Q3 2024 MSCI Inc Earnings Call
Speaker Change: Good day, ladies and gentlemen, and welcome to the MSCI 3rd Quarter 2024 earnings conference call. As a reminder, this call is being recorded. At this time, all participants are in a listen-only mode.
Speaker Change: Later, we will conduct a question and answer session, where participants are requested to ask one question at a time, then add themselves back to the queue for any additional questions.
Speaker Change: We will have further instructions for you later on.
Speaker Change: I would now like to turn the call over to Jeremy Ulan, head of investor relations and treasure you may begin.
Jeremy Ulan: Thank you. Good day and welcome to the MSCI 3rd quarter 2024 earnings conference call.
Jeremy Ulan: Earlier this morning, we issued a press release announcing our results for the third quarter 2024. This press release, along with an earnings presentation and brief quarterly update are available on our website, msci.com under the investor relations tab.
Speaker Change: Let me remind you that this call contains forward-looking statements, which are governed by the language on the second slide of today's presentation.
Speaker Change: You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made, are based on current expectations and current economic conditions, and are subject to risks and uncertainties that may cause actual results to differ materially from the results anticipated in these forward-looking statements.
Speaker Change: For a discussion of additional risks and uncertainties, please see the risk factors and forward-looking statements disclaimer in our most recent Form 10-K and in our other SEC filings.
Speaker Change: During today's call, in addition to results presented on the basis of U.S. GAAP, we also refer to non-GAAP measures.
Speaker Change: you'll find a reconciliation of our non-GAAP measures to the equivalent GAAP measures in the appendix of the earnings presentation.
Speaker Change: We will also discuss operating metrics, such as run rate and retention rate. Important information regarding our use of operating metrics, such as run rate and retention rate, are available in the earnings presentation.
Speaker Change: On the call today are Henry Fernandez, our Chairman and CEO, Bear Pettit, our President and COO, and Andy Wiechmann, our Chief Financial Officer.
Speaker Change: As a housekeeping item, we wanted to remind our analysts to ask one question at a time during the Q&A portion of our call. We do encourage you to ask more questions by adding yourselves back to the queue.
Speaker Change: With that, let me now turn the call over to Henry Fernandez. Henry?
Henry Fernandez: Thank you, Jeremy. Good day, everyone, and thank you for joining us.
Henry Fernandez: MSCI's third quarter results highlight the underlying strengths of our business model and client footprint.
Henry Fernandez: as well as the essential role that our solutions play in global investing.
Henry Fernandez: adjusted earnings per share growth of 12% and free cash flow growth of 46%.
Henry Fernandez: We repurchased $199 million worth of MSCI shares, bringing our total share repurchases for the year to $440 million.
Henry Fernandez: in our operating metrics.
Henry Fernandez: We deliver asset-based fee revenue growth of nearly 20%, subscription run rate growth of 15%, and a retention rate of 94%.
Henry Fernandez: looking at our overall performance.
Henry Fernandez: will show significant strength.
Henry Fernandez: in ABF Revenue.
Henry Fernandez: driven by record AUM balances in both ETF and non-ETF products linked to MSCI indices, including third-quarter ETF cash flows of $18.6 billion.
Henry Fernandez: Index and Analytics new recurring subscription sales grew 5% and almost 11% respectively.
Henry Fernandez: Among asset owners and hedge funds, organic subscription run rate growth was 11% and 15% respectively.
Henry Fernandez: New
Henry Fernandez: Met new recurring sales in our ESG and climate segment were down meaningfully.
Henry Fernandez: from last year's levels.
Henry Fernandez: We think the subdued demand in the ASEAN climate is cyclical and may be prolonged.
Henry Fernandez: But the need for all investors to integrate ESG financial materiality and to decarbonize portfolios are real and secular.
Henry Fernandez: On asset managers, new recurring subscription sales were down 5% year-over-year, reflecting cyclical pressures, although retention is excellent at 96%.
Henry Fernandez: As our Q3 results show, MSCI's product lines are diverse and increasingly complement each other.
Henry Fernandez: We are a growth company with enormous addressable markets for our products, which serve a vital function across the investment ecosystem.
Henry Fernandez: Today, I would also like to comment on three key drivers of our long-term strategy.
Henry Fernandez: First, our growth among wealth managers and how it reflects both the increasing use of
Henry Fernandez: and the benefits of our new technology platform.
Henry Fernandez: Second, our progress in developing private capital solutions that cut across product lines.
Henry Fernandez: And third, our commitment to providing climate solutions that clients need to measure, report, and act on decarbonization of investments.
Henry Fernandez: Starting with wealth. In Q3, MSCI achieved a major index win with the private banking arm of one of the world's largest banks.
Henry Fernandez: We also achieved direct indexing run rate growth of 22%.
Henry Fernandez: Meanwhile, our MSCI Wealth Manager technology platform, formerly known as Fabric, continues driving robust client engagement for analytics.
Henry Fernandez: Looking ahead, we believe this platform can help us deliver content for wealth managers that spans multiple product lines, including index, ESG, climate, and private assets.
Henry Fernandez: In private capital solutions, we believe that our work there can enhance our capabilities in many areas.
Henry Fernandez: We have already seen this with products such as MSCI Private Capital Fund Indices, which are catalyzing important new client wins and prospects since their launch in July.
Henry Fernandez: Our private capital fund indices cover more than 13,000 funds.
Henry Fernandez: that represent more than $11 trillion in AUM.
Henry Fernandez: and we believe they can help us become a standard setter in private assets.
Henry Fernandez: Our partnership with Moody's positions us well to expand our ESG coverage of private companies.
Henry Fernandez: while also providing more ESG content for segments such as banks, insurance companies, and corporates.
Henry Fernandez: As we announced last week, I am pleased to welcome Luke Flemmer to MSCI as our new Head of Private Assets to further build and scale our business to new heights.
Speaker Change: Luke Joyces from Goldman Sachs
Speaker Change: Regarding climate solutions,
Speaker Change: As the risks and negative impacts of climate change become ever more apparent,
Speaker Change: All institutional investors and capital market participants will need high-quality data, models, and research to adapt.
Speaker Change: This is inactivable and just a matter of time for this demand to accelerate.
Speaker Change: MSCI already supplies carbon emission data on more than 60,000 private companies and more than 7,500 private equity and private debt funds.
Speaker Change: MSCI is well positioned to be the provider of choice for this large-scale reallocation of capital and repricing of assets.
Speaker Change: With that in mind, we're also constantly seeking to upgrade both our talent and our solutions.
Speaker Change: Last week, we announced that Richard Matteson has joined MSCI as head of ESG and climate.
Speaker Change: Richard comes to us from S&P Global and is also the founder and former CEO of TrueCost.
Speaker Change: We know that MSCI will greatly benefit from his expertise and knowledge.
Speaker Change: Meanwhile, on the climate product side, MSCI has responded to the emerging consensus that voluntary carbon markets are critical to achieving net zero.
Speaker Change: Just last month, we introduced MSCI carbon project ratings, which offer comprehensive and independent assessment of more than 4,000 carbon credit projects around the world.
Speaker Change: All of this demonstrates MSCI's single most important competitive advantage.
Speaker Change: the global, diversified, and integrated nature of our franchise.
Speaker Change: We have always tried to capture the biggest trends reshaping the global investment industry.
Speaker Change: We are now better equipped than ever to capitalize on these trends while supporting both traditional and new client segments.
Speaker Change: And with that, let me turn the call over to Bear. Bear?
Bear Pettit: Thank you.
Bear Pettit: Thank you Henry, and greetings everyone. In my remarks today, as I review our third quarter results, I'll focus on our progress and opportunities with individual client segments across the investment ecosystem.
Bear Pettit: Let us start with asset owners who are accounted for some of MSCI's most notable Q3 business wins.
Bear Pettit: Overall, we delivered 11% organic subscription run rate growth with acid owners.
Bear Pettit: during particular strength in analytics.
Bear Pettit: In Asia, for example, a large public pension fund made MSCI their primary risk analytics provider, leveraging our highly competitive mix of applications, sophisticated algorithms, specialized data, and managed services.
Bear Pettit: We closed another significant deal in analytics with the U.S. Public Pension Fund, who selected MSCI as their analytics platform of choice for the entire investment process, from planning and asset allocation, through to performance attribution and measurement.
Bear Pettit: In each case, MSCI displays the major competitor.
Bear Pettit: Feels like these helps us achieve our best third quarter on record for recurring sales in analytics.
Bear Pettit: with particular strength in both Europe and the Americas.
Bear Pettit: Despite the softness that Henry mentioned, asset managers remain the largest contributor to our subscription run rate, adding over $60 million of organic run rate in the past 12 months alone.
Bear Pettit: are firm-wide retention rates among asset managers that stayed high, and it was close to 96% in the third quarter.
Bear Pettit: Our asset manager clients still face fee compression, leading to tighter budgets, though there are some signs of stabilizing redemption pressures and improving inflows.
Bear Pettit: In MSCI Index-linked ETFs, year-to-date inflows were nearly $68 billion, which helped our ABS revenues grow nearly 20%.
Speaker Change: As Henry mentioned, our work in index increasingly reinforces our work in climate, and MSCI is leveraging this integration to help asset managers navigate the low-carbon transition.
Speaker Change: In the third quarter, one of our pension fund clients in Europe seeded a $1.6 billion ETF linked to an MSCI Climate Custom Index launched by one of our asset manager clients.
Speaker Change: Turning to other client segments.
Speaker Change: MSCI also did well with hedge funds, wealth managers, and banks and broker-dealers, who have collectively added $60 million in organic subscription run rate over the past 12 months, and grew by 10% combined in Q3.
Speaker Change: For example, we completed a large ticket deal with a global quantitative investment firm who will use our index content and analytics risk data to enhance their overall research and alpha generation strategy.
Speaker Change: Shifting to Wealth Managers, they have added about $11 million to MSCI's organic subscription run rate over the past 12 months.
Speaker Change: Our wealth subscription run rate now stands at $112 million, growing 11% organically, and we have a wealth retention rate of over 97%.
Speaker Change: MSCI's Wealth Solutions have become a key differentiator with clients.
Speaker Change: taking firm-wide investment tools that support the home office while enabling optimization and alignment across leverage, risk, rebalancing, taxes, and securities and fund selection.
Speaker Change: We are well positioned to build on this momentum, leveraging the MSDI Wealth Manager platform in different business areas.
Speaker Change: Wealth represents a key opportunity for MSDI, and we will continue growing our wealth-focused investments across product, client coverage, and research.
Speaker Change: As you can see, MSCI remains determined to increase our wallet share with both established and newer client segments throughout the investment ecosystem.
Speaker Change: All of this has enabled our consistent delivery of attractive top-line growth and profitability. And with that, let me turn the call over to Andy. Andy?
Andy Wiechmann: Thanks, Bear, and hi everyone. In the third quarter, we delivered 11% organic revenue growth, 17% adjusted EBITDA growth, and 46% free cash flow growth.
Andy Wiechmann: Within our index segment, subscription run rate growth with asset managers and asset owners was 7% and 11% respectively.
Andy Wiechmann: These large established client segments represent nearly 70% of our index subscription run rate.
Andy Wiechmann: Index subscription run rate growth with hedge funds and wealth managers is 23% and 13% respectively in the third quarter.
Andy Wiechmann: Global cash inflows into equity ETFs linked to MSCI indexes was $18.6 billion in the quarter. We saw robust cash inflows into non-U.S. exposures, particularly in developed markets outside the U.S.
Andy Wiechmann: These flows, together with strong market appreciation, helped to power another quarter of record balances with the ending AUM and equity ETFs linked to MSCI indexes of $1.76 trillion.
Andy Wiechmann: Additionally, AUM and non-ETF passive products linked to MSCI indexes reach $3.65 trillion, also a record balance.
Andy Wiechmann: The combined record AUM balances of $5.4 trillion across ETFs and non-ETF index products linked to MSCI indexes drove nearly 20% year-over-year growth in ABF revenue and reflect momentum in the long-term trend of indexed investing.
Andy Wiechmann: In analytics, subscription run rate growth was 8%, reflecting the traction we see across several key growth areas such as our factor models, our insights offering, and our fixed income analytics offerings.
Andy Wiechmann: Organic revenue growth was slightly below 12% in the quarter, benefiting from another quarter of strong non-recurring revenue and some large implementations coming online faster than anticipated.
Andy Wiechmann: We still expect recurring revenue growth rates to more closely align with run rate growth in the upcoming quarters, especially as we begin to compare to prior year periods that included large implementation-related revenues.
Andy Wiechmann: As a reminder, the timing of implementations is lumpy, and revenue growth will fluctuate for several reasons, as it has in the past.
Andy Wiechmann: Regionally, the subscription run rate growth for this segment was 22% in Europe, 18% in Asia, and 7% in the Americas.
Andy Wiechmann: Client engagement remains strong, and we continue to see clients looking to grow with us on a number of fronts.
Andy Wiechmann: We have seen successes from clients looking to consolidate providers, solidifying our position as a leader.
Andy Wiechmann: We remain competitively differentiated and we continue to believe our ESG and climate solutions are a mission-critical part of the investment process, representing a massive opportunity across ESG integration, regulatory compliance, and climate.
Andy Wiechmann: We also recognize that the recovery of this product line to higher growth rates may take some time, and therefore we continue to evaluate the through-the-cycle growth trajectory of this product, and what the ultimate long-term growth target should be.
Andy Wiechmann: In private capital solutions, run rate growth was 17% over the same period last year, with new recurring subscription sales of over $6 million.
Andy Wiechmann: Since the end of 2023, over one-fourth of our incremental private capital solutions run rate growth has originated from new client relationships.
Andy Wiechmann: The private capital solutions retention rate was almost 94% and we recorded almost $27 million of revenue for the quarter.
Andy Wiechmann: In real assets, run rate growth was roughly 5% in the third quarter, with a retention rate slightly above 92%, improving both sequentially and versus the same period last year.
Andy Wiechmann: During the quarter, we closed a few large ticket deals in the Americas. One of these large deals was for our transaction data offering and was enabled by our open integration, which allows clients to access our large content sets on platforms like Snowflake.
Andy Wiechmann: We see very early signs of improving market activity, although the commercial real estate industry continues to see significant pressure.
Andy Wiechmann: Across the company, we saw the resilience of our financial model and our ability to generate strong free cash flows.
Andy Wiechmann: In the third quarter, we repurchased over $199 million of MSCI shares at an average price of roughly $522.
Andy Wiechmann: This brings our year-to-date repurchases to $440 million, or 879,000 shares at an average price of about $501.
Andy Wiechmann: Our cash balance at quarter end was over $500 million, and we continue to be focused on opportunistically repurchasing our shares.
Andy Wiechmann: I would highlight that we paid down $125 million of our revolvers subsequent to quarter end.
Andy Wiechmann: Moving forward, we may pay down and draw the revolver in modest amounts from time to time to support our capital uses and optimize interest expense.
Andy Wiechmann: Turning to our 2024 guidance, consistent with our previous comments, if markets remain at current levels or higher, we expect to be towards the higher end of our expense guidance range for full year 2024.
Andy Wiechmann: We have increased our CapEx guidance range by $10 million, reflecting our plan to purchase a larger amount of hardware for our data center in the fourth quarter.
Andy Wiechmann: We are enhancing our data center environment to more effectively and efficiently support the growth of several of our new solutions in a hybrid cloud and data center approach to infrastructure.
Andy Wiechmann: We have increased our free cash flow guidance range by $80 million, which reflects some strengthening of cash collections and some tax timing benefits.
Andy Wiechmann: This year we are seeing a $40 million discrete tax timing benefit and a roughly $30 million deferral on certain cash tax payments.
Andy Wiechmann: It's worth noting that the $30 million cash tax deferral will be paid in early 2025.
Andy Wiechmann: The lower interest expense guidance primarily reflects the previously mentioned revolver paydown.
Andy Wiechmann: We also narrowed the forecasted range for the effective tax rate to 18 to 19.5% based on refined estimates of discrete items we expect to be finalized in Q4.
Andy Wiechmann: In summary, we remain encouraged by the dialogue with clients and we see very attractive long-term opportunities.
Andy Wiechmann: Well, we are beginning to see some gradual signs of improvement in the sales pipeline. We still expect some degree of elevated cancel activity and longer sales cycles to continue in the near term.
Andy Wiechmann: We look forward to keeping you posted on our progress, and with that, Operator, please open the line for questions.
Speaker Change: Thank you. The floor is now open for questions. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue.
Speaker Change: If you would like to withdraw your question, simply press star 1 again.
Speaker Change: If you are called upon to ask your question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question.
Speaker Change: As a reminder, please ask one question at a time and requeue your line for any additional questions.
Speaker Change: Your first question comes from the line of Manav Patnaik from Barclays. Please go ahead.
Manav Patnaik: Thank you. Good morning, Henry. I just wanted to ask about the recent management changes you made in both ESG and private credit. Those are obviously two areas that you've talked a lot about, having a lot of long-term massive
Speaker Change: So thank you for that question, Manav.
Speaker Change: you know this is just a continuation of strengthening and deepening our senior management team especially in areas that we see incredible
Speaker Change: runway into the future.
Speaker Change: You know, the global investment process and the global investment community is increasingly focused on the investment in private assets.
Speaker Change: Obviously private credit is in a revolution right now and will transform finance.
Speaker Change: in many parts of the world with the continual strength in private equities.
Speaker Change: and private infrastructure is obviously developing into a major asset class.
Speaker Change: and even though private real estate is a little bit, parts of private real estate are in some difficulties. Overall, the world will need a lot more physical assets in that space.
Speaker Change: So with that, you know, we were fortunate to attract Luke to come to us from Goldman Sachs as a management.
Speaker Change: to help us lead this effort. We have traditionally been very strong in LPs and are looking to develop new products to be very strong also with GPs.
Speaker Change: ESG and climate, you know, you can obviously divide it into two, and ESG is still going through its own
Speaker Change: around the world, although we've stabilized and think that we'll do well, and on a long-term basis ESG investing is here to stay, and we're really focused on developing the climate part.
Speaker Change: which, you know, given the distractions in the global economy and global politics.
Speaker Change: in the last couple of years, we have seen an incredible increase in physical risks.
Speaker Change: the hurricanes in Florida, the floods in Europe.
Speaker Change: the droughts in Brazil, the fireplaces in Brazil. So, you know, there's no doubt that the world is changing.
Speaker Change: as it relates to climate and the capital industries of the world—investment, finance, insurance—will require massive amounts of data.
Speaker Change: especially carbon emission estimates. A lot of models, valuation models, risk models and the like.
Speaker Change: And we're very fortunate to have Richard joining us, effective today actually.
Speaker Change: to do that, and he comes from being founder and CEO of Trucos, a major company in climate, and we're very fortunate that he can help us lead that effort and develop new capabilities and new tools and new client segments.
Speaker Change: Your next question comes from the line of Tony Kaplan with Morgan Stanley. Please go ahead.
Tony Kaplan: Hey, thanks so much. Now that we're getting closer to the end of the year, I was hoping you could share any early read on the budget environment at your clients and maybe in particular how you're thinking about pricing in 2025. Thanks.
Andy Wiechmann: Sure, hi Tony, it's Andy here. I would say across MSCI and across our client base, speaking generally, we are beginning to see some gradual signs of improvement in dialogues.
Andy Wiechmann: which we hope will translate through to some building of sales pipeline over time. I would highlight that we do expect elevated cancel activity and longer sales cycles to continue in the near term here. As you know, asset managers are our largest client segment by run rate.
Andy Wiechmann: and well, redemptions and outflows, as Bear mentioned, are stabilizing.
Andy Wiechmann: Asset managers are still managing with tighter budgets, so we do see that pressure in our dialogue day-to-day. Although, given the run in AUMs, we are seeing more constructive dialogues and thinking around clients, which we hope translates through to improve budgets.
Andy Wiechmann: On the pricing front, listen, the message is consistent with what we've said in recent quarters here, where we have been
Andy Wiechmann: moderating our price increases and the contribution from price to overall recurring sales is
Andy Wiechmann: down slightly from a year ago.
Andy Wiechmann: I would say we are very focused on not only the overall pricing environment and client health, but the value that we're delivering.
Andy Wiechmann: And even where we can increase price more, and there probably are those opportunities, we are really taking a long-term view and a long-term approach here, and we want to be constructive partners to our clients.
Andy Wiechmann: I think there are places where some of our competitors are being more aggressive on price and I think this positions us well to build a relationship for the long term here.
Speaker Change: Your next question comes from the line of Alex Cram with UBS. Please go ahead.
Alex Cram: Yes, hey good morning everyone just just wanted to stay on the same topic and sorry if I'm being too nitpicky about the super short term here, but
Alex Cram: I think Andy previously you had suggested that things should get better in the 4Q in particular on
Alex Cram: on retention so if I'm hearing you correctly it sounds like things are still pretty soft so maybe you can be a little bit more specific
Alex Cram: how you think, you know, cancellations should be on a year-over-year base in the 4Q, which is obviously the most important quarter, and then maybe same comment on the sales. And if you want to be specific on the segments, given that you should have some line in sight by now, that would be helpful. Thank you.
Speaker Change: Yep, yep, sure Alex.
Speaker Change: And I don't want to be too specific. Obviously, things can move quarter to quarter here. And as you've seen, we can have some lumpiness quarter to quarter. But on the cancels side, we are expecting Q4 cancels to continue to be elevated relative to the fourth quarter of last year. And as you alluded to, Q4 typically tends to be a period of higher cancels.
Speaker Change: for us seasonally. I'd say we are continuing to work through the impacts of the elevated level of client events that we've seen over the last year and the impacts of many of the pressures that we've discussed on industry participants.
Speaker Change: I would say consistent with our past comments we do expect retention rates to be closer to the levels in the fourth quarter of last year relative to the size of the drop we saw in retention rates in Q3 compared to a year ago.
Speaker Change: On the sales side, as I alluded to, we continue to see tighter budgets.
Speaker Change: It really does vary across client segments.
Speaker Change: You know, we are seeing earlier signs of constructive dialogue, I think, as I alluded to in the prior question. With the run in AUMs, many of our clients are seeing their revenue improve, and so we have seen some encouraging signs. But these things take time to work through the system and work into resetting a budget with our clients. And so we are cautious here, but hopefully see some early momentum.
Speaker Change: Your next question comes from the line of Alexander Hess with J.P. Morgan. Please go ahead.
Speaker Change: One
Speaker Change: look internally and make sure that it's not...
Speaker Change: say, a product gap within MSCI or an execution gap within MSCI. And then two, you know, as we as analysts look externally,
Alexander Hess: What would you say are the biggest metrics or external to MSCI factors that the community can track and assess when that pivot might happen on client budgets?
Bear Pettit: Yeah, thanks for the question, Alex. Bear here. So look, clearly when we are making that sort of assessment
Bear Pettit: as you alluded to the competitive.
Bear Pettit: situation
Bear Pettit: is a critical one.
Bear Pettit: And, you know, we don't have enough time here to go product by product or sub-product.
Bear Pettit: But certainly where we tend to view it as a more of a industry thing, it's either where we may, you know, may not be doing that great ourselves, but the competition is doing significantly worse. And there are some cases of that. You may have seen that in some of the announcements.
Bear Pettit: of earnings that have come out from some of our competitors.
Bear Pettit: So, that's an important indicator. We're also clearly looking at the amount of cancels that may arise from client events.
Bear Pettit: as opposed to, you know, so it may be a consolidation of the kind that we've seen during the course of this year. So that's an important distinction of in the category of, you know, are we doing something, you know, right or wrong, etc.
Bear Pettit: And I think generally, you know, we have a pretty good track record of a high level of transparency on this call in terms of both
Bear Pettit: indications relating to, you know, the product pipeline, the competition, and in terms of the external numbers, you know, we give a pretty high level of granularity in terms of, you know, both at the front, at the, you know, the SEC segment level, but even below that in some of the combined categories that we have created for, you know, to analyze the market.
Bear Pettit: So I think that, you know, when we look at the sum of all of those things
Bear Pettit: I think it does help us to differentiate precisely what might be a more challenging competitive situation from one which is more driven by the economics of the industry and what's happening more broadly within a given client segment.
Speaker Change: Your next question comes from the line of Ashish Sabhadra with RBC Capital Market. Please go ahead.
Ashish Sabhadra: Hi, thanks for taking my question. I just wanted to drill down further on ESG and climate. There was a reference to a cyclical but prolonged subdued demand there, but strong secular trends. When do we start to see some of those cyclical headwinds moderate? What are the things that we should continue to track? And with this leadership change and a greater focus on climate, does that also help with the sales momentum and ability to bundle climate with ESG? So, any color on that answer? Thanks.
Speaker Change: So, look, I think it's important to differentiate the secular and the cyclical here.
Speaker Change: on a secular basis.
Speaker Change: if you analyze the world, the economic and social world we live in today,
Speaker Change: It's extremely hard to believe.
Speaker Change: that
Speaker Change: that societies around the world are not going to be focused on social issues.
Speaker Change: environmental issues and governance issues of the of the entities that are accountable to society.
Speaker Change: It's just extremely hard to believe that in a highly interconnected, highly interrelated world.
Speaker Change: that and we've seen a lot of that in terms of tensions, social tensions between the core population and the immigrant population of countries.
Speaker Change: We see tensions in the governance of companies and you know a week doesn't go by without some issues in a company or a non-for-profit or a university.
Speaker Change: And of course, you know, it's very hard to believe that the climate change is not going to affect the strategies and the winnings or losing of companies and societies and countries around the world. So,
Speaker Change: So, right now, the world is extremely short-term focused on monetary policy and inflation and the war in Europe and potential war in the Middle East, and it's taking its eyes off
Speaker Change: many of these issues, we believe very strongly at MSCI that that focus will come back.
Speaker Change: will come back. If you look at all the underlying trends that I was mentioning, we are in a cyclical
Speaker Change: drought in a cyclical downturn here given the reset of regulation in Europe.
Speaker Change: given you know some of the political events in the U.S.
Speaker Change: But, you know, we are a company that focuses on the long term and invest for the long term. And I think that, you know, climate is gradually going to recover.
Speaker Change: probably sooner rather than later, given all the physical events that are taking place in the world. And ESG may take a little more time, but it will recover, and it will return to higher growth rates.
Speaker Change: So, therefore, you know, we are not abandoning that philosophy because we are, MSCI is totally predicated on long-term trends that are going on in the global investment industry.
Speaker Change: So
Speaker Change: So all the people may disagree with our assessment.
Speaker Change: But, you know, we have been pretty good and having a good track record of pointing out to long-term trends.
Speaker Change: and how these trends will come back and we don't manage the company on a quarter-to-quarter basis or year-to-year basis. We are a long-term compounder of earnings growth and revenue growth and we believe that
Speaker Change: these two areas, so VSG and climate.
Speaker Change: will provide a meaningful uplift in our revenues, you know, over time. That is, you know, it's all predicated on an analysis of global economics, global social issues.
Speaker Change: global environmental issues and all of that and I think that as the world begins to
Speaker Change: received from the focus on inflation and monetary policy and soft landing or hard landing.
Speaker Change: or the war in Europe, you know, the focus will come back to a lot of the social issues in our multicultural societies.
Speaker Change: and what companies are doing to attract the best talent in an environment like that, and what companies are doing to navigate the low-carbon transition. So all of that, it will come back, and we're beginning to see some of that already in climate.
Speaker Change: You know, maybe it takes a little longer in ESG, but we're going to see that happening.
Speaker Change: Your next question comes from the line of Scott Wurtzel with Wolf Research. Please go ahead.
Scott Wurtzel: Hey, good morning guys. Thank you for taking my question. I wanted to ask on the fixed income and multi-asset side of the business. I mean, I think when you look at the emerging growth opportunities, it was one of the stronger growers on an organic basis. So I was really just wondering if you can kind of share with us maybe where we are in your journey on the fixed income, multi-asset class analytics side and how much more room there is for that side of the business to continue to sort of grow at these elevated rates. Thank you.
Speaker Change: So thanks for the question. You know, as you heard in the prepared remarks, I think it was Andy mentioned that, you know, fixed income has been an important, very important component of our sort of strength and credibility generally across analytics.
Speaker Change: So there are quite a number of...
Speaker Change: sales where, in very simple terms, I don't think we would have had the same success, let's say, three, five years ago with the capabilities that we had then.
Speaker Change: So, it's both an important component of the multi-asset class sales and we're looking for increasing ways of delivering those fixed income capabilities directly on a stand-alone basis to the front office.
Speaker Change: and seeing some success with that.
Speaker Change: So, you know, as we go forward into next year.
Speaker Change: if we can continue to enhance important areas.
Speaker Change: then we will believe that this will continue to be a really solid part of our growth story. It's not a fast, in quotes, sexy thing that moves quickly.
Speaker Change: But I think, you know, we're developing a reputation for delivering high quality, clearly mostly in fixed income analytics, but also increasingly in fixed income index.
Speaker Change: So I think in both of those areas, you know, we can expect the trend to continue for sure.
Speaker Change: Your next question comes from line of Kelsey Chu with Autonomous Research. Please go ahead.
Kelsey Chu: Hi, good morning. Thanks for taking my question.
Kelsey Chu: So, on private assets, I think with the new leadership in place, just kind of want to circle back to your medium term strategy to expand in that market.
Kelsey Chu: So previously, I think during the Burgess acquisition call, you talked about three buckets of private asset benchmarking data providers, and MSCI has plans to expand into front end of compiling transaction benchmarking data.
Kelsey Chu: So, just kind of curious to hear your latest thoughts on that topic, as well as, you know, the kind of investment that you plan to devote to that area, the timeline of this expansion.
Speaker Change: Hi, great question. Thank you. So look, first of all, you know, what I'm most excited about is
Speaker Change: We intend to continue to collect much deeper and broader data in private markets, which will enrich our analytical capabilities quite extensively.
Speaker Change: and the things that we're doing there also with AI to scale up the breadth and depth of the data we collect is very exciting.
Speaker Change: I had some really exciting demos even in the last week.
Speaker Change: and I think in the coming year we will see significant expansion of that.
Speaker Change: That means both we can continue to serve the LP client base
Speaker Change: where I think we have significant demand. We're growing in the high teens now, but you know, we would hope to do better there. You know, I'm not changing the guidance, but we're, you know, we've got a lot of opportunities.
Speaker Change: But equally, by taking all of that new data that we're bringing in, we can do more in specific sub-asset class analytics.
Speaker Change: for example, in private credit or other categories of private equity, etc. And then in turn, we believe that this can help us create a bridge between the LPs and the GPs and serve greater GP use cases.
Speaker Change: You also alluded to benchmarking and indexes in private markets.
Speaker Change: So, you know, it's relatively early days since...
Speaker Change: You know, we have taken over those benchmarks and we're redoing them. I think with our expertise there, there are quite a number of enhancements.
Speaker Change: related to specific use cases.
Speaker Change: that we're in the process of improving. So I think that, again, in the coming year, our role in benchmarking and measurement in private markets will extend beyond real estate into the other asset classes.
Speaker Change: So I think overall, you know, I'm very excited about the opportunity we have there and, you know, bringing Luke on board I think will also help to drive that strategy even further.
Speaker Change: Your next question comes from the line of George Tong with Goldman Sachs. Please go ahead.
George Tong: Hi, thanks. Good morning. I wanted to revisit net new recurring subscription trends So net new recurring subscription sales flipped from positive growth in 2q to a decline in 3q You talked about tighter client budgets
George Tong: cancel rates in the quarter, which was also the case in 2Q. Can you talk a bit more about what happened in this quarter to drive this flip and what external conditions you would need to see for trends to improve?
George Tong: Sure, hey George, Andy. So I would highlight that that the sales remain
Andy Wiechmann: pretty strong. We saw particularly in areas like Index and Analytics, our two large franchises, pretty good sales.
Andy Wiechmann: We've just seen an uptick in cancels in the third quarter compared to a year ago.
Andy Wiechmann: cancels as you know can be lumpy quarter to quarter and we've seen that this year. We do expect some of that lumpiness to continue in the near term but overall as I alluded to we are seeing early signs of improvement in the space.
Andy Wiechmann: Some of the cancels that we've been seeing are a reflection of the client events that we've seen over the last year So we're still working through those
Andy Wiechmann: and so the combination of improvements in client dialogue, translating through to enhanced sales pipeline. With us continuing to just work through these lingering cancels, we believe should translate through to more encouraging, recurring that new for us moving forward here.
Speaker Change: Your next question comes from the line of Faiza Alwi with Deutsche Bank. Please go ahead.
Faiza Alwi: Hi, thank you. I wanted to ask about competitive displacement. I think there in your commentary, I think you were referring specifically to
Faiza Alwi: the analytics business and you mentioned several deals where you displaced a competitor. Curious if you can give us more color around the sustainability of that and are there any, is there a specific product?
Faiza Alwi: that's leading to these displacements, just any additional color there would be helpful.
Speaker Change: Sure, so look, I think that
Speaker Change: If you look at ESG and climate, I think there's a lot of data showing that we're displacing competitors.
Speaker Change: notwithstanding some of the headwinds.
Speaker Change: you know, and we had, for example, still 22 percent.
Speaker Change: run rate growth in EMEA.
Speaker Change: So I think that there's plenty of evidence there. I think that our, you know, our position in index is very strong.
Speaker Change: in analytics, and we have a longstanding policy that we don't go into any competitors by name here.
Speaker Change: But, you know, these are often quite formal situations where there may be an RFP or there's a significant decision by the client. So it's pretty clear what the competitive framework is.
Speaker Change: and generally a bit less so in private markets.
Speaker Change: where, you know, again, depending on what part of the woods you're in, the competitive situation is more fluid. So I would say that
Speaker Change: Overall, we are confident that we are executing well in a competitive framework.
Speaker Change: Now, clearly, you know, there's always new functionality, there's always new capabilities being brought into the market by both ourselves and our competitors, but allowing for the information available to us, I think we feel...
Speaker Change: Your next question comes from the line of David Mutamadjan with Evercore. Please go ahead.
David Mutamadjan: Hey, thanks. Good morning.
David Mutamadjan: Andy and Bear, you guys both spoke about seeing early signs of constructive dialogues with clients just given the run in AUM.
David Mutamadjan: Uh
David Mutamadjan: which is helping the revenue at your clients improve and also some stabilization and flows. I'm just wondering, you know, from your perspective, what else do you think you need to see before we reach an inflection point on the new sales? And is there anything that makes you think the historic relationship between AUM and client activity will not hold in the future?
Speaker Change: Yeah, and it's important to underscore that we do see.
Speaker Change: varying dynamics across the business. We are a diversified franchise that has many different aspects to growth here and so it's it's more complex than we are making it.
Speaker Change: But listen, we know our largest client segment is active asset managers.
Speaker Change: We know they've worked through a couple tough years here where they've seen very strong outflows.
Speaker Change: We have seen those outflows stabilize, as you alluded to, and we've seen the AUM increase year over year. These are organizations that are looking to grow and they want to grow with us and the tools that we provide them are tools that can help them grow.
Speaker Change: and so that is encouraging for us and as you alluded to and as we've mentioned here
Speaker Change: Those are things that should translate through to additional demand. The clients aren't yet, I'd say, in expansionary mode.
Speaker Change: but they are in early days of constructive mode and hopefully that translates through to the more constructive budget setting for 2025.
Speaker Change: For us, I do also want to highlight that we see strong momentum in other client segments. So we're seeing outsized growth in many of those big markets where we are.
Speaker Change: of smaller size today. So we're seeing strong momentum in wealth. We see big opportunities there.
Speaker Change: We've seen strong momentum in areas like insurance companies, asset owners.
Speaker Change: as they increasingly internalize and become as much managers themselves.
Speaker Change: We are seeing big opportunities to grow with them and that comes through both on the subscription side as well as on the ABF side.
Speaker Change: and so we have a number of avenues of growth across the franchise that should continue to drive elevated growth on top of what we hope is some rebound on the active asset managers here over the coming quarters.
Speaker Change: Your next question comes from the line of Quensom Lau with Oppenheimer. Please go ahead.
Speaker Change: Yeah, it's Owen Lau from Oppenheimer. Thank you for taking my question. So on analytics, I want to better understand the message here.
Owen Lau: Many of the peers talked about type budget and vendor consolidation, and I think you also talked about it, but both of your recurring subscriptions and non-recurring revenue were pretty strong in the third quarter. So was it driven by implementation revenue or episodic large deal? And if you can talk about the outlook of analytics, that would be great.
Owen Lau: And then just quickly on Runway, when I do the math, by adding your beginning analytics subscription Runway to the net new sales, I got $685 million, but the reported number was 691. It would be great if you can explain the data here, thanks.
Speaker Change: Sure, sure. Yeah, and there's a few dynamics in there that I'll call out separately. So just on your last question about the beginning run rate plus net new being different than the ending run rate, there are some technical items that can cause it to be different, one of which, most notably, is FX.
Speaker Change: So FX movements impact the overall run rate base and so can cause that that run rate to move
Speaker Change: by differing amounts than the net new addition.
Speaker Change: In terms of the growth in analytics, I'll talk first about the overall business momentum and what that means for the run rate growth, but then I will touch on the revenue growth, which has been elevated for the last several quarters here, and I'll talk about what's been driving that.
Speaker Change: but listen, across analytics, as Bear alluded to earlier, we've really had strong success on a number of fronts.
Speaker Change: I think much of that is driven by an environment that is more dynamic, where there's heightened risk, and so we've seen strong demand for our equity risk models.
Speaker Change: as clients are looking to understand what is driving their portfolios and have a better understanding of the bets that they are taking.
Speaker Change: We see our equity risk models being integrated into many different parts of the active management industry. And we've had tremendous success with hedge funds, but even with active managers.
Speaker Change: We also have seen some wins on the back of the improvements we've made in the fixed income offering and that also includes things like liquidity analytics.
Speaker Change: which are areas that tend to get more attention and higher risk environments and environments that are a bit more volatile. And then we've also been an enabler for our clients to be more efficient. So things like our
Speaker Change: insights offering or risk insights offering or something that not only allow our clients to glean more insights from our risk services that we provide but it makes it more efficient for them to work with us.
Speaker Change: and so it can be a win-win for them, where they're not only improving their analytics, but they are also operating more efficiently. And so all those things in these environments are helpful and have been encouraging.
Speaker Change: Now, on the revenue side, we did have a large implementation come online in Q3, which was earlier than we expected.
Speaker Change: And as a result, we had a sizable revenue catch up. We have seen a number of large implementations coming online over the last several quarters, which have caused the revenue growth to be higher than a run rate growth.
Speaker Change: As we've said before, we expect revenue growth to drop to be closer to run rate growth, or even in periods, some periods below that, as we begin to compare to the periods where we've had these large implementation catch-up revenues over this past year.
Speaker Change: Your next question comes from the line of Craig Huber with Huber Research Partners. Please go ahead.
Craig Huber: Yeah, hi there. Maybe just talk a little bit further about the environment here. I know you went on and talked about this a lot, though, but...
Craig Huber: Given how well the stock market has done here, not only this year, but last year, given what the Fed is finally lowering rates here, inflation seems like it's much more under control. People, as we all know, a year, year and a half ago, two years ago, were very worried about the recession in the U.S., at least. That has not happened.
Craig Huber: Most managers you talk to feel better about the U.S. economy and stuff.
Speaker Change: but definitely with better AUM numbers out there and stuff. Why do you guys keep talking about and thinking and sensing and hearing from your clients?
Speaker Change: What a tough operating environment here. I mean, is it still just too early to talk about 2025 and having those discussions here? Because I would think that those discussions in November, December, January that set the budgets for next year
Speaker Change: are probably going to be a lot more positive than they were a year ago. My question is, what am I missing here? Why are things so negative out there, what you're hearing from clients? With a little bit of green shoots, but nothing great you're saying. Thank you.
Speaker Change: It's a very insightful question now, and it cuts across the core of...
Speaker Change: and what we've been talking about here is, so basically when you look at the totality,
Speaker Change: over MSEI.
Speaker Change: We have a number of very strong areas of performance.
Speaker Change: You have, you know, the asset-based fee business coming out of PASI, which is hitting records.
Speaker Change: of AUM and ETF and non-ETF-linked products linked to MSCI. You have significant sales into asset owners, into hedge funds.
Speaker Change: into wealth managers.
Speaker Change: incipient sales into the insurance client segment.
Speaker Change: and on the product side, clearly significant sales of analytics, very strong sales of analytics and into many of those segments, etc.
Speaker Change: I think that in this call and overall, you know, maybe there is an overemphasis
Speaker Change: on the weaker areas.
Speaker Change: or the software areas of the company. And the first one for sure is 50 plus percent of our subscription run rate is to active asset managers.
Speaker Change: who are a segment that, you know, is not fully recovered yet.
Speaker Change: They definitely have had a price increase, so to speak, with the global equity market setting records.
Speaker Change: and the fund flows are getting better.
Speaker Change: you know, significantly better in the last few quarters. So we should see, you know, major recovery of the asset, of the active asset management segment.
Speaker Change: going into 25, given that, as you rightly pointed out, their budgets are going to be better, given the return of growth in revenues and in profitability.
Speaker Change: But that hasn't happened yet, and we always call a spade a spade. So, you know, that hasn't happened yet, and it may or may not happen in the fourth quarter.
Speaker Change: But, you know, we're cautiously optimistic that
Speaker Change: if logic indicates
Speaker Change: and President indicates that that will begin to happen in 2025. So that's one area of softness. The second area of softness is clearly the ESG and climate sales, which as I alluded to earlier.
Speaker Change: are in a cyclical, have been in a cyclical downturn.
Speaker Change: We feel that we're reaching, we have reached bottom in ESG. We're recovering in climate, but you know, it's hard to predict.
Speaker Change: on a quarter-to-quarter basis.
Speaker Change: There are major consolidation plays that we have achieved in ESG away from
Speaker Change: from competitors, that is likely to continue. We have significant sales on ESG into non-asset management client segments.
Speaker Change: like corporates, for example, and GPs.
Speaker Change: and the like.
Speaker Change: and climate, you know, has slowed down but, you know, it's temporary. We believe that...
Speaker Change: given the physical and transition risks that are going on in the world.
Speaker Change: and potentially with the focus of the climate cop by the UN in Brazil next year, there's going to be a renewed effort in all of that. So, I think that, I don't think you'll get, I think you're absolutely right. I mean, I think you are, there's no mystery to what is happening here.
Speaker Change: We have a major reliance on the active asset management segment that has gone through some of these issues for the last year or two. We should expect that to get better.
Speaker Change: We should expect, you know, climate sales maybe to get better. ESG, it will depend on what happens.
Speaker Change: in 25, but the rest of the company, we're setting records in ABF, we're setting records in sales and index, we're setting records in sales and analytics.
Speaker Change: So there is a little bit of too much emphasis on the glass half empty, obviously, in this call.
Speaker Change: Your next question comes from the line of Jason Haas with Wells Fargo. Please go ahead.
Speaker Change: Hey, good afternoon. Thanks for taking my question.
Jason Haas: I'm curious if you could talk about why you didn't decide to raise the expense guidance range for the year, recognizing you're saying that higher AUM levels, you know, could lead you to the higher end of the range. But yeah, just given how the market's performed this year, why not take that out? Are you seeing offsetting savings or, you know, is it the environment that keeps you more cautious to invest more? Any comment there would be helpful. Thank you.
Speaker Change: Sure, yeah, so listen, we're always looking for...
Speaker Change: opportunities to invest more in key growth areas in the business and as you alluded to that AUM levels
Speaker Change: are higher than those that we'd assumed underlying our guidance at the beginning of the year. And so, as we mentioned, if they stay at this level or higher, we are likely to be towards the higher end of our expense guidance range, which is a reflection of...
Speaker Change: a pickup in our level of investment, and we are using it as an opportunity to continue to drive growth in those compelling secular opportunities like rules-based index portfolios, private markets,
Speaker Change: enhancing our position with the front office and analytics, investing in our architecture and interfaces, including AI capabilities that not only drive internal efficiencies, but are powering growth. And so those are all things that
Speaker Change: we are focused on and doing.
Speaker Change: and will continue to do, but we are continually balancing.
Speaker Change: you know, driving stable and continued profitability growth with investing for the long term. And it's a constant calibration. The other thing I would highlight is there can be some lag as well. And so when there are some investments that come through quickly, but there's some that take some time to work through. And so it's just a nuanced dynamic on our cost base. And there are several factors at play that can cause expenses to swing quarter to quarter here. So I wouldn't read too much into one quarter and our expense guidance for the year. As I said, it's a constant calibration and we are continually looking for opportunities to invest in the business.
Speaker Change: Your next question comes from the line of Russell Clout with Redburn Atlantic. Please go ahead.
Russell Clout: Good morning, thank you for having me on. You reported another strong quarter of mid-teens run rate revenue growth in the custom and specialised index solutions. I think that now accounts for close to 10% of index segment run rate revenue.
Russell Clout: I'm wondering how big you see the opportunity here to be and what's differentiated about MSCI's proposition versus competitors that are also talking about growth here.
Russell Clout: and as a kind of second part to that question, can you sort of explain to what extent, if any, growth in this business sort of cannibalizes opportunities in other parts of the index business and how it affects the overall segment index margin?
Speaker Change: Hi Russell, thanks for the question. Yes, so look, we remain very excited about this and I would say that it's not merely a capability question, which is important, but it also plays itself out across very different use cases in different client segments.
Speaker Change: So, we're integrating the FoxFerry acquisition into our custom index capabilities, and that will be coming online in, you know, roughly the next few quarters. That should give us significantly greater speed and flexibility in terms of what we can do, whether that's by different types of calculations, combinations of different asset classes eventually, etc.
Speaker Change: So then in turn, I think
Speaker Change: where we have some competitive advantage is precisely because of both the models, the capabilities, the research that we have from analytics for portfolio construction and risk.
Speaker Change: factor exposures, all of the enormous topic of climate and indexes adjusted on that basis, which we had in some of our prepared remarks today, the opportunities that those are creating.
Speaker Change: There's quite literally not a client segment that we work with.
Speaker Change: that doesn't need more of these capabilities, whether they be asset owners, either at the mandate or the plan, the entire plan level, and clearly even specific use cases depending on the type of asset owner.
Speaker Change: the asset management industry, both for products and benchmarks.
Speaker Change: The sell side for structured products, which is a huge opportunity for us that we can do a lot more in.
Speaker Change: you know, in well.
Speaker Change: the capabilities of both doing mass customization with index.
Speaker Change: linking that to ETFs.
Speaker Change: building that into the Wealth Manager platform.
Speaker Change: for Wealth Management Firms to control, you know, the risk at scale while customizing portfolios.
Speaker Change: So all of this is, you know, really, really critical and exciting part of our growth story.
Speaker Change: and, as I said, we're at an inflection point where we're just bringing on new capabilities in this area, which, in the next few quarters and going into next year, will become much more significant and will increase our speed to market and will allow us to do a lot more in all of this. So, delighted to take the question, and this will remain a very large opportunity for us.
Speaker Change: Thank you. Thank you.
Speaker Change: Your next question comes from the line of Gregory Simpson with BN Paribas. Please go ahead.
Gregory Simpson: Hi there, I just wanted to check in on how the RCA business is performing within the context of the 2% private assets organic run rate growth this quarter. I think when you originally acquired it you talked about a double digit growth aspiration, so what do you see as key to accelerate this back up? Is it mainly a cyclical issue around real estate transaction activity or is there anything you'd call out on the competitive side you're seeing? Thank you.
Speaker Change: Yeah, thanks for the question. So look, I think the simple and
Speaker Change: A major challenge we've been seeing in this is transaction volume. It's a pretty straightforward answer. So there's been the extremely significant drop in transaction volume, which is a major part of the revenue drivers here.
Speaker Change: Now, we're starting to see that pick up.
Speaker Change: And there are, you know, there's definitely evidence.
Speaker Change: of the, you know, we have various research measurements of the spread between basically buyers and sellers.
Speaker Change: We believe we're likely to see that
Speaker Change: More in the coming in the coming year, you know Maybe in keeping with the overall tone of this call where I think we're trying to be, you know sober And and maybe a little bit more the under promise and over deliver department, you know We're we didn't put that in our prepared remarks But I think we have good grounds to believe that we could be, you know, turning the corner in that area You know in the coming year
Speaker Change: Your next question comes from the line of Alex Cram with UBS. Please go ahead.
Alex Cram: Yes, hey again. Just one very quick one on the custom opportunity that you just discussed. Maybe I'm being, again, too nitpicky on the numbers or glass half empty, but if I look at the run rate that they just closed for custom and specialized, I think it actually went down a couple hundred thousand dollars quarter over quarter. Again, it's a small number, it's a small quarter, but just wondering if there were some elevated cancels to call out or why that didn't grow quarter over quarter. Thanks.
Speaker Change: Yeah, Alex, nothing to call out right now. If anything, I would just say some of the broader pressures impacting the business are also impacting custom special packages. They're impacting all of our modules.
Speaker Change: But everything Bayer said holds true. This is a massive opportunity for us and we see strong engagement across many different client bases and use cases.
Speaker Change: The other thing to underscore here is climate custom indexes is a key growth driver for us in ABF as well.
Speaker Change: And so clearly it's something that's helping on the subscription side, but it's something that's helping to fuel many different avenues within the asset-based fee line as well. And we see that across institutional passive mandates. We see it in...
Speaker Change: That concludes our Q&A session. I will now turn the conference back over to Henry Fernandez for closing remarks.
Henry Fernandez: Well, thank you very much, everyone, for joining us today and your continued interest in MSCI.
Henry Fernandez: As you can see from all the publications we have did today and the prepared remarks and the Q&A, we're intensely focused on delivering innovative products and capabilities.
Henry Fernandez: Our steadfast execution is what enables us to deliver on a very ambitious strategy.
Henry Fernandez: and to be a long-term compounder of shareholder value creation.
Henry Fernandez: Obviously, you know, we always try to moderate our enthusiasm.
Henry Fernandez: moderate our optimism and our positivism because we like to show delivery of actual results rather than talk about potential results.
Henry Fernandez: and you saw some of that in this call, so please be mindful of that. We look forward to engaging with all of you during the quarter and update you on all the exciting things we're doing.
Speaker Change: This concludes today's conference call. Thank you for joining. You may now disconnect.
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