee X.XX we points the basis X.XX of prior by down out contribution from There lower resulted Most entirely products and be did that U.S. say contribution a would to lower nothing there's here. points. shift. almost see with I AUM quarter That new a of from higher from dynamics can modest fee international call to decline from a mix in was some basis AUM the exposure. levels. with products driven higher

was the fees. this And you levels AUM there when stability in dropped, more saw

at and down where we levels. arrangements up lower have AUM higher at they vice fee some do are levels there AUM fees So versa, the step step

in different although growth And out new what down, or seen. decline, we've we've come have of We do fees the seen so is by we nothing many out, be nothing over I'd than that across so in to assets to driven frontiers one relative ordinary expect can that opportunity the mix what gradually the to time we but the shift factor tremendous offset small and expect point say past. to more which

also tell revenue And growth. overall revenue contribution, as but ETF the overall by can ABF the healthy you

we tremendous And so I stable higher indexes would about custom the is an back type and going times, see. there. highlight that question those within areas non-ETF where can passive, indexes the area fee fee many the around and engagement to That passive dynamics more mandates in have growth see non-ETF category. we that like been that's And custom be much

Operator

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

Craig Huber

you at forward that time, benefits And you on going front? you and that the opportunity sell cost-cutting on, see benefit can you on that higher also touch touch the products over Can if significantly could on AI price excites you point? going front? would, to forward What your here potentially

C. Pettit

Sure. I'll few a make observations that. on

with I'll the So start efficiencies. is point, which about first

our to So I it that think efficiencies talking we about. of because lot try we're things opportunities that reinvest cost-cutting is get these a lot to see than of prefer growth and faster rather in as to goal per to a done se

focused very projects variety that across we're we going have aspect a But things of on on. that of

also turn, of working in in product areas. a So apply we're AI variety to

which insights Analytic have, through have launch this of coming up parse of enormous AI. in and We they a the for using during normally bring course ways the Insights clients, would take amount an in inefficient complex actually, we, quarter rather direct on to essence, where data

of think I will that the that. just So beginning be

be competitive this really thinking on to a have about environment. in focused We

is get think that our a we to we we always to so insights AI that the greater clients those us forward, go And data-rich are capabilities of deliver And as real trying are of out for of benefit environment. I them. very all

insight product new as both we our development, of quarter this and quarters differentiated be using faster keeping in about bring this more of news ahead, during you that's terms capabilities said, calculations have definitely as I and greater the out, year bringing in AI. clients so where and rest And we'll

Operator

Bank. the Deutsche Faiza next Your line Alwy question comes with from of

Faiza Alwy

stock if on more things? doing and given would you been opportunities what the capital to your and prioritize have wanted I touch last recently, curious evolved I'm over M&A on and versus views capital has share buybacks how year allocation the just potential allocation, other

Andrew Wiechmann

Yes. Sure.

say, to changed. generally, approach not I'd our capital So allocation has

grows a and that. excess we look And to dividend So generate pay of company. with cash we that beyond EPS capital the steady value then with

so are we continually for to And do looking that. opportunities

MSCI, sometimes investing value is market the monitor our in strategic stock [ opportunity do for potentially for the we creating ], buying for us attractive back. so While best MP&A

future And so company value. believers we are long-term and in the the

so our cash share approach opportunities and to in we attractive look not to the has And changed, see when use available stock. repurchases we'll

Operator

question Redburn comes Quelch of next Atlantic. Russell from Your with line the

comes question of the Paribas. line Your from Greg next BNP Simpson with

Gregory Simpson

are Burgiss. And for XXXX markets? talked about in about track? check private XX% any environment beyond the wanted just challenges you rate of if in sales there think to run you private markets. growth you Can looks I top talk still on the the growth Or within and on line

Andrew Wiechmann

Yes. Sure.

in technology a as I growth our from track So and private would say Baer both run integration alluded XX% solutions. rate standpoint. data a we saw to, generally, on infrastructure largely and a capital go-to-market

areas We value. think where have the seen encouraging signs can in add we we

outsized So in traction in we've growth seen EMEA good getting and Asia.

to more I see where we continue optimistic solutions capital and the the be areas generally, big long-term to help MSCI long-term can there. about on think continue private across go-to-market, would So opportunity I say opportunities

Operator

MSCI. turn That CEO to Chairman now and of session. over conference Henry I Fernandez, the concludes back will our Q&A

Henry Fernandez

Thank you very that questions insightful you today us joining asked. those for for and

said of have is share that. compounder price MSCI the our our in to be of our to continue objectives absolutely achieve a to is we earnings at And structure and in our operating that. all and long-term there revenues As past, no and our change

Despite events tailwinds do not levels unparalleled, the this the quarter that challenges do of we want we and were quarter. our level and environment had increasing last cancels they that things we remain to level as totally that will quarters, every operating to in as said, a every engagement in solutions the continue of have that is in expect first that ahead with week, they is we've result these conscious a few pretty that business. day, is with to high, we to opportunities record the at see client in quarters The concentration elevated it to of clients experienced and our up on every power come. us continue is we And of a want us much at parallel, come secular

we times. and you business like objectives, through for or those look joining forward we their few whether supports bad us you weeks. next problems it with with them to helping are franchise achieve morning, And Therefore, in times we very committed thank in is and pretty capitalizing speaking therefore, this would on our again it's and dealing good all-weather days and to the in And the opportunities resilient, portfolios.

Operator

Ladies gentlemen, for and call. all that Thank you concludes joining. today's

You disconnect. now may

MSCI (MSCI) 23 Apr 242024 Q1 Earnings call transcript