MSCI - Earnings call transcript Q2 2024

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Operator

Good day, ladies and gentlemen, and welcome to the MSCI Second Quarter 2024 Earnings Conference Call.

As a reminder, this call is being recorded. [Operator Instructions]

I would like to now turn the call over to Jeremy Ulan, Head of Investor Relations and Treasurer.

You may begin.

Jeremy Ulan

you. Thank welcome Second and Conference XXXX the Call. to day, Quarter MSCI Earnings Good

we release Relations along a for this msci.com, update issued Earlier morning, our on press presentation brief quarter website, This are available earnings the the XXXX. announcing press an release, Investor with under and quarterly tab. second results our

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

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

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

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

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

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

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

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

Henry Fernandez

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

of We XX% intense by free organic achieved growth subscription XX%, flow metrics, growth both revenue delivered range AUM we execution. of operating delivered with mission-critical our client X%. nonlisted wide Indices, of blue-chip products the run asset-based on of strong in of of share earnings driven of including growth thanks per rate linked revenue growth franchise, all-weather our cash and organic XX%. fee base, second results, growth adjusted In quarter, our to XX%, MSCI MSCI our to solutions In balances XX% ETFs and record growth our focus

record of retention Our recurring of MSCI. up quarter sales new and a across almost XX% XX% highest on subscription rate second million, for $XX year-over-year

repurchased share. of Through million MSCI average per $XXX we $XXX shares worth price an at yesterday, of

We have shares MSCI of average since XX per back at a of more billion. than share bought now million roughly price XXXX for total consideration $XXX $X.X an

relentless XX% combined of shares the and Year outstanding with MSCI. repurchases capital in allocation. creating on are consistent of for focused out, are almost year and our represent shareholders. These obsessively focus total Our our value own actions on change we

starts has Value and strategy, strategy creation with our not changed.

We are for such asset classes data-driven rising the capture to demand industry and outcome-oriented disrupting high-quality long-term trend investment investment increased insights, transparency as and determined more models solutions. across secular a the

of rules only financial private client levels these and at and portfolio our based and seen management results engagement. be our providing commercializing delivering not The can tools, climate in high evidence is sustainability and indexed assets, management establishing scale. also enabling of wealth progress by in in standards trends comprehensive MSCI solutions, but transforming MSCI's risk personalized

with the Over to eager I prospects months, about and met United we few areas clients talk Everywhere the new with Europe and were our past across of Asia. clients have traveled, Baer and collaboration States, MSCI.

our Our and in recent announcements launches highlight product action. strategy

content ESG sustainability within also company private meaningfully us broaden It and with private Moody's strategic example, help our expand and among expand corporates. reach companies banks, partnership would insurance credit. the our For of coverage our capabilities our

easier our markets. becoming help it fund tools MSCI market Meanwhile, and with generative analytical pinpoint complement private performance. for shaping artificial capital advanced and MSCI goal a Insights us This private to combines also intelligence most view the launched fund of important to AI wider our real deliver Portfolio closed-end recently achieve in our indices. indices property modeling indices Likewise, clients private and asset risk investment will factors to make of leader can the capabilities global

managers, deal client our see acquired potential the a from solutions managers, which insurance Fabric us general dramatically particular, partners, advisers. We has such this platform wealth our corporate year, to earlier have at Wealth during about companies, as new tremendous enabled to to scale. quarter. second close corporates and increased across in newer learn been personalization support segments ability This these large excited for technology our

as subscription and asset XX%, subscription funds across Meanwhile, product $XXX growth lines respectively. wealth million. and posting quarter by run We reaching owners rate rate organic run XX%, strong grew with our well, hedge a XX% had of

by footprint All segment including and generative key and To advanced want client We among among illustrates large strengthening traditional growing segments our to mature of a maximize of that our expand technology, rapidly and while data AI. solutions strategy. such more mission-critical our powered part this as continue MSCI models, position managers. developing our will asset client strategy,

drive enables All of this compounding to and profitability shareholders. for growth us

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

C. Pettit

my will greetings, the greater and discuss on product both segments. focus everyone. second quarter I with Henry, In remarks detail and lines you, today, in our Thank client performance

our in work continues performance time shareholders horizons, deliver do Our also term. necessary we short how strategy the hard and to business for the balance short-term plans shows for MSCI execution. long-term but designed to We extended

and results. including In our XX% growth indexes growth, at custom growth special Index, and EMEA package. both quarter in XX% MSCI second achieved X% subscription APAC rate and in Looking run

addition, MSCI now is In year-over-year. investing up billion, indexes on based XX% direct $XXX AUM

asset closed supported new indexes. enhanced series linked launch ETF of climate the with year. the half also on select indexes. In of a Meanwhile, are we a product transition to launch their custom aware the second underway MSCI with We we of platform custom acquisition encouraged by in Foxberry custom large index for manager client our our an QX,

second over investment the general, to scale over to depth X are in the of the MSCI we products flows Looking quarter. linked to $XX casted flows, with of global In years products cash and that continues indexes linked billion grow. encouraged indexes at tradable ETF inflows during MSCI highest

flows provider top ETF MSCI the equity nearly Open $X.X our fund X% linked index same to the During and last interest in billion of as the share nearly indexes to as quarter, translating cash year. is ETF of for we in for linked up doubled equity MSCI launches ETFs flows. nearly year-over-year, derivatives new billion, XX% strengthened indexes to of now $XXX a products position number period

at another our regions strong to best Shifting ever best-ever $XX million Most Analytics including We strong areas. for equity sales delivered our achieved QX across and hedge support fund We win funds, XX%. clients' business subscription notably, model for quarter recent quarter QX launch. new over with and recurring our a retention large rate at a close to risk to new Analytics. had the

supporting investor cases offerings as regulatory market reporting. risk, management, are broad Our monitoring such and credit capital management, use counterparty liquidity risk

million global power We to harnessing risk services, owners, under risk management. recurring generative from of sales firms investment industry pressure XX% also AI. asset reimagining their in $X.X to support teams of risk enterprise grow while the up potential all new find modernize management, are and year-over-year Amid an efficiencies,

strengths language IP tool and processing risk new industry-leading Portfolio with Insights demonstrates during future We learning AI existing and MSCI's drive QX, as This models. machine deep and our our to It leverage MSCI our launched mentioned. innovation. tool, data how Henry factor suite in risk we natural and combines can including product a history

ESG XX% growth combined climate to rate with Turning product the growth for We segment, Climate. and XX% our delivered rate offerings. run along across run

also global sustainability of to reinforces clients coverage private new game-changing the MSCI's Moody's us help as ESG broad offer for base for partnership ESG our Our will partnership and data company. to market expand standard with The Moody's MSCI sustainability ESG.

global Moody's align advance our issuers, for MSCI continues considerations data to regulatory in product the Corporate confirms also for Europe. new Last we importance Directive In addition, of launched road map, the to advisers set corporates Sustainability or and sustainability help solutions. Reporting partnership with month, CSRD continuing a example, investing. in including

lenders GeoSpatial and In on With private nature-based we identify we million clients again an physical once product, help companies. X locations than important for this product, will Intelligence, climate, which MSCI Asset public XX,XXX using and released risks more are new Initial prominent and their AI data already with that encouraging. And including we've can and assess so risks for GP. books. is deals, private investors portfolios credit a large and interest in X better collection client loan signed mapping climate

acquisition. MSCI XX% In products milestones. and private almost the Private And subscription assets, retention the year XX%. Solutions to was the run Burgiss' last rate period over $XXX client of rate is Capital in growth same driving we're important which prior represents almost performance million,

evaluate investors with side, to the become Indexes, seeking achieved economies in our On private a to launch measure benchmarks private will and market, asset standard setter a MSCI the consistently. we and key supporting push accelerate Capital classes product milestone which standardized Private of

clients private markets. in Given benchmarking, track interest for expressed have record significant us MSCI's having indexing of global in and indexes leadership create success benchmark and

Real Assets, posted in growth XX%. retention X% of run and Finally, we rate rate of a a

enabled While million portfolio sales including insights we year-over-year. uncorrelated services, challenging, climate, index market demand the Europe, volumes, land in remains products XX% commercial to are $X growing by transaction recurring encouraged estate almost us with real client and of for which new

strategy will MSCI's laser-focused staying Looking aligning while and secular short-term long-term we competitive on with advantages continue trends execution. ahead, our

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

Andrew Wiechmann

everyone. hi, and Baer, Thanks,

cash growth and quarter, revenue growth. adjusted XX% delivered EBITDA In the organic second we XX% free growth, XX% flow

in even in reflect face the results, the market persist by may short headwinds, encouraged to execution of dedication the our are We term. which which unrelenting

although elevated by the year, We cycles in seen in quarter, conditions QX we remain did persist sales first term. have longer which in we expect to any rates compared short are somewhat we from rebound the retention cancels to we expect to not last encouraged and and the in deterioration expect,

modules, softer run our X% tends Index rate and Meanwhile, funds custom hedge XX%, Index, and respectively. of on XX% collectively Across another want our quarter run asset we strong owners among us a subscription XX% grew Index and and front. special respectively. from to rate saw with XX%, These subscription rate. Within that quarter at managers be note grew also segments and to subscription seasonally I packages, subscription our Index wealth for the asset sales QX XX%. run we growing managers represent

particularly appreciation revenues linked inflows to exposures MSCI markets billion in and of equity during in non-U.S. attract outside flows markets a XX% benefiting second seen $XX linked developed indexes year-over-year, quarter. into exposures, ETFs cash outside the to from have in emerging were to up ABF in flows our billion U.S. about the as pickup and market in we ETFs of U.S. the ETFs indexes continue with $XX

partnership income to is AUM at of Fixed billion and with MSCI over $X year-to-date now ETFs inflows indexes billion. Bloomberg linked $XX

quarter the revenue and higher reported We this MSCI AUM product to ETFs of related passive equity indexes a in recent significant milestone AUM $X performance, Given in quarter launches. strong client true-ups reported now tracking market with non-ETF impact products the included newly in non-ETF trillion. surpassing and reached

impact In largely was The last subscription growth XX%. is run again, couple and recent from client the growth rate implementations, once attributable, X%, which the quarters. to Analytics, of continued of organic revenue was difference

items revenue of noted we implementations, in more growth we've be rates such the QX. align As revenue because rate as lumpy growth in to these can growth closely with past, Analytics expect run and

contribution segment In Europe, our QX subscription XX% ESG rate and the subscription XX%, and X% rate the the XX% in the was impact segment Asia in was Trove. partnership. $X the run within Americas. Regionally, new growth Climate from and which included rate about run from reportable significant for the of a growth FX for run million of segment, excludes recurring sales organic Moody's

Private was and key XX%, Solutions, traction markets. we rate continue to in run In gain year-over-year growth Capital

record, rate New Private sales recurring sales Capital in The traction we our solid a in retention recorded also was we $XX in quarter. and with Europe million GP approximately revenue of reached the and XX%, client Solutions base. saw almost

above was run retention X% slightly In Real a Assets, roughly with rate rate growth XX%.

term. momentum have in and impacting to offerings, we to Index income our and which headwinds our including the We RCA intel in continue continue climate our to property industry and while see solid transaction insights we continue offerings, face near expect products, pressure our Intel to data

Through approach since April. shares XXX,XXX million rigorous $XXX yesterday, roughly remains have we or allocation capital to repurchased Our unchanged. over late

Our available cash cash $XXX including U.S. balance in of remains more the over than million. million, readily $XXX

We've of acquisition, intangible Foxberry the in increased depreciation guidance. Turning the expense amortization from operating impact reflecting expense XXXX to expenses in April. by closed million, for and guidance and $X acquired which part our amortization our

end from higher slightly would through ETF that I would guidance year. June the increase our that of note we levels assumes expect ranges. the To higher of the guidance expense levels than AUM be this, the XX our AUM to levels extent towards end track

expect QX to additional to of XX% we before XX% the now, right items. discrete the quarterly in QX and of effective As both any in tax range rate be

headwinds underscore see client we tangible questions, We but and look near-term tremendous it and you secular want progress. Before compelling drive markets client opportunities posted that to for in up execute with engagement long-term We leadership will drive strong continue these that addressable for We see drive I we to and on open keeping growth. see trends. we pressures, opportunities us. our forward to to large growth

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

Operator

Instructions] first the UBS. The from Alex from [Operator comes of line question Kramm

Alex Kramm

a look strong still to think tone the fairly last wanted little the sales quarter Just bit more. mean maybe I quarter, in I somber. unpack obviously, even soft, growth the fairly and forward

what across help just maybe segments. So could happens different the us you

force cycle a happened Just trying environment. Or really sales timing strong just sales I here the after results to gain engaged a mean challenging understand after quarter? deals lot maybe did of closed? you it these the Was longer been really was what what's last pricing? more that

Andrew Wiechmann

It's Thanks, Alex. Sure. Andy.

observations So few a here.

remind Firstly, say as you in see an and a conditions. pointed the would sales would deterioration I still I cancels clients. and would haven't QX sales were you the out. yet. I be you, lumpy we that longer seen I we can in haven't see Overall, quarter-to-quarter. on I that say seen still know We also say would both this, And solid, sales cycle. pressures think we inflection

can And be sales to would quarter subscription in our as buying market. although seasonally tends sustained op sales as the we've in more prepared a momentum us. QX the for to the we helpful continue in is But overall and the softer expect remarks, and So highlighted equity metrics lag before, mentioned markets impact generally I lumpiness here. on cancels dynamics, to

the see and would are client across areas across engagement that most client seeing it highlight segments. and we we strong I product globe,

on in both eventually lead think to I front. momentum momentum the engagement markets should and the some equity the strong client sales the

encouraged we're expect cautious so remain here, and but continued we And lumpiness. some

Operator

comes Barclays. next The from Patnaik line the from Manav question of

Manav Patnaik

ask to partnership about interesting wanted partnership. a Moody's I very the actually. It's

Sounds a I the now on just context to between of sharing know and win-win. presume bit, agreement I mechanics how But like of alluded maybe there's two why the on a Henry. going the like you revenue you. works on.

already I in And think your missed that just some there that. Moody's. I contribution quickly, mentioned from remarks I was Andy, you apologize,

that. If you could just help us with

C. Pettit

Baer Manav. Hey, Yes. here.

lookout of put, here various look, is the all, in on partnerships. the is our deal And across constantly of of ways. meetings hope think a higher thing, variety with level, we're the stated So so I on maybe first will simply have impact a we've positive that critical for a -- a you this in we business repeatedly in call and many which

us very they hard private -- company here that across Moody's of significantly at their that's in fronts. their and have And for with cases, exploring company we've database where clients. Moody's really a now we're of And a products, use that with call data So being information variety we be we of. felt what their to get to that MSCI in variety an on could and has of information a focused in extraordinary And better an can been product being up hold started come with ESG notably on in sort area for to Climate essence, turn, ESG variety leader trying services they that Moody's is a get of but use us Orbis. a where

for parts, parties. partnership we -- two a were mostly a you this So number able overall, well, with very of together of quickly specifically, think with very put if just because pleased like, to it's both that's kind We're But in we great months of it true two Moody's. the with deal. deal sides, the of the a spirit

So future. see upside a we this lot from the in of

Andrew Wiechmann

the And maybe just second economics. the if could I Manav, of about question, that on touch part

seen notable prepared significant the highlight the has in to Unfortunately, sales seeing can't new recurring I we've in give quarters. remarks, specifics, to As resulted recent we more changes would in I but haven't trends been QX. that the any segment mentioned that in partnership I contribution a

Operator

of Stanley. comes Next line question Toni the from from Morgan Kaplan

Toni Kaplan

I past is spoken seems you've cyclical versus about secular one past this be couple have a going And guess, think has It the market. little in tight I like tough intensified, to the still around quarters, debates bit emerged the years. it's of of end roughly In asset of that X the the challenges XQ. debate which budgets, manager over

you the I at alluding a being the to Because of what guess point? catalyst are think sort I we'll more see that cyclical change that issue. you is for of this some think And you Or sustainably do grow up? you drives in that so continues environment that challenged? end double sort -- change? need market pick what what that be to to digits And an can of do

Henry Fernandez

there The very active, Yes. thematic et And concentrated systematic There obviously, private ultimate which concentrated private the both portfolios, is estate, and are management, unabated. investing, class One that investment private cetera. it asset global the credit, portfolios continues buckets rules-based on things expression include -- is on industry. which sides. to index hand in private Toni. is X Thanks, the does real that. like of very But barbells management, other equity, are big the grow

increasing going we're continue And two slower in number of widely -- index right on through relying diversified very subscription of that index our traditional we large rapidly And ups pace It a through through index to and go challenges that penetration go XX-plus That the on have segment, on systematic rules-based revenues. but will downs. a our for and that. management, is management, grow other will our foray the management. a segment and middle active including shares, and about will challenge percent largest the than been with the into hand, -- the includes And investing active quantitative of that which clearly at But assets. and And investing management other it more all all ones. now. segment active segment private

I we They're definitely rely we will sides, management in and as now right more down investing. more some investing and what they is to our penetrate because So us do traditional future, the growth look in will us that see asset rules-based more. on the systematic more is don't which going active into the going rate though in X significantly it's and we private industry other even an our difficulties And cyclically. growth through increase slowing class

Operator

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

Ashish Sabadra

index custom think Henry, I was and particularly, back and the about slowdown the if we I wanted on parse further cap market how about growth midterm, into indexing over you indices? double-digit you to could that you the think do profile? the versus direct wondering look, But think subscription do understood. growth, low just And versus as us those about front drill down help how the and factor is in thematic marching growth

wins revenue. that And those Fabric we now, thanks XX% for X direct about subscription the AUM well direct are years? over about indexing? should Right But the of indices how these the X to as do Index for next we think flagging direct as of custom some for only think How indexing.

Andrew Wiechmann

Sure.

pressures momentum Index say, to long-term highlight and that rate, I I net alluded we several results, reflection focus if which of quarter opportunity on subscription there. think are and environment on would recurring last from are growth resilience the over of second them. the touch we think we've would try the Ashish, now of the to quarters, seeing based I new you slowdown this, softer and which tougher reinforces us. a I is few on for number I'll the questions although that the about, talked the a seeing we

the we that of similar I double-click outsized recent on Index in drivers the if what's it's quarters. seen franchise, areas driving the we've and And think across to growth the growth

or of as benefit develop So we modules, but our are is a positioned in and rules-based indexes there. outcome-oriented in highlighted, towards this reflection systematic to custom- strategies. move market special you saw type XX% investing and well effective X% a our very packages, custom We're cap efficient where growth which to mechanism growth those

managers we with look asset segments, growth XX% we than across funds. saw hedge growth and If and with owners client with more X% XX% growth and managers and wealth asset XX%

continuing see towards related large opportunity and as part opportunities a move a large think secular us. indexation of long-term in for compelling segments. many so And we tremendous to client alluded that And to, Henry different is in reflection I this trend

but or only its is managers today for non-ETF focus managers about, is to on indexes, indexing well customization mainly non-ETF are going that think, I wealth line, place think at showing in I run in comes and you still our them direct us. scale. help on both serving which indexing, we underlying we're are, is the line also our that that and wealth alluded as comes direct in and it's early to asked direct the solutions most from to very journey It provide indexing that positioned solutions If asset rate of to passive up managers with passive a of help not broader where most them from where revenue evolution,

optimizers risk ESG like our and there, our Analytics and like content. our Fabric tools content things an models broader is enabler climate and

to are big still positioned believe be uniquely in its and which from I a longer indexing, we opportunity benefit is early days will So direct term.

Operator

of The Hess next from question Alexander from JPMorgan. comes line the

Alexander EM Hess

the one large Can indexes. involving in opportunity your you deal on for of this private asset a touched quarter. private the So points was was larger of the space one and clients that there --

how as to you sorts about those Any But some opportunity data? technical been business, opportunity the how MSCI private and creating is demand Solutions comments those? And to tackle the challenges capital of private be do think to frame Capital appreciated the well. of would about indexes gathering Private for that how able has your business talking own Now out and about own index for your indexes.

Henry Fernandez

we private very at about that assets assets, them. we're what in real of differences thanks look doing we're excited as private capital the for the in So between because and X question

know, private announced indices, private so indices, the private yesterday real and infrastructure, real we already And launch asset both equity, private capital as we So about at private XX the debt, level. credit, property et level cetera. at or the you have of XXX asset or fund

excited very that about we're launch. So

and challenges come technical opportunities The data. first to data, the with the access

So MSCI is at now $XX has trillion data of across underlying access worth all because about the directly request assets. of highest that to that planet in it comes private And exists the data quality GP LP. the from the the

So we amount that of data. enormous have

are private asset the indices trillion trillion, say, the So yesterday on that the that trillion, are is capital $XX real announced $X trillion. of upon. what we built $XX $X built about indices other other And

it with So that. starts

Then that and process do you years. the throughout the book XX so your the methodologies create of these methodologies about investment the indices. to And secondly -- last understanding we've construction the written and or need to is index index

that that. question expert an on no is there we're So

And is, terms challenge at the the world. clients around you the one technical owners and have pretty with have allocators managers asset every and third in managers, X,XXX assets. the of asset associated And of of calling that those people do much MSCI the we distribution on the the

So important. is that

cetera. in a come from and in And as want obviously, and quality independence in terms transparent in and I think of excelled has tools of key obviously methodology, et independent and terms robust to other independent. their this well of see of is source. indices terms part an a MSCI thing People that

the to And of all pretty data the of cetera. construction, our et cetera, risk attribution, asset So that from completion prices, we be assets leader in confident benchmark evaluated on out include assets indices, before are. And models, we position Burgiss good the of real private of the et will aspects and do top feel tools about with tools. acquisition in acquisition to performance the setting liquidity, that, top we the portfolio the on we're RCA allocation, pretty where we the what that's feel the the

Operator

the Oppenheimer. line comes from from Lau of question Next Owen

Kwun Sum Lau

that So in market I'm strong what year the guidance? would And than see wondering and else first broader market quite flow probably so the half raise free full can initial was your to you the better assumption. like just you cash

Andrew Wiechmann

Yes. Sure.

the So It been flow has us. strong the was cash second in quarter. strong for performance

flow. from are highlight ago front a think both and ABF. high compared cash Everything lot Obviously, of free we a higher on there collections on benefited guidance tend collections and ABF and cash across that from payments. would environment lower tax although us, subscription I to billing we've lag. impact factors can bill both to the that year a help I ABF, does a

a flow and expenses swing cash focused only cash tax it on then strong the can and continually but conversion, And flow driving And payments cash strong we quite cash I quarter-to-quarter. are would bit. We're through halfway year. free free growth that highlight swing can

Operator

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

Heather Balsky

forward. you -- more of sort modest expansion I about was talked talked you around call, the going expect the And margin message think during quarter, you Last expansion.

of thoughts thinking through reinvesting we how most seeing you are investments, changed accelerate last where sort growth quarter? strong your that? if were the As focused? with you're are about AUM, regards you And think to to from anyway you Have

Andrew Wiechmann

Sure.

say growth. flow specific So free a and margin term attractive focused for investing we or I expansion are What would we don't not Heather, driving long target doing and cash we profitability while margin on is are level. the continually balancing

And continually is that driving. on the focused and calibration so that we are

higher what expense that, AUMs levels would will guidance where AUM assumed running previous our the current have to, the remarks AUM our track And in for above quarters. the the in end high you I And balances. comments of been we we've prepared than highlight that likely levels here, ranges. as X/XX underlied guidance be alluded from I increased the made if slightly at guidance that

in use in past, have key invest tend to in we're big the the growth the across we areas We those cut key higher frontiers would growth business the to as about. areas that and talking

do And to to standpoint, investments front. have private involving across in. market. topic we from opportunities a and number of focused a capital climate broad solutions custom assets We index on front, from researchers go everything the are so private the and There technology very investing in that a that's to are

the on And continuing identify so while laser-focused at expenses to drivers to we business. long-term time run growth efficiencies same the are drive and in continuing the these to business squeeze

a constant outlook calibrating only that. are generally, posted performance, based and on not But for keep AUM more on calibration business you financial And levels, we'll we overall it's but and dynamics us.

Operator

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

Faiza Alwy

seeing have there growth. because to follow I sounds Moody's on like talk then So subscription you're a significant was partnership of out the also that recurring sort that alluded it may chunk new environment you wanted and around heard up I specifically sales But in you growth. a of Climate increase that ESG to CSRD. I driven pretty there, products new know the And about in

what us the around any improved. underlying environment different or give is you're expecting a So bit has more ESG for and if

Andrew Wiechmann

Sure.

the been that been So I would we've you've seeing to been continuation we've dynamics of recent we've trends seen and in say There a changes major been the seeing. seeing haven't quarters. that

what with fairly the in in XX% in of was the segment line in we we're what run X%, highlighted but within with segment generally in the the about a XX% standpoint the that seeing is themes is last regions think And Americas seen this, quarter. and each we about from is in APAC, past. I EMEA regional which rate growth saw consistent we've

opportunities, pace measured cycles and investors integrating like U.S., to, alluded you a That's we're we more In as sales on the decisions. purchasing causing regulations. deliberate more how seeing see do EMEA, they're in ESG. longer areas In take still

confusion complexity Pillar to financial things the time creating cuts with to as across But we've EBA is it from specific and some at So harm objectives different some had like wins regulation climate materiality many do and early no X. same CSRD objectives.

that hesitancy many in so is clients. And resulting some for

And then in its Asia, engagement, of we adoption is are seeing it like feels and solid earlier ESG. Asia in

And seen the to so trends similar very past. we've in what

type ESG there probably segment, types environmental use cases that range the such impacted use pressures. are client of Climate impactful the that wide I and the are impact a industry significantly that all would and users cases parts we more probably more nice-to-have highlight serve business of that get will pressures from and where similar within

term, by We dynamics dynamics remain the here. persist to short expect these but long-term encouraged the we in

as around are offering areas early and also but compelling the Baer some risk data nature sets. some level, opportunities our like seen regulation alluded so physical asset I that of opportunities, And to, and wins, highlighted areas new we've in

solution offering is a but that to add quite tremendous clients. continue segments us. of area Our value climate still with only new for client see exciting, that, to but the GeoSpatial And Explorer are on early has top our that across as very very these sets things opportunities we dynamic not days,

areas so directly, Henry up like to, alluded as opportunities insurance opening banks, in GPs. And opportunities even with companies, corporates

about the are opportunities And excited and we change term. term. in long wide term, But short expect of it so dynamics, the in we no to are the there in the a range in short continue

Operator

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

Keen Fai Tong

this are performance? Your top strong the had strong in organic quarter, factors another retention sustainable enabling Analytics? double-digit sales is and Analytics rates. And growth how business subscription including recurring What new

Andrew Wiechmann

Yes.

So good noticed I in quarters, momentum. of and this -- last seen we've would some say several the you've the results

investment definitely across so to So helpful been and focus benefit we that environment us different probably engagement parts of an has many the we're our some all credit liquidity tools. risk strong fronts, are and risk. risk driving client areas. certain in intense leader seeing on a on And There's analytical from and

continued performance also enhancements in to the The that is part by and deliver. driven innovations we've

capabilities through seen we've with we integrated data an And risk traction that's as insights some So you our enhanced traction which strong client do see And we've our modern know, -- us. sales a fixed area We've our analytics sales risk business architecture now we've is analytics offering, AI into and recent where new see engagement. been and seeing quarters. offering models, seen solid for income there. the equity enabling that, to with delivers with our we opportunities within equity we've something strong see highlighted opportunities continue or continue to which in see momentum And in visualization.

the that drivers we've encouraging. of same in talked lot a about been the has past So

it's lumpy, the that some impacted as continue and Analytics are likely to broader I impact well. say to will opportunities, of We to see company that although likely pressures the be have

Operator

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

Scott Wurtzel

notable about margin pretty maybe Analytics year-over-year to the Obviously, expansion, on were and it's Wanted segment sequentially seeing the there. and basis. you stay that talk both on a

through down can Analytics? maybe drivers and drill in the you walk margin that if us maybe into wondering of expansion just notable So

Andrew Wiechmann

past. We've several Yes. that Sure. years. last factors commented have and in driven are the several this Analytics margin There on drive the the higher it over

So have capitalizing one software. been we is

Doesn't up but operating impact the the EBITDA the a of does which impact so drive has margin. EBITDA bit, And level the margin, margin. picked will software capitalized

would business discipline given segment, the efficiencies been have the across are other Analytics to been I and invest well. investing that us many that tends invested of strategic our very the invested for Analytics of the targeted expense of Analytics have but parts to less and are to in, in highlight in have we just that some that we do expense the as allow there parts allocations. we we strategic company less we how very Broader have impact We've been there parts have of in company with that parts us. also

And those over contributed factors time. increasing the to so Analytics margin have all

are As we only opportunities very right, you see own not but that the within company. they opportunities the can driving by are in growth, Analytics growth their strategic growth tell very do for across attractive compelling

do and will investment we opportunities that we into so And Analytics invest money putting to in. have be in continue

Operator

Huber question Craig line from Partners. Research of comes the Next from Huber

Craig Huber

side, question even question cost where Can AI uses where a help some And here out margins also a on of the ask revenues really side, on us you your on the excited AI guys efficiency the cost stuff. AI Just similar you of wanted term? you're about you help can help long give better. to really examples and to drive

C. Pettit

Sure.

So look, quite both really areas engaging critical, dramatically. on fronts we're and both those of are

So in environment. first of efficiency, within story, could all, there's efficiency would call data whole also what a quality in the cost even you like and our that efficiency, notably say terms -- I the

data, across doing work whether in ESG be data extraction, in calculations, Climate the of board notably data markets, tremendous as we're that such in across the board, hard in to production, and can So difficult amounts controversies. find that private areas be in

so moving with board really special a all certain we've internally -- in we're on directors, of And we ahead this have our happily those focus been some are had in and expertise area. members So areas. this, of -- who have we both

So numbers. the one area some is pretty where efficiency we're starting to attractive see

typically setting starting probably this will is for can effort. exercise next to make. As efficiencies start And of -- year, we first end our AI the for and efficiencies mentioned, we see of we're year nontrivial year, a that a Andy here go the as for budgets be budgeting the the year into continuous next part and

MSCI. AI today, a our product part the risk. we development, data, the terms have interesting out this future risk clearly do can much across new just geospatial In very our also download and it work board. may the to you for use of the which of way, really in like, free. if the are you of without X live, we of you sort and to whole on where into By AI very wouldn't use able recent launch the as of is website, of brought goes We on examples that paper want which of of which been which There's the have risk, is future future Google

ESG there's story, going next able and AI. both the give in we're of a quarters business in using development of hope be you in where to an and new part and product So efficiency pretty into in much -- And to we in and ahead Climate increasingly no Analytics, so the specific I terms information year. private think markets, not

Operator

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

Russell Quelch

I if size market I see rate there if focus you market addressable Congratulations QX think and could wondered I the to on is wanted on you current which growing. result. a the strong you private can. at that asset benchmarks,

you also guys? And you'll the competitive to is talk you Or white you if mainly grow? this be Is could as that displace looking for dynamics. there to space others

opportunities, the area? will now? finally, And of all you need data particularly data assets sort growth around you looking to further be in to do inorganic this Or you have grow

Henry Fernandez

us. sources there on the benchmark to are So value of are X themselves, -- there

benchmarking the I or is one and first sales should in for classes various say, themselves asset private assets. in subsectors The within -- various GPs LPs the the

the LPs biggest recently to world be met private needed management more of providers I the One credit wealth the benchmark that to the get and assets with both institutional able said, "I in of part." from

create will that So revenue opportunities.

clearly of how that will dimension We and that's timing of one the be haven't but much area. yet a created that,

the in. models it in to the one management valuation the speak, that ecosystem And then -- benchmarks, of able puts tent, center to the we're that. and leading in they that probably LPs GPs to all The obviously, area asset bigger models, second models, becoming invest stage underlying the there that the of inside and right models, asset allocation we the if of risk of attribution expand then provide so performance liquidity and models, from class by private even us provider is and assets become center

Of well, advantageous an part benchmark as course, it of puts therefore, data the And position us but enormously it sale." will provide put us position. that's in a in "the underlying key to

we've ago, what expanded upon years the we that's it done since the the and I Stanley. company created Morgan throughout we what Group That's built cap history. Capital by created XX and business And our market XX-plus-year

do So the you asset private allocation to we're of private of very to of private assets. on what seamless world. this investing risk asset bought, in a and understanding -- public you got across to create is overall and excited understanding to about Obviously, the capital, assets alluding and return what can the what understanding transparency, totally sources we all risk

or bridge and identified public company a company hedge can risk a and a or of compared in building, a in credit of with in unit capital venture unit in fund. a risk or a in a in be easily bond So easily a public private

we're what going that's So after.

Operator

question BNP Paribas. next comes Gregory from The from of the Simpson line

Gregory Simpson

segments of check and just quickly changes new there's Can and each? the Index around pricing on across I contribution latest the pricing in sales if other behavioral any client to

Andrew Wiechmann

Sure. Yes.

last price say what so I smaller the said increases company, contribution than very quarter. consistent slightly we with would across So last was the year, of

economic pricing increases is price many very our quarter. said places, what moderating in given slightly been have which environment, line We with we the in much and last

I aligning on we that increase and focused the to are price importantly, want this, say I'd delivering. are we with value underscore

and the value the pricing the on also with long-term in our overall solutions we for environment that to focused our balancing enhancements we do clients. make client service the that we're and health, we And but so as that our well factor with capturing are ensuring relationship and

our to is growth of existing most from So come going clients.

And to partner selling our to long-term translate enhanced them. additional more we adding very will through services but translates that also are so to we And value, them. strong, being clients. enhanced them, can to means through focused deliver a providing means to on increases price that that And that services to

continually And balancing with price so we're that value increases.

Operator

Kramm The UBS. of next question from Alex from the line comes

Alex Kramm

do sales XQ? anything the you question. that's comfortable dollars, in last can quick in follow-up think second XQ or When yes, sales are specific, a it's more I comfortable? asked second So but year's about earlier. this are you to environment maybe if little year on you half, you too know and still you Just Or maybe compare about sales the I bit as or specific to that half the the a

Andrew Wiechmann

Sure.

perspective. as prescriptive typically a QX be quarter too quarter sales mentioned, us. happen. can know I specific and Alex, or to don't XQ, softer for what this, aware to seasonally I of a you're a is about strong seasonally for I quarter be from for XQ us, want So tends softer us

do some mentioned, as do And seen see both I be that said dynamics in well. clients. lumpy, translate buying alluded We I over through to as are as still earlier, see engagement. as into the out see As We But can we cautious. we But we've we on see client out are we dynamics for markets, if more favorable equity sustained there. seeing there cycles, earlier, clients. pressures time sales opportunities in strong is But some and there. opportunities overall, cancels challenging to momentum and past I tends

Operator

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

Henry Fernandez

strategy that not and up growth we're heard our what So our flares We're executing as do. as commentary, you compounding we grand and flares you quarter-to-quarter, an entity, intensely well, in on down. know focused that's and year-to-year

be and executing compounding to that extremely very executing. to consistently of strong longer But expectations, of some going trend powerful quarters and horizon be be quarters there'll the relative to are is weaker. very are some are We this growth going that company of on And in the growth compounding very the excited are indicator We're the to the questions as us, a that large you of of by opportunities and high your answers in is leading front and very of a profitability. heard in by encouraged sales client commentary future. typically level engagement

over of forward look with And and us, we off. again to the all engaging few you you some thank next So I take and summer you for time months. enjoy joining hope all the

Operator

your Thank This participation. today's conference call. for concludes you

You may now disconnect.

MSCI (MSCI) 23 Jul 242024 Q2 Earnings call transcript