MSCI - Earnings call transcript Q3 2024

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Operator

Good day, ladies and gentlemen, and welcome to the MSCI Third 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 Investor Relations and Treasurer.

You may begin.

Jeremy Ulan

Thank you. to Third 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 third 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'll of our earnings to the measures measures find a GAAP appendix the presentation. reconciliation the in of equivalent non-GAAP

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

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

Henry Fernandez

million. In as per role XX%, run of achieved growth and free of Thank $XXX our third of underlying of and global our shares, rate XX%, strength of the total nearly XX% Good in as bringing and revenue client delivered MSCI share model worth repurchased rate of growth you, everyone, XX% the we million the adjusted highlight a subscription year repurchases We operating of Financially, that to us. MSCI's asset-based quarter cash our fee our results Jeremy. metrics, growth essential retention for day, earnings revenue play total of joining well $XXX we you share thank solutions investing. and business XX%. for growth footprint, flow growth XX%.

flows overall in subscription billion. Index record and linked Among of our ETF including ETF we third respectively. strength grew hedge non-ETF and driven asset funds, XX%, balances XX%, $XX.X new organic and owners to AUM at and and rate performance, cash run in Analytics recurring show by both MSCI sales subscription revenue, was almost products ABF Looking indices, XX% respectively. significant quarter growth X%

integrate in is to subscription from managers, secular. On be were subdued reflecting segment net ESG and ESG -- at levels. ESG new X% investors in and We XX%. recurring all down Climate cyclical pressures, year-over-year, sales our cyclical were real and meaningfully to prolonged. But down may the portfolios, recurring new New financial last decarbonize are asset and climate materiality year's demand think retention for need and although sales excellent is the

our other. product and QX show, lines diverse results are each increasingly As MSCI's complement

comment vital like function key growth market the ecosystem. Today, a our products also across addressable would are with serve a We our strategy. on company of investment for long-term to enormous I which drivers three

of both managers growth use technology reflects indices wealth First, how our the the and it increasing among of our platform. benefits and new

to a win on banking act largest a to across clients providing with need lines; climate measure, in and banks. major product report decarbonization Second, of with the investments. Starting In solutions QX, capital that and our of that developing one private of our arm index third, [indiscernible] MSCI world's progress solutions wealth. private achieved commitment

fabric, formerly engagement MSCI for wealth of driving growth technology manager direct achieved as known analytics. also XX%. client We rate continued our platform, indexing robust run Meanwhile,

including wealth in and there index, for capabilities we our solutions, help [ product lines, private enhance that us ] can private can assets. In managers expands work platform ESG, ahead, believe content climate many deliver areas. our this we multiple Looking capital that believe

client seen launch are July. such prospects already new which have since and this We with products wins in capital fund as private their important capitalizing MSCI, indices,

more more Our we cover help private AUM, than can capital XX,XXX us a indices funds fund trillion that $XX than private in setter become standard represent they believe in and assets.

companies, Moody's providing also segments banks, companies expand such coverage well corporates. as for Our to with ESG partnership us ESG and while content positions our more of insurance private

[ [ I Private us heights. Flammer Head Goldman week, new to welcome business of joins ] to from scale As as pleased Sachs. our am we our to build Luke MSCI and Luke ] announced last new Assets to further

provider and the [ from Trucost former side, MSCI to benefit funds. the data and Regarding climate responded expertise Madison we're MSCI will Last are research to as need to emerging this Climate Head to large-scale XX,XXX inestimable just ]. and positioned carbon and also that ] and ESG the our participants is and Climate. to that of more high-quality repricing on has us consensus in knowledge. Meanwhile, of for more well X,XXX constantly emission has his and We and choice CEO markets also upgrade accelerate. comes seeking Solutions, both net Global know investors MSCI be achieving market solutions. than matter capital on ever become that MSCI than week, all carbon S&P the to we as the mind, already that of equity is impacts climate models private supplies Richard of is this change and greatly critical product This for to of joined capital reallocation from announced private adapt. of talent our demand Richard risks apparent, data more voluntary assets. With debt a and and and time founder institutional will private of [ MSCI negative companies zero.

last comprehensive and carbon world. X,XXX offer ratings, projects independent Just we around more project assessment than introduced MSCI the month, which credit carbon of

most global, single nature our MSCI's advantage, demonstrates important competitive franchise. integrated and this diversified of All the of

the capture reshaping trends to We global biggest have industry. investment always tried the

over let than better We turn me now on new both these are with segments. trends to the supporting capitalize while Baer. equipped Baer? to that, And traditional call and client ever

C. Pettit

and greetings, everyone. as our investment client on our Henry, and the focus I quarter with review segments today, progress I'll across results, you, ecosystem. individual In remarks opportunities my Thank third

for Europe our these major entire displayed quarter from record helped with Despite run XX the particular of asset to us strength performance MSCI rate start are and mentioned, in largest a public selected and achieve public both Henry competitor. Deals pension softness planning owners investment who owners, particular on analytics. asset Let delivered another MSCI deal asset In as through with QX and made who for us in of past months recurring their managers competitive to pension Asia, a a accounted the significant mix leveraging allocation with strength some organic notable our alone. example, attribution organic rate, we algorithms, large $XX contributor and analytics, rate like the run choice the best sophisticated provider, process, In that analytics case, MSCI for each for measurement. throwing with asset wins. Overall, Americas. third analytics million business our most subscription in remain MSCI's services. fund their U.S. the sales primary We analytics of adding run XX% of growth managed closed data fund highly in specialized platform over risk subscription applications, in

managers among rate third have retention close quarter. firm-wide high, and XX% Our to stayed in was asset it the

ABS index-linked inflows. In fee Our redemption MSCI grow manager revenues compression, budgets, pressures asset tighter billion, still improving our stabilizing face signs of there XX%. and were to $XX inflows though ETFs, clients leading nearly are helped nearly some which year-to-date

Henry low Climate third is our an linked pension one this Europe carbon by a one of reinforces transition. In $X.X managers the to launched clients. our As quarter, billion index of and integration climate, our asset the work leveraging help clients ETF in index to mentioned, navigate asset increasingly custom our manager fund MSCI in in work ceded MSCI

Turning and over banks XX% collectively grew in QX. to broker-dealers, hedge with also $XX in who rate by segments. and subscription well added combined client run wealth have the other past and organic MSCI million XX months managers funds, did

For example, and managers. overall the research have strategy. Shifting analytics run generation health $XX rate deal to They to our enhance data content about global large who risk will over with investment use past wealth ticket added we in MSCI's rate organic months. a a million their firm, completed subscription to a XX index quantitative and run

a wealth key taking rebalancing, rate while over differentiator run support now million, become and we leverage, clients, XX% rate wealth the Our across alignment retention and organically, subscription office stands growing with wealth have tools fund taxes at optimization have home securities enabling solutions and risk, MSCI's that and investment firm-wide XX%. selection. $XXX of a

Wealth wealth we growing key represents investments client momentum, this MSCI, on build across in to positioned for well and different well-focused areas. leveraging manager will MSCI platform are research. business opportunity coverage and the our continue product, We a

MSCI increase to As our remains both share the you determined see, wallet segments and client ecosystem. established newer investment throughout can with

this over of Andy? call attractive to turn consistent Andy. let profitability. And of has our All line growth me the top delivery enabled with that, and

Andrew Wiechmann

strong in balances linked was particularly rate of quarter, We developed delivered in Index XX% subscription with organic non-U.S. third Thanks, Baer, Within free growth $X.XX cash hedge managers AUM respectively. to run market asset nearly exposures, and represent power X% with we EBITDA markets ending linked growth, the XX% funds subscription run flows, MSCI was XX%, helped adjusted asset rate. XX% MSCI our In outside established ETFs quarter growth. equity run of everyone. XX% subscription in growth hi, inflows $XX.X managers and the wealth ETFs to indexes These our and of Index and large trillion. quarter. Global cash indexes with the U.S. saw together XX%, segment, index robust growth billion equity into flow respectively, owners third was segments appreciation to cash These and XX% inflows revenue client the with into and quarter. another rate and record

revenue, indexes and investing. In XX% areas nearly in subscription Additionally, Analytics, of traction indexes as run X%, $X.X passive non-ETF our index the to such year-over-year non-ETF $X.XX linked MSCI across growth key and growth of trillion several MSCI trillion, ETFs indexed products balances across reflect balance. reflecting AUM also momentum and the trend we The linked income AUM rate recurring revenues. record we with to long-term growth some reached record factor was fixed a growth in growth our ABF see combined especially expect products drove quarters, faster models, year and that align online below large begin offerings. of strong our revenue the slightly nonrecurring revenue rates analytics implementations from as benefiting closely another upcoming offering quarter, quarter Organic included still large in implementation-related to compare in We period than was the more anticipated. XX% insights growth coming revenue and run prior to rate to

lumpy is $X.X fluctuate run impact for the rate of has implementation revenue past. In of As and FX the organic in about a XX%, segment, excludes Climate million which timing reminder, ESG and as growth growth it the run Trove. Client our Americas. a number was XX% engagement rate strong, of several and of the reasons will rate looking from run X% fronts. with on clients and to segment growth for was the the continue to Regionally, in us see Asia we in Europe, in remains and XX% subscription grow reportable

from We climate. differentiated successes part and have opportunity and representing leader. a and the ESG our are a across ESG providers, we our clients looking solidifying to We massive regulatory mission-critical investment process, continue to Climate competitively position solutions consolidate compliance of integration, a seen believe remain as

run this take to ultimate period evaluate rate product of Solutions, Capital We the last sequentially growth last with should and $XX of slightly above Real also may Private growth of product X/X our growth new we new target of growth trajectory we in period million. continue same therefore, revenue higher third rate run XX% this private million through-the-cycle run year. has recognize long-term incremental with the the of capital originated In that over the almost recorded solutions end Private was client $X improving recurring a what was Capital time, the growth to growth versus rate line over of both retention Solutions subscription year, some Since sales XXXX, be. In and almost recovery rates Assets, relationships. for The was from same the over retention and and XX%, quarter. rate quarter X% roughly rate the the XX%,

the During the in large-ticket Americas. deals we few quarter, a closed

to integration, commercial see One although which for our significant the market and enabled third our [ ability continues cash to saw of resilience In industry year-to-date roughly generate was average access sets XXX,XXX data very on We open brings by of offering transaction repurchases of flows. shares million Snowflake of the $XXX. platforms model company, real estate free deals clients these like our price ]. shares large activity, average MSCI content early our over large an pressure. Across our was of signs allows see improving our about at strong an we $XXX or we million financial $XXX at repurchased the This $XXX. of quarter, and price to the to

balance at that we opportunistically continue focused to our million, and end be we would over shares. quarter cash on $XXX highlight paid $XXX end. Our repurchasing revolver down million our of subsequent quarter was I to

we interest revolver time modest our expense. to and and support forward, down capital from Moving may time the amounts draw optimize pay and uses to

end year at guidance current plan to of larger quarter. full for higher, guidance $XX our our XXXX amount levels our expect or XXXX. CapEx our the for be higher guidance. expense We've range purchase our by towards to fourth hardware of a to Turning Consistent with million, data the comments, we markets a center increased range if previous in reflecting remain

We data more our data to are efficiently center the support solutions cloud center several enhancing of new hybrid growth approach our environment a and effectively in of and infrastructure. to

guidance a tax $XX flow benefit that interest reflects increased paid million cash are on tax reflects which the revolver by will some early and a tax tax million, guidance in have $XX million previously timing million paydown. free $XX strengthening cash the cash certain $XX collections some we deferral our It's discrete timing worth We mentioned roughly year, noting XXXX. The expense be lower of seeing deferral benefits. payments. cash primarily This range and

attractive expect We also clients, estimates with summary, we in range tax be refined effective to narrowed to rate encouraged dialogue QX. In the the forecasted based the we finalized very remain opportunities. and to we discrete XX.X%, for on see XX% items, of long-term by

improvement activity and the with still to for in We the in are to our progress. please you look pipeline, on longer term. near keeping operator, of And sales degree sales some cycles see the While we beginning some gradual signs expect questions. we elevated open cancel of to forward line continue posted that,

Operator

[Operator question of Barclays. comes Patnaik Instructions] from line from Manav first Your the

Manav Patnaik

a both the ask opportunities. ESG credit. of lot just wanted you've private I long-term you two recent a about having Henry, changes and to about Those management massive areas obviously that in are talked made lot

you strategy to So any just us? if any point might out signaling or to understand want trying to that's of change nuances that

Henry Fernandez

incredible that for is The you this continuation the and we question, especially runway future. deepening into Thank team a just in Manav. areas strengthening -- -- of see our senior management run that

assets. said As real private some a that continued a -- a in difficulties the investment and growing overall, parts we assets major strength have in though in is more community private will private world finance or a investment of before, need space. transform and obviously focused the ] the many part on infrastructure developing is lot right [ private process little equities. is the Obviously, is revolution will physical into estate investment the see increasingly even We in now are credit in world. estate real private asset And private class. And in global

So with were to help assets effort. [ attract lead to that, to Luke this from us come management fortunate we to ] us Goldman's

ESG and GP. ESG And in divide also have to long-term in still and do its and be given own will [ We although the to global is is we droughts on last think years, ] Climate in which in the stabilized of part, The into around global in Florida, on politics the in an are strong world, investing very looking it a LPs through Climate, basis, develop with products couple distractions here new in increase the focused developing the Brazil. very obviously can they floods fireplaces Brazil, we've traditionally issues have strong hurricanes and in we're the well. incredible stay. And the to been seen going economy really risks. ESG you physical Europe, the two.

actually finance, of And require climate valuation will no the risk of as major he new insurance changing capital to and that, the Founder today, [ do effective is of and like. a ] lot it amounts have there's client from doubt of company he that estimates, we're very joining fortunate and models, new in and massive models, tools world, that relates carbonation segments. and new Richard very the can being and and capabilities and lead investment, to help us So a us [indiscernible] we're industries comes develop world especially CEO data, the climate, to effort fortunate that models

Operator

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

Toni Kaplan

that end in could was on year, your hoping Now the we're pricing read any how thinking I maybe the and you're clients in you about at early to share environment XXXX? the closer particular, getting of budget

Andrew Wiechmann

building I Sure. base, we and are dialogues in of signs Toni, highlight over we client MSCI will say to it's to improvement beginning and do that hope here. near would across some some I translate term would Andy sales elevated here. we activity across our the pipeline cancel of to time. sales cycles speaking in which gradual continue through see longer generally, expect

redemptions asset know, tighter you largest are budgets. Baer are asset And with run managers client as by our rate. mentioned, still As managing and while stabilizing are outflows, segment managers

to do day. So pressure see we that our in day dialogue

given in hope around thinking constructive we budgets. are the Although improved which run to through we seeing clients, AUMs, translates and more dialogues

we but there And not more, been increase to increases probably really quarters is contribution is very are we've clients. sales here, consistent view recent -- long-term down from a with where we and on opportunities, price we On we the and the said where delivering. say what ago. slightly from environment to pricing a our have only are approach client recurring price to moderating I we're message constructive health, overall and are price pricing front, listen, that the here, in and the long-term be would focused overall we those even year and want we a the can partners taking our value

of here. are long I think being build competitors for our this on and there some us our price, to positions are where term places think the relationship well aggressive I more

Operator

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

Alex Kramm

previously, topic about you But wanted in to on retention. things same that too sorry the here. suggested XQ, on Andy, I stay being the nitpicky if short had I'm particular think, in Just get should the super better and term

you I'm are hearing like correctly, soft. it if things So pretty sounds still

So maybe you how of most specific, you be year-over-year specific that be some segments, have same want a more you And be that comment on a line you can in the the cancellations which bit maybe quarter? And helpful. important little think is by obviously basis sales. on should on the be would should XQ, sight given then to if the now,

Andrew Wiechmann

be QX quarter-to-quarter to to can to, saw to rates rates specific. to can drop through continuing comments, discussed many impacts tends the side, the participants. I alluded relative we Yes, be last Alex. ago. that to compared of closer would continue last Obviously, we a we've we levels be be of are QX us that cancels to as of the year QX over pressures to lumpiness retention here. the seen, things for consistent past elevated seasonally. to have too typically client quarter expecting quarter year with impacts relative And on in higher work the you of industry the I want you've the the year to in our And And we've of expect I'd of are do cancel size sure, fourth say elevated we fourth some to retention as and of don't say seen year. period cancels of a on in the move level events we quarter-to-quarter. But the the last

On to does side, across we It the sales really continue client as budgets. alluded I vary tighter segments. to, see

have constructive things through budget many the AUMs, work in of signs. take alluded I are and in think, dialogue, signs we our encouraging improve, the I of our resetting to seeing work their run earlier so some seeing time clients as seen the prior are of with clients. to and these revenue But system into question, We with

momentum. see we so cautious but hopefully are here, early some And

Operator

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

Alexander EM Hess

Yes.

two, [ discussion one, sure gap we've within look as you around in the pivot do channel and factors MSCI community can it MSCI or But quite make quarters say, analysts are track biggest when external happen look internally a So guys metrics externally, and we how what evaluate, client cycle that with an sort execution assess the ] gap on a say asset you had product of within that would the then sales might as few or it's now the not, that manager specifically. MSCI? And budgets?

C. Pettit

Baer Alex. Yes. for Thanks here. the question,

more time we making when the that go But that to, tend may clearly, a is view thing. cases or competition significantly you are as we doing there one. worse, have product product as some look, to and is assessment, be a sub competitive a not it And of critical don't product. to we doing sort but situation the here that. So where where certainly, ourselves, It's either are of alluded great industry enough we of by

from the that that have some come of competitors. earnings may seen of of out have our You in of announcements some

year. clearly opposed -- events that so it arise the may indicator. We're also may a at as during we've looking important the an course of consolidation that's So from of the cancels that this kind be amount of seen to client

-- in in even ] both SEC at give in categories of combined segment the that to competition. market. created to of high level of think an we below wrong, And product we granularity track record both in of [ the external distinction a a that's have of the generally, the terms important of So in numbers, category we level that et we but high level, right I pretty indications of on pretty of, a are the relating pipeline, for something this -- transparency or the some terms call have analyze doing the terms of cetera. And good

of differentiate challenging So that more broadly be which those might the a sum of look within happening one, industry economics driven things, we segment. all when I from what it does by help client situation the of to and think given more think precisely competitive I us is at a the what's more

Operator

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

Ashish Sabadra

that to on just ESG cyclical further to moderate? leadership strong down things to we help a with Climate. that does of see also front. do bundle start should drill with change but that color to a Where sales I continue was So but and ] and greater to track? demand There wanted and the this any cyclical What reference there, those And a trends. momentum with the [ on on subdued secular climate, focus are ability ESG? headwinds climate we prolonged some

Henry Fernandez

by societies of highly I to entities cyclical be social if it's issues secular course, interrelated affect the that immigrant around to some the to to university. or a that going without company in not strategies not the the hard to population economic in and climate population It's And basis, issues, that secular very a you that differentiate of and in are on the of and and just or believe here. On governance are accountable seeing the around or and a and profit world change believe of it's focused hard lot between issues for of societies the So believe it's that the winning the -- today, -- interconnected, extremely countries. analyze going hard and the highly losing in we're tensions see the companies world not the tensions important a to world terms society. that countries issues think world, a environmental governance extremely we the world. look, a social is live to tensions doesn't in and go core of companies We and a of week social

So trends come off focused mentioning. war We monetary inflation the the look of strongly if at at policy his many very I it's right and world eyes these all the and We'll is on MSCI, taking East, was underlying come and focus Middle Europe the that you potential and war now, issues. back will in in believe, extremely back. short-term that

that a term. cyclical political term given a U.S. And regulation Europe, long drought, in are focuses the I invest think events in of in given reset the some We've for company rates. all physical recover, sooner will it to And world. little rather may going time, place probably recover gradually long the will to events it the have climate that We growth are return take than higher is later. in a But downturn that a the ESG cyclical on and of here and but will given taken in we more the the

So philosophy in -- are because not on that MSCI trends therefore, on investment predicated we going are abandoning we long-term industry. the that global are totally is

trends. and these come good of pointing out So all long-term company track have how the a people may a having will we manage a on year-to-year trends disagree quarter-to-quarter with our assessment, but to basis. don't back. or we been the and And pretty good basis record

doing revenues two issues, landing what doing and and multicultural to environment or and and attract over of social that low and are are to the soft companies it's revenue are analysis all the on global predicated growth earnings time. That focus our in hard in climate areas landing carbon our of received And an growth, these like on of what We navigate the or companies a the from social policy to uplift talent Europe, compounder provide global the world lot to monetary will we economics, -- issues come a and societies, a in long-term all back I an believe the environmental is think best war focus will in of and inflation that issues meaningful the that begins transition. as and ESG of global that.

Maybe to but some of that, happening. climate. in come that in ESG, see all it will takes a of to And little longer So that it we're beginning back. going already we're see

Operator

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

Scott Wurtzel

look of you the multi-asset the ask an opportunities, income it I fixed one at mean, was to the I basis. on on side and stronger growers of when think organic business. the growth wanted emerging I

if analytics So the really continue and fixed grow share multi-asset can us kind to these of class with at wondering that side are, your of we you business just in side how for income, journey, of room on where rates? to is sort there elevated more the maybe much

C. Pettit

Sure.

So question. thanks for the

prepared mentioned generally credibility in heard think I and -- income or you Andy analytics. sort As fixed been of very an remarks, was the has important important across component, it that strength

sales of the number we a have there. where, same with we X say, capabilities X, very had don't quite think are there So years success, in would that had I ago let's terms, the simple

component So of stand-alone it's to sales, and directly important those seeing the both success multi-asset class fixed for the basis capabilities that. ways some a we're with on increasing of front looking office delivering income and an

can a to of attribution, So income performance will to intention fixed reputation as moves are analytics, which story. It's but we we I into forward also analytics, next retention will and this the index. quality, in fixed "sexy", we developing really in a income we then year, like not very and fast, which a critical delivering clearly, believe mostly of I growth much quickly, both go be we're but solid increasingly continue part that fixed to our think high thing important if sales capability continue enhance doing, we're think areas that have income

can sure. continue to those I areas, in trend the expect So of we think for both

Operator

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

Kelsey Zhu

assets, strategy private want I in I with the leadership kind markets. circle just to back place, to to think of medium-term new your expand that in on So

data. transaction providers. I into about front-end of think And MSCI during acquisition benchmarking data call, [indiscernible] compiling to the talked So previously, you Burgiss plans has benchmarking expand

kind just of line plan you that to this the and of latest kind investment as to to on So topic time the your expansion? as curious that well develop area that thoughts hear of

C. Pettit

Great you. question. Thank

that. That would even data look, in So the could can think taking LP do enrich base got We're do all, lot we and in high demand. up things some quite categories example, very And data that more equity, that will we et to in a to about is, had to of exciting. I cetera. use bridge in we that last capabilities and that between we equally, can but turn, also most broader the much the scale first And both year, expansion analytical our GP us doing GP and there. AI, depth what really analytics private we see continue of I with demos believe private by we we're week. in significant greater but where we're of excited have guidance, growing collect in, continue new I'm credit in now, opportunities. all breadth specific serve cases. But we've of serve think bringing in there, better the teens intend other that we then is the to which significant LPs I'm will markets, the extensively. help the sub-asset deeper not means the collect I or we class and And the hope private client this for the a create coming exciting data changing of to

also indexes to markets. and You private in alluded benchmarking

them. have redoing since those benchmarks, So we're taken and early over it's relatively days we

of I our the expertise a are think there, related that process of with there cases improving. in enhancements number use we're specific quite to

that, in beyond measurement estate think private year, in classes. coming markets I So the asset will other role benchmarking again, and in our real extend the into

about very help we board, overall, I opportunity bringing So there and even on I further. the that think Luke think, strategy will ] drive have [ also to excited I'm

Operator

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

Keen Fai Tong

wanted revisit subscription to trends. recurring I net new

new to sales XQ. in subscription XQ growth net So positive a from recurring in flipped decline

tighter the external quarter, you what drive And cancel talk this this happened more in see a to in bit also to XQ. Can case flip? budget in was for rates quarter the talked trends what conditions need about which client improve? would You about you to

Andrew Wiechmann

Sure. George, Andy.

can some as of quarter-to-quarter, in lumpiness this term. continue seeing the quarter and to strong. alluded would So in that compared the pretty do we We've X space. highlight we've early saw of franchises, are sales. as the to and I near be areas expect you like improvement seen We third in a know, analytics, in our ago. particularly year uptick the But year. large seen good an to, lumpy cancels We pretty I Cancels, remain index in that that sales signs overall, just

year, cancels that still seeing the of the Some client last we've a the through over are seen that we're been we've events working so those. reflection of

And so in net with here. recurring the to for us continuing a pipeline to moving we cancels, just client through us translating dialogue more new sales forward combination enhanced of improvements translate to lingering through these work believe encouraging should through

Operator

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

Faiza Alwy

wanted competitive ask I about displacement. to

you the a your business, that think around the several these to [indiscernible]. referring to I specifically -- Baer think you is sustainability of there I you more product are you give if mentioned and where And deals specific that's Curious leading displaced us in any competitor. analytics there were the that? can commentary, color

Just helpful. color any would there be additional

C. Pettit

Sure.

displacing still look some growth for look, headwinds. data of a ESG in XX% So that if there's at that we think competitors. I think had, EMEA. Climate, the you I showing Notwithstanding of and we're rate example, lot And run

plenty So of I there's think evidence there. that's --

position our in that an there very -- there go have into that we these policy we competitors quite index the situations is And as think I decision are is formal where But know, may here. name we be you RFP in strong don't a by or client. long-standing a by significant often any analytics.

you're is the pretty generally, on in woods it's -- where depending the of competitive the we're that -- markets So the situation private framework what competitive fluid. more part what is. And clear less bit so a again, in,

are overall, So well we are confident in competitive I would framework. we that say a that, executing

I brought us, what competitors. always the think both Now capabilities and new new There's we our about doing solid ourselves by cut information vis-a-vis to it the But always being market competition. feel clearly, available allowing there's we're for to functionality.

Operator

David Your line of next comes Motemaden from question the with Evercore.

David Motemaden

Andy do you clients from reach in sales? And wondering, and some hold and you flows. constructive future? your just else an stabilization think what early point between perspective, at the AUM think their activity the you there revenue, on is makes I'm the AUM just need to which anything will also not and in we spoke helping the you signs dialogues with about is client clients, before historic that Barry, new improve run see relationship inflection in your given guys seeing both of

Andrew Wiechmann

see sharing dynamics it's Yes. underscore the business. And important to across we that do

many franchise aspects We here. that has [indiscernible] to diversified are growth

than We years outflows. segment so very where largest we they've managers. And strong more making of it's are they've it. complex we client know active tough know worked is couple seen through But here listen, our a there -- asset

we've tools you alluded we increase year-over-year. looking they with and provide These outflows have help can us tools them them are grow that And are those AUM We seen the to seen and as to. stabilize grow grow. to that organizations want that the

mentioned clients to say, encouraging are And we've in us. And they through I'd translate translates that for for that XXXX. aren't setting And constructive here, of expansionary and is so to as mode. should days that the mode, to demand. an are things alluded those yet, you constructive hopefully, budget but as additional early more The through

other see For do I client us. in also we momentum that highlight segments. strong to want

where growth we outsized seeing those smaller today. many size we're are in big So of markets of

owners in increasingly strong companies, and We much momentum themselves. strong momentum like insurance managers as as seen in seeing see big opportunities there. they become asset we're So areas internalize wealth. We've

with as both the big on subscription that opportunities on as well side to grow the seeing are through We side. them, ABF comes and

to growth And rebound we so on some on top hope we should that coming have a number asset growth over franchise drive active of avenues quarters. the managers the the here continue across of is what elevated of

Operator

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

Kwun Sum Lau

it's Yes, from Lau Owen Oppenheimer.

nonrecurring peers strong were on vendor tight better quarter. consolidation. budget And But understand pretty recurring think So I to revenue third about also [indiscernible] here. the in it. about message Analytics, want and the Many the of talked I you talked and subscriptions

by adding then if I or explain sales, driven the it would When quickly the run $XXX of large the [ can you on analytics the deal? But here. run be math net beginning got then reported can subscription million And to implementation ]. delta the if number was It I [indiscernible] will [ be great. And new analytics, that you about rate great $XXX your a million. was do talk by ] So revenue just rate. outlook

Andrew Wiechmann

I'll Sure, sure. in call out there's Yes. a And separately. there few dynamics that

be just notably being technical the plus rate. FX. So last it can than There runway items beginning question on is different, are most cause your run different to [indiscernible] net one about of that new some rate which

rate than So to base addition. net impact different FX the can overall amounts move so rate movements by run and run that the new cause

the first touch analytics, overall growth, talk run will in growth growth, I revenue business on several the to as number I'll which on what talk of the but that been momentum for driving of the and been last about here, means analytics, about terms I'll and a rate earlier, elevated In has the that. But for fronts. strong we've across listen, quarters then really Baer alluded what's had success

I think an by [indiscernible] risk. environment dynamic is much there's of that where more driven that is

understanding many for equity our parts our a active are into managers. driving with with taking. We models industry. models of to management different had of understand we've risk equity risk the looking so strong clients have hedge success see active we've being portfolios they as what seen better but And and integrated even demand And funds, their are the is bets that tremendous

which of are the more We bit risk to offering, that back income to environments be on in also things also get volatile. And an made the then higher clients some efficient. areas wins also seen and have fixed and we've that that improvements the are tend environments more and analytics enabler more like for we've includes been liquidity our a attention

but insights more services we not to risk work glean makes it to our offering risk it that or them So something with allow only things that insights efficient offering for clients or from provide, more insights like us. our our

they can be a for them more analytics, their but not also operating win-win it so they're And are improving only where efficiently.

are environments and And been so have encouraging. those helpful these all in things

revenue Now which was we come on expected. had a up. in online And we did side, implementation the QX, result, a revenue earlier catch large than we a sizable have as

have growth higher We growth. be number have seen a coming several rate large to implementations which the quarters, online the than over run a last of revenue caused

the closer be run drop past these even periods revenues growth to some before, expect -- where implementation periods said as in we've we to this large to compare revenue rate had to begin that or we've periods below growth year. over to we As catch-up

Operator

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

Craig Huber

but the a just a probably talk but about you a on stock is, market inflation shoots, more finally you're is year saying? well lowering and went lot, about year early year those about to Maybe ago. only given numbers there December, I rates the little Well, budgets I out Fed negative environment here, as know talk we nothing the keep why last clients than It better this control. at like and happened. but those is seems under And so bit talking more all hearing sensing it's out do here, guys lot not you that know, what the about how feel and think thinking for the just that talked bit what the this tough having further November, a am little in positive I year, the done very question here. and given hearing [indiscernible] though, least, worried years your My ago, things from are has better set recession about not they managers here. be about and about stuff. Why you here? and environment January much from operating green there most U.S. to talked too economy what AUM X.X are definitely and U.S. great were are ago, that with People, with would stuff. years still a [indiscernible] a you're discussions missing X discussions next in of XXXX a year, But is

Henry Fernandez

and we've It's question the is. core here been talking a of what cuts about it across very insightful

look you of at when a number MSCI basically, of performance. have totality areas of strong we the So very

records ], ETF and [ is passive You have out which products of AUM business the hitting to non-ETF linked asset-based linked fee and MSCI. coming of

into product segments, side, You And a into of many and those of on sales of into client sales cetera. the sales asset segment. significant sales strong very et the managers, incipient insurance hedge analytics have significant clearly owners, funds analytics, wealth into

sure, weaker the company. I one, an overemphasis run think areas that the active asset subscription in is this of call the XX-plus and And overall, is there rate the is areas, managers our first to of percent a from who global segment or softer on -- yet for getting definitely in markets they fully increase, is speak, significantly last recovered are better And the better, had so a and to the flows the records. in equity not have price with quarters. are fund that maybe few

the of call and to major growth are budgets And of a should a see the pointed in asset be happened -- going given that in active recovery we their yet. profitability. But out, a So 'XX, revenues that asset management going of better, rightly segment given into we always the return doesn't spade spade.

cautiously that happen will precedent But So 'XX. that, in to begin may fourth hasn't happened that happen indicates the logic and and that not if it optimistic in may indicates quarter. we're or yet

So that's softness. one area of

plays The second cyclical in I alluded feel sales, major We're consolidation competitors. away that That in to are climate, quarter-to-quarter on We bottom have reached ESG. reaching in a is -- -- we downturn. to been the which likely in clearly recovering ESG have that Climate a have achieved earlier, predict are but it's area we hard is as and cyclical from continue. of a basis. There softness in to ESG we're

be GPs for the given corporates, like. And and it's We like non-asset and on down, that We have segments management but physical transition into ESG significant believe sales risks client slowed [ example, the going COP temporary. has it the climate, and on going that. by in next in renewed there's ] with year, climate potentially the a all of focus the Brazil UN are that of effort to in a and world

what that no think there's I I get you -- are is -- think right. absolutely I I you'll mean you're here. think think to -- don't So I mystery happening

setting company, setting will in the the climate happens better. through gone Analytics. in better. the We're have maybe to asset what We of reliance these Index. issues the of depend 'XX. But X. expect on year on records that and rest get ABF. in major to last or ESG, We get management records We're sales for should has sales expect sales segment it we're records a should active We some and that in setting

pointing here. much So works we're and point what working. is look having And doesn't approach understand and we the a that to the true But little to emphasis glass call. to you little there's bit what balanced sometimes more to we're a not out obviously, is too of on why. out empty And working got what what in at I this always of

Operator

with from Wells next the question comes Jason Fargo. of Haas Your line

Jason Haas

you decide if end AUM that could you expense the range for talk to recognizing curious you're But [indiscernible] be how the Any the savings? could why the about seeing performing take is you invest saying this the more? keeps Why more out environment Or market that is just year, color not higher you levels it guidance given offsetting are cautious the of would be range. higher didn't to raise year. I'm -- to that helpful.

Andrew Wiechmann

Sure. Yes.

underlying for looking that than invest AUM alluded higher levels had the the year. of opportunities are areas in to to, you growth always And our at we're those in beginning guidance the we business. assumed key listen, So more as that

we private of at end are our investment, stay our which reflection it level a likely and if be an this pickup as And as a in range, level towards higher higher, we so the guidance expense or we in mentioned, is powering those they of and compelling using not to of are opportunities drive in enhancing portfolios, that interfaces, internal our drive office but opportunity position the the index are growth. growth efficiencies, and secular AI analytics, our to capabilities rules-based to investing architecture front including only with continue markets like

continue driving constant stable continued we are and those all things long the it's will and so calibration. And a balancing, doing and are that continually do. But we with for growth on term, are profitability investing and focused to

The is lag some there can be well. other would as highlight thing I

there And through. but some quickly, so time that to when there are through work that are come take some some investments

and cost so on it's that -- at to base, play our there quarter-to-quarter And dynamic cause just a factors here. are nuanced several expenses can swing

our too year. for the read guidance wouldn't X I in much So quarter into expense

we continually and are the in to invest opportunities for it's business. calibration said, constant I looking a As

Operator

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

Russell Quelch

mid-teens of another growth strong rate, custom quarter reported You the and specialized solutions. run in revenue index

be? of what's explain index index are other growth think the of any proposition question, here? And of I'm I sort in to rate second to in to how that extent if cannibalizes versus opportunities about that index sort part see parts also this of here the what for run segment revenue. wondering now accounts differentiated of can growth it MSCI's you the And competitors margin? talking how overall kind that big business business opportunity about XX% close you of segment and the affects

C. Pettit

Yes. thanks for question. the Russell,

remain this. not a segments. itself capability is about use very So but that excited client look, we different across different And important, plays would question, in it cases merely I out which very it's say also

what in flexibility So next and should roughly and different the terms Foxberry eventually, will give cetera. That by we're integrating different our combinations types calculations asset custom that index acquisition can of quarters. online do, classes, significantly capabilities, of into coming speed in or the few us et whether we greater be that's of

from that the factor in indexes competitive models, then topic research a scale analytics that building both advantage both mass with So of in. climate the customization lot the at that turn, precisely for wealth entire enormous have products on manager we where index, for clearly do and control adjusted both huge have think management type we sell firms that the portfolio because the the In of capabilities, some the even we can of risk I all is structured platform, exposures, capabilities construction and of remarks mandate prepared ETFs, opportunity level literally either some and side of that us asset the doesn't is not the -- on owner the with be that a those while to for a cases, for of plan, are our asset segment need more portfolios. opportunities use the we customizing into linking at in industry, whether wealth more wealth that which creating. There depending these that the work are of for basis, or capabilities, the products, today, asset which management owners, there's doing the we quite had client they to and risk plan benchmarks, specific

much we're area point is just this said, growth of exciting really I in all this. going our will of and speed in to and will into new will we're lot on the next really, of So capabilities and story. And where which bringing market a at few next quarters critical inflection year more do [indiscernible] and all this part as us increase our become to an more significant allow

this and So will remain large us. delighted question, very for to a take opportunity the

Operator

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

Gregory Simpson

I just business growth wanted performing within the how is this organic on run to context in assets check rate X% the the of private quarter. RCA

I think about when you a originally talked double-digit it, aspirations. growth you acquired

around Is competitive mainly So to activity? transaction a on accelerate key this you're call seeing? real Or it as what is estate the see anything you'd back side out issue do there you up? cyclical

C. Pettit

Yes. Thanks for the question.

pretty is So seeing I a been It's major and simple we've volume. transaction straightforward challenge answer. the this look, think in

in revenue was there volume, part been there's here. which the a So transaction significant drivers major -- a drop clearly of is

we're this grounds the of over-deliver evidence the maybe and that see are more remarks. believe the department didn't turning in we're prepared have between trying we we be area good Now sober We're little to see starting to -- think more we a believe significantly. call, see we're of year. Maybe various to and be in buyers in definitely keeping tone in in the that overall pick the up likely more with there coming I have estate put to where of our We there's under-promise we But in to sellers I could basically has real the bit corner the year. coming that of and transactions. think compressed measurements that -- research starting that beginning market that and the spread

Operator

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

Alex Kramm

didn't look if discussed. quick dollars to that one it's at run empty, specialized, grow the down a that I a nitpicky were or again that very but or on it's just Maybe to quarter-over-quarter. I of custom wondering couple some one there customer numbers they quarter-over-quarter? small if quarter, Again, glass out thousand opportunity the disclosed Just small a call think I'm went number, but being and of elevated the you it why for on actually just rate hundred cancels

Andrew Wiechmann

to packages are everything client Baer massive across But of all the anything, call are business and special engagement out bases right impacting our nothing Yes, broader many impacting If a use that holds impacting of now. would see I say custom cases. us, strong said, opportunity also true. just for pressures different This some and modules. the we and is

index The a climate other to well. key in is here us thing is ABF growth custom underscore for as driver

ETF And something helping And it's different it's fuel within even and in asset-based see we we the to see We many avenues as that's with so indexing the clearly, on institutional the with that fee across passive that's side, subscription something helping direct mandates. well. see it providers. it but line wealth channel

for is levels. excited that us one of number it's on a So

Operator

back will remarks. now the conference Fernandez I for concludes over closing Q&A That our turn session. to Henry

Henry Fernandez

for in and MSCI. you interest thank joining continued everyone, Well, very us today your much,

As all focused and -- with publications delivering we and you grow the today them. support the Q&A, and did our on intensely the innovative products capabilities remarks clients the wallet have we're can prepared share see from and our to

Our saw of Obviously, some shareholder what results. that delivery talk very and we to like show rather be call. a And moderate is you actual than long-term to of potential in to our strategy optimism positivism ambitious creation. this deliver we execution because value our moderate try our about steadfast results to enthusiasm, compounder enables us of and always a on

things all all the of forward exciting engaging update on look mindful you during the of be with please quarter So and we're to that. We doing. you

Operator

for call. today's Thank concludes joining. conference This you

disconnect. now may You

MSCI (MSCI) 29 Oct 242024 Q3 Earnings call transcript