Q1 2025 MSCI Inc Earnings Call

Recorded at this time all participants are in a listen only mode. 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. We will have further instructions for you later on I would now like to turn.

On the call over to Jeremy you land head of Investor Relations and Treasurer, you may begin.

Jeremy: Thank you Gigi good day and welcome to the MSCI first quarter 2025 earnings Conference call.

Jeremy: Earlier. This morning, we issued a press release announcing our results for the first quarter of 2025. This press release, along with an earnings presentation and brief quarterly update are available on our website MSCI dot com under the Investor Relations Tab, Let me remind you that this call contains forward looking statement.

Jeremy: <unk>, which are governed by the language on the second slide of today's presentation. 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 <unk>.

Jeremy: For materially from the results anticipated in these forward looking statements 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.

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

Jeremy: A reconciliation of our non-GAAP measures to the equivalent GAAP measures in the appendix.

Jeremy: The earnings presentation.

Jeremy: 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 or retention rate are available in the earnings presentation on.

Baer Pettit: On the call today are Henry Fernandez, our chairman and CEO Baer, Pettit, our president and COO and Andy Wichmann, Our Chief Financial Officer Lastly.

Baer Pettit: Lastly, we wanted to remind our analysts asked 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.

Baer Pettit: With that let me now turn the call over to Henry Fernandez Henry.

Speaker Change: Thank you Jeremy.

Baer Pettit: Good day, everyone and thank you for joining us.

Speaker Change: Sorry for the Scratchy voice.

Or from Allergists at this time of the year.

Speaker Change: In the first quarter MSCI deliver strong financial metrics.

Speaker Change: Including organic revenue growth of 10%.

Speaker Change: Adjusted EBITDA growth of 11%.

Speaker Change: And adjusted earnings per share growth of almost 14%.

Speaker Change: We also repurchased $275 million worth of <unk> shares during Q1 and through April 21st.

Speaker Change: As always these share repurchases are firm or Lee.

Speaker Change: In the current and future value of our stock.

Speaker Change: Our commitment to a robust capital allocation policy.

Speaker Change: Our first quarter operating metrics show durable retention and asset based fee revenue growth.

Speaker Change: Although new recurring subscription sales were down from Q1 of 2024.

More specifically MSCI deliver a retention rate of over 95% organic subscription run rate growth of 8%.

Speaker Change: Asset based fee growth revenue.

Speaker Change: 18%.

Speaker Change: This reflects the strong growth in both EPS and non ETF AUM linked to MSCI indices.

Speaker Change: <unk> the highest Q1 cash flows into ETF products linked to MSCI indices since 2021.

Speaker Change: Among our client segments, we had a strong quarter with hedge funds.

Speaker Change: Asset owners.

Speaker Change: Banks and broker dealers.

Speaker Change: And wealth managers.

Speaker Change: At the product level, we achieved retention rates of over 96% in index.

Speaker Change: And over 95% in analytics.

Speaker Change: We also drove recurring net new sales growth of over 60%.

Speaker Change: Each of these product lines.

Speaker Change: Msci's, providing a growing mix of solutions for portfolio customization.

Speaker Change: Personalization.

Speaker Change: We have built solid momentum and custom indices.

Speaker Change: Which will be further supported by our integration of Fox F nine platform.

Speaker Change: Meanwhile, named new recurring subscription sales in private capital solutions grew by 24%.

Speaker Change: We continue building new solutions to help clients diversify into private assets.

Speaker Change: Yesterday, we announced a very exciting partnership with Moody's to develop independent credit risk assessments for <unk>.

Speaker Change: <unk> credit.

Speaker Change: By combining Moody's credit risk modeling solutions with Msci's private credit investment data.

Speaker Change: We will drive greater clarity and confidence in this asset class, especially at a period of credit stress in the world.

Speaker Change: MSCI has the capabilities and the business model to weather periods of global turmoil.

Speaker Change: Periods of market. This drop disruptions have always been when <unk> clients need the most.

Speaker Change: These are the moments when MSCI standards and solutions.

Speaker Change: Take on much greater the importance for clients across segments.

Speaker Change: Not just our benchmark indices and risk analytics, but also the full range of our integrated interconnected tools and content.

Speaker Change: 88% of our subscription run rate come from clients, who use multiple MSCI product lines.

We provide mission critical data.

Speaker Change: Models and technology that clients need in all environments in all phases of the business cycle, but especially in periods of high uncertainty.

Speaker Change: So clarity and relative volatility in markets.

Speaker Change: This enables MSCI is all weather franchise.

Speaker Change: The robust cash flows.

Speaker Change: And fortress balance sheet.

Speaker Change: And all of that makes us confident in our ability to deliver consistent financial results amid the current market turmoil.

Speaker Change: And with that let me turn over the call over to Baer Pettit.

Baer Pettit: Thank you Henry and greetings everyone in my remarks today, I will discuss our first quarter performance by client segment.

Baer Pettit: Including meaningful business wins that give us conviction in our global strategy.

Baer Pettit: We delivered encouraging results among established and newer segments.

Baer Pettit: Among hedge funds MSCI achieved 14% subscription run rate growth driven by analytics and index and covering a wide range of products and capabilities, including customization and the reimagining of risk.

Baer Pettit: For example, our Nextgen factor models and analytics are helping our growing number of hedge funds understand the key factors driving risk and return and meet high levels of market volatility.

Baer Pettit: We now have more than 60 hedge funds using those models up from just a in 2022.

Baer Pettit: We also completed a significant multi region hedge fund deal for our ETF linked custom index module.

Baer Pettit: Amongst banks and broker dealers, we delivered over 9% subscription run rate growth with strong analytics, new recurring subscription sales in Europe and the Americas.

Baer Pettit: In particular, we saw robust demand for our factor models and related solutions confirming the importance of our risk analytics tools during periods of market volatility.

Baer Pettit: We also saw strong demand for custom baskets created with MSCI index solutions, another sign of the growing push for customization.

Baer Pettit: In addition, we completed a multiyear deal with a large bank in the Americas for our sustainability and climate regulatory solution that can support asset liability management.

Baer Pettit: This last win demonstrated that MSCI can generate enormous value of course climate risks and sustainable finance.

Baer Pettit: Turning to wealth managers, we achieved subscription run rate growth of 15%.

Baer Pettit: Driven by index across all regions and by sustainably sustainability and climate in Europe.

Baer Pettit: For example, we landed a large one MSCI when including index and private capital solutions with the wealth arm of a prominent global financial institution.

Baer Pettit: This win came part of a seven figure Multilocation renewal deal that span seven countries and broadened the scope of an existing client relationship.

Baer Pettit: Resulting in a client run rate expansion of almost 38%.

Baer Pettit: In the process, we fully displaced the equity benchmarks are two key competitors.

Baer Pettit: We also secured a large multi year sustainability and climate win with a European wealth manager to expand their integration of sustainability at both the home office level and in client portfolios.

Baer Pettit: Meanwhile, <unk>.

Baer Pettit: Direct indexing AUM based on MSCI indexes increased by 30% to more than $131 billion.

Baer Pettit: All of this illustrates how msci's wealth solutions cut across product lines and meet different use cases are growing number of clients.

Baer Pettit: Moving on to asset owners, we delivered subscription run rate growth of 12% driven by analytics and private capital solutions.

Baer Pettit: Notably, we achieved 10% run rate growth among asset owners and analytics with particular strength in the Americas.

Baer Pettit: We also completed several large private capital solutions deals with pension funds in the Americas and Europe.

Baer Pettit: These deals helped us drive, 24% recurring net new sales growth and the overall ECS product line.

Baer Pettit: Additionally, asset owners and other clients continue adapting MSCI indexes to support their climate strategies.

Baer Pettit: In Q1 assets under management in ETF, and non ETF products linked to MSCI climate indexes grew by 50%, reaching $387 billion in total.

Baer Pettit: Finally shifting to asset managers, our subscription run rate growth remained steady at around 5% driven by index.

Baer Pettit: We achieved a retention rate of 96% with asset managers in Q1 up from 95% a year earlier.

Baer Pettit: In our most notable business when we completed a seven figure index deal with the asset management arm of a major European Bank.

Baer Pettit: Who made MSCI their exclusive partner in index provider for all future path of Etfs.

Baer Pettit: This deal also included access to our fixed income issuance weighted module and our fixed income custom index.

Speaker Change: Looking ahead MSCI is redoubling, our product development efforts to meet asset managers rapidly evolving need, especially around active etfs and fixed income.

Speaker Change: In summary, MSCI is increasingly diversified portfolio of clients products and services strengthen our all weather franchise and with that let me turn the call over to Andy.

Speaker Change: Thank you Baer and Hello, everyone.

Speaker Change: In these times, our global frameworks must have content and trusted risk and performance tools are essential for understanding and navigating markets.

Speaker Change: And our relationships with the world's leading investment institutions are deeper than ever positioning us to help them navigate global markets.

Operator: As a reminder, this call is being recorded. At this time, all participants are in a listen-only mode.

Operator: As a reminder, this call is being recorded. At this time, all participants are in a listen-only mode. 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. We will have further instructions for you later on. I would now like to turn the call over to Jeremy Ulan, Head of Investor Relations and Treasurer. You may begin.

Operator: As a reminder, this call is being recorded. At this time, all participants are in a listen-only mode. 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. We will have further instructions for you later on. I would now like to turn the call over to Jeremy Ulan, Head of Investor Relations and Treasurer. You may begin.

Speaker Change: With 98% recurring revenue strong margins and high cash flow conversion, we have a highly resilient financial model that positioned us for strength in all environments.

Products linked to MSCI climate indexes grew by 50%, reaching $387 billion in total.

Operator: 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. We will have further instructions for you later on.

Speaker Change: In index subscription run rate growth was 9%.

Finally shifting to asset managers, our subscription run rate growth remained steady at around 5% driven by index.

Speaker Change: With asset managers growing nearly 7% and asset owners growing over 10%.

Jeremy Ulan: I would now like to turn the call over to Jeremy Ulan, Head of Investor Relations and Treasurer. You may begin. Thank you Gigi.

Speaker Change: Sue client segments comprised almost almost 70% of our index subscription run rate.

We achieved a retention rate of 96% with asset managers in Q1 up from 95% a year earlier.

Speaker Change: In index subscription run rate growth with hedge funds wealth managers and thanks of broker dealers was 22%, 16% and 11% respectively.

Jeremy Ulan: Thank you, Gigi. Good day and welcome to the MSCI First Quarter 2025 Earnings Conference Call. Earlier this morning, we issued a press release announcing our results for the first quarter of 2025. This press release, along with an earnings presentation, and brief quarterly update, are available on our website, MSCI.com, under the Investor Relations tab. 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. 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.

Ashish Sabadra: Thank you, Gigi. Good day and welcome to the MSCI First Quarter 2025 Earnings Conference Call. Earlier this morning, we issued a press release announcing our results for the first quarter of 2025. This press release, along with an earnings presentation, and brief quarterly update, are available on our website, MSCI.com, under the Investor Relations tab. 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. 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.

Jeremy Ulan: Good day and welcome to the MSCI first quarter 2025 earnings conference call. Earlier this morning we issued a press release announcing our results for the first quarter 2025. This press release along with the earnings presentation and brief quarterly updates are available on our website msci.com under the investor relations tab.

In our most notable business when we completed a seven figure index deal with the asset management arm of a major European Bank.

Speaker Change: Please note that beginning this quarter, our investor slides, we will show a slightly different presentation of our index subscription run rate.

Who made MSCI there excuse me partner and index provider for all future path of Etfs.

Speaker Change: This new categorization, which now breaks out the run rate across market cap weighted products non market cap weighted products and custom index products is intended to provide better insights into the growth dynamics across key offerings, especially the custom index offerings.

This deal also included access to our fixed income issuance weighted module and our fixed income custom index.

Jeremy Ulan: 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. You are cautioned not to place undue reliance on forward-looking statements which speak only as 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. For discussion of additional risks and uncertainties please see the risk factors and forward-looking statements disclaimer in our most recent form 10k and in our other SEC filings.

Looking ahead MSCI is redoubling, our product development efforts to meet asset managers rapidly evolving needs, especially around active etfs and fixed income.

Speaker Change: The most notable change from the prior categorization is that the run rate from special packages is now primarily included in the market cap weighted category.

In summary, MSCI is increasingly diversified portfolio of clients products and services strengthen our all weather franchise and with that let me turn the call over to Andy.

Speaker Change: Non market cap weighted run rate, primarily includes our standard factor and sustainability and climate modules, which span both equities and fixed income offerings.

Speaker Change: As you can see in our presentation subscription run rate growth from custom indexes was 15%.

Andy: Thank you Baer and Hello, everyone.

Jeremy Ulan: For 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. During today's call, in addition to results presented on the basis of US GAAP, we also refer to non-GAAP measures. You'll find a reconciliation of our non-GAAP measures to the equivalent GAAP measures in the appendix of the earnings presentation. 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. On the call today are Henry Fernandez, our Chairman and CEO, Bear Pettit, our President and COO, and Andy Wiechmann, our Chief Financial Officer. Lastly, we wanted to remind our analysts to ask one question at a time during the Q&A portion of our call.

For 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. During today's call, in addition to results presented on the basis of US GAAP, we also refer to non-GAAP measures. You'll find a reconciliation of our non-GAAP measures to the equivalent GAAP measures in the appendix of the earnings presentation. 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.

Andy: In these times, our global frameworks must have content and trusted risk and performance tools are essential for understanding and navigating markets.

Speaker Change: Asset based fee revenue grew 18% aided by stronger flows into international exposure products, an area, where MSCI has particular strength.

And our relationships with the world's leading investment institutions are deeper than ever positioning us to help them navigate global markets.

Jeremy Ulan: During today's call, in addition to results presented on the basis of U.S. GAAP, we also refer to non-GAAP measures. You'll find a reconciliation of our non-GAAP measures to the equivalent GAAP measures in the appendix of the earnings presentation. 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: Non ETF AUM linked to MSCI indexes was nearly $3 nine trillion growing 20% year over year.

With 98% recurring revenue strong margins and high cash flow conversion you are a highly resilient financial model that positions us for strength in all environments.

Speaker Change: MSCI linked equity Etfs had an imbalance of 178 trillion at the end of March after attracting nearly 42 billion of inflows.

In index subscription run rate growth was 9%.

Speaker Change: <unk> $37 billion of the inflows went into products linked to MSCI DM ex U S.

With asset managers growing nearly 7% and asset owners growing over 10%.

Speaker Change: And all country exposures categories, where MSCI collectively captured roughly 45% of all inflows. These.

These two client segments comprised almost almost 70% of our index subscription run rate.

On the call today are Henry Fernandez, our Chairman and CEO, Bear Pettit, our President and COO, and Andy Wiechmann, our Chief Financial Officer. Lastly, 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. With that, let me now turn the call over to Henry Fernandez. Henry?

Jeremy Ulan: 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: These cash flows represent the second strongest quarter since 2022 behind only Q4 of last year.

In index subscription run rate growth with hedge funds wealth managers and banks and broker dealers was 22%, 16% and 11% respectively.

Speaker Change: Our strong asset base fee growth also benefited from growth in fixed income index products fixed.

Operator: Lastly, 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.

Please note that beginning this quarter, our investor slides will show a slightly different presentation of our index subscription run rate.

Speaker Change: Fixed income ETF AUM linked to MSCI and partner indexes is now over 76 billion.

Jeremy Ulan: We do encourage you to ask more questions by adding yourselves back to the queue. With that, let me now turn the call over to Henry Fernandez. Henry?

Speaker Change: Growing 20% from a year ago.

Andy: This new categorization, which now breaks out the run rate across market cap weighted products non market cap weighted products and custom index products is intended to provide better insights into the growth dynamics across key offerings, especially the custom index offerings.

Henry Fernandez: With that, let me now turn the call over to Henry Fernandez. Henry? Thank you, Jeremy.

Speaker Change: And analytics subscription run rate growth was 7%, reflecting continued momentum in equity analytics and solid growth with hedge funds trading firms and asset owners.

Henry Fernandez: Thank you, Jeremy. Good day, everyone, and thank you for joining us. Sorry for the scratchy voice. I suffer from a seasonal allergy at this time of the year. In the first quarter, MSCI delivered strong financial metrics, including organic revenue growth of 10%, adjusted EBITDA growth of 11%, and adjusted earnings per share growth of almost 14%. We also repurchased $275 million worth of MSCI shares during Q1 and through 21 April 2024. As always, the share repurchases affirm our belief in the current and future value of our stock and our commitment to a robust capital allocation policy. Our first quarter operating metrics showed durable retention and asset-based fee revenue growth, although new recurring subscription sales were down from Q1 of 2024. More specifically, MSCI delivered a retention rate of over 95%, organic subscription run rate growth of 8%, and asset-based fee revenue growth of 18%.

Henry Fernandez: Thank you, Jeremy. Good day, everyone, and thank you for joining us. Sorry for the scratchy voice. I suffer from a seasonal allergy at this time of the year. In the first quarter, MSCI delivered strong financial metrics, including organic revenue growth of 10%, adjusted EBITDA growth of 11%, and adjusted earnings per share growth of almost 14%. We also repurchased $275 million worth of MSCI shares during Q1 and through 21 April 2024. As always, the share repurchases affirm our belief in the current and future value of our stock and our commitment to a robust capital allocation policy. Our first quarter operating metrics showed durable retention and asset-based fee revenue growth, although new recurring subscription sales were down from Q1 of 2024. More specifically, MSCI delivered a retention rate of over 95%, organic subscription run rate growth of 8%, and asset-based fee revenue growth of 18%.

Henry Fernandez: Good day, everyone, and thank you for joining us. Sorry for this scratchy voice. I suffer from sensual allergies at this time of the year. In the first quarter, MSCI delivered strong financial metrics. including organic revenue growth of 10 percent. adjusted EBITDA growth of 11 percent. and adjusted earnings per share growth of almost 14%. We also repurchased $275 million worth of MSCI shares during Q1 and through April 21st. As always, the shared repurchases affirm our belief. in the current and future value of our stock and our commitment to a robust capital allocation policy.

Speaker Change: Similar to last quarter, we expect the analytics revenue growth to be in line with to slightly lower than run rate growth in Q2, as we compare to periods last year, when we had meaningful contributions from implementation related revenues.

The most notable change from the prior categorization is that the run rate from special packages is now primarily included in the market cap weighted category.

Andy: Non market cap weighted run rate, primarily includes our standard factor and sustainability and climate modules, which span both equities and fixed income offerings.

Speaker Change: And our sustainability and climate reportable segment previously referred to as the ESG and climate segment, we drove almost 10% subscription run rate growth, reflecting some large deals in banking that we previously spoke about supported by 14% growth with both both asset owners and wealth managers.

Andy: As you can see in our presentation subscription run rate growth from custom indexes was 15%.

Andy: Asset based fee revenue grew 18% aided by stronger flows into international exposure products, an area, where MSCI has particular strength.

Speaker Change: Our long term target for this product line remains under review as we assess the impact of the near term environment on a long term trajectory.

Andy: Non ETF AUM linked to MSCI indexes was nearly $3 nine trillion dollars grown 20% year over year.

Speaker Change: That said, we're seeing traction on several fronts, including with our geospatial asset intelligence solutions, where we've had several recent wins.

Andy: MSCI linked equity Etfs had an ending balance of $1 seven eight trillion at the end of March after attracting nearly $42 billion of inflows.

Speaker Change: The retention rate of 94, 5% for the segment highlights that our sustainability and climate tools remain mission critical.

Speaker Change: As a reminder, in the second quarter, we will be lapping the prior year benefit from the Moody's partnership, which had a significant contribution to last year's sustainability and climate new recurring sales.

Andy: $37 billion of the inflows went into products linked to MSCI EM ex U S.

Henry Fernandez: Our first quarter operating metrics showed durable retention and asset-based fee revenue growth, although new recurring subscription sales were down from Q1 of 2024. More specifically, MSCI delivers a retention rate of over 95%. Organic subscription run rate growth of 8% and asset-based fee growth revenue growth of 18%. This reflected strong growth in both ETF and non-ETF AUM linked to MSCI indices. including the highest Q1 cash flows into ETF products linked to MSCI indices since 2021. Among our client segments, we had a strong quarter with hedge funds. I said owners. Banks and Broker Dealers, and Wealth Managers.

Andy: And all country exposures.

Andy: He is where MSCI collectively captured roughly 45% of all inflows east.

Speaker Change: And private capital solutions, we saw a 24% increase in recurring net new sales and continued mid teens growth of our run rate, reflecting steady interest in our data performance and benchmarking solutions.

Andy: These cash flows represent the second strongest quarter since 2022 behind only Q4 of last year.

Andy: Our strong asset base fee growth also benefited from growth in fixed income index products fixed.

Speaker Change: Assets overall activity remained muted.

Andy: Fixed income ETF AUM linked to MSCI and partner Index is now over 76 billion.

Speaker Change: We continue to face headwinds related to client consolidation, particularly among brokers and developers.

Andy: Growing 20% from a year ago.

Speaker Change: On the capital allocation front, we've repurchased over $275 million of MSCI stock, where over 493000 shares since the start of the year.

Henry Fernandez: This reflected strong growth in both ETF and non-ETF AUM linked to MSCI indices, including the highest Q1 cash flows into ETF products linked to MSCI indices since 2021. Among our client segments, we had a strong quarter with hedge funds, asset owners, banks and broker dealers, and wealth managers. At the product level, we achieved retention rates of over 96% in index and over 95% in analytics. We also drove recurring net new sales growth of over 60% for each of these product lines. MSCI is providing a growing mix of solutions for portfolio customization and personalization. We have built solid momentum in custom indices, which will be further supported by our integration of Foxberry F9 platform. Meanwhile, net new recurring subscription sales in private capital solutions grew by 24%. We continue building new solutions to help clients diversify into private assets.

This reflected strong growth in both ETF and non-ETF AUM linked to MSCI indices, including the highest Q1 cash flows into ETF products linked to MSCI indices since 2021. Among our client segments, we had a strong quarter with hedge funds, asset owners, banks and broker dealers, and wealth managers. At the product level, we achieved retention rates of over 96% in index and over 95% in analytics. We also drove recurring net new sales growth of over 60% for each of these product lines. MSCI is providing a growing mix of solutions for portfolio customization and personalization. We have built solid momentum in custom indices, which will be further supported by our integration of Foxberry F9 platform. Meanwhile, net new recurring subscription sales in private capital solutions grew by 24%. We continue building new solutions to help clients diversify into private assets.

Andy: And analytics subscription run rate growth was 7%, reflecting continued momentum in equity analytics and solid growth with hedge funds trading firms and asset owners.

Speaker Change: This reflects our opportunistic approach to capital deployment and our belief in the long term value of the franchise.

Andy: Similar to last quarter, we expect the analytics revenue growth to be in line with to slightly lower the run rate growth in Q2, as we compare to periods last year, when we had meaningful contributions from implementation related revenues.

Speaker Change: We have a strong balance sheet with our gross leverage ratio now at two six times the last 12 months adjusted EBITDA.

Andy: And our sustainability and climate reportable segment previously referred to as the ESG and climate segment, we drove almost 10% subscription run rate growth, reflecting some large deals in banking that we previously spoke about supported by 14% growth with those both asset owners and wealth managers.

Speaker Change: Our guidance is unchanged in this complex operating environment, we are preparing MSCI to navigate a broad range of possible outcomes as.

Speaker Change: As we mentioned last quarter, our guidance assumed that market levels gradually increase throughout the year to the extent markets remain at their current levels. We would expect expenses to be at the low end of our current guidance ranges.

Henry Fernandez: At the prologue level, we achieve retention rates of over 96% in indexed... and over 95% in analytics. We also drove recurring net new sales growth of over 60% for each of these product lines. MSCI is providing a growing mix of solutions for portfolio customization and personalization. We have built solid momentum in Costa Mendes. which will be further supported by our integration of Foxbury F9 platform. Meanwhile, net new recurring subscription sales in private capital solutions grew by 24%. We continue building new solutions to help clients diversify into private assets.

Andy: Our long term target for this product line remains under review as we assess the impact of the near term environment on a long term trajectory.

Speaker Change: As a reminder, we have various expense playbook levers that we can rapidly flex. These include but are not limited to managing the pace of hiring and flexing non comp and professional fees. Additionally, our incentive comp remains self adjusting with over all financial performance. Our Q1 effective tax rate of 12, 8% reflected the benefit of significant discrete items.

Andy: That said, we're seeing traction on several fronts, including with our geospatial asset intelligence solutions, where we've had several recent wins.

Andy: The retention rate of 94, 5% for the segment highlights that our sustainability and climate tools remain mission critical.

Speaker Change: Since we previously indicated.

Andy: As a reminder, in the second quarter, we will be lapping the prior year benefit from the Moody's partnership, which had a significant contribution to last year's sustainability and climate new recurring sales.

Speaker Change: Beyond Q1, we expect the quarterly effective tax rate, excluding potential discrete items to be in the range of 19% to 21% each quarter for the rest of 2025.

Andy: And private capital solutions, we saw a 24% increase in recurring net new sales and continued mid teens growth of a run rate, reflecting steady interest in our data performance and benchmarking solutions.

Speaker Change: Our Q1 performance adds to our track record of consistent durable financial results. The long term secular opportunities remain intact and we remain laser focused on anticipating the needs of the investment community as market conditions evolve.

Andy: Real assets overall activity remained muted we.

Speaker Change: With that operator, please open the line for questions.

Andy: We continue to face headwinds related to client consolidation, particularly among brokers and developers.

Henry Fernandez: Yesterday, we announced a very exciting partnership with Moody's to develop independent credit risk assessments for private credit. By combining Moody's credit risk modeling solutions with MSCI's private credit investment data, we will drive greater clarity and confidence in this asset class, especially at a period of credit stress in the world. MSCI has the capabilities and the business model to weather periods of global turmoil. Periods of market disruptions have always been when MSCI's clients need us the most. These are the moments when MSCI standards and solutions take on much greater importance for clients across segments. not just our benchmark indices and risk analytics but also the full range of our integrated interconnected tools and content.

Henry Fernandez: Yesterday, we announced a very exciting partnership with Moody's to develop independent credit risk assessments for private credit. By combining Moody's credit risk modeling solutions with MSCI's private credit investment data, we will drive greater clarity and confidence in this asset class, especially at a period of credit stress in the world. MSCI has the capabilities and the business model to weather periods of global turmoil. Periods of market disruptions have always been when MSCI's clients need us the most. These are the moments when MSCI standards and solutions take on much greater importance for clients across segments, not just our benchmark indices and risk analytics, but also the full range of our integrated interconnected tools and content. 88% of our subscription run rates come from clients who use multiple MSCI product lines.

Yesterday, we announced a very exciting partnership with Moody's to develop independent credit risk assessments for private credit. By combining Moody's credit risk modeling solutions with MSCI's private credit investment data, we will drive greater clarity and confidence in this asset class, especially at a period of credit stress in the world. MSCI has the capabilities and the business model to weather periods of global turmoil. Periods of market disruptions have always been when MSCI's clients need us the most. These are the moments when MSCI standards and solutions take on much greater importance for clients across segments, not just our benchmark indices and risk analytics, but also the full range of our integrated interconnected tools and content. 88% of our subscription run rates come from clients who use multiple MSCI product lines.

Speaker Change: As a reminder to ask a question. Please press star one one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one one again, please stand by while we compile the Q&A roster.

Andy: On the capital allocation front, we've repurchased over $275 million of MSCI stock, where over 493000 shares since the start of the year.

Andy: This reflects our opportunistic approach to capital deployment and our belief in the long term value of the franchise.

Speaker Change: Our first question comes from the line of Toni Kaplan from Morgan Stanley.

Andy: We have a strong balance sheet with our gross leverage ratio now at two six times the last 12 months adjusted EBITDA.

Toni Kaplan: Thank you.

Toni Kaplan: Wanted to ask about just the selling environment.

Andy: Our guidance is unchanged in this complex operating environment, we are preparing MSCI to navigate a broad range of possible outcomes as.

Toni Kaplan: Look like and in periods of market volatility I feel like retention typically is strong and we saw that this quarter, but I guess I wanted to focus more on sort of new sales. So.

Andy: As we mentioned last quarter, our guidance assumed that market levels gradually increase throughout the year to the extent markets remain at their current levels. We would expect expenses to be at the low end of our current guidance ranges.

Toni Kaplan: Particularly maybe index and sustainability I guess, what are you hearing from clients in terms of conversations is there a little bit of reluctance to make new purchases.

Andy: As a reminder, we have various expense playbook levers that we can rapidly flex. These include but are not limited to managing the pace of hiring and flexing non comp and professional fees. Additionally, our incentive comp remains self adjusting with over all financial performance our.

Toni Kaplan: As Fannie DLO, sorry, that's getting pushed out and just wanted to understand if there was any change in market environment, particularly maybe towards the end of the quarter.

Andy: Our Q1 effective tax rate of 12, 8% reflected the benefit of significant discrete items as we previously indicated.

Andy: Beyond Q1, we expect the quarterly effective tax rate, excluding potential discrete items to be in the range of 19% to 21% each quarter for the rest of 2025.

Hi, Toni Baer here.

Henry Fernandez: 88% of our subscription run rates come from clients who use multiple MSCI product lines. We provide mission-critical data. models and technology that clients need in all environments and all phases of the business cycle, but especially in periods of high uncertainty, low clarity and relative volatility in markets. This enables MSCI's all-weather franchise. Robust Cash Flows. and Fortress Bannenship. And all of that makes us confident in our ability to deliver consistent financial results amidst the current market turmoil.

Toni Kaplan: So look I want to be very measured in my comments.

Toni Kaplan: So the first one which I think is self evident as this is an extremely uncertain environment.

Henry Fernandez: We provide mission-critical data, models, and technology that clients need in all environments and all phases of the business cycle, but especially in periods of high uncertainty, low clarity, and relative volatility in markets. This enables MSCI's all-weather franchise, robust cash flows, and fortress balance sheet, and all of that makes us confident in our ability to deliver consistent financial results amid the current market turmoil. With that, let me turn the call over to Bear Pettit.

We provide mission-critical data, models, and technology that clients need in all environments and all phases of the business cycle, but especially in periods of high uncertainty, low clarity, and relative volatility in markets. This enables MSCI's all-weather franchise, robust cash flows, and fortress balance sheet, and all of that makes us confident in our ability to deliver consistent financial results amid the current market turmoil. With that, let me turn the call over to Bear Pettit.

Andy: Our Q1 performance adds to our track record of consistent durable financial results.

Toni Kaplan: It's new news coming every day on a variety of market topics.

Andy: The long term secular opportunities remain intact, and we remain laser focused on anticipating the needs of the investment community as market conditions evolve and with that operator. Please open the line for questions.

Toni Kaplan: If we then go more specifically and narrowly to our clients and our day to day activities.

Andy: As a reminder to Alaska question. Please press star one one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one one again, please standby, while we compile the Q&A roster.

Toni Kaplan: As of today.

Toni Kaplan: We don't have evidence.

Toni Kaplan: That there is a change in the purchasing habits or the pipeline with our clients.

Toni Kaplan: More specifically a few items that did not close in Q1 again as of today.

Andy: Our first question comes from the line of Toni Kaplan from Morgan Stanley.

Toni Kaplan: We believe they will close in Q2 that information could change in the coming weeks, but as of today.

Bear Pettit: And with that, let me turn over the call over to Bear Pettit. Thank you, Henry, and greetings, everyone. In my remarks today, I will discuss our first quarter performance by client segment, including meaningful business wins that give us conviction in our global strategy. we delivered encouraging results among established and newer segments. Among hedge funds, MSEI achieved 14% subscription run rate growth, driven by analytics and index and covering a wide range of products and capabilities, including customization and the reimagining of risk. For example, our next-gen factor models in analytics are helping a growing number of hedge funds understand the key factors driving risk and return amid high levels of market volatility.

Toni Kaplan: Thank you.

Speaker Change: Wanted to ask about just the selling environment.

Toni Kaplan: We believe that some of those items that didn't close in Q1 will close in Q2.

Baer Pettit: Thank you, Henry, and greetings, everyone. In my remarks today, I will discuss our first quarter performance by client segment, including meaningful business wins that give us conviction in our global strategy. We delivered encouraging results among established and newer segments. Among hedge funds, MSCI achieved 14% Subscription Run Rate growth, driven by Analytics and Index, and covering a wide range of products and capabilities, including customization and the reimagining of risk. For example, our next-gen factor models and Analytics are helping a growing number of hedge funds understand the key factors driving risk and return amid high levels of market volatility. We now have more than 60 hedge funds using those models, up from just eight in 2022. We also completed a significant multi-region hedge fund deal for our ETF-linked custom index module.

Baer Pettit: Thank you, Henry, and greetings, everyone. In my remarks today, I will discuss our first quarter performance by client segment, including meaningful business wins that give us conviction in our global strategy. We delivered encouraging results among established and newer segments. Among hedge funds, MSCI achieved 14% Subscription Run Rate growth, driven by Analytics and Index, and covering a wide range of products and capabilities, including customization and the reimagining of risk. For example, our next-gen factor models and Analytics are helping a growing number of hedge funds understand the key factors driving risk and return amid high levels of market volatility. We now have more than 60 hedge funds using those models, up from just eight in 2022. We also completed a significant multi-region hedge fund deal for our ETF-linked custom index module.

Speaker Change: Look like and in periods of market volatility I feel like retention typically is strong and we saw that this quarter, but I guess I wanted to focus more on sort of new sales, so, particularly maybe in depths and sustainability.

Toni Kaplan: The our pipeline is in decent shape or.

Toni Kaplan: Our levels of client engagement are high.

Toni Kaplan: And notably.

Toni Kaplan: A few a few observations there is a clear demand among clients for transparency analytics.

Speaker Change: What are you hearing from clients in terms of conversations is there a little bit of reluctance to.

Toni Kaplan: Testing in the current environment.

Toni Kaplan: There is an emphasis on opportunities out.

Speaker Change: Make no purchases.

Speaker Change: As any deal Oh, sorry, that's getting pushed out and just wanted to understand if there was any change in the market environment, particularly maybe towards the end of the quarter. Thanks.

Toni Kaplan: Outside the U S from a number of clients.

Toni Kaplan: In all geographies.

Toni Kaplan: And and so those are some of the key things so.

Toni Kaplan: We are.

Toni Baer: Hi, Toni Baer here.

Toni Kaplan: We are we are not seeing a dramatic change.

Toni Baer: So look I want to be very measured in my comments.

Speaker Change: In constant contact with our clients at all levels of the organization from the Salesforce to Henry and myself.

Toni Baer: So the first one which I think is self evident as this is an extremely uncertain environment.

Bear Pettit: We now have more than 60 hedge funds using those models up from just eight in 2022. We also completed a significant multi-region hedge fund deal for our ETF linked custom index module. Amongst banks and broker-dealers, we delivered over 9% subscription run rate growth with strong analytics, new recurring subscription sales in Europe and the Americas. In particular, we saw robust demand for our factor models and related solutions, confirming the importance of our risk analytics tools during periods of market volatility. We also saw strong demand for custom baskets created with MSEI index solutions, another sign of the growing push for customization.

Speaker Change: And we hope we can navigate this with our with our important mission critical tools.

Toni Baer: With new news coming every day on a variety of market topics.

Toni Baer: If we then go more specifically and narrowly to our clients and our.

Thank you.

Speaker Change: Thank you one moment for our next question.

Toni Baer: Our day to day activities.

Baer Pettit: Among banks and broker dealers, we delivered over 9% subscription run rate growth with strong analytics, new recurring subscription sales in Europe and the Americas. In particular, we saw robust demand for our factor models and related solutions, confirming the importance of our risk analytics tools during periods of market volatility. We also saw strong demand for custom baskets created with MSCI index solutions, another sign of the growing push for customization. In addition, we completed a multi-year deal with a large bank in the Americas for a sustainability and climate regulatory solution that can support asset liability management. This last win demonstrated that MSCI can generate enormous value across climate risk and sustainable finance. Turning to wealth managers, we achieved subscription run rate growth of 15%, driven by index across all regions and by sustainability and climate in Europe.

Among banks and broker dealers, we delivered over 9% subscription run rate growth with strong analytics, new recurring subscription sales in Europe and the Americas. In particular, we saw robust demand for our factor models and related solutions, confirming the importance of our risk analytics tools during periods of market volatility. We also saw strong demand for custom baskets created with MSCI index solutions, another sign of the growing push for customization. In addition, we completed a multi-year deal with a large bank in the Americas for a sustainability and climate regulatory solution that can support asset liability management. This last win demonstrated that MSCI can generate enormous value across climate risk and sustainable finance. Turning to wealth managers, we achieved subscription run rate growth of 15%, driven by index across all regions and by sustainability and climate in Europe.

Toni Baer: As of today, we don't have evidence.

Speaker Change: Our next question comes from the line of Manav Patnaik from Barclays.

That there is a change in the purchasing habits or the pipeline with our clients.

Manav Patnaik: Hi, Thank you Andy I just wanted to ask in terms of your comment on you're preparing for a wide range of outcomes may be just <unk>.

Toni Baer: More specifically a few items that did not close in Q1 again as of today.

Speaker Change: Mind us.

Speaker Change: Kind of of that downturn playbook that you've talked about many times before but just a little bit more context on perhaps.

Toni Baer: We believe they will close in Q2.

Toni Baer: That information could change in the coming weeks, but as of today.

Toni Baer: We believe that some of those items that didn't close in Q1 will close in Q2.

Speaker Change: This outcome, you're referring to in this environment.

Bear Pettit: In addition, we completed a multi-year deal with a large bank in the Americas for a sustainability and climate regulatory solution that can support asset liability management. This last wind demonstrated that MSCI can generate enormous value across climate risk and sustainable finance. Turning to wealth managers, we achieved subscription run rate growth of 15%, driven by index across all regions and by sustainability and climate in Europe. For example, we landed a large one MSCI win, including index and private capital solutions with the wealth arm of a prominent global financial institution. This win came part of a seven-figure, multi-location renewal deal that spanned seven countries and broadened the scope of an existing client relationship, resulting in a client run rate expansion of almost 38%.

Speaker Change: Sure.

Toni Baer: The our pipeline is in decent shape.

Speaker Change: As you know.

Speaker Change: We continually calibrate the pace of spend based on not only the market levels, but business performance and opportunities that we see and so if markets improve we will we will flex up and similarly if markets.

Toni Baer: Our levels of client engagement are high.

Toni Baer: And notably.

Toni Baer: A few a few observations there is a clear demand among clients for transparency analytics stress testing in the current environment.

Speaker Change: Turned down we have the levers to manage our expenses down.

There is an emphasis on opportunities.

Speaker Change: Just to be a little bit more specific about those levers that we have if.

Toni Baer: Outside the U S from a number of clients.

Speaker Change: If we if we need to use them.

Toni Baer: In all geographies.

Speaker Change: You've got incentive compensation.

Toni Baer: And so those are some of the key things so.

Speaker Change: Richard.

Speaker Change: And naturally with the outlook for the business and overall business performance relative to targets.

Baer Pettit: For example, we landed a large one MSCI win, including index and Private Capital Solutions, with the wealth arm of a prominent global financial institution. This win came part of a seven-figure multi-location renewal deal that spanned seven countries and broadened the scope of an existing client relationship, resulting in a client run rate expansion of almost 38%. In the process, we fully displaced the equity benchmarks of two key competitors. We also secured a large multi-year sustainability and climate win with a European wealth manager to expand their integration of sustainability at both the home office level and in client portfolios. Meanwhile, Direct Indexing AUM based on MSCI indexes increased by 30% to more than $131 billion. All of this illustrates how MSCI's wealth solutions cut across product lines and meet different use cases for a growing number of clients.

For example, we landed a large one MSCI win, including index and Private Capital Solutions, with the wealth arm of a prominent global financial institution. This win came part of a seven-figure multi-location renewal deal that spanned seven countries and broadened the scope of an existing client relationship, resulting in a client run rate expansion of almost 38%. In the process, we fully displaced the equity benchmarks of two key competitors. We also secured a large multi-year sustainability and climate win with a European wealth manager to expand their integration of sustainability at both the home office level and in client portfolios. Meanwhile, Direct Indexing AUM based on MSCI indexes increased by 30% to more than $131 billion. All of this illustrates how MSCI's wealth solutions cut across product lines and meet different use cases for a growing number of clients.

Toni Baer: We are.

Toni Baer: We are we are not seeing a dramatic change.

Speaker Change: A 10% swing in the performance relative to our targets have an annual impact of about $20 million just to dimension, how much that can swing.

Speaker Change: We are in constant contact with our clients at all levels of the organization from the Salesforce to Henry and myself.

Speaker Change: And we hope we can navigate this with our with our important mission critical tools.

Speaker Change: There are certain non comp expenses that we can flex.

Speaker Change: Delaying professional fees down flexing other non comp items.

Speaker Change: Thank you.

Speaker Change: That can collectively have an annualized impact of about $20 million and those can start to impact expenses.

Speaker Change: Thank you one moment for our next question.

Bear Pettit: In the process, we fully displaced the equity benchmarks of two key competitors. We also secured a large multi-year sustainability and climate win with the European Wealth Manager to expand their integration of sustainability at both the home office level and in client portfolio. Meanwhile, direct indexing AUM based on MSCI indexes increased by 30% to more than $131 billion. All of this illustrates how MSCI's wealth solutions cut across product lines and meet different use cases for a growing number of clients. Moving on to asset owners, we delivered subscription run rate growth of 12% driven by analytics and private capital solutions.

Speaker Change: Our next question comes from the line of Manav Patnaik from Barclays.

Speaker Change: Within a quarter or two so relatively quickly and then we can control the pace of hiring which usually takes a couple of quarters to start to have an impact on our financial results.

Speaker Change: Hi, Thank you Andy I just wanted to ask in terms of your comment on you're preparing for a wide range of outcomes maybe just.

Speaker Change: But that similarly can have about a $20 million annual impact, if we flex hiring up or down.

Speaker Change: Mind us.

Speaker Change: Kind of off that downturn playbook that you've talked about many times before that but just a little bit more context on perhaps.

Speaker Change: On the year, and so and we can even calibrate more or less obviously.

Speaker Change: All of those levers and so it's a continual calibration as.

Speaker Change: You know those outcomes, you're referring to in this environment.

Speaker Change: As we had said before our guidance assumed that markets gradually increase throughout the year. If the market levels remain relatively flat through the year, we will be towards the low end or at the low end of our expense guidance ranges and we wanted to give you that color just to calibrate how much the market would.

Sure.

Speaker Change: As you know we continually calibrate the pace of spend based on not only the market levels, but business performance and opportunities that we see and so if markets improve we will we will flex up and similarly if markets.

Baer Pettit: Moving on to asset owners, we delivered Subscription Run Rate growth of 12%, driven by analytics and Private Capital Solutions. Notably, we achieved 10% run rate growth among asset owners and analytics, with particular strength in the Americas. We also completed several large Private Capital Solutions deals with pension funds in the Americas and Europe. These deals helped us drive 24% recurring net new sales growth in the overall PCS product line. Additionally, asset owners and other clients continue adapting MSCI indexes to support their climate strategies. In Q1, Assets Under Management in ETF and non-ETF products linked to MSCI Climate Indexes grew by 50%, reaching $387 billion in total. Finally, shifting to asset managers, our Subscription Run Rate growth remained steady at around 5%, driven by index. We achieved a Retention Rate of 96% with asset managers in Q1, up from 95% a year earlier.

Moving on to asset owners, we delivered Subscription Run Rate growth of 12%, driven by analytics and Private Capital Solutions. Notably, we achieved 10% run rate growth among asset owners and analytics, with particular strength in the Americas. We also completed several large Private Capital Solutions deals with pension funds in the Americas and Europe. These deals helped us drive 24% recurring net new sales growth in the overall PCS product line. Additionally, asset owners and other clients continue adapting MSCI indexes to support their climate strategies. In Q1, Assets Under Management in ETF and non-ETF products linked to MSCI Climate Indexes grew by 50%, reaching $387 billion in total. Finally, shifting to asset managers, our Subscription Run Rate growth remained steady at around 5%, driven by index. We achieved a Retention Rate of 96% with asset managers in Q1, up from 95% a year earlier.

Bear Pettit: Notably, we achieved 10% run rate growth among asset owners in analytics, with particular strength in the Americas. We also completed several large private capital solutions deals with pension funds in the Americas and Europe. These deals helped us drive 24% recurring net new sales growth in the overall PCS product line. Additionally, Asset Owners and other clients continue adapting MSCI indexes to support their climate strategy. In Q1, assets under management in ETF and non-ETF products linked to MSCI climate indexes grew by 50%, reaching $387 billion in total. Finally, shifting to asset managers, our subscription run rate growth remains steady at around 5% driven by index.

Speaker Change: Turned down we have the levers to manage.

Speaker Change: <unk> overall expenses.

Speaker Change: But it is important to highlight that there are many factors that feed into the pace of expenses beyond just the market levels and AUM levels, but we also look at business opportunities financial performance.

Speaker Change: <unk> is down.

Speaker Change: Just to be a little bit more specific about those levers that we have if.

Speaker Change: If we if we need to use them.

Speaker Change: You've got incentive compensation.

Speaker Change: And potential investment traction that we're getting in key areas. So it's something that will continue to calibrate based on the outlook and we'll keep you posted but we're confident that we have a very very strong financial model here and the levers to deliver strong results in all environments.

Richard: Richard just naturally with the outlook for the business and overall business performance relative to our targets.

Richard: A 10% swing in the performance relative to our targets have an annual impact of about $20 million just to dimension, how much that can swing.

Speaker Change: Okay. Thank you Andy.

Speaker Change: Thank you one moment for our next question.

Richard: There are certain non comp expenses that we can flex.

Richard: Delaying professional fees down flexing other non comp items.

Speaker Change: Our next question comes from the line of Alex Crane from UBS.

Richard: That can collectively have an annualized impact of about $20 million and those can start to impact expenses.

Speaker Change: Yes, Hello, everyone.

Speaker Change: Wanted to come back to the selling environment in particular want to ask about <unk>.

Richard: Within a quarter or two so relatively quickly and then we can control the pace of hiring which usually takes a couple of quarters to start to have an impact on our financial results.

Speaker Change: The national investing I mean, it seems to be the first time in a long time that people are talking about.

Bear Pettit: We achieved a retention rate of 96% with asset managers in Q1, up from 95% a year earlier. In our most notable business win, we completed a seven-figure index deal with the asset management arm of a major European bank, who made MSCI their exclusive partner and index provider for all future path of ETFs. This deal also included access to our fixed income issuance weighted module and our fixed income custom index. Looking ahead, MSCI is redoubling our product development efforts to meet asset managers' rapidly evolving needs, especially around active ETFs and fixed income.

Speaker Change: Asset flows not not towards the us, but towards international markets, which seems fairly fairly new.

Richard: But that similarly can have about a $20 million annual impact if we flex our hiring up or down.

Baer Pettit: In our most notable business win, we completed a seven-figure index deal with the asset management arm of a major European bank, who made MSCI their exclusive partner and index provider for all future passive ETFs. This deal also included access to our fixed income issuance-weighted module and our fixed income custom indexes. Looking ahead, MSCI is redoubling our product development efforts to meet asset managers' rapidly evolving needs, especially around active ETFs and fixed income. In summary, MSCI's increasingly diversified portfolio of clients, products, and services strengthen our all-weather franchise. And with that, let me turn the call over to Andy.

In our most notable business win, we completed a seven-figure index deal with the asset management arm of a major European bank, who made MSCI their exclusive partner and index provider for all future passive ETFs. This deal also included access to our fixed income issuance-weighted module and our fixed income custom indexes. Looking ahead, MSCI is redoubling our product development efforts to meet asset managers' rapidly evolving needs, especially around active ETFs and fixed income. In summary, MSCI's increasingly diversified portfolio of clients, products, and services strengthen our all-weather franchise. And with that, let me turn the call over to Andy.

Speaker Change: So given that most of your indices are on subscription sites internationally focus just wondering if you're starting to see a change at all in terms of investor or customer sentiment. So it's more assets are flowing into let's say Europe or.

Richard: On the year, and so and we can even calibrate more or less obviously.

Richard: All of those levers and so it's a continual calibration.

Speaker Change: As we had said before.

Speaker Change: Our guidance assumed that markets gradually increase throughout the year, if the market levels remain relatively flat through the year, we will be towards the low end or at the low end of our expense guidance ranges and we.

Speaker Change: From the U S. How would we think about maybe a pickup in your business not only on the on the ETF side, but more on the subscription side like would you expect more fund launches any anything you can you can see already or is it just way too early but just trying to think about it. This is a new trends in the long time hub could actually impact your business.

Speaker Change: Wanted to give you that color just to calibrate how much the markets would impact the overall expenses.

Bear Pettit: In summary, MSCI's increasingly diversified portfolio of clients, products, and services strengthen our all-weather franchise.

Speaker Change: But it is important to highlight that there are many factors that feed into the pace of expenses beyond just the market levels and that AUM levels, but we also look at business opportunities and financial performance and.

Speaker Change: Thanks.

Andy Wiechmann: And with that, let me turn the call over to Andy. Thank you, Bear, and hello, everyone. In these times, our global frameworks must have content and trusted risk and performance tools are essential for understanding and navigating market. and our relationships with the world's leading investment institutions are deeper than ever, positioning us to help them navigate global markets. With 98% recurring revenue, strong margins, and high cashflow conversion, we have a highly resilient financial model that positions us for strength in all environments. In index, subscription run rate growth was 9%. with Asset Managers growing nearly 7% and Asset Owners growing over 10%.

Speaker Change: Well thanks for that question Alex.

Speaker Change: That's that's.

Andrew Wiechmann: Thank you, Bear, and hello, everyone. In these times, our global frameworks, must-have content, and trusted risk and performance tools are essential for understanding and navigating markets. Our relationships with the world's leading investment institutions are deeper than ever, positioning us to help them navigate global markets. With 98% recurring revenue, strong margins, and high cash flow conversion, we have a highly resilient financial model that positions us for strength in all environments. In index, subscription run rate growth was 9%, with asset managers growing nearly 7% and asset owners growing over 10%. These two client segments comprise almost 70% of our index subscription run rate. In index subscription run rate growth with hedge funds, wealth managers, and banks and broker dealers was 22%, 16%, and 11%, respectively. Please note that beginning this quarter, our investor slides will show a slightly different presentation of our index subscription run rate.

Andy Wiechmann: Thank you, Bear, and hello, everyone. In these times, our global frameworks, must-have content, and trusted risk and performance tools are essential for understanding and navigating markets. Our relationships with the world's leading investment institutions are deeper than ever, positioning us to help them navigate global markets. With 98% recurring revenue, strong margins, and high cash flow conversion, we have a highly resilient financial model that positions us for strength in all environments. In index, subscription run rate growth was 9%, with asset managers growing nearly 7% and asset owners growing over 10%. These two client segments comprise almost 70% of our index subscription run rate. In index subscription run rate growth with hedge funds, wealth managers, and banks and broker dealers was 22%, 16%, and 11%, respectively. Please note that beginning this quarter, our investor slides will show a slightly different presentation of our index subscription run rate.

Speaker Change: Potential investment traction that we're getting in key areas. So it's something that will continue to calibrate based on the outlook and we'll keep you posted but we're confident that we have a very very strong financial model and the levers to deliver strong results in all environments.

Speaker Change: In Italy, we are seeing.

Speaker Change: A mark change.

Speaker Change: And everything we're talking about this obviously accelerated with the tariff.

Speaker Change: But it was already ongoing.

Speaker Change: Okay. Thank you Andy.

Speaker Change: From.

Speaker Change: The beginning of the year.

Speaker Change: Thank you one moment for our next question.

Speaker Change: In waves.

Speaker Change: A lot of our global clients, including U S clients and they're in their global portfolios.

Speaker Change: Our next question comes from the line of Alex Crane from UBS.

Speaker Change: We're already.

Yes, Hello, everyone.

Speaker Change: Placing a lot of bets on on Europe.

Speaker Change: Just wanted to come back to the selling environment and in particular I want to ask about you know internationally investing I mean, it seems to be the first time in a long time that people are talking about.

Speaker Change: On a non Japan.

Speaker Change: And given the.

Speaker Change: At that time the decline in.

Andy Wiechmann: These two client segments comprise almost 70% of our index subscription run. and index subscription run rate growth with hedge funds, wealth managers and banks and broker dealers was 22%, 16% and 11% respectively.

Speaker Change: And interest rates.

Speaker Change: Obviously, the weakening of the dollar we also saw flows going into emerging markets.

Speaker Change: Asset flows not not towards the us, but towards international markets, which seems fairly fairly new.

Speaker Change: Our new new inflows into emerging markets.

Speaker Change: So given that most of your indices are on subscription sites internationally.

Said that accelerated.

Speaker Change: Meaningfully.

Andy Wiechmann: Please note that beginning this quarter, our investor slides will show a slightly different presentation of our index subscription run. This new categorization, which now breaks out the run rate across market cap weighted products, non-market cap weighted products, and custom index products, is intended to provide better insights into the growth dynamics across kiosks. especially the custom index. The most notable change from the prior categorization is that the run rate from special packages is now primarily included in the market cap weighted category. Non-market cap weighted run rate primarily includes our standard factor and sustainability and climate modules, which span both equities and fixed income.

Speaker Change: Just wondering if.

Speaker Change: Since the since April cycle and.

Speaker Change: If you're starting to see a change at all in terms of our investor or customer sentiment. So it's more assets are flowing into let's say Europe or away from the U S. How would we think about maybe a pickup in your business not only on the on the ETS side, but more on the subscription side like.

Speaker Change: And when you look at our business, we have done relatively well.

Andrew Wiechmann: This new categorization, which now breaks out the run rate across market cap-weighted products, non-market cap-weighted products, and custom index products, is intended to provide better insights into the growth dynamics across key offerings, especially the custom index offerings. The most notable change from the prior categorization is that the run rate from special packages is now primarily included in the market cap-weighted category. Non-market cap-weighted run rate primarily includes our standard factor and sustainability and climate modules, which span both equities and fixed income offerings. As you can see in our presentation, subscription run rate growth from custom indexes was 15%. Asset-based fee revenue grew 18%, aided by stronger flows into international exposure products, an area where MSCI has particular strength. Non-ETF AUM linked to MSCI indexes was nearly $3.9 trillion, growing 20% year over year.

This new categorization, which now breaks out the run rate across market cap-weighted products, non-market cap-weighted products, and custom index products, is intended to provide better insights into the growth dynamics across key offerings, especially the custom index offerings. The most notable change from the prior categorization is that the run rate from special packages is now primarily included in the market cap-weighted category. Non-market cap-weighted run rate primarily includes our standard factor and sustainability and climate modules, which span both equities and fixed income offerings. As you can see in our presentation, subscription run rate growth from custom indexes was 15%. Asset-based fee revenue grew 18%, aided by stronger flows into international exposure products, an area where MSCI has particular strength. Non-ETF AUM linked to MSCI indexes was nearly $3.9 trillion, growing 20% year over year.

Speaker Change: Against in the last two three years.

Speaker Change: Relative to the strong headwinds for us.

Speaker Change: Because a lot of first of all our breakdown.

Speaker Change: Script run rate is about 40% Americas, 40% in Europe, or EMEA, and 20% Asia Pacific So.

Speaker Change: Would you expect more fund launches any anything you can you can see already or is it just way too early but just trying to think about it. This is the new trends in the long time help us could actually impact your business. Thanks.

Speaker Change: So we are not.

Speaker Change: And that is where the client is located and but at the end our business is predicated on global investing and if there is a massive amount of money flowing into the U S market.

Speaker Change: Well thanks for that question Alex.

Speaker Change:

Andy Wiechmann: As you can see in our presentation, subscription run rate growth from custom indexes was 15%. Asset-based fee revenue grew 18%. aided by stronger flows into international exposure products, an area where MSCI has particular strength. Non-ETF AUM linked to MSCI indexes was nearly $3.9 trillion, grown 20%. MSCI linked equity ETFs had an ending balance of $1.78 trillion at the end of March after attracting nearly $42 billion. $37 billion of the inflows went into products linked to MSCI DMXUS. EM, and all country exposures. categories where MSCI collectively captured roughly 45% of all These cash flows represent the second strongest quarter since 2022 behind only Q4 of last year.

Speaker Change: But definitely we're seeing a mark change.

Speaker Change: And everything we're talking about.

It's a headwind for us and Thats what was happening in the last.

Speaker Change: This obviously accelerated with the tariff.

Speaker Change: Two or three years that trend is reversing significantly.

Speaker Change: But it was already ongoing.

Speaker Change: From.

Speaker Change: Aye.

Speaker Change: At the beginning of the year.

Speaker Change: And the last.

Speaker Change: In waves.

Speaker Change: Month, or so I've had 70 to 80.

Speaker Change: A lot of our global clients, including U S clients.

Andrew Wiechmann: MSCI-linked equity ETFs had an ending balance of $1.78 trillion at the end of March after attracting nearly $42 billion of inflows. $37 billion of the inflows went into products linked to MSCI DM, XUS, EM, and all-country exposures, categories where MSCI collectively captured roughly 45% of all inflows. These cash flows represent the second-strongest quarter since 2022, behind only Q4 of last year. Our strong asset-based fee growth also benefited from growth in fixed income index products. Fixed income ETF AUM linked to MSCI and partner indexes is now over $76 billion, growing 20% from a year ago. In analytics, subscription run rate growth was 7%, reflecting continued momentum in equity analytics and solid growth with hedge funds, trading firms, and asset owners.

MSCI-linked equity ETFs had an ending balance of $1.78 trillion at the end of March after attracting nearly $42 billion of inflows. $37 billion of the inflows went into products linked to MSCI DM, XUS, EM, and all-country exposures, categories where MSCI collectively captured roughly 45% of all inflows. These cash flows represent the second-strongest quarter since 2022, behind only Q4 of last year. Our strong asset-based fee growth also benefited from growth in fixed income index products. Fixed income ETF AUM linked to MSCI and partner indexes is now over $76 billion, growing 20% from a year ago. In analytics, subscription run rate growth was 7%, reflecting continued momentum in equity analytics and solid growth with hedge funds, trading firms, and asset owners.

Speaker Change: CEO level meetings through our all of Europe, and Asia, which are just came back and that you could see pump bubble that that shift so that hopefully will benefit us.

Speaker Change: And there are and they're global portfolios.

Speaker Change: We're already.

Speaker Change: Placing a lot of bets on on Europe.

On a non Japan.

Speaker Change: And given the debt at that time the decline in <unk>.

Speaker Change: On a relative sense, because we were having this headwind for a long period of time that will clearly benefit the asset based fee remember most of our asset based fees are.

Speaker Change: And interest rates.

Speaker Change: And obviously the weakening of the dollar we also saw flows going into emerging markets.

Speaker Change: New new inflows into emerging markets.

Speaker Change: Or based on exposures that outside of the U S. On and then we translate them into dollars. So we may get two benefits.

Andy Wiechmann: Our strong asset base fee growth also benefited from growth in fixed income index products. Interest income ETFs AUM linked to MSCI and partner indexes is now over $76 billion, growing 20% from a year ago. In analytics, subscription run rate growth was 7%, reflecting continued momentum in equity analytics and solid growth with hedge funds, trading firms, and asset owners. Similar to last quarter, we expect analytics revenue growth to be in line with to slightly lower than run rate growth in Q2 as we compare to periods last year when we had meaningful contributions from implementation related.

Speaker Change: Has that accelerated.

Speaker Change: Meaningfully.

Speaker Change: Since the since April cycle and.

Speaker Change: Relative better relative performance of assets outside of the U S compared to the U S and secondly, depreciation of the dollar so that may benefit is there.

Speaker Change: And when you look at our business you know we have done relatively well.

Speaker Change: Again in the last two or three years.

Speaker Change: Relative to the strong headwinds for us.

Speaker Change: On the subscription side clearly.

Speaker Change: The active managers, the pension funds and all of that.

Speaker Change: Because a lot of first of all our breakdown.

Andrew Wiechmann: Similar to last quarter, we expect analytics revenue growth to be in line with, to slightly lower than run rate growth in Q2 as we compare to periods last year when we had meaningful contributions from implementation-related revenues. In our sustainability and climate reportable segment, previously referred to as the ESG and climate segment, we drove almost 10% subscription run rate growth, reflecting some large deals in banking that we previously spoke about, supported by 14% growth with both asset owners and wealth managers. Our long-term target for this product line remains under review as we assess the impact of the near-term environment on the long-term trajectory. That said, we're seeing traction on several fronts, including with our geospatial asset intelligence solutions, where we've had several recent wins. The retention rate of 94.5% for the segment highlights that our sustainability and climate tools remain mission-critical.

Similar to last quarter, we expect analytics revenue growth to be in line with, to slightly lower than run rate growth in Q2 as we compare to periods last year when we had meaningful contributions from implementation-related revenues. In our sustainability and climate reportable segment, previously referred to as the ESG and climate segment, we drove almost 10% subscription run rate growth, reflecting some large deals in banking that we previously spoke about, supported by 14% growth with both asset owners and wealth managers. Our long-term target for this product line remains under review as we assess the impact of the near-term environment on the long-term trajectory. That said, we're seeing traction on several fronts, including with our geospatial asset intelligence solutions, where we've had several recent wins. The retention rate of 94.5% for the segment highlights that our sustainability and climate tools remain mission-critical.

Speaker Change: We'll do that.

Speaker Change: Script.

Speaker Change: But I want to amplify my answer here to say these are the periods in which people need a lot more data.

Speaker Change: Run rate is about 40% of amerigas, 40% in Europe, or EMEA and 20% in Asia Pacific So.

Speaker Change: To understand.

So we are not.

Andy Wiechmann: in our Sustainability and Climate Reportable Segment, previously referred to as the ESG and Climate Segment. we drove almost 10% subscription run rate growth, reflecting some large deals in banking that we previously spoke about, supported by 14% growth with both asset owners and wealth managers. Our long-term target for this product line remains under review as we assess the impact of the near-term environment on the long-term. That said, we're seeing traction on several fronts, including with our geospatial asset intelligence. where we've had several recent. The retention rate of 94.5% for the segment highlights that our sustainability and climate tools remain mission critical.

Speaker Change: The underlying the underlying issues of portfolios, whether it's index data or our transparency data for private assets or ESG data and know sustainability data climate data they want to understand what's going on this geospatial.

Yeah.

Speaker Change: And that is where the client is located.

Speaker Change: But at the end you know our business is predicated on global investing.

Speaker Change: And if there is a massive amount of money flowing into the U S market.

Speaker Change: You know, it's a it's a headwind for us and that's what was happening in the last.

Speaker Change: Location problems that we have is enormously valuable to know people trying to assess.

Speaker Change: Two three years that trend is reversing significantly I.

Speaker Change: Who are the companies that are going to get more impacted or less impacted by by trade wars and all <unk>.

Speaker Change: And the last job.

Speaker Change: This we have location of manufacturing plants of our company locations.

Speaker Change: Month, or so I've had 70 to 80.

Speaker Change: CEO level meetings throughout all of Europe, and Asia, which I just came back and that you could see pump a bowl you know that that shift so that hopefully will benefit us.

Speaker Change: When they are selling the products and all of that so that hopefully can cannot.

Speaker Change: There was a lot of benefit in there. These are times in which people need a lot of models to understand the stress testing and scenario planning scenario.

Andrew Wiechmann: As a reminder, in the second quarter, we will be lapping the prior year benefit from the Moody's partnership, which had a significant contribution to last year's sustainability and climate new recurring sales. In Private Capital Solutions, we saw a 24% increase in recurring net new sales and continued mid-teens growth of our run rate, reflecting steady interest in our data, performance, and benchmarking solutions. In real assets, overall activity remained muted. We continue to face headwinds related to client consolidation, particularly among brokers and developers. On the capital allocation front, we've repurchased over $275 million of MSCI stock, or over 493,000 shares since the start of the year. This reflects our opportunistic approach to capital deployment and our belief in the long-term value of the franchise. We have a strong balance sheet with our gross leverage ratio now at 2.6 times the last 12 months' adjusted EBITDA.

As a reminder, in the second quarter, we will be lapping the prior year benefit from the Moody's partnership, which had a significant contribution to last year's sustainability and climate new recurring sales. In Private Capital Solutions, we saw a 24% increase in recurring net new sales and continued mid-teens growth of our run rate, reflecting steady interest in our data, performance, and benchmarking solutions. In real assets, overall activity remained muted. We continue to face headwinds related to client consolidation, particularly among brokers and developers. On the capital allocation front, we've repurchased over $275 million of MSCI stock, or over 493,000 shares since the start of the year. This reflects our opportunistic approach to capital deployment and our belief in the long-term value of the franchise. We have a strong balance sheet with our gross leverage ratio now at 2.6 times the last 12 months' adjusted EBITDA.

Andy Wiechmann: As a reminder, in the second quarter, we will be lapping the prior year benefit from the Moody's partnership, which had a significant contribution to last year's sustainability and climate new recurring sales. In private capital solutions, we saw a 24% increase in recurring net new sales and continued mid-teens growth of our run. reflecting steady interest in our data performance and benchmarking. real assets, overall activity remains. continue to face headwinds related to client consolidation, particularly among brokers. On the capital allocations front, we've repurchased over $275 million of MSCS stock, or over 493,000 shares since the start of.

Speaker Change: And they are on a relative sense, because we were having this headwind for a lumpier over time that will clearly benefit the asset base being remember most of our asset based fees are.

Speaker Change: This what if that fact.

Speaker Change: Factors the compensation there is major shifts that will go on into a value company a growth company a momentum company a quality company and all of that.

Speaker Change: Or based on exposures that outside of the U S. On and then we translate them into dollars. So we may get two benefits.

Speaker Change: So we're seeing significant dialogue going on with our clients with respect to a lot of that and I said the transparency. So if you think about private assets.

Speaker Change: Relative better relative performance of assets outside of the U S compared to the U S and secondly, depreciation of the dollar so that may benefit is there and on the subscription side clearly the active managers the pension funds and all of that you know well.

Speaker Change: It's important to note that in an environment like this we're not counting on a lot of money going into private assets that would be icing on the cake. We're counting on the kind of investors in private assets, one thing much more transparency of whats going on in their portfolio and Thats, where we come in.

Andy Wiechmann: This reflects our opportunistic approach to capital deployment and our belief in the long-term value of the franchise. We have a strong balance sheet with our gross leverage ratio now at 2.6 times the last 12 months adjusted EBITDA. Our guidance is unchanged in this complex operating environment. We are preparing MSCI to navigate a broad range of possible outcomes. As we mentioned last quarter, our guidance assumes that market levels gradually increase throughout the year. To the extent markets remain at their current levels, we would expect expenses to be at the low end of our current guidance. As a reminder, we have various expense playbook levers that we can wrap it.

Speaker Change: We'll do that.

Speaker Change: But I want to amplify.

Speaker Change: In private credit for example.

Speaker Change: The answer here to say these are the periods in people in which people need a lot more data.

Speaker Change: It would.

Speaker Change: The potential of a slowdown or recession around the world, especially U S. Europe people will want to know what's underneath my private credit portfolio. So we have a database of 2800 private credit funds that have about 14000 companies, we have terms and conditions and those private credit funds and now.

Speaker Change: To understand.

Andrew Wiechmann: Our guidance is unchanged. In this complex operating environment, we are preparing MSCI to navigate a broad range of possible outcomes. As we mentioned last quarter, our guidance assumed that market levels gradually increase throughout the year. To the extent markets remain at their current levels, we would expect expenses to be at the low end of our current guidance ranges. As a reminder, we have various expense playbook levers that we can rapidly flex. These include, but are not limited to, managing the pace of hiring and flexing non-comp and professional fees. Additionally, our incentive comp remains self-adjusting with overall financial performance. Our Q1 effective tax rate of 12.8% reflected the benefit of significant discrete items, as we previously indicated. Beyond Q1, we expect the quarterly effective tax rate, excluding potential discrete items, to be in the range of 19% to 21% each quarter for the rest of 2025.

Our guidance is unchanged. In this complex operating environment, we are preparing MSCI to navigate a broad range of possible outcomes. As we mentioned last quarter, our guidance assumed that market levels gradually increase throughout the year. To the extent markets remain at their current levels, we would expect expenses to be at the low end of our current guidance ranges. As a reminder, we have various expense playbook levers that we can rapidly flex. These include, but are not limited to, managing the pace of hiring and flexing non-comp and professional fees. Additionally, our incentive comp remains self-adjusting with overall financial performance.

Speaker Change: The underlying the underlying issues of portfolios, whether it's index data or our transparency data for private assets or ESG data and know sustainability data climate data they want to understand what's going on this geospatial.

Speaker Change: Location problems that we have is it really valuable.

Speaker Change: Now we have this partnership with Moody's we will have credit assessment on that so that's another example of the benefits we can get in this environment and again, we're not favoring this environment, we're not we do.

Speaker Change: Volume will do know people trying to assess.

Speaker Change: Who are the companies that are going to get more impacted or less impacted by by trade wars.

Andy Wiechmann: These include, but are not limited to, managing the pace of hiring, inflexing non-comp and professionalism, Additionally, our incentive comp remains self-adjusting with overall financial. Q1 effective tax rate of 12.8% reflected the benefit of significant discreet items as we previously discussed. Beyond Q1, we expect the quarterly effective tax rate, excluding potential discreet items, to be in the range of 19 to 21% each quarter for the rest of 2020. Our Q1 performance adds to our track record of consistent, durable financial results. The long-term secular opportunities remain intact, and we remain laser-focused on anticipating the needs of the investment community as market conditions evolve.

Speaker Change: Because you know this we have location of manufacturing plants of our company locations.

Speaker Change: We can say we're done this already.

Speaker Change: In the light, but in an environment like this this is why our missy icon at its best right.

Our Q1 effective tax rate of 12.8% reflected the benefit of significant discrete items, as we previously indicated. Beyond Q1, we expect the quarterly effective tax rate, excluding potential discrete items, to be in the range of 19% to 21% each quarter for the rest of 2025. Our Q1 performance adds to our track record of consistent, durable financial results. The long-term secular opportunities remain intact, and we remain laser-focused on anticipating the needs of the investment community as market conditions evolve. With that, operator, please open the line for questions.

Speaker Change: You know when they were selling their products on all of that so that hopefully can.

Speaker Change: Okay. Thank you.

Speaker Change: It gives us a lot of benefit in there. These are times in which people need a lot of models to understand stress testing.

Speaker Change: Thank you one moment before next question.

Speaker Change: Mario planning scenario, you know what if this what if that you know factor. The compensation you know there is major shifts there will go on into a value company a growth company a momentum company, a quality company and all of that.

Speaker Change: Our next question comes from the line of law, Ashish Saba draw from RBC.

Andrew Wiechmann: Our Q1 performance adds to our track record of consistent, durable financial results. The long-term secular opportunities remain intact, and we remain laser-focused on anticipating the needs of the investment community as market conditions evolve. With that, operator, please open the line for questions.

Speaker Change: Taking my question I just wanted to focus on the pricing I was just wondering if you could comment on how the pricing is trending both for renewables, but also for new sales. Thanks.

Speaker Change: So we're seeing significant dialogue going on with our clients with respect to a lot of that and in that sense. The transparency. So if you think about private assets.

Operator: And with that, operator, please open the line for questions. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Stand by while we compile the Q&A, Ross.

Operator: As a reminder to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Tony Kaplan from Morgan Stanley.

Operator: As a reminder to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Tony Kaplan from Morgan Stanley.

Speaker Change: Sure. So I would say across the firm in the first quarter the percent contribution from price increases to new recurring sales was roughly in line with the contribution we saw a year ago that is slightly lower than what we saw in 2023. It does vary a bit.

Speaker Change: It's important to know that.

Speaker Change: In an environment like this we're not counting on a lot of money going into private assets that would be icing on the cake. We're counting on the kind of investors in private assets one thing much more transparency of whats going on in their portfolio and that's why we call them in.

Speaker Change: For private credit for example into what they would do.

Toni Kaplan: Our first question comes from the line of Toni Kaplan from Morgan Stanley. I wanted to ask about just the selling environment. It looked like, in periods of market volatility, I feel like retention typically is strong and we saw that this quarter, but I guess I wanted to focus more on sort of new sales.

Speaker Change: Across product lines and client segments, but in most areas.

Speaker Change: The potential of slowdowns organizations around the world.

Speaker Change: Price increases were roughly comparable to last year.

Tony Kaplan: Thank you. I wanted to ask about just the selling environment. It looked like in periods of market volatility, I feel like retention typically is strong, and we saw that this quarter. I guess I wanted to focus more on sort of new sales, particularly maybe index and sustainability. I guess what are you hearing from clients in terms of conversations? Is there a little bit of reluctance to make new purchases? Are any deals sort of getting pushed out? Just wanted to understand if there was any change in the market environment, particularly maybe towards the end of the quarter. Thanks.

Toni Kaplan: Thank you. I wanted to ask about just the selling environment. It looked like in periods of market volatility, I feel like retention typically is strong, and we saw that this quarter. I guess I wanted to focus more on sort of new sales, particularly maybe index and sustainability. I guess what are you hearing from clients in terms of conversations? Is there a little bit of reluctance to make new purchases? Are any deals sort of getting pushed out? Just wanted to understand if there was any change in the market environment, particularly maybe towards the end of the quarter. Thanks.

Speaker Change: Especially U S. Europe people will want to know what's underneath my private credit portfolio. So we have a database of 2800 private credit funds that that'll have about 14000 companies, we have terms and conditions in those private credit funds.

Speaker Change: It's important to keep in mind here that.

Speaker Change: Price increases are not just like for like increases we are oftentimes, providing our clients with enhancements to the existing solutions.

Speaker Change: For access and broader usage in addition to continuing to.

Toni Kaplan: So particularly maybe index and sustainability, you know, I guess what are you hearing from clients in terms of conversations, is there a little bit of reluctance to make new purchases, you know, is any deals sort of getting pushed out, and just wanted to understand if there was any change in the market environment, particularly maybe towards the end of the quarter. Thank you.

Speaker Change: And now we have this partnership with Moody's we will have credit assessment on that so that's another example of the benefits we can get in this environment and again, we're not favoring this environment. We're not we wouldn't say we're done this already.

Speaker Change: To provide enhanced client service and so all of those things factor into.

Speaker Change: Our approach to pricing.

Speaker Change: And we do also look at client health and the overall pricing environment as inputs as well.

Speaker Change: There are definitely areas, where we could push price more but we are very focused on being a very strong partner to our clients as we said before.

Speaker Change: And the like but in an environment like this this is why our Missy I call them out as best right.

Speaker Change: Thank you.

Speaker Change: Henri alluded too in these environments and we have the opportunity to do to do more with organizations and help them in these times and so we factor that into the overall pricing equation as well.

Speaker Change: Thank you.

Bear Pettit: Hi, Toni, Bear here. So look, I want to be very measured in my comments. So the first one, which I think is self-evident, is this is an extremely uncertain environment with new news coming every day on a variety of market topics. If we then go more specifically and narrowly to our clients and our day-to-day activities, You know, as of today, we don't have evidence. that there is a change in the purchasing habits or the pipeline with our clients. More specifically, a few items that did not close in Q1, again, as of today, that we believe they will close in Q2.

Baer Pettit: Hi, Tony. Bear here. So look, I want to be very measured in my comments. So the first one, which I think is self-evident, is this is an extremely uncertain environment with new news coming every day on a variety of market topics. If we then go more specifically and narrowly to our clients and our day-to-day activities, as of today, we don't have evidence that there is a change in the purchasing habits or the pipeline with our clients. More specifically, a few items that did not close in Q1, again, as of today, that we believe they will close in Q2. That information could change in the coming weeks, but as of today, we believe that some of those items that didn't close in Q1 will close in Q2. Our pipeline is in decent shape. Our levels of client engagement are high. And notably, a few observations.

Baer Pettit: Hi, Tony. Bear here. So look, I want to be very measured in my comments. So the first one, which I think is self-evident, is this is an extremely uncertain environment with new news coming every day on a variety of market topics. If we then go more specifically and narrowly to our clients and our day-to-day activities, as of today, we don't have evidence that there is a change in the purchasing habits or the pipeline with our clients. More specifically, a few items that did not close in Q1, again, as of today, that we believe they will close in Q2. That information could change in the coming weeks, but as of today, we believe that some of those items that didn't close in Q1 will close in Q2. Our pipeline is in decent shape. Our levels of client engagement are high. And notably, a few observations.

Speaker Change: One moment before next question.

Speaker Change: Our next question comes from the line of law, Ashish Sop I draw from RBC.

Speaker Change: That's very helpful color. Thank you.

Speaker Change: Thank you.

Ashish Sop: Taking my question I just wanted to focus on the pricing I was just wondering if you could comment on how the pricing is trending both for renewables, but also for new sales.

Speaker Change: One moment for our next question.

Speaker Change: Our next question comes from the line of Owen Lau from Oppenheimer.

Speaker Change: Thank you for taking my questions I wanted to go back to the newer sales environment and you mentioned that some deals push out from the first quarter to second quarter, but you are still cautious and are cautiously optimistic that you can find them in the second quarter. So.

Ashish Sop: Sure. So I would say across the firm in the first quarter the percent contribution from price increases to new recurring sales was roughly in line with the contribution we saw a year ago that is slightly lower than what we saw in 2023. It does vary a bit.

Speaker Change: So could you please provide more color on.

Speaker Change: Under what circumstances extensive set that they will proceed with the deal.

Ashish Sop: [noise] across product lines and client segments, but in most areas.

Bear Pettit: You know, that information could change in the coming weeks, but as of today, you know, we believe that some of those items that didn't close in Q1 will close in Q2. The, you know, our pipeline is in decent shape. Our levels of client engagement are high.

Ashish Sop: Price increases were roughly comparable to last year.

Speaker Change: Do they need to feed the escalation of the trade war.

Ashish Sop: It's important to keep in mind here that.

Speaker Change: Trade War.

Speaker Change: These tariff narrowed to drag on for another quarter.

Ashish Sop: Price increases are not just like for like increases we are oftentimes, providing our clients with enhancements to the existing solutions.

Speaker Change: Do you think <unk> signed the deal.

Speaker Change: <unk>.

Speaker Change: Yes look I think it's really not so much in the context of the trade War honestly.

Ashish Sop: For access and broader usage in.

Bear Pettit: And notably, a few observations. There's a clear demand among clients for transparency, analytics, stress testing in the current environment. There's an emphasis on opportunities outside the U.S. from a number of clients in all geographies.

Ashish Sop: Addition to <unk>.

Ashish Sop: To provide enhanced client service and so all of those things factor into.

Baer Pettit: There's a clear demand among clients for transparency, analytics, stress testing in the current environments. There is an emphasis on opportunities outside the US from a number of clients in all geographies. And so those are some of the key things. So we are not seeing a dramatic change. We are in constant contact with our clients at all levels of the organization, from the salesforce to Henry and myself. And we hope we can navigate this with our important mission-critical tools.

There's a clear demand among clients for transparency, analytics, stress testing in the current environments. There is an emphasis on opportunities outside the US from a number of clients in all geographies. And so those are some of the key things. So we are not seeing a dramatic change. We are in constant contact with our clients at all levels of the organization, from the salesforce to Henry and myself. And we hope we can navigate this with our important mission-critical tools.

Speaker Change: It's just much more kind of in quote normal business. So in the sense that look sometimes some quarters, we get a lot of things at the very last minute, sometimes things get bonds. We had a few larger deals that didn't make it this past quarter I was actually personally involved in some of those so I think.

Ashish Sop: Our approach to pricing.

Ashish Sop: And we do also look at a quaint health and the overall pricing environment as inputs as well.

Ashish Sop: There are definitely areas, where we could push price more but we are very focused on being a very strong partner to our clients as we said before.

Bear Pettit: And so those are some of the key things. So we are, you know, we are not seeing a dramatic change. We are in constant contact with our clients at all levels of the organization from the sales force to Henry and himself. And we hope we can navigate this with our important mission critical tools. Thank you.

Speaker Change: I want to link it left to the environment.

Ashish Sop: Henri alluded too in these environments and we have the opportunity to do to do more with organizations and help them in these times and so we factor that into the overall pricing equation as well.

Speaker Change: In the sense that.

Speaker Change: My overall observation was one we are not for the moment seeing anything unusual people. Our clients are cautious there is a lot of uncertainty, but on the day to day level of what's going on with our clients in terms of let's say a deal not making it from one quarter to the next.

Speaker Change: That's very helpful color. Thank you.

Speaker Change: Thank you one moment for our next question.

Speaker Change: Our next question comes from the line of Owen Lau from Oppenheimer.

Tony Kaplan: Thank you.

Toni Kaplan: Thank you.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Manav Patnaik from Barclays.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Manav Patnaik from Barclays.

Speaker Change: With the evidence shows that those things will close based on what we know today. So my main point is really to say that as of today, we're not really seeing a big change in the environment.

Operator: One moment for our next question.

Owen Lau: Thank you for taking my questions I wanted to go back to the newer sales and bottom line and you mentioned that some deals push out from the first quarter to second quarter, but you are still cautious and are cautiously optimistic that you can find them in the second quarter.

Manav Patnaik: Our next question comes from the line of Manav Patnaik from Barclays. Hi, thank you.

Manav Patnaik: Hi, thank you. Andy, I just wanted to ask, in terms of your comment on your preparing for a wide range of outcomes, maybe just remind us kind of of that downturn playbook that you've talked about many times before, but with just a little bit more context on perhaps those outcomes you're referring to in this environment.

Manav Patnaik: Hi, thank you. Andy, I just wanted to ask, in terms of your comment on your preparing for a wide range of outcomes, maybe just remind us kind of of that downturn playbook that you've talked about many times before, but with just a little bit more context on perhaps those outcomes you're referring to in this environment.

Andy Wiechmann: Andy, I just wanted to ask in terms of your comment on your preparing for a wide range of outcomes, maybe just, you know, remind us, you know, kind of off that downturn playbook that you've talked about many times before, but, you know, with just a little bit more context on, you know, perhaps, You know, there's outcomes you're referring to in this environment. Sure. And as you know, we continually calibrate the pace of spend based on not only the market levels, but business performance and opportunities that we see. And so if markets improve, we will we will flex up.

Speaker Change: We're not being told by clients that the environment will mean, they do not do something and so in that sense. My emphasis is on continuity in what we're doing continuity in our client talks but the background is this uncertainty. So it will a lot can happen in the next.

Speaker Change: So could you please provide more color on under what circumstances.

Owen Lau: It said that they would proceed with the deal.

Speaker Change: Do they need to feed the escalation of the trade war.

Owen Lau: If this trade war.

Speaker Change: Tariff narrowed to drag on for another quarter.

Andrew Wiechmann: Sure. And as you know, we continually calibrate the pace of spend based on not only the market levels, but business performance, and opportunities that we see. And so if markets improve, we will flex up. And similarly, if markets turn down, we have the levers to manage our expenses down. Just to be a little bit more specific about those levers that we have, if we need to use them, you've got incentive compensation, which adjusts naturally with the outlook for the business and overall business performance relative to targets. A 10% swing in the performance relative to our targets has an annual impact of about $20 million, just to dimension how much that can swing. There are certain non-comp expenses that we can flex, delaying professional fees, flexing other non-comp items that can collectively have an annualized impact of about $20 million.

Andy Wiechmann: Sure. And as you know, we continually calibrate the pace of spend based on not only the market levels, but business performance, and opportunities that we see. And so if markets improve, we will flex up. And similarly, if markets turn down, we have the levers to manage our expenses down. Just to be a little bit more specific about those levers that we have, if we need to use them, you've got incentive compensation, which adjusts naturally with the outlook for the business and overall business performance relative to targets. A 10% swing in the performance relative to our targets has an annual impact of about $20 million, just to dimension how much that can swing. There are certain non-comp expenses that we can flex, delaying professional fees, flexing other non-comp items that can collectively have an annualized impact of about $20 million.

Speaker Change: During the course of this quarter, but as of right now we're not seeing.

Do you think there was to sign the deal.

Speaker Change: The volatility effect specific deals that we have in the pipeline right now.

Speaker Change: Yeah look I think it's really not so much in the context of the trade War honestly.

Speaker Change: Got it thanks a lot.

Speaker Change: I think it's just much more kind of in quote normal business. So in the sense that look sometimes some quarters, we get a lot of things at the very last minute, sometimes things get bumps. We had a few larger deals that didn't make it this past quarter I was actually personally involved in some of those so I think.

Andy Wiechmann: And similarly, if markets turn down, we have the levers to to manage our expenses down. Just to be a little bit more specific about those levers that we have, if we if we need to use them, you've got incentive compensation, which adjusts naturally with the outlook for the business and overall business performance relative to the target. A 10% swing in the performance relative to our targets has an annual impact of about $20 million, just to dimension how much that could be. There are certain non-comp expenses that we can flex, delaying professional fees, flexing other non-comp items that can collectively have an annualized impact of about $20 million, and those can start to impact expenses within a quarter or two, so relatively quickly.

Speaker Change: Thank you one moment for our next question.

Speaker Change: Our next question comes from the line of Alex <unk> from J P. Morgan.

Alex <unk>: Hi, everybody.

Speaker Change: Fair, Andy could you potentially comment on.

Speaker Change: I want to link it to the environment.

Speaker Change: AUM has trended in the non ETF part of your business overall.

Speaker Change: In the sense that.

Speaker Change: My overall observation was one we are not for the moment seeing anything unusual people. Our clients are cautious there is a lot of uncertainty, but on the day to day level of what's going on with our clients in terms of let's say a deal not making it from one quarter to the next.

Speaker Change: I saw that we had some pretty healthy growth in the quarter.

Speaker Change: Just sort of elaborate as to what is driving your growth there and what your expectations are for the balance of the year up 27% by my math.

Speaker Change: Just under $50 million on a quarterly basis surely.

Speaker Change: Well the evidence shows that those things will close based on what we know today. So my main point is really to say that as of today, we're not really seeing a big change in the environment.

Speaker Change: A big step up for you guys to be helpful to know what we should be looking for there and maybe what's driving it. Thank you.

Andrew Wiechmann: Those can start to impact expenses within a quarter or two, so relatively quickly. Then we can control the pace of hiring, which usually takes a couple of quarters to start to have an impact on the financial results. But that similarly can have about a $20 million annual impact if we flex hiring up or down on the year. And we can even calibrate more or less, obviously, on all those levers. And so it's a continual calibration. As we had said before, our guidance assumed that markets gradually increase throughout the year. If the market levels remain relatively flat through the year, we will be towards the low end or at the low end of our expense guidance ranges. We wanted to give you that color just to calibrate how much the market would impact overall expenses.

Those can start to impact expenses within a quarter or two, so relatively quickly. Then we can control the pace of hiring, which usually takes a couple of quarters to start to have an impact on the financial results. But that similarly can have about a $20 million annual impact if we flex hiring up or down on the year. And we can even calibrate more or less, obviously, on all those levers. And so it's a continual calibration. As we had said before, our guidance assumed that markets gradually increase throughout the year. If the market levels remain relatively flat through the year, we will be towards the low end or at the low end of our expense guidance ranges. We wanted to give you that color just to calibrate how much the market would impact overall expenses.

Andy Wiechmann: And then we can control the pace of hiring, which usually takes a couple quarters to start to have an impact on the financial results. But that similarly can have about a $20 million annual impact if we flex hiring up or down on the year. And so and we can even calibrate more or less, obviously, on all those levers. And so it's a continual calibration. As we had said before, our guidance assumed that markets gradually increase throughout the year. If the market levels remain relatively flat through the year, we will be towards the low end or at the low end of our expense guidance ranges.

Speaker Change: Sure sure Hi, Alex.

Speaker Change: So firstly, it's important to.

Speaker Change: Keep in mind that there can be a little bit of lumpiness in revenue in the non ETF passive category related to true ups and true downs.

Speaker Change: We're not being told by clients that the environment will mean, they do not do something and so in that sense. My emphasis is on continuity.

Speaker Change: Just when we get the updated assets reported to clients, but if you look at the underlying AUM, we do see pretty healthy growth. There. So non ETF average AUM was up around 20% in the quarter compared to a year ago.

Speaker Change: And what we're doing continuity in our client talks but the background is.

Speaker Change: Certainty so.

Speaker Change: A lot can happen in the next.

Speaker Change: During the course of this quarter, but as of right now we are not seeing.

Speaker Change: We saw.

Speaker Change: Pretty healthy growth of new fund creation, we even saw that particularly in areas like climate and custom mandates.

Speaker Change: The volatility affect specific deals that we have in the pipeline right now.

Speaker Change: And so we continue to be encouraged about the opportunity there are a.

Andy Wiechmann: We wanted to give you that color just to calibrate how much the market would impact overall expenses. But it is important to highlight that there are many factors that feed into the pace of expenses beyond just the market levels and AUM levels. But we also look at business opportunities, financial performance and potential investment traction that we're getting in key areas. So it's something that we'll continue to calibrate based on the outlook and we'll keep you posted. But we're confident that we have a very, very strong financial model here and the levers to deliver strong results in all environments.

Speaker Change: Got it thanks a lot.

Speaker Change: A couple of areas to note here, we commented in the prepared remarks about direct indexing. So direct indexing does come through this line, while it's relatively small it is high growth for US and then there are areas like institutional passive which we continue to see healthy growth in where institutions are launching mandates against one of our indexes.

Speaker Change: Thank you one moment for next question.

Andrew Wiechmann: But it is important to highlight that there are many factors that feed into the pace of expenses beyond just the market levels and AUM levels. But we also look at business opportunities, financial performance, and potential investment traction that we're getting in key areas. So it's something that we'll continue to calibrate based on the outlook, and we'll keep you posted. But we're confident that we have a very, very strong financial model here and the levers to deliver strong results in all environments.

But it is important to highlight that there are many factors that feed into the pace of expenses beyond just the market levels and AUM levels. But we also look at business opportunities, financial performance, and potential investment traction that we're getting in key areas. So it's something that we'll continue to calibrate based on the outlook, and we'll keep you posted. But we're confident that we have a very, very strong financial model here and the levers to deliver strong results in all environments.

Speaker Change: Our next question comes from the line of Alex <unk> from J P. Morgan.

Alex: Hi, everybody.

Speaker Change: Fair, Andy could you potentially comment on.

Alex: How AUM has trended in the non ETF part of your business overall.

Speaker Change: And as I alluded to that.

Speaker Change: Thats increasingly against custom indexes and that's a place where we are differentiated.

Alex: I saw that we had some pretty healthy growth in the quarter.

Speaker Change: We can be a helpful partner to clients and.

Alex: Just sort of elaborate as to what is driving your growth there and what your expectations are for the balance of the year up 27% by my math.

Manav Patnaik: Okay. Thank you, Andy.

Manav Patnaik: Okay. Thank you, Andy.

Speaker Change: We do see pretty pretty stable economics, there and so average basis points have been quite resilient across non ETF passive on the heels of our non market cap.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Alex Crane from UBS.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Alex Crane from UBS.

Andy Wiechmann: Thank you.

Operator: One moment for our next question.

Alex Crane: Our next question comes from the line of Alex Crane from UBS. Yes, hello, everyone. I just wanted to come back to the selling environment, and in particular, I want to ask about, you know, international investing. I mean, it seems to be the first time in a long time that people are talking about, you know, asset flows, not towards the US, but towards international markets, which seems fairly new. So, given that most of your indices are on subscription sides, internationally focused, just wondering if you start to see a change at all in terms of investor or customer sentiment.

Alex: Just under $50 million on a quarterly basis as Shirley.

Speaker Change: And custom index.

Speaker Change: Type of mandates. So yes, it's an area that we were focused heavily on it's very strategic for us and I think it's a reflection of some of those custom index opportunities that we see out there.

Alex Crane: Yes, hi, hello everyone. Just wanted to come back to the selling environment. And in particular, I want to ask about international investing. I mean, it seems to be the first time in a long time that people are talking about asset flows, not towards the US, but towards international markets, which seems fairly new. So given that most of your indices are on the subscription side internationally focused, just wondering if you started to see a change at all in terms of investor or customer sentiment. So if more assets are flowing into, let's say, Europe or away from the US, how would we think about maybe a pickup in your business, not on the ETF side, but more on the subscription side? Would you expect more fund launches? Anything you can see already, or is it just way too early?

Alex Kramm: Yes, hi, hello everyone. Just wanted to come back to the selling environment. And in particular, I want to ask about international investing. I mean, it seems to be the first time in a long time that people are talking about asset flows, not towards the US, but towards international markets, which seems fairly new. So given that most of your indices are on the subscription side internationally focused, just wondering if you started to see a change at all in terms of investor or customer sentiment.

Speaker Change: A big step up for you guys to be helpful to know what we should be looking for there and maybe what's driving it. Thank you.

Speaker Change: Sure sure Hi, Alex.

Speaker Change: Thanks, and just in case it wasn't clear I didn't mean to ask for end of period AUM for the non ETF business sorry about that.

Speaker Change: Yeah, so firstly, it's important to.

Speaker Change: Keep in mind that there can be a little bit of lumpiness in revenue in the non ETF passive category related to true ups and true downs.

Speaker Change: Yes, yes.

Speaker Change: Yes, no problem end of period.

Speaker Change: Just when we get the updated assets reported to clients, but if you look at the underlying AUM.

Speaker Change: AUM in non ETF passive was around $3 nine trillion dollars.

We do see pretty healthy growth there. So non ETF average AUM was up around 20% in the quarter compared to a year ago.

Speaker Change: Thank you.

Alex Crane: So, if more assets are flowing into, let's say, Europe or away from the US, how would we think about maybe, you know, a pickup in your business, not on the ETF side, but more on the subscription side? Like, would you expect more fund launches, anything you can see already, or is it just way too early? But just trying to think about if this is a new trend in a long time, how this could actually impact your business.

So if more assets are flowing into, let's say, Europe or away from the US, how would we think about maybe a pickup in your business, not on the ETF side, but more on the subscription side? Would you expect more fund launches? Anything you can see already, or is it just way too early? But just trying to think about if this is a new trend in a long time, how this could actually impact your business. Thanks.

Speaker Change: One moment for our next question.

Speaker Change: We saw.

Speaker Change: Our next question comes from the line of Faiza <unk> from Deutsche Bank.

Speaker Change: Pretty healthy growth of new fund creation, we even saw that particularly in areas like climates and custom mandates.

Faiza <unk>: Yes, hi, thank you.

Speaker Change: And so we continue to be encouraged about the opportunity. There are couple of areas to note here, we will comment on it in the <unk>.

Faiza: Wondering if you could comment a little bit on retention rates.

Alex Crane: But just trying to think about if this is a new trend in a long time, how this could actually impact your business. Thanks.

Speaker Change: Prepared remarks about direct indexing, so direct indexing does come through this line, while it's relatively small it is high growth for US and then there are areas like institutional passive which we continue to see healthy growth in where institutions are launching mandates against one of our indexes and as I alluded to that's.

Faiza: Particularly on the index side on analytics, and if I look at those it seems that we're pretty normal relative to the historical trend if I look back to 22 and 'twenty three.

Henry Fernandez: Well, thanks for that question, Alex. Definitely, we're seeing a mark change in everything you're talking about. This obviously accelerated with the tariffs, but it was already ongoing, you know, from from the beginning of the year. in which a lot of our global clients including US clients in their in their global portfolios were already placing a lot of bets on on Europe and on Japan. And given, at that time, the decline in interest rates and obviously the weakening of the dollar, we also saw flows going into emerging markets and new inflows into emerging markets. As I said, that accelerated meaningfully since April 2.

Baer Pettit: Well, thanks for that question, Alex. Definitely, we're seeing a marked change in everything you're talking about. This obviously accelerated with the tariffs, but it was already ongoing from the beginning of the year, in which a lot of our global clients, including US clients in their global portfolios, were already placing a lot of bets on Europe and on Japan. And given at that time the decline in interest rates and obviously the weakening of the dollar, we also saw flows going into emerging markets and new inflows into emerging markets. As I said, that accelerated meaningfully since 2 April. And when you look at our business, we have done relatively well in the last two, three years relative to strong headwinds for us because a lot of, first of all, our breakdown in subscription run rate is about 40% Americas, 40% Europe or EMEA, and 20% Asia-Pacific.

Baer Pettit: Well, thanks for that question, Alex. Definitely, we're seeing a marked change in everything you're talking about. This obviously accelerated with the tariffs, but it was already ongoing from the beginning of the year, in which a lot of our global clients, including US clients in their global portfolios, were already placing a lot of bets on Europe and on Japan. And given at that time the decline in interest rates and obviously the weakening of the dollar, we also saw flows going into emerging markets and new inflows into emerging markets. As I said, that accelerated meaningfully since 2 April. And when you look at our business, we have done relatively well in the last two, three years relative to strong headwinds for us because a lot of, first of all, our breakdown in subscription run rate is about 40% Americas, 40% Europe or EMEA, and 20% Asia-Pacific.

Faiza: I know you had talked about some lingering impacts over time potentially from consolidation by the European asset managers. So just curious if we should think about these levels as more normal from here are there additional impacts that you are expecting related to just the current environment or.

Speaker Change: That's increasingly against custom indexes and that's a place where we are differentiated.

Speaker Change: We can be a helpful partner to clients and and we do see pretty pretty stable economics, there and so average basis points have been quite resilient across non ETF passive on the heels of our non market cap.

Faiza: More generally anything else that you are expecting.

Faiza: Sure So <unk>.

Speaker Change: And custom index.

Faiza: Just to provide a bit more color on the retention rate in the quarter.

Speaker Change: Type of mandates. So yes, it's an area that we were focused heavily on it's very strategic for us and I think it's a reflection of some of those custom index opportunities that we see out there.

Faiza: We can talk about some of the dynamics.

Faiza: Looking moving forward here, but if we look at.

Faiza: Q1 of this year compared to Q1 of last year.

Speaker Change: Thanks, and just in case it wasn't clear I didn't mean to ask for end of period AUM for the non ETF business sorry about that.

Faiza: We had lower cancels across most client segments and we had notable declines in cancels with hedge funds and banks compared to a year ago, which probably is not surprising if you remember.

Speaker Change: Yes, yes.

Yes, no problem end of period.

Speaker Change: AUM in non ETF passive was around three nine trillion dollars.

Faiza: We had the large cancel related to the large global bank merger in the first quarter of last year, and we had some elevated hedge fund events in the first quarter of last year.

Henry Fernandez: And when you look at our business, we have done relatively well in the last two, three years relative to strong headwinds for us because a lot of, first of all, our breakdown in subscription run rate is about 40% America, 40% Europe or EMEA, and 20% Asia Pacific. And that is where the client is located. But at the end, our business is predicated on global investing. And if there is a massive amount of money flowing into the US market, you know, it's, it's a hell wind for us. And that's what was happening in the last, you know, couple two, three years, that trend is reversing, you know, significantly.

Speaker Change: Thank you.

Speaker Change: One moment for our next question.

Faiza: And so we saw a nice rebound in <unk>.

Speaker Change: Our next question comes from the line of Faiza, all lie from Deutsche Bank.

Faiza: In retention among those client segments, but.

Speaker Change: Your point, we saw a pretty healthy retention in our largest product segments. So within index.

Faiza: Yes, hi, Thank you I was wondering if you could comment a little bit on retention rate.

Speaker Change: 96, 5% and within analytics 95, 5% and from a client segment standpoint, we saw our retention rate of about 96% with asset managers.

Faiza: Particularly on the index side on analytics, and if I look at those it seems like they were pretty normal relative to the historical trend if I look back to 22 and 'twenty three.

Baer Pettit: So we are not, and that is where the client is located. But at the end, our business is predicated on global investing. And if there is a massive amount of money flowing into the US market, it's a headwind for us. And that's what was happening in the last two, three years. That trend is reversing significantly. In the last month or so, I've had 70 to 80 CEO-level meetings throughout all of Europe and Asia, which I just came back. And you could see palpably that shift. So that hopefully will benefit us in a relative sense because we were having this headwind for a long period of time. That will clearly benefit the asset-based fee. Remember, most of our asset-based fees are based on exposures that are outside of the US. And then we translate them into dollars.

So we are not, and that is where the client is located. But at the end, our business is predicated on global investing. And if there is a massive amount of money flowing into the US market, it's a headwind for us. And that's what was happening in the last two, three years. That trend is reversing significantly. In the last month or so, I've had 70 to 80 CEO-level meetings throughout all of Europe and Asia, which I just came back. And you could see palpably that shift. So that hopefully will benefit us in a relative sense because we were having this headwind for a long period of time. That will clearly benefit the asset-based fee. Remember, most of our asset-based fees are based on exposures that are outside of the US. And then we translate them into dollars.

Speaker Change: And north of 95% with asset owners.

Speaker Change: And so the.

Speaker Change: Part of it part of the business saw some pretty healthy resilience in the quarter.

Faiza: I know you had talked about some lingering impacts over time potentially from you know consolidation with European asset managers. So just curious if we should think about these levels as more normal from here are there additional impact that you're expecting related to just the current environment or.

Speaker Change: The top cause of cancels continues to be client events and I think the comments that I made last quarter around.

Speaker Change: Around some caution, particularly in Europe still holds I think when we look forward. This year, it's possible we could see some lumpiness in cancels.

Henry Fernandez: I, you know, in the last month or so, I've had 70 to 80 CEO level meetings throughout all of Europe and Asia, which I just came back, and you could see palpable, you know, that shift, you know, so that hopefully will benefit us in the on a relative sense, because, you know, we were having this headwind for a long period of time, that will clearly benefit the asset base fee. Remember, you know, most of our asset base fees are based on exposures that are outside of the US. And then we translate them into dollars. So we may get two benefits, you know, relative, better relative performance of assets outside of the US compared to the US.

Speaker Change: In certain periods, particularly if the market uncertainty continues and that that recent volatility continues.

Faiza: Generally anything else that you're expecting.

Faiza: Sure. So maybe just to provide a bit more color on the retention rate in the quarter.

Speaker Change: Which can lead to some elevated client events, but it's important to keep in mind that our tool is really our mission critical here and Henry alluded to there must have solutions in these types of environments, but.

Faiza: And then we can talk about some of the dynamics.

Faiza: Looking moving forward here, but if we look at.

Faiza: In Q1.

Speaker Change: But we were encouraged by the retention here, but a bit cautious on the outlook for the balance of the year.

Faiza: Of this year compared to Q1 of last year we.

Faiza: We had lower cancels across most client segments and we had notable declines in cancels with hedge funds and banks compared to a year ago, which which probably is not surprising if you remember.

Thank you one moment for our next question.

Speaker Change: Our next question comes from the line of Kelsey Xu from autonomous.

Baer Pettit: So we may get two benefits: better relative performance of assets outside of the US compared to the US, and secondly, depreciation of the dollar. So that may benefit us there. And on the subscription side, clearly, the active managers, the pension funds, and all of that will do that. But I want to amplify my answer here to say these are periods in which people need a lot more data to understand the underlying issues of portfolios, whether it's index data or transparency data for private assets or ESG data, sustainability data, climate data. They want to understand what's going on.

So we may get two benefits: better relative performance of assets outside of the US compared to the US, and secondly, depreciation of the dollar. So that may benefit us there. And on the subscription side, clearly, the active managers, the pension funds, and all of that will do that. But I want to amplify my answer here to say these are periods in which people need a lot more data to understand the underlying issues of portfolios, whether it's index data or transparency data for private assets or ESG data, sustainability data, climate data. They want to understand what's going on.

Faiza: We had the large cancel related to the large global bank merger in the first quarter of last year, and we had some elevated hedge fund events in the first quarter of last year.

Kelsey Xu: Hi, good morning, Thanks for taking my question.

Speaker Change: And I'll, let sex and thank you previously highlighted that in a period of high volatility and uncertainty annualized six which generally see stronger crowds.

Henry Fernandez: And secondly, depreciation of the dollar. So that may, you know, benefit us there. And on the subscription side, clearly, the active managers, the pension funds, and all of that, you know, we'll, we'll do that, you know, but I want to amplify, you know, my answer here to say these are periods in people in which people need a lot more data. to understand the underlying issues of portfolios, whether it's index data, or transparency data for private assets, or ESG data, sustainability data, climate data. They want to understand what's going on. This geospatial location problem that we have is enormously valuable to now people trying to assess who are the companies that are going to get more impacted or less impacted by trade wars.

Faiza: So we saw a nice rebound in in retention among those client segments, but.

Speaker Change: I'm not sure we've really seen this in Q1 that sales numbers, but under the current environment and I was wondering if you can talk a little bit more about growth expectations for an analyst 16, samsel kits sailing the rest of the year.

Faiza: To your point, we saw a pretty healthy retention in our largest product segments. So within index. It was 96, 5% and within analytics 95, 5% and from a client segment standpoint, we saw our retention rate of about 96% with asset managers.

Speaker Change: Okay.

Speaker Change: So.

Speaker Change: First of all.

Faiza: And north of 95% with asset owners.

Speaker Change: Q1.

Speaker Change: Was not yet a period of significant.

Faiza: And so you know the the core part of part of the business saw some pretty healthy resilience in the quarter.

Speaker Change: And our turmoil or.

Baer Pettit: This geospatial location product that we have is enormously valuable to now people trying to assess who are the companies that are going to get more impacted, or less impacted, by trade wars because we have location of manufacturing plants per company, locations of where they're selling the products, and all of that. So that hopefully can give us a lot of benefit in there. These are times in which people need a lot of models to understand stress testing, to scenario planning, scenario, what if this, what if that, factor decomposition. There is major shift that will go on into a value company, a growth company, a momentum company, a quality company, and all of that. So we're seeing significant dialogue going on with our clients with respect to a lot of that. And I said the transparency.

This geospatial location product that we have is enormously valuable to now people trying to assess who are the companies that are going to get more impacted, or less impacted, by trade wars because we have location of manufacturing plants per company, locations of where they're selling the products, and all of that. So that hopefully can give us a lot of benefit in there. These are times in which people need a lot of models to understand stress testing, to scenario planning, scenario, what if this, what if that, factor decomposition. There is major shift that will go on into a value company, a growth company, a momentum company, a quality company, and all of that. So we're seeing significant dialogue going on with our clients with respect to a lot of that. And I said the transparency.

Speaker Change: Uncertainty if anything.

Faiza: The top cause of cancels continues to be client events and I think the comments that I made last quarter.

Speaker Change: There was a little bit on this part of the Q1, there was a little bit of the carryover of the assignment.

Faiza: Around some caution, particularly in Europe still holds I think when we look forward. This year, it's possible we could see some lumpiness in cancels.

Speaker Change: Of the New U S administration, and the risk on trades that took place.

Henry Fernandez: Because we have location of manufacturing plants per company, locations of where they're selling the products, and all of that. So that hopefully can give us a lot of benefit in there. These are times in which people need a lot of models to understand stress testing, to a scenario planning, a scenario what if this, what if that, factor decomposition. There is major shift that will go on into a value company, a growth company, a momentum company, a quality company, and all of that. So we're seeing significant dialogue going on with our clients with respect to a lot of that.

Speaker Change: So I would not read too much on that Q1 being a period of difficulty.

Faiza: In certain periods, particularly if the market uncertainty continues and that that recent volatility continues.

Speaker Change: Clearly things started to.

Faiza: Which can lead to some elevated client events, but it's important to keep in mind that our tool is really our mission critical here.

Speaker Change: To get a little more to deteriorate then.

Speaker Change: In the latter part of Q1 and then obviously in April.

And as Henri alluded to there must have solutions in these types of environments.

Speaker Change: So embarrassed like this.

Faiza: But we were encouraged by the retention here, but I'm a bit cautious on the outlook for the balance of the year.

Speaker Change: There are two big in periods like this.

Speaker Change: Especially this one there are a little bit of three different forces.

Speaker Change: Thank you one moment for our next question.

Speaker Change: That will shape up.

Speaker Change: Our next question comes from the line of Kelsey due from autonomous.

Speaker Change: Our sales and our growth and all of that right.

Henry Fernandez: And I said the transparency. So if you think about private assets.

Speaker Change: First Forbes is.

Kelsey: Hi, Good morning, Thanks for taking my question just on <unk> I think you previously highlighted that in a period of high volatility and uncertainty we analyze six would generally see stronger crowd.

Baer Pettit: So if you think about private assets, it's important to know that in an environment like this, we're not counting on a lot of money going into private assets. That would be icing on the cake. We're counting on the current investors in private assets, wanting much more transparency of what's going on in their portfolio. And that's where we come in. In private credit, for example, with the potential of slowdowns or recessions around the world, especially US, Europe, people will want to know what's underneath my private credit portfolio. So we have a database of 2,800 private credit funds that have about 14,000 companies. We have terms and conditions in those private credit funds. And now we have, with this partnership with Moody's, we will have credit assessment on that. So that's another example of the benefits we can get in this environment.

So if you think about private assets, it's important to know that in an environment like this, we're not counting on a lot of money going into private assets. That would be icing on the cake. We're counting on the current investors in private assets, wanting much more transparency of what's going on in their portfolio. And that's where we come in. In private credit, for example, with the potential of slowdowns or recessions around the world, especially US, Europe, people will want to know what's underneath my private credit portfolio.

Speaker Change: Client needles the most.

Henry Fernandez: It's important to know that in an environment like this, we're not counting on a lot of money going into private assets. That will be icing on the cake. We're counting on the current investors in private assets wanting much more transparency of what's going on in their portfolio. And that's where we come in. For private credit, for example, with the potential of slowdowns or recessions around the world, especially in US, Europe, people will want to know what's underneath my private credit portfolio. So we have a database of 2,800 private credit funds that have about 14,000 companies.

Speaker Change: Clients need more data they need more stress testing factor the compensation they need more understanding of what is inside an index.

Speaker Change: They need better transparency with private assets and all of that because they want to know what's underneath the hood of all their investments right.

Kelsey: I'm not sure we've really seen this in Q1 that youll see on some numbers, but under the current environment and I was wondering if you can talk a little bit more outgrowth expectations for analytic school Samsel Q2, and the rest of the year.

Speaker Change: And therefore that will be out.

Speaker Change: Very significant positive, especially in.

Kelsey: Okay.

Speaker Change: In our risk analytics.

Kelsey: So so.

Speaker Change: And our index offerings.

Kelsey: First of all you know Q1.

So we have a database of 2,800 private credit funds that have about 14,000 companies. We have terms and conditions in those private credit funds. And now we have, with this partnership with Moody's, we will have credit assessment on that. So that's another example of the benefits we can get in this environment. Again, we're not savoring this environment. We say we don't deserve it and the like. But in an environment like this, this is where MSCI come at its best, right?

Speaker Change: Which is the largest part of MSCI right.

Kelsey: It was not yet a period of significant Oh.

Speaker Change: Imperial's like this also.

Henry Fernandez: We have terms and conditions in those private credit funds. And now we have this partnership with Moody's. We will have credit assessment on that. So that's another example of the benefits we can get in this environment. Again, we're not savoring this environment. We say we don't deserve it and the like.

Speaker Change: No. It appears like there is in this particular period there is a significant.

Kelsey: A lot of turmoil or.

Kelsey: Uncertainty if anything.

Kelsey:

Speaker Change: Reallocation of assets too.

Kelsey: There was a little bit at least part of the Q1, there was a little bit of the carryover of the assignment.

Speaker Change: Non U S markets.

Speaker Change: With a consequent declining of the dollar.

Kelsey: The new U S administration, and the risk on trades that took place.

Baer Pettit: Again, we're not savoring this environment. We say we don't deserve it and the like. But in an environment like this, this is where MSCI come at its best, right?

Speaker Change: We're boring, Japan, and Europe, and other places like that and we're seeing that and that that again is another positive for us.

Kelsey: So.

Kelsey: I would not read too much on on Q1 being a period of difficulty.

Operator: But in an environment like this, this is where MSCI comes at its best. Thank you. One moment before our next question.

Speaker Change: Compared to what.

Speaker Change: What the last three years was a massive inflow into the U S market. So on balance we do much better when money flows around the world.

Kelsey: Clearly things started to tilt.

Manav Patnaik: Very good. Thank you.

Alex Kramm: Very good. Thank you.

Kelsey: To get a little more to deteriorate in the.

Operator: Thank you. One moment before our next question. Our next question comes from the line of Ashish Sabhadra from RBC.

Operator: Thank you. One moment before our next question. Our next question comes from the line of Ashish Sabhadra from RBC.

Kelsey: Latter part of Q1, and then obviously in April.

Kelsey: So embarrassed like this.

Speaker Change: The U S market.

Ashish Sabadra: Our next question comes from the line of Ashish Sabadra from RBC. Thank you for taking my question. I just wanted to focus on the pricing. I was just wondering if you could comment on how the pricing is trending, both for renewables, but also for new sales. Sure. So, I would say across the firm in the first quarter, the percent contribution from price increases to new recurring sales was roughly in line with the contribution we saw a year ago. That is slightly lower than what we saw in 2023. It does vary a bit across product lines and client segments, but in most areas, I'd say price increases were roughly comparable to last year.

Speaker Change: Those two very significant positive needs to be weighed against.

Kelsey: There are two big it appears like this you know and especially this one there are a little bit of three different forces.

Speaker Change: The.

Speaker Change: The spending of our clients you know the budgets of our clients in which there are some clients that are doing well you know a lot of equity amongst our hedge funds will do well macro hedge funds will go well based on funds are typically very steady.

Baer Pettit: Thank you. My question. I just wanted to focus on the pricing. I was just wondering if you could comment on how the pricing is trending both for renewals but also for new sales. Thanks.

Ashish Sabadra: Thank you. My question. I just wanted to focus on the pricing. I was just wondering if you could comment on how the pricing is trending both for renewals but also for new sales. Thanks.

Kelsey: That will shape.

Kelsey: Our our sales.

Kelsey: Our growth and all of that right. The first Forbes is client needles the most.

Andrew Wiechmann: Sure. So I would say across the firm, in Q1, the percent contribution from price increases to new or recurring sales was roughly in line with the contribution we saw a year ago. That is slightly lower than what we saw in 2023. It does vary a bit across product lines and client segments, but in most areas, I'd say price increases were roughly comparable to last year. It's important to keep in mind here that price increases are not just like-for-like increases. We are oftentimes providing our clients with enhancements to the existing solutions, broader access, and broader usage, in addition to continuing to provide enhanced client service. And so all of those things factor into our approach to pricing. And we do also look at client health and the overall pricing environment as inputs as well.

Andy Wiechmann: Sure. So I would say across the firm, in Q1, the percent contribution from price increases to new or recurring sales was roughly in line with the contribution we saw a year ago. That is slightly lower than what we saw in 2023. It does vary a bit across product lines and client segments, but in most areas, I'd say price increases were roughly comparable to last year. It's important to keep in mind here that price increases are not just like-for-like increases. We are oftentimes providing our clients with enhancements to the existing solutions, broader access, and broader usage, in addition to continuing to provide enhanced client service. And so all of those things factor into our approach to pricing. And we do also look at client health and the overall pricing environment as inputs as well.

Speaker Change: Index fund managers are going to be.

Kelsey: Clients need more data they need more stress testing, the fact or the compensation they need more understanding of what is inside an index they need better transparency with private assets and all of that because they want to know what's underneath the hood of older investments right.

Speaker Change: Active managers may be may not do as well, but some of them. If there is a period in which active management.

Speaker Change: It should be very brave men is this barrier. So some of those like the manager the well and their budgets aren't really going to be core tail, but others may be curtail so I think that.

Kelsey: Therefore that will be a very significant positive, especially in.

Speaker Change: We need to put those three factors into into the equation how much of the two positives outweigh the negatives of potential lesser spending by our clients or vice versa, and we don't know the answer to that until we go through the whole period right.

Andy Wiechmann: It's important to keep in mind here that price increases are not just like-for-like increases. We are oftentimes providing our clients with enhancements to the existing solutions, broader access, and broader usage, in addition to continuing to provide enhanced client service. And so all of those things factor into our approach to pricing. And we do also look at client health and the overall pricing environment as inputs as well. And there are definitely areas where we could push price more, but we are very focused on being a very strong partner to our clients, as we've said before, and as Henry alluded to in these environments, we have the opportunity to do more with organizations and help them in these times.

Kelsey: In our risk analytics.

Kelsey: And our index offerings.

Kelsey: Which is the largest part of MSCI right.

Kelsey: Periods like this also.

Kelsey: There is no.

Kelsey: Though it appears like it is in this particular period there is a significant.

Speaker Change: Thank you one moment for our next question.

Kelsey: Allocation of assets.

Speaker Change: Our next question comes from the line of Scott Wurtzel from Wolfe Research.

Kelsey: Two non U S markets.

Kelsey: With a consequent declining of the dollar.

Kelsey: And you know, we're boring you know, Japan, and Europe, and other places like that and we're seeing that and that that again is another positive for us.

Scott Wurtzel: Great. Thank you guys for taking my question I wanted to ask on the sustainability and climate segment just in terms of the acceleration in run rate of growth that we've seen this quarter along with it sounds like some relatively large deals being so I'm. Just wondering if you think we're maybe seeing a potential inflection point.

Andrew Wiechmann: There are definitely areas where we could push price more, but we are very focused on being a very strong partner to our clients, as we said before. As Henry alluded to, in these environments, we have the opportunity to do more with organizations and help them in these times. So we factor that into the overall pricing equation as well.

There are definitely areas where we could push price more, but we are very focused on being a very strong partner to our clients, as we said before. As Henry alluded to, in these environments, we have the opportunity to do more with organizations and help them in these times. So we factor that into the overall pricing equation as well.

Kelsey: Compared to what the last two or three years was a massive inflow into the U S market.

Kelsey: <unk>.

Kelsey: Ireland will do much better when money flows.

Speaker Change: In that segment or that we could potentially see acceleration in growth down the line here.

Andy Wiechmann: And so we factor that into the overall pricing equation. That's very helpful. Good. Thank you.

Kelsey: Around the world that just to the U S market those two very significant positive needs to be weighed against the.

Baer Pettit: That's very helpful. Good. Thank you.

Ashish Sabadra: That's very helpful. Good. Thank you.

Speaker Change: So there is.

Speaker Change: There's no question that sustainability.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Owen Lau from Oppenheimer.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Owen Lau from Oppenheimer.

Kelsey: The spending of our clients you know the budgets of our clients in which there are some clients that are doing well you know a lot of equity long short hedge funds when the well micro hedge funds will grow well basic phones are typically very steady.

Owen Lau: One moment for our next question. Our next question comes from the line of Owen Lau from Oppenheimer. Thank you for taking my questions. I want to go back to the new sales environment. And you mentioned that some deals are pushed out from the first quarter to second quarter, but you are still cautiously optimistic that you can find them in the second quarter. So could you please provide more color on under what circumstances that they will proceed with the deal? Do they need to see the escalation of the trade war if this trade war or if this tariff narrative drag on for another quarter, do you think they will still sign the deal?

Speaker Change: ESG.

Speaker Change: It is on a cyclical.

Speaker Change: Cyclical headwind.

Speaker Change: We continue to believe that on a secular structural basis.

Owen Lau: Thank you for taking my questions. I want to go back to the new sales environment. You mentioned that some deals are pushed out from Q1 to Q2, but you are still cautiously optimistic that you can sign them in Q2. Could you please provide more color on under what circumstances that they will proceed with the deal? Do they need to see the escalation of the trade war? If this trade war or if this tariff narrative drags on for another quarter, do you think they will still sign the deal? Thanks.

Owen Lau: Thank you for taking my questions. I want to go back to the new sales environment. You mentioned that some deals are pushed out from Q1 to Q2, but you are still cautiously optimistic that you can sign them in Q2. Could you please provide more color on under what circumstances that they will proceed with the deal? Do they need to see the escalation of the trade war? If this trade war or if this tariff narrative drags on for another quarter, do you think they will still sign the deal? Thanks.

Speaker Change: Factors related to sustainability and understanding the inside of the portfolios.

Kelsey: At the.

Kelsey: Index fund managers are going to do well.

Kelsey: Active managers, maybe may not do as well, but some of them. If there was a period in which active management.

Speaker Change: It will be positive.

Speaker Change: We will return to higher growth.

Kelsey: It should be a very brilliant is this area. So some of those like the Manitoba under well under budgets aren't really going to be called tail or others, maybe curtail. So I think that you know we need to put those three factors into our into the equation how much of the two positives outweigh the negatives.

Speaker Change: But the demand is also changing the demand that we had was largely ESG ratings people would think of as waiting that cross sell and what we do is they didn't want to look under the hood and they went out and created portfolios on that now people say, yeah, I would love to think curious youre waiting, but I want to see the underlying information I went on.

Kelsey: Basically all lessors spending by our clients or vice versa, and we don't know the answer to that until we go through the whole period right.

Speaker Change: Take it down into the various you know the environmental in those sections.

Owen Lau: Thanks.

Speaker Change: Actual sex yours, and all of that so decline and the demand is changing and therefore, we are gearing up to that change in demand, which is a lot more underlying data, which is actually very positive for us because we have all of that is just a question of how do we package and how we sell it.

Owen Lau: Thanks, Owen. Yeah, look, I think it's really not so much in the context of the trade war, honestly. I think it's just much more kind of, in quote, normal business. So in the sense that, look, sometimes some quarters, we get a lot of things at the very last minute. Sometimes things get bumped. We had a few larger deals that didn't make it this past quarter. I was actually personally involved in some of those. So I think I don't, I want to link it less to the environment in the sense that, you know, my overall observation was one, we are not for the moment seeing anything unusual.

Jeremy Ulan: Thanks, Owen. Yeah, look, I think it's really not so much in the context of the trade war, honestly. I think it's just much more kind of, in quote, normal business. So in the sense that, look, some quarters, we get a lot of things at the very last minute. Sometimes things get bumped. We had a few larger deals that didn't make it this past quarter. I was actually personally involved in some of those. So I think I want to link it less to the environment in the sense that my overall observation was, one, we are not, for the moment, seeing anything unusual. Our clients are cautious. There's a lot of uncertainty.

Andy Wiechmann: Thanks, Owen. Yeah, look, I think it's really not so much in the context of the trade war, honestly. I think it's just much more kind of, in quote, normal business. So in the sense that, look, some quarters, we get a lot of things at the very last minute. Sometimes things get bumped. We had a few larger deals that didn't make it this past quarter. I was actually personally involved in some of those. So I think I want to link it less to the environment in the sense that my overall observation was, one, we are not, for the moment, seeing anything unusual. Our clients are cautious. There's a lot of uncertainty.

Speaker Change: Thank you one moment for our next question.

Speaker Change: Our next question comes from the line of Scott Wurtzel from Wolfe Research.

Speaker Change: The other change in the demand is major regulatory burden so people a lot of our clients.

Scott Wurtzel: Great. Thank you guys for taking my question I wanted to ask on the sustainability and climate segment just in terms of the acceleration in run rate of growth that we've seen this quarter along with it sounds like some relatively large deals being so I'm. Just wondering if you think we're maybe seeing a potential inflection point in that segment.

Speaker Change: Who have portfolios on sustainability or are launching sustainability. They won a lot more help in complying with every one of these regulations all over the world and we have packages that help them do that in an automatic fashion. So so.

Scott Wurtzel: That we could potentially see the acceleration in growth down the line here. Thanks.

Speaker Change: Now the last piece is that you know bear in mind.

Owen Lau: People are, our clients are cautious. There's a lot of uncertainty, but on the day-to-day level of what's going on with our clients in terms of, let's say, a deal not making it from one quarter to the next, you know, the evidence shows that those things will close based on what we know today. So my main point is really to say that as of today, we're not really seeing a big change in the environment. We're not being told by clients that the environment will mean they do not do something. And so in that sense, my emphasis is on continuity in what we're doing, continuity in our client talks, but the background is this uncertainty.

Scott Wurtzel: So there is a.

Speaker Change: In order for us to get to sustainability, we gather an enormous amount of information about our clients' operations.

Scott Wurtzel: There's no question that sustainability, you know the old ESG.

Jeremy Ulan: But on the day-to-day level of what's going on with our clients in terms of, let's say, a deal not making it from one quarter to the next, the evidence shows that those things will close based on what we know today. So my main point is really to say that as of today, we're not really seeing a big change in the environment. We're not being told by clients that the environment will mean they do not do something. And so in that sense, my emphasis is on continuity in what we're doing, continuity in our client talks, but the background is this uncertainty. So a lot can happen in the next months during the course of this quarter. But as of right now, we're not seeing the volatility affect specific deals that we have in the pipeline right now.

But on the day-to-day level of what's going on with our clients in terms of, let's say, a deal not making it from one quarter to the next, the evidence shows that those things will close based on what we know today. So my main point is really to say that as of today, we're not really seeing a big change in the environment. We're not being told by clients that the environment will mean they do not do something. And so in that sense, my emphasis is on continuity in what we're doing, continuity in our client talks, but the background is this uncertainty. So a lot can happen in the next months during the course of this quarter. But as of right now, we're not seeing the volatility affect specific deals that we have in the pipeline right now.

Scott Wurtzel: It is on a cyclical.

Speaker Change: The employees, where they are located.

Scott Wurtzel: You know cyclical headwind.

Scott Wurtzel: We continue to believe that on a secular structural basis.

Speaker Change: Their offices. They are you know they're there.

Speaker Change: In hiring practices and their control versus their days and all of that so that database becomes very valuable also to examine other issues not just sustainability, but all their issues. So and so that's something that can can pick up in demand now on climate.

Scott Wurtzel: Factors related to sustainability and understanding the inside of the portfolios.

Scott Wurtzel: It will be positive.

Scott Wurtzel: We'll return to higher growth.

Scott Wurtzel: But the demand is also changing you know the demand that we had was largely ESG ratings people would think of as just waiting that grasp of what we do is they didn't want to look under the hood and they went out and created portfolios on that now people say, yeah I love it.

Speaker Change: It would just climate demand factors are variables are going to gradually be very separate than the older part of sustainability, what we call ESG right, we used to call the issue so.

Operator: So, you know, it will, a lot can happen in the next, you know, months during the course of this quarter. But as of right now, we're not seeing, you know, the volatility affects specific deals that we have in the pipeline right now. I got it. Thanks a lot. Thank you. One moment for our next question.

Scott Wurtzel: Right.

Scott Wurtzel: Right.

Speaker Change: On climate is not going away.

Scott Wurtzel: Yes.

Speaker Change: But the man who is also chair is.

Scott Wurtzel: Okay.

Speaker Change: Going from trends long term long dated transition.

Okay.

Scott Wurtzel: [noise].

Speaker Change: At risk in pools of assets that were loan data such as pension funds sovereign wealth funds and all of that.

Scott Wurtzel: Okay.

Scott Wurtzel: [noise] [noise] right.

Owen Lau: I got it. Thanks a lot.

Owen Lau: I got it. Thanks a lot.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Alex Hess from J.P. Morgan.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Alex Hess from J.P. Morgan.

Speaker Change: And on translation net zero commitment and how to get there and all of that that continues but the bigger demand is now in the frozen in physical risks with banks and insurance companies one thing too to do that and that's why our partnership with Swiss re on physical risk model is part of.

Alex Hess: Our next question comes from the line of Alex Hess from J.P. Morgan. Hi, everybody.

Scott Wurtzel: Good morning.

Scott Wurtzel: Right.

Andrew Wiechmann: Hi, everybody. Andy, could you potentially comment on how AUM has trended in the non-ETF part of your business overall? I saw that was some pretty healthy growth in the quarter. If you could just sort of elaborate as to what is driving your growth there and what your expectations are for the balance of the year. Up 27% by my math to just under $50 million on a quarterly basis is surely a big step up for you guys. It'd be helpful to know what we should be looking for there and maybe what's driving it. Thank you. Sure. Sure. Hi, Alex. Yeah. So firstly, it's important to keep in mind that there can be a little bit of lumpiness in revenue in the non-ETF passive category related to true-ups and true-downs just when we get the updated assets reported to clients.

Alex Hess: Hi, everybody. Andy, could you potentially comment on how AUM has trended in the non-ETF part of your business overall? I saw that was some pretty healthy growth in the quarter. If you could just sort of elaborate as to what is driving your growth there and what your expectations are for the balance of the year. Up 27% by my math to just under $50 million on a quarterly basis is surely a big step up for you guys. It'd be helpful to know what we should be looking for there and maybe what's driving it. Thank you.

Scott Wurtzel: Okay.

Andy Wiechmann: There, Andy, could you potentially comment on how AUM has trended in the non-ETF part of your business overall? I saw that was a pretty healthy growth in the quarter. If you could just sort of elaborate as to what is driving your growth there and what your expectations are for the balance of the year, you know, up 27% by my math, to just under 50 million on a quarterly basis is surely a big step up for you guys. It would be helpful to know, you know, what we should be looking for there and, you know, maybe what's driving it.

Scott Wurtzel: Okay.

Speaker Change: As part of going in that and that the climate direction.

Speaker Change: As I said I just spent three months on the road five splay.

Scott Wurtzel: Perfect.

Scott Wurtzel: Yeah.

Speaker Change: Five straight weeks at a time for 10 weeks of the weather.

Yeah.

Got it.

Speaker Change: I met with $78 in yours, I didn't see anybody.

Speaker Change: And away from the climate risk issues now in an environment like this is that the person, they're going to do probably not but because they need to survive in the short term before they make it to the medium term the climate risk is hitting this people really hard, especially banks and insurance companies.

Scott Wurtzel: Right.

Scott Wurtzel: Right.

Scott Wurtzel: [noise] [noise].

Andy Wiechmann: Thank you. Sure. Hi, Alex. Yeah, so firstly, it's important to keep in mind that there can be a little bit of lumpiness in revenue in the non-ETF passive category related to true ups and true downs, just when we get the updated assets reported to clients. But if you look at the underlying AUM, we do see pretty healthy growth there. So non-ETF average AUM was up around 20% in the quarter compared to a year ago. We saw, you know, pretty healthy growth of new fund creation. We even saw that particularly in areas like climate and custom mandates.

Andy Wiechmann: Sure. Sure. Hi, Alex. Yeah. So firstly, it's important to keep in mind that there can be a little bit of lumpiness in revenue in the non-ETF passive category related to true-ups and true-downs just when we get the updated assets reported to clients. But if you look at the underlying AUM, we do see pretty healthy growth there. So non-ETF average AUM was up around 20% in the quarter compared to a year ago. We saw pretty healthy growth of new fund creation. We even saw that particularly in areas like climate, and custom mandates. And so we continue to be encouraged about the opportunity. A couple of areas to note here.

Scott Wurtzel: Okay.

Scott Wurtzel: Okay.

Scott Wurtzel: Okay.

Speaker Change: Say it in all over the world the physical risk has increased so so we're hopeful that after a period of maybe softness on climate that things begin to pick up. One. Notable example, one notable area that we're doing a lot of work, particularly with European asset owners.

Scott Wurtzel: Okay.

Scott Wurtzel: Okay.

Scott Wurtzel: Sure.

Scott Wurtzel: Yeah.

Scott Wurtzel: Okay.

Scott Wurtzel: I'm proud of the men and factors are and variables are going to gradually be very separate than the older part of sustainability, what we call ESG right, we used to call the issue so.

Andrew Wiechmann: But if you look at the underlying AUM, we do see pretty healthy growth there. So non-ETF average AUM was up around 20% in the quarter compared to a year ago. We saw pretty healthy growth of new fund creation. We even saw that particularly in areas like climate, and custom mandates. And so we continue to be encouraged about the opportunity. A couple of areas to note here. We commented in the prepared remarks about direct indexing. So direct indexing does come through this line. While it's relatively small, it is high growth for us. And then there are areas like institutional passive, which we continue to see healthy growth in, where institutions are launching mandates against one of our indexes. And as I alluded to, that's increasingly against custom indexes. And that's a place where we are differentiated. We think we can be a helpful partner to clients.

Speaker Change: <unk> is taking up a climate risk overlay or fixed income portfolio towards delivering six climate adjusted fixed income indices for this asset.

Scott Wurtzel: On climate is not going away, but the man who is also chair is going from trends long term long dated transition at risk in pools of assets that were loan betas, such as pension funds sovereign wealth funds and all of that.

Speaker Change: Our clients do we.

Speaker Change: Reallocate their their fixed income portfolios in this direction.

Speaker Change: I hope that helps.

Andy Wiechmann: And so we continue to be encouraged about the opportunity. A couple areas to note here. We commented in the prepared remarks about direct indexing. So direct indexing does come through this line. While it's relatively small, it is high growth for us. And then there are areas like institutional passives, which we continue to see healthy growth and where institutions are launching mandates against one of our indexes. And as I alluded to, that's increasingly against custom indexes. And that's a place where we are differentiated. We think we can be a helpful partner to clients. And and we do see pretty, pretty stable economics there.

Speaker Change: Okay.

Speaker Change: Thank you one moment for our next question.

We commented in the prepared remarks about direct indexing. So direct indexing does come through this line. While it's relatively small, it is high growth for us. And then there are areas like institutional passive, which we continue to see healthy growth in, where institutions are launching mandates against one of our indexes. And as I alluded to, that's increasingly against custom indexes. And that's a place where we are differentiated. We think we can be a helpful partner to clients.

Scott Wurtzel: And on translation net zero commitment and how to get there and all of that that continues but the bigger demand is now in the fraud in it.

Speaker Change: Our next question comes from the line of Craig Huber from Huber Research partners LLC.

Speaker Change: Yeah.

Scott Wurtzel: Right.

Speaker Change: Yeah.

Scott Wurtzel: Right.

Speaker Change: Yes, hi, Thank you my question around ESG is there a material difference in the year over year growth rate in the quarter. We just finished here by region Europe versus Asia versus the Americas and maybe also if you could touch on the climate growth within ESG, how those revenues did year over year that piece of it. Please.

Scott Wurtzel: Okay.

Scott Wurtzel: Okay.

Scott Wurtzel: Alright.

Scott Wurtzel: Okay.

Scott Wurtzel: Yeah.

Scott Wurtzel: [noise] put demands on the road by saying you know.

Andrew Wiechmann: We do see pretty stable economics there. So average basis points have been quite resilient across non-ETF passive on the heels of our non-market cap and custom index type of mandate. So yeah, it's an area that we are focused heavily on. It's very strategic for us. I think it's a reflection of some of those custom index opportunities that we see out there. Thanks. Just in case it wasn't clear, I did mean to ask for end-of-period AUM for the non-ETF business. Sorry about that. Yeah. Yeah, no problem. End-of-period AUM and non-ETF passive was around $3.9 trillion.

We do see pretty stable economics there. So average basis points have been quite resilient across non-ETF passive on the heels of our non-market cap and custom index type of mandate. So yeah, it's an area that we are focused heavily on. It's very strategic for us. I think it's a reflection of some of those custom index opportunities that we see out there. Thanks. Just in case it wasn't clear, I did mean to ask for end-of-period AUM for the non-ETF business. Sorry about that. Yeah. Yeah, no problem. End-of-period AUM and non-ETF passive was around $3.9 trillion.

Speaker Change: Five straight weeks at a time for 10 weeks of the weather and I met with some of the ADC yours I didn't see anybody stepping away from the climate risk issues now in an environment like this.

Speaker Change: Sure sure Hi, Craig Yes, so the.

Andy Wiechmann: And so average basis points have been quite resilient across non ETF passives on the heels of our non market cap and in custom index type of mandate. So, yeah, it's an area that we we are focused heavily on. It's very strategic for us. And I think it's a reflection of some of those custom index opportunities that we see out there. Thanks.

Speaker Change: There was a difference.

Speaker Change: So the subscription run rate growth for sustainability and climate in EMEA was about 14%.

Speaker Change: Is that the person, they're gonna do probably not because they need to survive in the short term before they make it to the medium term the climate risk is hitting this people really hard, especially banks and insurance companies.

Speaker Change: 4% in the Americas, and eight 5% in APAC.

Speaker Change: And those regions contribute about 52% from EMEA, 34% Americas and 14%.

Operator: And just in case it wasn't clear, I did mean to ask for end of period AUM for the non ETF business. Sorry about that. Yeah, so no, yeah, no problem. End of period AUM and non ETF passive was around $3.9 trillion. Thank you. One moment for our next question.

Speaker Change: And we say it in all over the World you know the physical risk has increased so so we're hopeful that after a period of maybe softness.

Speaker Change: In the APAC region.

Speaker Change: Climate run rate growth was 20% across the entire company.

Speaker Change: Climate.

Speaker Change: [noise] [noise] [laughter].

Speaker Change: Within the sustainability and climate segments.

Speaker Change: It was about 17% growth growth in just the dimension that.

Speaker Change: The climate related run rate within the sustainability and climate segment is around $75 $76 million.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Faiza Alwai from Deutsche Bank.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Faiza Alwai from Deutsche Bank.

Speaker Change: [noise] [noise].

Faiza Alwy: Our next question comes from the line of Faiza Alwy from Deutsche Bank. Yes, hi, thank you. I was wondering if you could comment a little bit on retention rates, particularly on the index side and analytics. And if I look at those, it seems like they were pretty normal relative to the historical trend, if I look back to 22 and 23. I know you had talked about, you know, some lingering impacts over time, potentially from, consolidation with European asset managers. So just curious if we should think about, you know, these levels as more normal from here, or if there's, you know, additional impacts that you're expecting related to just the current environment or, you know, more generally, anything else.

Speaker Change: Thank you.

Speaker Change: One moment for our next question.

Speaker Change: Uh huh.

Henry Fernandez: Yes. Hi. Thank you. I was wondering if you could comment a little bit on retention rates, particularly on the index side and analytics. If I look at those, it seems like they were pretty normal relative to the historical trend if I look back to 2022 and 2023. I know you had talked about some lingering impacts over time, potentially from consolidation with European asset managers. Just curious if we should think about these levels as more normal from here or if there's additional impacts that you're expecting related to just the current environment or more generally anything else that you're expecting.

Faiza Alwy: Yes. Hi. Thank you. I was wondering if you could comment a little bit on retention rates, particularly on the index side and analytics. If I look at those, it seems like they were pretty normal relative to the historical trend if I look back to 2022 and 2023. I know you had talked about some lingering impacts over time, potentially from consolidation with European asset managers. Just curious if we should think about these levels as more normal from here or if there's additional impacts that you're expecting related to just the current environment or more generally anything else that you're expecting.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Jason Haas from Wells Fargo.

Speaker Change: Sure.

Speaker Change: Thank you.

Jason Haas: Hi, good morning, and thanks for taking my question I was curious if you could talk about why the first quarter EBITDA expenses came in below your expectations.

Speaker Change: <unk>.

Speaker Change: Yeah.

Speaker Change: Thank you Mike.

Speaker Change: Okay.

Speaker Change: Different to me.

Speaker Change: Great.

Jason Haas: Sure.

Speaker Change: Hi, Sharon.

Jason Haas: Well, we we.

Speaker Change: In Asia Pacific.

Jason Haas:

Speaker Change: Yes.

Jason Haas: See a number of as we've talked about before.

Speaker Change: If you could touch on climate.

Jason Haas: Lumpy expenses in the first quarter.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Yeah.

Jason Haas: Our heavily related to compensation and benefits related expenses.

Speaker Change: Sure sure.

Speaker Change: Yes.

Speaker Change: [laughter].

Jason Haas: And we have other expenses that tend to be a bit elevated around yearend.

Speaker Change: Okay.

Andrew Wiechmann: Sure. So maybe just to provide a bit more color on the retention rate in the quarter, and then we can talk about some of the dynamics looking forward here. But if we look at Q1 of this year compared to Q1 of last year, we had lower cancels across most client segments. And we had notable declines in cancels with hedge funds and banks compared to a year ago, which probably is not surprising. If you remember, we had the large cancel related to the large global bank merger in the first quarter of last year. And we had some elevated hedge fund events in the first quarter of last year. And so we saw a nice rebound in retention among those client segments. But to your point, we saw a pretty healthy retention in our largest product segments. So within index, it was 96.5%, and within analytics, 95.5%.

Andy Wiechmann: Sure. So maybe just to provide a bit more color on the retention rate in the quarter, and then we can talk about some of the dynamics looking forward here. But if we look at Q1 of this year compared to Q1 of last year, we had lower cancels across most client segments. And we had notable declines in cancels with hedge funds and banks compared to a year ago, which probably is not surprising. If you remember, we had the large cancel related to the large global bank merger in the first quarter of last year. And we had some elevated hedge fund events in the first quarter of last year. And so we saw a nice rebound in retention among those client segments. But to your point, we saw a pretty healthy retention in our largest product segments. So within index, it was 96.5%, and within analytics, 95.5%.

Speaker Change: First of all.

Andy Wiechmann: So, maybe just to provide a bit more color on the retention rate in the quarter, and then we can talk about some of the dynamics. looking forward here. But if we look at Q1 of this year compared to Q1 of last year, we had lower cancels across most client segments. And we had notable declines in cancels with hedge funds and banks compared to a year ago, which probably is not surprising. If you remember, we had the large cancel related to the large global bank merger in the first quarter of last year, and we had some elevated hedge fund events in the first quarter of last year.

Speaker Change: Got it.

Speaker Change: EMEA was up 14%.

Jason Haas: And so those just the ultimate magnitude of those and the timing of those can cause some swings in the expenses in the quarter.

Speaker Change: Presenting.

Speaker Change: Perfect.

Speaker Change: Yes.

Jason Haas: Importantly, as you saw we have not changed our guidance for the year.

Speaker Change: And forget about it.

Speaker Change: Yeah.

Speaker Change: For something like 13%.

Jason Haas: And so we're kind of assuming the markets gradually increase for the year or the expense trajectory is on track for those.

Speaker Change: Okay.

Speaker Change: Yeah.

Speaker Change: Right.

Jason Haas: Those expense guide ranges as we alluded to we are being cautious and to the extent markets remain flat or go down we will calibrate accordingly.

Speaker Change: Okay.

Yeah.

Speaker Change: Got it.

Speaker Change: <unk>.

Speaker Change: Just had mentioned.

Jason Haas: But expenses are kind of in the first quarter, we're on the trajectory, which we expected.

Speaker Change: Yeah.

Speaker Change: Alright.

Speaker Change: Yes.

Speaker Change: Please go ahead.

Andy Wiechmann: And so we saw a nice rebound in retention among those client segments. But to your point, we saw pretty healthy retention in our largest product segments. So within index, it was 96.5%. And within analytics, 95.5%. And from a client segment standpoint, we saw a retention rate of about 96% with asset managers and north of 95% with asset owners. And so the core part of the business saw some pretty healthy resilience in the quarter. The top cause of cancels continues to be client events. And I think the comments that I made last quarter around some caution, particularly in Europe, still holds.

Speaker Change: Okay.

Speaker Change: Okay.

Jason Haas: Thank you.

Speaker Change: Okay.

Speaker Change: One moment for our next question.

Speaker Change: Our next question comes from the line of David <unk> from Evercore ISI.

Speaker Change: Thank you.

Speaker Change: [noise] [noise] [noise] course, correct.

David: Hey, Thanks, Good morning, I was hoping to dig into the sales the gross sales that didn't close in <unk> that you guys are hoping will close in Q2.

Andrew Wiechmann: From a client segment standpoint, we saw a retention rate of about 96% with asset managers and north of 95% with asset owners. So the core part of the business saw some pretty healthy resilience in the quarter. The top cause of cancels continues to be client events. I think the comments that I made last quarter around some caution, particularly in Europe, still holds. I think when we look forward this year, it's possible we could see some lumpiness in cancels in certain periods, particularly if the market uncertainty continues and that recent volatility continues, which can lead to some elevated client events. But it's important to keep in mind that our tools really are mission-critical here. And as Henry alluded to, there must have solutions in these types of environments.

From a client segment standpoint, we saw a retention rate of about 96% with asset managers and north of 95% with asset owners. So the core part of the business saw some pretty healthy resilience in the quarter. The top cause of cancels continues to be client events. I think the comments that I made last quarter around some caution, particularly in Europe, still holds.

Speaker Change: It sounds like.

Speaker Change: Hello.

Speaker Change: Some of those could be meaningful I guess, I'm wondering where those concentrated within any segment. It looks like index was was definitely a little bit lower was it was a lot of that in there or any any other detail.

Speaker Change: Patients.

Speaker Change: Sure.

Speaker Change: Well, we we.

Speaker Change: See a number of as we've talked about before lumpy expenses in the first quarter those are heavily related to compensation and benefits related expenses.

Speaker Change: You could give us would be helpful.

Andy Wiechmann: I think when we look forward this year, it's possible we could see some lumpiness in cancels in certain periods, particularly if the market uncertainty continues and that recent volatility continues, which can lead to some elevated client events. But it's important to keep in mind that our tools really are mission critical here. And as Henry alluded to, there must have solutions in these types of environments. But we were encouraged by the retention here, but a bit cautious on the outlook for the balance.

I think when we look forward this year, it's possible we could see some lumpiness in cancels in certain periods, particularly if the market uncertainty continues and that recent volatility continues, which can lead to some elevated client events. But it's important to keep in mind that our tools really are mission-critical here. And as Henry alluded to, there must have solutions in these types of environments. We were encouraged by the retention here, but a bit cautious on the outlook for the balance of the year.

Speaker Change: Sure So look.

Speaker Change: And we have other expenses that tend to be a bit elevated around yearend.

Speaker Change: So this has come up a few times I want to reiterate that my key point related to this is that this is kind of what I would call normal sales activity in a given quarter, where certain deals either make it or don't make it right. So.

Speaker Change: And so those just the ultimate magnitude of those and the timing of those can cause some swings in the expenses in the quarter.

Speaker Change: No change.

Andrew Wiechmann: We were encouraged by the retention here, but a bit cautious on the outlook for the balance of the year.

Speaker Change: Thank you.

Speaker Change: My emphasis is not so much on these deals in the context of change, but more to say look we had a few deals that didn't make it and we think we're going to make it in the second quarter rather than that there is something special about them or unusual or what have you.

Speaker Change: So.

Speaker Change: Yes.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Kelsey Zhu from Autonomous.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Kelsey Zhu from Autonomous.

Operator: Thank you.

Kelsey Zhu: One moment for our next question.

Speaker Change: Thanks for that.

Speaker Change: Okay.

Kelsey Zhu: Our next question comes from the line of Kelsey Zhu from Autonomy. Hi, good morning. Thanks for taking my question. Just on analytics, I think you previously highlighted that in a period of high volatility and uncertainty, analytics would generally see stronger growth. I'm not sure we've really seen this in Q1, that new sales numbers.

Yes.

Speaker Change: Yes.

Speaker Change: Sure.

Speaker Change: Please go ahead Sir.

Speaker Change: That's true.

Operator: Hi. Good morning. Thanks for taking my question. Just on analytics, I think you previously highlighted that in the period of high volatility and uncertainty, analytics would generally see stronger growth. I'm not sure we've really seen this in Q1, that new sales numbers. But under the current environment, I was wondering if you can talk a little bit more about growth expectations for analytics new sales in Q2 and the rest of the year?

Kelsey Zhu: Hi. Good morning. Thanks for taking my question. Just on analytics, I think you previously highlighted that in the period of high volatility and uncertainty, analytics would generally see stronger growth. I'm not sure we've really seen this in Q1, that new sales numbers. But under the current environment, I was wondering if you can talk a little bit more about growth expectations for analytics new sales in Q2 and the rest of the year?

Speaker Change: Sure.

Speaker Change: The long story short as they are across a number of different product lines. They were they were literally across all of our product lines. Some of the some of the larger what are few of the larger deals.

Speaker Change: Okay.

Speaker Change: Right.

Speaker Change: Right.

Speaker Change: Okay.

Speaker Change: Yeah.

Speaker Change: Okay.

Speaker Change: So I think it is.

Speaker Change: It's Christian.

Speaker Change: Kind of a dangerous category to go too much into the detail and I think it's important to elevate the point to the higher level that I was trying to get to which is look some deals didn't make it which can happen in any given quarter, but in the slightly changed circumstances. Since then we're not seeing evidence that those deals will now not close.

Henry Fernandez: But under the current environment, I was wondering if you can talk a little bit more about growth expectations for analytics, new sales in Q2 and the rest of the year. So, so, uh. First of all, you know, Q1 was not yet a period of significant, you know, a turmoil or... Uncertainty, if anything. There was a little bit, at least part of the Q1, there was a little bit of the carryover of the excitement of the new U.S. administration and the risk-on trade that took place. So, I will not read too much on that Q1 being a period of difficulty.

Speaker Change: Yeah.

Speaker Change: Hi.

Speaker Change: Good morning.

Speaker Change: Yeah.

Owen Lau: So first of all, Q1 was not yet a period of significant turmoil or uncertainty. If anything, there was a little bit of at least part of the Q1; there was a little bit of the carryover of the excitement of the new US administration and the risk-on trades that took place. So I will not read too much on that Q1 being a period of difficulty. Clearly, things started to get a little more to deteriorate in the latter part of Q1 and then, obviously, in April. So in periods like this, there are two big in periods like this, and especially this one, there are a little bit of three different forces that will shape our sales and our growth and all of that, right? The first force is client needs the most. Clients need more data. They need more stress testing, factor decomposition.

Henry Fernandez: So first of all, Q1 was not yet a period of significant turmoil or uncertainty. If anything, there was a little bit of at least part of the Q1; there was a little bit of the carryover of the excitement of the new US administration and the risk-on trades that took place. So I will not read too much on that Q1 being a period of difficulty. Clearly, things started to get a little more to deteriorate in the latter part of Q1 and then, obviously, in April. So in periods like this, there are two big in periods like this, and especially this one, there are a little bit of three different forces that will shape our sales and our growth and all of that, right? The first force is client needs the most. Clients need more data. They need more stress testing, factor decomposition.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: That's probably right.

Speaker Change: I a rapidly changing environment.

Speaker Change: Yeah.

Speaker Change: Uh huh.

Speaker Change: More uncertainty, but our belief and understanding with our client engagement is that those deals that didn't make it in Q1 will make it in Q2, and we hope that to be the case.

Speaker Change: Hum.

Speaker Change: Yes.

Speaker Change: Concentrated.

Speaker Change: Okay.

Speaker Change: Right.

Speaker Change: Okay.

Speaker Change: Alright.

Speaker Change: Thank you one moment for our next question.

Speaker Change: Hum.

Speaker Change: Yes.

Speaker Change: Our next question comes from the line of Joshua dinner Lean from Bank of America Securities.

Speaker Change: Sure.

Speaker Change: [noise] [noise] [laughter].

Speaker Change: Yeah, Hey, guys I wanted to ask about the new the new Moody's a partnership could you provide a little bit more color on how that came about and just maybe how youre thinking about it.

Henry Fernandez: Clearly, things started to... to get a little more, to deteriorate in the latter part of Q1, and then obviously, you know, in April. So in periods like this.

Speaker Change: Yeah.

Speaker Change: Okay.

Yes.

Got it impacting your growth rate I'm, assuming it's going to show up in private assets private asset segment.

Speaker Change: Yeah.

Speaker Change: Okay.

Speaker Change: Yeah.

Henry Fernandez: There are two big emperors like this, you know, and especially this one, there are a little bit of three different forces. that will shape our sales and our growth and all of that, right. The first force is client needles the most. Client need more data. They need more stress testing, factor decomposition. They need more understanding of what is inside an index. They need better transparency with private assets and all of that because they want to know what's underneath the hood of all their investments. And therefore, that will be a very significant positive, especially in. in our risk analytics and in our index offering, which is the largest part of MSCI.

Speaker Change: Yeah.

Speaker Change: Yes, so we started.

Speaker Change: Okay.

Speaker Change: [noise] [noise] [noise] [noise] [noise] [noise].

Speaker Change: Quite a number of years ago.

Speaker Change: We have gone to.

Speaker Change: And the senior management of Moody's and said to them.

Speaker Change: We are we have a number of highly complementary.

Speaker Change: Capabilities why don't we why don't we try to do some partnerships and at the time, obviously was their focus on ESG.

Owen Lau: They need more understanding of what is inside an index. They need better transparency with private assets and all of that because they want to know what's underneath the hood of all their investments, right? And therefore, that will be a very significant positive, especially in risk analytics and in our index offering, which is the largest part of MSCI, right? In this particular period, there is a significant reallocation of assets to non-US markets with a consequent declining of the dollar and buoying Japan, Europe, and other places like that. And we're seeing that. And that, again, is another positive for us compared to what the last two, three years was a massive influence to the US market. So on balance, we do much better when money flows around the world than just to the US market.

They need more understanding of what is inside an index. They need better transparency with private assets and all of that because they want to know what's underneath the hood of all their investments, right? And therefore, that will be a very significant positive, especially in risk analytics and in our index offering, which is the largest part of MSCI, right? In this particular period, there is a significant reallocation of assets to non-US markets with a consequent declining of the dollar and buoying Japan, Europe, and other places like that. And we're seeing that. And that, again, is another positive for us compared to what the last two, three years was a massive influence to the US market. So on balance, we do much better when money flows around the world than just to the US market.

Speaker Change: Yes.

Speaker Change: [noise] [noise] [noise] [noise] [laughter].

Speaker Change: And we said to them instead of you running a whole ESG business why don't you rely on OSM youll see the year to date on models on ratings into your entire business.

Speaker Change: And so that so you know couple of years ago.

Speaker Change: They came back and said that.

Speaker Change: Got it.

Speaker Change: Right.

Speaker Change: That makes a little sense rather than us.

Yeah.

Henry Fernandez: Imperials like this also, not imperials like this, in this particular period, there is a significant reallocation of assets. to non-US markets. a with a consequent you know declining of the dollar and you know booing you know Japan and Europe and other places like that and we're seeing that and that that again is another positive for us. compared to what the last two, three years was a massive influence to the U.S. market. So on balance, we do much better when money flows around the world than just to the U.S. market. Those two very significant positives need to be weighed against the spending of our clients, you know, the budgets of our clients in which there's some clients that are doing well, you know, a lot of equity, long term hedge funds will do well, micro hedge funds will do well, patient funds are typically very steady, you know, the, you know, index fund managers are going to do well, you know, active managers maybe may not do as well, but some of them, if there is a period in which active management, you know, should, should be a very brilliant is this period.

Speaker Change: So why don't we do that and that culminated in the partnership that we announced on our own ESG last summer.

[noise] [noise] [noise] [noise] camera.

Speaker Change: On the on the success of that.

Speaker Change: Working relationship and partnership we started talking about what are what are all the other things that we can do that one plus one is three so that they don't have to replicate what we do and we don't replicate what we do and then we started focusing on private credit.

Speaker Change: Sure.

Speaker Change: Got it.

Speaker Change: Joshua.

Speaker Change: Yeah.

Speaker Change: Okay.

Speaker Change: So so that started last July.

Hey, guys.

Speaker Change: Sure.

Speaker Change: We went through a number of iterations as to what were the areas that we could potentially benefit mutually from private credit and eventually settle on.

Speaker Change: Understood.

Speaker Change: Okay.

Speaker Change: Thanks.

Speaker Change: Alright, Thank you got it.

Speaker Change: Okay great.

Owen Lau: Those two very significant positives need to be weighed against the spending of our clients, the budgets of our clients, in which there are some clients that are doing well. A lot of equity, long-short hedge funds will do well. Micro hedge funds will do well. Pension funds are typically very steady. Index fund managers are going to do well. Active managers may not do as well. But some of them, if there is a period in which active management should be very brilliant, it's this period. So some of those active managers are going to do well, and their budgets are not going to be curtailed. But others may be curtailed. So I think that we need to put those three factors into the equation. How much of the two positives outweigh the negative of potential lesser spending by our clients or vice versa?

Those two very significant positives need to be weighed against the spending of our clients, the budgets of our clients, in which there are some clients that are doing well. A lot of equity, long-short hedge funds will do well. Micro hedge funds will do well. Pension funds are typically very steady. Index fund managers are going to do well. Active managers may not do as well. But some of them, if there is a period in which active management should be very brilliant, it's this period.

Speaker Change: Okay.

Speaker Change: Using their their flagship.

Speaker Change: Okay.

Speaker Change: But our ability of default models.

Speaker Change: Yes.

Speaker Change: And apply it to two MSCI is a database.

Speaker Change: [laughter].

Speaker Change: Okay.

Speaker Change: And models on.

Speaker Change: Yes.

Speaker Change: The other risk models.

Speaker Change: [noise] [noise] [noise] [noise] [noise].

Speaker Change: To come up with a third party.

Speaker Change: Significant assessment of credit worthiness of the.

Speaker Change: Private credit funds and the underlying <unk>.

Speaker Change: Instrument, the underlying holdings of those private credit funds.

Speaker Change: So it is significant because we have some probability of default models, where they're not definitely at the scale of Moody's.

Henry Fernandez: So some of those active managers are going to do well, and their budgets are not going to be curtailed, but others may be curtailed. So I think that, you know, we need to put those three factors into, into the equation, how much of the two positives outweigh the negative of potential lesser spending by our clients, or vice versa. And we don't know the answer to that until we go through the whole period. Thank you.

So some of those active managers are going to do well, and their budgets are not going to be curtailed. But others may be curtailed. So I think that we need to put those three factors into the equation. How much of the two positives outweigh the negative of potential lesser spending by our clients or vice versa? We don't know the answer to that until we go through the whole period, right?

Speaker Change: [laughter].

Speaker Change: [noise] [noise] now.

Speaker Change: Moody's has databases, but our database is superior to their private credit database. So we joined forces to do that together so that we can present, a going products to the market.

Speaker Change: Right.

Speaker Change: We're going to marketed across all of our analytical platforms and our client basis, they're going to market. It in their own client basis on a linear platforms.

Owen Lau: We don't know the answer to that until we go through the whole period, right?

Speaker Change: Sure.

Speaker Change: [laughter].

Operator: Thank you. One moment for our next question. Our next question comes from the line of Scott Wurtzel from Wolfe Research.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Scott Wurtzel from Wolfe Research.

Operator: One moment for our next question.

Speaker Change: Sure.

Speaker Change: [noise] [noise] Scott.

Speaker Change: And almost a third party platform saw its a win win.

Scott Wurtzel: Our next question comes from the line of Scott Wurtzel from Wolf Research. Great. Thank you guys for taking my question. I wanted to ask on the sustainability and climate segment, just in terms of the, you know, acceleration and run rate growth that we've seen this quarter, along with it sounds like some, you know, relatively large deals being signed. Just wondering if you think we're maybe seeing a potential inflection um... in that segment of that week So there's no question that sustainability, you know, the old ESG is on a cyclical. in a cyclical headwind. We continue to believe that on a secular, structural basis.

Speaker Change: For that and therefore and on the heels of that second partnership, which obviously, we announced yesterday.

Andrew Wiechmann: Great. Thank you, guys, for taking my question. Wanted to ask on the sustainability and climate segment, just in terms of the acceleration and run rate growth that we've seen this quarter, along with, it sounds like, some relatively large deals being signed. Just wondering if you think we're maybe seeing a potential inflection point in that segment and that we could potentially see acceleration and growth down the line here. Thanks.

Scott Wurtzel: Great. Thank you, guys, for taking my question. Wanted to ask on the sustainability and climate segment, just in terms of the acceleration and run rate growth that we've seen this quarter, along with, it sounds like, some relatively large deals being signed. Just wondering if you think we're maybe seeing a potential inflection point in that segment and that we could potentially see acceleration and growth down the line here. Thanks.

Speaker Change: Talking about what other partnerships are there things that we can do on the climate.

Speaker Change: [noise] [laughter].

Speaker Change: Climate, they have incredible things on incredible models on climate.

Speaker Change: Sure.

Speaker Change: Physical models and other kinds of models and we have obviously models were very strong and transition risk theyre stronger in physical risk.

Speaker Change: Yeah.

Speaker Change: [noise] right.

Speaker Change: We obviously have this other partnership on physical risks with Swiss re we have they have a lot of real estate database. We have a lot of real estate data basically we have a lot of other private they have their own orbitz database, we have our own.

Speaker Change: Uh huh.

Speaker Change: Gotcha.

Owen Lau: So there's no question that sustainability, the old ESG, is on a cyclical headwind. We continue to believe that on a secular, structural basis, factors related to sustainability and understanding the inside of portfolios will be positive and will return to higher growth. But the demand is also changing. The demand that we had was largely ESG ratings. People would take our ESG rating. They trusted what we did. They didn't want to look under the hood, and they went out and created portfolios on that. Now people say, "Yeah, I would love to take your ESG rating, but I want to see the underlying information.

Henry Fernandez: So there's no question that sustainability, the old ESG, is on a cyclical headwind. We continue to believe that on a secular, structural basis, factors related to sustainability and understanding the inside of portfolios will be positive and will return to higher growth. But the demand is also changing. The demand that we had was largely ESG ratings. People would take our ESG rating. They trusted what we did. They didn't want to look under the hood, and they went out and created portfolios on that. Now people say, "Yeah, I would love to take your ESG rating, but I want to see the underlying information.

Speaker Change:

Speaker Change:

Speaker Change: [noise] [laughter].

Speaker Change: Sort of a investment database. So can we do things so in a nutshell is.

Speaker Change: Uh huh.

Speaker Change: Instead of them trying to replicate what we do.

[noise] Party.

Speaker Change: To come up with new products and we're also replicating what they do we partner up to.

Henry Fernandez: uh factors related to sustainability and understanding the the inside of portfolios you know will be positive and will return to higher growth um but the demand is also changing you know the demand that we had was largely ESG ratings people would take our ESG rating they trusted what we did they didn't want to look under the hood and they went out and created portfolios on that now people say yeah I would love to take your ESG rating but I want to see the underlying information I want to break it down into the various you know the environmental you know sections the social sectors and all of that so the client the demand is changing and therefore we're giving up to that change in demand which is a lot more underlying data which is actually very positive for us because we have all of that it's just a question of how do we package it and we sell it you know the other change in the demand is major regulatory burden so people a lot of our clients who have portfolios on sustainability or are launching sustainability they want a lot more help in complying with every one of these regulations all over the world and we have packages that help them you know do that in an automatic you know fashion so so now the last piece is that you know bear in mind that in order for us to get to sustainability we gather an enormous amount of information about our clients operations where the employees, where they're located, their offices, their hiring practices, and their controversies, their this and all of that.

Speaker Change: Yeah.

Speaker Change: Yes.

Speaker Change: Yeah.

Speaker Change: To benefit from each other's capabilities, that's a little bit of the process that we've gone through.

Speaker Change: [noise] [noise] [noise] sorry.

Speaker Change: And Josh It will show up in the private asset segments, Although I would highlight that the financial impact this year is likely going to be immaterial relatively small.

Speaker Change: Yeah.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: [noise] [noise].

Speaker Change: Thank you one moment for our next question.

Speaker Change: Our next question comes from the line of George Tong from Goldman Sachs.

Speaker Change: Yes.

Speaker Change: Okay.

Owen Lau: I want to break it down into the environmental sections, the social sectors, and all of that. The demand is changing, and therefore, we're gearing up to that change in demand, which is a lot more underlying data, which is actually very positive for us because we have all of that. It's just a question of how do we package it and how we sell it. The other change in the demand is major regulatory burden. A lot of our clients who have portfolios on sustainability or are launching sustainability, they want a lot more help in complying with every one of these regulations all over the world. We have packages that help them do that in an automatic fashion.

I want to break it down into the environmental sections, the social sectors, and all of that. The demand is changing, and therefore, we're gearing up to that change in demand, which is a lot more underlying data, which is actually very positive for us because we have all of that. It's just a question of how do we package it and how we sell it. The other change in the demand is major regulatory burden. A lot of our clients who have portfolios on sustainability or are launching sustainability, they want a lot more help in complying with every one of these regulations all over the world. We have packages that help them do that in an automatic fashion.

Speaker Change: Yes.

Speaker Change: [noise].

Speaker Change: Hi, Thanks, Good morning I am.

Speaker Change: Wanted to go back to sustainability and climate.

Speaker Change:

Speaker Change: Oh.

Speaker Change: [noise] [noise] [laughter].

Speaker Change: This was the only segment to see net new sales declined in the quarter can you talk a little bit more about.

Speaker Change: The factors behind that and when you might expect net new sales to inflect to growth and maybe in what kind of environment that would be most likely to happen.

Speaker Change: Yeah.

Speaker Change: [noise] [noise] models, and we have obviously models, we're very strong in transition risks, they're stronger and physical risks.

Speaker Change: Sure.

George: So George.

George: And you can see this in the retention rate, which was relatively solid in the quarter as Henri alluded to clients are committed to sustainability and.

George: Climate is very topical and a big focus area for them.

Speaker Change: We obviously have this other partnership on physical risks with Swiss re we have they have a lot of real estate database. We have a lot of real estate data basically we have a lot of other private they have their own Orbis database, we have our own you know sort of investment database. So can we do things. So in a nutshell is you know instead of them trying to replicate what we.

Owen Lau: So now the last piece is that bear in mind that in order for us to get to sustainability, we gather an enormous amount of information about our clients' operations, where the employees are, where they're located. They have their offices. They are in hiring practices, and there are controversies, there are this, and all of that. So that database becomes very valuable also to examine other issues, not just sustainability, but other issues. So that's something that can pick up in demand. Now, on climate, which is climate demand and factors and variables are going to gradually be very separate than the other part of sustainability, what we call ESG, right? We used to call ESG. So on climate, it's not going away, but the demand is also changing.

So now the last piece is that bear in mind that in order for us to get to sustainability, we gather an enormous amount of information about our clients' operations, where the employees are, where they're located. They have their offices. They are in hiring practices, and there are controversies, there are this, and all of that. So that database becomes very valuable also to examine other issues, not just sustainability, but other issues. So that's something that can pick up in demand. Now, on climate, which is climate demand and factors and variables are going to gradually be very separate than the other part of sustainability, what we call ESG, right? We used to call ESG. So on climate, it's not going away, but the demand is also changing.

George: We are seeing muted demand in areas.

George: Needless to say, it's a very nuanced and dynamic landscape.

But we are seeing subdued demand, particularly in the U S where investors remain cautious about launching sustainability strategies and funds and even in Europe. We've seen some regulatory complexity that we've talked about in the past and some uncertainty persists.

Speaker Change: Do it too.

Speaker Change: To come up with new products, and what else replicating what they do we partner up.

Henry Fernandez: So that database becomes very valuable also to examine other issues, not just sustainability, but other issues. So that's something that can pick up in climate, you know, which is climate demand and factors are, and variables are gonna gradually be very separate than the other part of sustainability, what we call ESG, right? We used to call ESG. So On climate, it's not going away, but the demand is also changing. It's going from long-term, long-dated transition risk in pools of assets that were long-dated, such as pension funds, over wealth funds, and all of that, and on transition, net zero commitments, and how to get there, and all of that.

Speaker Change: To benefit from each other's capabilities, that's a little bit of the the process that we've gone through.

George: There is the potential for reduced scope on CSR D.

Speaker Change: And Josh It will show up in the private asset segments, although I would highlight.

George: Which is small for us today.

George: Very small for us today, but obviously was an opportunity for us.

George: That's looking less likely and so our tools are remain absolutely mission critical to clients, but there is some caution and.

Speaker Change: Sure.

Speaker Change: Okay.

Speaker Change: Yeah.

Speaker Change: Okay.

George: Some headwinds which were likely to see in the near term here. So we expect that performance in the next couple of quarters to be similar to what we've seen in.

Speaker Change: Okay.

Speaker Change: Sure.

Speaker Change: Yeah.

Speaker Change: Thanks.

Owen Lau: It's going from long-term, long-dated transition risk in pools of assets that were long-dated, such as pension funds, sovereign wealth funds, and all of that. On transition net zero commitments and how to get there and all of that, that continues. But the bigger demand is now in the front end, in physical risk, with banks and insurance companies wanting to do that. So that's why our partnership with Swiss Re on physical risk models is part of going in that climate direction. As I said, I just spent three months on the road, five straight weeks at a time for 10 weeks altogether. I met with 70, 80 CEOs. I didn't see anybody stepping away from the climate risk issues. Now, in an environment like this, is that the first thing they're going to do?

It's going from long-term, long-dated transition risk in pools of assets that were long-dated, such as pension funds, sovereign wealth funds, and all of that. On transition net zero commitments and how to get there and all of that, that continues. But the bigger demand is now in the front end, in physical risk, with banks and insurance companies wanting to do that. So that's why our partnership with Swiss Re on physical risk models is part of going in that climate direction. As I said, I just spent three months on the road, five straight weeks at a time for 10 weeks altogether. I met with 70, 80 CEOs. I didn't see anybody stepping away from the climate risk issues. Now, in an environment like this, is that the first thing they're going to do?

Speaker Change: Hi.

George: In recent quarters as Henri alluded to earlier, we continue to be bullish about the long term opportunity here.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Yeah.

George: We are seeing investors evolves on the climate front from.

Speaker Change: Right.

Speaker Change: Okay.

Speaker Change: Hi, Matt.

George: Emissions into physical risk.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Yeah.

George: We see investors brought in their thinking around sustainability into resilience and really double clicking into all aspects of risk related to sustainability and that's an area, where we have always been differentiate it and are very well positioned and so.

Henry Fernandez: That continues, but the bigger demand is now in the front end, in physical risk, with the banks and insurance companies wanting to do that. That's why our partnership with Swiss Re on physical risk models is part of going in that climate direction.

Speaker Change: Okay.

Speaker Change: What happened.

Speaker Change: Sure.

Speaker Change: Thank you.

Speaker Change: Definitely.

Speaker Change: Right.

Speaker Change: And it kind of analytical clients are committed to sustainability and.

George: There are these attractive opportunities areas within climate, where were getting early traction I think some of the broader cyclical dynamics are going to persist here in the short term, but over the long term, we continue to be focused on the big opportunities in front of us.

Speaker Change: Climate is very topical and a big focus area for them.

Henry Fernandez: As I said, I just spent three months on the road, five straight weeks at a time, for 10 weeks altogether, and I met with 70, 80 CEOs. I didn't see anybody stepping away from the climate risk issues. Now, in an environment like this, is that the first thing they're going to do? Probably not, because they need to survive in the short term before they make it to the medium term. Climate risk is hitting these people really hard, especially banks and insurance companies. We see it all over the world. The physical risk has increased. We're hopeful that after a period of maybe softness on climate, that things begin to pick up.

Speaker Change: We are seeing muted demand in areas of.

Speaker Change: Needless to say, it's a very nuanced and dynamic landscape.

Speaker Change: But we are seeing subdued demand, particularly in the U S where investors remain cautious about launching sustainability strategies and funds and even in Europe, we've seen some regulatory complexity.

George: Thank you one moment for our next question.

Owen Lau: Probably not because they need to survive in the short term before they make it to the medium term. But climate risk is hitting these people really hard, especially banks and insurance companies. And we see it all over the world. The physical risk has increased. So we're hopeful that after a period of maybe softness on climate, that things begin to pick up. For example, one notable area that we're doing a lot of work, particularly with the European asset owners, is taking a climate risk overlay on fixed income portfolios. So we're delivering climate-adjusted fixed income indices for these asset owner clients to reallocate their fixed income portfolios in this direction. I hope that helped.

Probably not because they need to survive in the short term before they make it to the medium term. But climate risk is hitting these people really hard, especially banks and insurance companies. And we see it all over the world. The physical risk has increased. So we're hopeful that after a period of maybe softness on climate, that things begin to pick up. For example, one notable area that we're doing a lot of work, particularly with the European asset owners, is taking a climate risk overlay on fixed income portfolios. So we're delivering climate-adjusted fixed income indices for these asset owner clients to reallocate their fixed income portfolios in this direction. I hope that helped.

Speaker Change: Our next question comes from the line of Russell Quelch from Redburn Atlantic.

Speaker Change: We've talked about in the past and some uncertainty persists.

Russell Quelch: Thank you good morning, perhaps as a follow up to now the earlier question over Ted should kind of quickly check that the improvement in Q1 was driven by lapping of one off client consolidations are not.

Speaker Change: There is the potential for reduced scope done.

Speaker Change: Yeah.

Speaker Change: Okay.

Speaker Change: Okay.

That's my question.

Speaker Change: Due to proactive actions on price discounting.

Speaker Change: Okay.

Henry Fernandez: One notable, for example, one notable area that we're doing a lot of work, particularly with European asset owners, is taking a climate risk overlay on fixed income portfolios. We're delivering climate adjusted fixed income indices for these asset owner clients to reallocate their fixed income portfolios in this direction. I hope that helped. Thank you.

Speaker Change: Yes.

Speaker Change: Okay.

Russell Quelch: So.

Speaker Change: Okay great.

Russell Quelch: Comparing the retention rate.

Speaker Change: Yes.

Speaker Change: Okay.

Russell Quelch: Q1 of last year.

Speaker Change: Okay.

Russell Quelch: Q1 of last year, we saw a lower retention rate related to that client activity that I talked about with banks.

Speaker Change: Yeah.

Speaker Change: Okay.

Good morning.

Russell Quelch: And in hedge funds, particularly.

Speaker Change: Got it.

Speaker Change: Yeah.

Russell Quelch: I'd say the retention rate was reasonably strong across all segments for us here and I'd say I wouldn't attribute that to any one thing in specific other than.

Speaker Change: Thank you.

Speaker Change: Okay.

Speaker Change: Okay.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Craig Huber from Huber Research Partners, LLC.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Craig Huber from Huber Research Partners, LLC.

Operator: One moment for our next question.

Speaker Change: Okay.

Speaker Change: Hum.

Craig Huber: Our next question comes from the line of Craig Huber from Huber Research Partners, LLC. Yes, hi, thank you. My question around ESG, is there a material difference in the year-over-year growth rate in the quarter we just finished here by region, Europe versus on the climate growth. Sure, sure.

Speaker Change: <unk>.

Russell Quelch: The broad mission criticality of our tools, our proactive client engagement and client service efforts.

Speaker Change: Correct.

Speaker Change: Okay.

Speaker Change: Thank you.

Speaker Change: Okay.

Russell Quelch: And our strong position relative to competitors in the market.

Henry Fernandez: Yes. Hi. Thank you. My question around ESG is, there a material difference in the year-over-year growth rate in the quarter we just finished here by region, Europe versus Asia versus the Americas? And maybe also, if you could touch on the climate growth within ESG, how those revenues did year-over-year, that piece of it, please.

Craig Huber: Yes. Hi. Thank you. My question around ESG is, there a material difference in the year-over-year growth rate in the quarter we just finished here by region, Europe versus Asia versus the Americas? And maybe also, if you could touch on the climate growth within ESG, how those revenues did year-over-year, that piece of it, please.

Speaker Change: Right.

Russell Quelch: So I wouldn't say it necessarily is tied to pricing, but if you compare to last year. Obviously, we did have some elevated client events in the first quarter of last year, which is why you saw a big increase year over year.

Speaker Change: Alright.

Speaker Change: Got it.

Speaker Change: Thank you Frank.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Thanks, so much.

Russell Quelch: Thank you one moment far next question.

Speaker Change: Okay.

Speaker Change: Perfect.

Jeremy Ulan: Sure. Sure. Hi, Craig. Yeah. So there was a difference. So the subscription run rate growth for sustainability and climate in EMEA was about 14%. And that was 4% in the Americas and 8.5% in APAC. And those regions contribute about 52% from EMEA, 34% Americas, and 14% in the APAC region. Climate run rate growth was 20% across the entire company. Within the sustainability and climate segment, it was about 17% growth. And just to dimension that, the climate-related run rate within the sustainability and climate segment is around $75 to 76 million.

Andy Wiechmann: Sure. Sure. Hi, Craig. Yeah. So there was a difference. So the subscription run rate growth for sustainability and climate in EMEA was about 14%. And that was 4% in the Americas and 8.5% in APAC. And those regions contribute about 52% from EMEA, 34% Americas, and 14% in the APAC region. Climate run rate growth was 20% across the entire company. Within the sustainability and climate segment, it was about 17% growth. And just to dimension that, the climate-related run rate within the sustainability and climate segment is around $75 to 76 million.

Speaker Change: Right.

Andy Wiechmann: Hi, Craig. Yeah, so there was a difference. So the subscription run rate growth for sustainability and climate in EMEA was about 14%. That was 4% in the Americas and 8.5% in APAC. And those regions contribute about 52% from EMEA, 34% Americas, and 14%. in the APAC region. Climate run rate growth was 20% across the entire company. Within the sustainability and climate segment, it was about 17% growth. And just to dimension that, the climate related run rate within the sustainability and climate segment is around $75, $76 million. Thank you.

Speaker Change: Thank you.

Russell Quelch: Okay.

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

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: [noise] pressure.

Gregory Simpson: Hi, there I just wanted to ask you a bit more color on private capital solutions, which had 15 run rate growth this quarter and in particular, how the sales and uptake of the suites of private capsule.

Speaker Change: Sure.

Speaker Change: Okay.

Gregory Simpson: As you launched last year have been going just feel like there should be low demand for transparency private markets and this kind of backdrop, but also where it's a bit of competition in the space. Thank you.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Thank you.

Speaker Change: Right.

Speaker Change: Okay.

Speaker Change: Okay.

Gregory Simpson: So private capital solutions.

Speaker Change: <unk>.

Speaker Change: Yes.

Gregory Simpson: Formerly the.

Speaker Change: [laughter].

Gregory Simpson: Burgers made the <unk> acquisition, we made.

Our retention rate.

Gregory Simpson: At the moment is largely.

Speaker Change: Thank you Mike.

Speaker Change: Hum.

Gregory Simpson: Our broad offering transparency.

Speaker Change: Yeah.

Speaker Change: Related to that.

Gregory Simpson: Institutional investors institutional Lps.

Speaker Change: Thanks.

Speaker Change: Yes.

Speaker Change: Okay.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Jason Haas from Wells Fargo.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Jason Haas from Wells Fargo.

Gregory Simpson: They're investments in GBS.

Operator: One moment for our next question.

Speaker Change:

Speaker Change: Retention rate.

Speaker Change: Across all segments.

Gregory Simpson: Across the whole spectrum of private assets.

Speaker Change: Yes.

Jason Haas: Our next question comes in the line of Jason Haas from Wells Fargo. Hi, good morning, and thanks for taking my question. I was curious if you could talk about why the first quarter EBITDA expenses came in below your expectations.

Okay.

Gregory Simpson: There are a lot of them a lot of other sales that are for <unk>.

Speaker Change: Got it.

Speaker Change:

Speaker Change: Okay.

Speaker Change: Okay.

Operator: Hi. Good morning, and thanks for taking my question. I was curious if you could talk about why the first quarter EBITDA expenses came in below your expectations.

Jason Haas: Hi. Good morning, and thanks for taking my question. I was curious if you could talk about why the first quarter EBITDA expenses came in below your expectations.

Gregory Simpson: Entities related to that in that ecosystem.

Speaker Change: Instrument.

Speaker Change: Right.

Gregory Simpson: And therefore.

Speaker Change: Okay.

Gregory Simpson: The market that we have.

Speaker Change: I'm sorry.

Gregory Simpson: We have over 1000 institutional Lps as clients and in this area.

Speaker Change: The pricing.

Andy Wiechmann: Sure. Well, we, we, um... See a number of, as we've talked about before, lumpy expenses in the first quarter. Those are heavily related to compensation and benefits related expenses, and we have other expenses that tend to be a bit elevated around year end. And so with those, just the ultimate magnitude of those and the timing of those can cause some swings in the expenses in the quarter.

Jeremy Ulan: Sure. Well, we see a number of, as we've talked about before, lumpy expenses in Q1. Those are heavily related to compensation and benefits-related expenses. We have other expenses that tend to be a bit elevated around year-end. So just the ultimate magnitude of those and the timing of those can cause some swings in the expenses in the quarter. Importantly, as you saw, we have not changed our guidance for the year. We're kind of assuming the markets gradually increase for the year. The expense trajectory is on track for those expense guide ranges. As we alluded to, we are being cautious. To the extent markets remain flat or go down, we will calibrate accordingly. But expenses are kind of, in Q1, on the trajectory which we expected.

Andy Wiechmann: Sure. Well, we see a number of, as we've talked about before, lumpy expenses in Q1. Those are heavily related to compensation and benefits-related expenses. We have other expenses that tend to be a bit elevated around year-end. So just the ultimate magnitude of those and the timing of those can cause some swings in the expenses in the quarter. Importantly, as you saw, we have not changed our guidance for the year. We're kind of assuming the markets gradually increase for the year. The expense trajectory is on track for those expense guide ranges. As we alluded to, we are being cautious. To the extent markets remain flat or go down, we will calibrate accordingly. But expenses are kind of, in Q1, on the trajectory which we expected.

Speaker Change: Last year.

Speaker Change: Okay.

Gregory Simpson: And we're fairly Underpenetrated underpenetrated in this in this product line.

Speaker Change: Yes.

Speaker Change: Please proceed.

Speaker Change: Yes.

Gregory Simpson: Around the world.

Speaker Change: Okay.

Gregory Simpson: Basically outside of the U S.

Speaker Change: Next question.

Gregory Simpson: In the institutional Lps understanding with a lot of transparency what is the portfolio how is that doing relative to our benchmark. What is the performance of the portfolio the risk of the portfolio.

Okay.

Speaker Change: Okay.

Speaker Change: Great.

Speaker Change: [laughter].

Speaker Change: Hi.

Speaker Change: Okay.

Gregory Simpson: What are the trajectory of capital calls.

Speaker Change: This is Scott.

Speaker Change: Okay.

Speaker Change: Okay.

Gregory Simpson: Returns on capital and things like that so we remain extremely bullish about our continuation of fairly decent growth rates around the world.

Andy Wiechmann: Importantly, as you saw, we have not changed our guidance for the year. And so we're kind of assuming the markets gradually increase for the year, the expense trajectories on track for those expense guide ranges. As we alluded to, we are being cautious and to the extent markets remain flat or go down, we will calibrate accordingly. But expenses are kind of in the first quarter. We're on that trajectory, which we expect.

Speaker Change: Okay.

Speaker Change: Yeah.

Speaker Change: Thank you.

Speaker Change: Yeah.

Speaker Change: Okay.

Speaker Change: That's right.

Speaker Change: Yes.

Speaker Change: Okay.

Gregory Simpson: On this area.

Gregory Simpson: The second part that we are now focused on is.

Speaker Change: Yeah.

Gregory Simpson: Think of them as well as Lps.

Speaker Change: Yes.

Speaker Change: Oh.

Gregory Simpson: Or individual Lps advised by well by their wealth manager they are not dramatically different than an institutional M. B. They are Lps. They are investors and therefore, we're gearing up to provide much higher level footprints Bering sea to those investors.

Speaker Change: [noise] [noise] [noise].

Operator: Thank you. One moment for our next question. Our next question comes from the line of David Motemedem from Evercore ISI.

Operator: Thank you. One moment for our next question. Our next question comes from the line of David Motemedem from Evercore ISI.

Operator: Thank you.

David Motemaden: One moment for our next question.

David Motemaden: Our next question comes from the line of David Motemaden from Evercore ISI. Hey, thanks. Good morning. I was hoping to dig in to the sales, the gross sales that didn't close in one queue that you guys are hoping will It sounds like some of those could be meaningful. I guess I'm wondering, were those concentrated within any segment? It looks like index was definitely a little bit lower. Was a lot of that in there or any other? Sure. So, look, this has come up a few times. I want to reiterate that my key point related to this is that this is kind of what I would call normal sales activity in a given quarter where certain deals either make it or don't make it, right?

Speaker Change: [noise] [noise] [noise] [noise].

Gregory Simpson: In private assets.

Gregory Simpson: Of course private credit is one of the biggest.

Andrew Wiechmann: Hey, thanks. Good morning. I was hoping to dig into the gross sales that didn't close in Q1 that you guys are hoping will close in Q2. It sounds like some of those could be meaningful. I guess I'm wondering, were those concentrated within any segment? It looks like index was definitely a little bit lower. Was a lot of that in there? Or any other detail you could give us would be helpful?

David Motemaden: Hey, thanks. Good morning. I was hoping to dig into the gross sales that didn't close in Q1 that you guys are hoping will close in Q2. It sounds like some of those could be meaningful. I guess I'm wondering, were those concentrated within any segment? It looks like index was definitely a little bit lower. Was a lot of that in there? Or any other detail you could give us would be helpful?

Gregory Simpson: The sellers there and the like that's a second area.

Gregory Simpson: The initiative that we have and the third one is as time goes by we are creating more products totally fitted for bgp's understanding their own portal or their own portfolios comparing it to.

Speaker Change: [noise] upfront.

Speaker Change: Yeah.

Gregory Simpson: <unk> portfolios and all of that so so far we.

Speaker Change: [noise] [laughter].

Gregory Simpson: This market is you know you can hear a lot of competitors here and there and all of that but this is a market we have a very strong leadership and it varies.

Speaker Change: [noise] [noise] [noise] [noise] [laughter].

Gregory Simpson: Very strong leadership and.

Operator: Sure. So look, this has come up a few times. I want to reiterate that my key point related to this is that this is kind of what I would call normal sales activity in a given quarter where certain deals either make it or don't make it, right? So my emphasis is not so much on these deals in the context of change, but more to say, "Look, we had a few deals that didn't make it, and we think we're going to make it in the second quarter," rather than that there's something special about them, or unusual, or what have you. So I think the long story short is they're across a number of different product lines. They were literally across all of our product lines. Some of the larger, one or few of the larger deals that didn't quite make it.

Baer Pettit: Sure. So look, this has come up a few times. I want to reiterate that my key point related to this is that this is kind of what I would call normal sales activity in a given quarter where certain deals either make it or don't make it, right? So my emphasis is not so much on these deals in the context of change, but more to say, "Look, we had a few deals that didn't make it, and we think we're going to make it in the second quarter," rather than that there's something special about them, or unusual, or what have you. So I think the long story short is they're across a number of different product lines. They were literally across all of our product lines. Some of the larger, one or few of the larger deals that didn't quite make it.

We are advancing on that leadership by making it bigger and wider.

Gregory Simpson: The benchmark indices associated with that.

Speaker Change: Okay.

Gregory Simpson: Our eco broadening of that level of transparency.

Speaker Change: Yeah.

Speaker Change: Okay.

Speaker Change:

Gregory Simpson: They may not be an end in themselves, meaning we may not have a large amount of revenue that come from just the benchmark. Kim this is in private assets, although we're gonna dry bud, but they were going to be any major a major part of the entire transparency from performance.

Speaker Change: Sure.

Andy Wiechmann: So, my emphasis is not so much on these deals in the context of change, but more to say, look, we had a few deals that didn't make it and we think we're going to make it in the second quarter, rather than that there's something special about them or unusual or what have you. So, I think the long story short is they're across a number of different product lines. They were literally across all of our product lines, one or two of the larger deals that didn't quite make it. So, I think it's kind of a dangerous category to go too much into the detail and I think it's important to elevate the point to the higher level that I was trying to get to, which is, look, some deals didn't make it, which can happen in any given quarter, but in the slightly changed circumstances since then, we're not seeing evidence that those deals will now not close, i.e.

Speaker Change: Yeah.

Speaker Change: [noise] [noise] [noise].

Gregory Simpson: So understanding the market, which is a benchmark to the comparison to the market et cetera et cetera. So we're very bullish on this.

Gregory Simpson: Private capital solutions product line going forward.

Speaker Change: Yeah.

Gregory Simpson: Yeah.

Speaker Change: Yeah.

Gregory Simpson: Thank you.

Yeah.

Operator: So I think it's kind of a dangerous category to go too much into the detail. And I think it's important to elevate the point to the higher level that I was trying to get to, which is, "Look, some deals didn't make it," which can happen in any given quarter. But in the slightly changed circumstances since then, we're not seeing evidence that those deals will now not close, i.e., rapidly changing environment, more uncertainty. But our belief and understanding with our client engagement is that those deals that didn't make it in Q1 will make it in Q2. And we hope that to be the case.

So I think it's kind of a dangerous category to go too much into the detail. And I think it's important to elevate the point to the higher level that I was trying to get to, which is, "Look, some deals didn't make it," which can happen in any given quarter. But in the slightly changed circumstances since then, we're not seeing evidence that those deals will now not close, i.e., rapidly changing environment, more uncertainty. But our belief and understanding with our client engagement is that those deals that didn't make it in Q1 will make it in Q2. And we hope that to be the case.

Gregory Simpson: There are no further questions I will now turn the floor over to Henry Fernandez for closing remarks.

Speaker Change: Yes.

Speaker Change: Right.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Okay.

Gregory Simpson: Thank you operator.

Speaker Change: [laughter].

Speaker Change: I just want to reiterate.

Speaker Change: [laughter].

Gregory Simpson: That there is a global turmoil.

Speaker Change: Okay.

Yeah.

Gregory Simpson: <unk> clients needles the most.

Speaker Change: [noise] [noise] right.

Gregory Simpson: And when we do our best.

Andy Wiechmann: rapidly changing environment, more uncertainty, but our belief and understanding with our client engagement is that those deals that didn't make it in Q1 will make it in Q2 and we hope that to be the case. Thank you.

Gregory Simpson: We provide mission critical tools for owners understanding key sources of investment risk and investment performance.

Uh huh.

Speaker Change: No.

Speaker Change: Okay.

Gregory Simpson: And combining both of them into portfolio construction and asset allocation across market cycles.

Speaker Change:

Speaker Change: Uh huh.

Speaker Change: Right.

Gregory Simpson: Those tools can take on even greater relevance.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Joshua Denerline from Bank of America Securities.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Joshua Denerline from Bank of America Securities.

Speaker Change: [noise] [noise] [noise].

Operator: One moment for our next question.

Gregory Simpson: High levels of volatility. This is why MSCI remains confident.

Joshua Dennerlein: Our next question comes from the line of Joshua Dennerlein from Bank of America Security. Yeah, hey, guys, I wanted to ask about the new the new Moody's partnership. Can you provide a little bit more color on how that came about? And just maybe how you're thinking about it, about it impacting your growth rate? I'm assuming it's going to show up in private assets that private Yeah, so, you know, we started.

Gregory Simpson: In the resilience and adaptability of our all weather franchise and our ability to expand in periods like this.

Andrew Wiechmann: Yeah. Hey, guys. I wanted to ask about the new Moody's partnership. Could you provide a little bit more color on how that came about and just maybe how you're thinking about it impacting your growth rate? I'm assuming it's going to show up in that private asset segment.

Joshua Dennerlein: Yeah. Hey, guys. I wanted to ask about the new Moody's partnership. Could you provide a little bit more color on how that came about and just maybe how you're thinking about it impacting your growth rate? I'm assuming it's going to show up in that private asset segment.

Speaker Change: The benchmark indices associated with that are our eco broadening of that level of transparency.

As.

Gregory Simpson: Everyone tried to expand in bull markets and when things are going well.

Speaker Change: They may not be and then themself, meaning that we may not have.

Gregory Simpson: MSCI normally expands the most in periods like this because claim needles demos they want to talk to us the most and all of that so thank you again for joining us today and listening to our story and we look forward to speaking to all of you again soon.

Speaker Change: A large amount of revenue that come from just the benchmark indices in private assets. Although you know, we're gonna dry bud, but they were gonna be any major.

Owen Lau: Yeah. So we started quite a number of years ago. We had gone to the senior management of Moody's and said to them, "We have a number of highly complementary capabilities. Why don't we try to do some partnerships?" And at the time, obviously, it was very focused on ESG. And we said to them, "Instead of you running a whole ESG business, why don't you rely on us and you feed the ESG data and models and ratings into your entire business?" So a couple of years ago, they came back and said, "That makes a lot of sense rather than us doing that. So why don't we do that?" And that culminated in the partnership that we announced on ESG last summer.

Henry Fernandez: Yeah. So we started quite a number of years ago. We had gone to the senior management of Moody's and said to them, "We have a number of highly complementary capabilities. Why don't we try to do some partnerships?" And at the time, obviously, it was very focused on ESG. And we said to them, "Instead of you running a whole ESG business, why don't you rely on us and you feed the ESG data and models and ratings into your entire business?" So a couple of years ago, they came back and said, "That makes a lot of sense rather than us doing that. So why don't we do that?" And that culminated in the partnership that we announced on ESG last summer.

Speaker Change: A major part of the entire transparency from performance to risk to understanding the market, which is a benchmark to the comparison until the market et cetera et cetera. So we're very bullish on this you know private capital solutions product lines going forward.

Henry Fernandez: You know, quite a number of years ago, we had gone to the senior management of Moody's and said to them. We have a number of highly complimentary. capabilities why don't we why don't we try to do some partnerships and at the time you know obviously was very focused on the ESG And we said to them, instead of you running a whole ESG business, why don't you rely on us and you feed, you know, the ESG data and models and ratings into your entire business? And so that, so, you know, a couple of years ago. You know, they came back and said, you know, that makes a lot of sense rather than us doing that.

Gregory Simpson: This concludes today's conference call. Thank you for participating you may now disconnect.

Speaker Change: Thank you.

Speaker Change: Yeah.

Speaker Change: Christian.

Speaker Change: Sure.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change:

Speaker Change: Right.

Speaker Change: Yeah.

Speaker Change: [noise] [noise] [laughter].

Henry Fernandez: So why don't we do that? And that culminated in the partnership that we announced on ESG last summer. On the success of that working relationship and partnership, we started talking about what are all the other things that we can do, that one plus one is three, so that they don't have to replicate what we do and we don't replicate what we do. And then we started focusing on private credit. So that started last July. So we went through a number of iterations as to what were the areas that we could potentially benefit mutually from private credit and eventually settle on using their flagship probability of default models and apply it to MSCI's database of private credit and models, and other risk models, to come up with a third-party significant assessment of creditworthiness of the private credit funds and the underlying instruments, the underlying holdings of those private credit funds.

Speaker Change: [noise] [noise] [noise] [noise] [noise] [noise].

Owen Lau: On the success of that working relationship and partnership, we started talking about what are all the other things that we can do that one plus one is three, so that they don't have to replicate what we do and we don't replicate what we do. And then we started focusing on private credit. That started last July. We went through a number of iterations as to what were the areas that we could potentially benefit mutually from private credit and eventually settle on using their flagship Probability of Default Models and apply it to MSCI's database of private credit and models and other risk models to come up with a third-party significant assessment of credit worthiness of the private credit funds and the underlying instruments, the underlying holdings of those private credit funds.

On the success of that working relationship and partnership, we started talking about what are all the other things that we can do that one plus one is three, so that they don't have to replicate what we do and we don't replicate what we do. And then we started focusing on private credit. That started last July. We went through a number of iterations as to what were the areas that we could potentially benefit mutually from private credit and eventually settle on using their flagship Probability of Default Models and apply it to MSCI's database of private credit and models and other risk models to come up with a third-party significant assessment of credit worthiness of the private credit funds and the underlying instruments, the underlying holdings of those private credit funds.

Speaker Change: Right.

Speaker Change: Okay.

Speaker Change: Bob.

Speaker Change: [noise] [noise] [laughter].

Speaker Change: Okay.

Speaker Change: Alright.

Speaker Change:

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Thank you.

Speaker Change: [noise] [noise].

Owen Lau: So it's significant because we have some probability of default models, but they're not definitely at the scale of Moody's. Moody's has databases, but our database is superior to their private credit database. So we joined forces to do that together so that we can present a joint product to the market. We're going to market it across all of our analytical platforms and our client bases. They're going to market it in their own client bases, analytical platforms, and obviously third-party platforms. So it's a win-win for that. On the heels of that second partnership, which obviously we announced yesterday, we're talking about what other partnerships are there. Are there things that we can do on climate? They have incredible things on incredible models on climate, physical models, and other kinds of models. We have obviously models. We're very strong in transition risk. They're stronger in physical risk.

So it's significant because we have some probability of default models, but they're not definitely at the scale of Moody's. Moody's has databases, but our database is superior to their private credit database. So we joined forces to do that together so that we can present a joint product to the market. We're going to market it across all of our analytical platforms and our client bases. They're going to market it in their own client bases, analytical platforms, and obviously third-party platforms. So it's a win-win for that. On the heels of that second partnership, which obviously we announced yesterday, we're talking about what other partnerships are there. Are there things that we can do on climate? They have incredible things on incredible models on climate, physical models, and other kinds of models. We have obviously models. We're very strong in transition risk. They're stronger in physical risk.

Henry Fernandez: So it's significant because we have some probability of default models, but they're not definitely at the scale of Moody's. Moody's has databases, but our database is superior to their private credit database. So we joined forces to do that together so that we can present a joint product to the market. We're going to market it across all of our analytical platforms and our client bases. They're going to market it in their own client bases, analytical platforms, and obviously third-party platforms. So it's a win-win for that.

Speaker Change: [noise] [music].

Speaker Change: Hmm.

Speaker Change: [music].

Henry Fernandez: And therefore, on the heels of that second partnership, which obviously we announced yesterday, we're talking about what other partnerships. Are there things that we can do on climate? They have incredible models on climate, physical models, and other kinds of models, and we have obviously models. We're very strong in transition risk. They're stronger in physical risk. We obviously have this other partnership on physical risk with Swiss Re. They have a lot real estate database. We have a lot of real estate databases. We have a lot of other private, they have their own Orbis database. We have our own investment database.

Owen Lau: We obviously have this other partnership on physical risk with Swiss Re. They have a lot of real estate database. We have a lot of real estate databases. We have a lot of other private—they have their own Orbis database. We have our own sort of investment database. So can we do things? So in a nutshell, instead of them trying to replicate what we do to come up with new products and us replicating what they do, we partner up to benefit from each other's capabilities. That's a little bit of the process that we've gone through.

We obviously have this other partnership on physical risk with Swiss Re. They have a lot of real estate database. We have a lot of real estate databases. We have a lot of other private—they have their own Orbis database. We have our own sort of investment database. So can we do things? So in a nutshell, instead of them trying to replicate what we do to come up with new products and us replicating what they do, we partner up to benefit from each other's capabilities. That's a little bit of the process that we've gone through.

Henry Fernandez: So can we do things?

Operator: So in a nutshell, instead of them trying to replicate what we do to come up with new products, and we're also replicating what they do, we partner up to benefit from each other's capabilities. That's a little bit of the process that we've gone through. And Josh, it will show up in the private asset segment, although I would highlight that the financial impact this year is likely going to be immaterial relative. Thank you. One moment for our next question.

Jeremy Ulan: Josh, it will show up in the private asset segment, although I would highlight that the financial impact this year is likely going to be immaterial, relatively small.

Andy Wiechmann: Josh, it will show up in the private asset segment, although I would highlight that the financial impact this year is likely going to be immaterial, relatively small.

Operator: Thank you. One moment for our next question. Our next question comes from the line of George Tong from Goldman Sachs.

Operator: Thank you. One moment for our next question. Our next question comes from the line of George Tong from Goldman Sachs.

George Tong: Our next question comes from the line of George Tong from Goldman Sachs. Hi, thanks. Good morning.

Andrew Wiechmann: Hi, thanks. Good morning. I wanted to go back to sustainability and climate. This was the only segment to see net new sales decline in the quarter. Can you talk a little bit more about the factors behind that and what you might expect net new sales to inflect to growth and maybe in what kind of environment that would be most likely to happen?

Craig Huber: Hi, thanks. Good morning. I wanted to go back to sustainability and climate. This was the only segment to see net new sales decline in the quarter. Can you talk a little bit more about the factors behind that and what you might expect net new sales to inflect to growth and maybe in what kind of environment that would be most likely to happen?

Andy Wiechmann: I wanted to go back to sustainability and climate. This was the only segment to see net new sales decline in the quarter. Can you talk a little bit more about the factors behind that and what you might expect that new sales to inflect to growth, and maybe in what kind of environment that would be most likely to happen? Sure. So, so, George, and you can see this in the retention rate, which was relatively solid in the quarter, as Henry alluded to, clients are committed to sustainability and climate is very topical and a big focus area for them.

Jeremy Ulan: Sure. So George, and you can see this in the retention rate, which was relatively solid in the quarter. As Henry alluded to, clients are committed to sustainability, and climate is very topical and a big focus area for them. We are seeing muted demand in areas. Needless to say, it's a very nuanced and dynamic landscape. But we are seeing subdued demand, particularly in the US, where investors remain cautious about launching sustainability strategies and funds. And even in Europe, we've seen some regulatory complexity that we've talked about in the past, and some uncertainty persists. There is the potential for reduced scope on CSRD, which is small for us today, very small for us today, but obviously was an opportunity for us that's looking less likely.

Andy Wiechmann: Sure. So George, and you can see this in the retention rate, which was relatively solid in the quarter. As Henry alluded to, clients are committed to sustainability, and climate is very topical and a big focus area for them. We are seeing muted demand in areas. Needless to say, it's a very nuanced and dynamic landscape. But we are seeing subdued demand, particularly in the US, where investors remain cautious about launching sustainability strategies and funds. And even in Europe, we've seen some regulatory complexity that we've talked about in the past, and some uncertainty persists. There is the potential for reduced scope on CSRD, which is small for us today, very small for us today, but obviously was an opportunity for us that's looking less likely.

Andy Wiechmann: We are seeing muted demand in areas. Needless to say, it's a very nuanced and dynamic landscape. but we are seeing subdued demand particularly in the U.S. where investors remain cautious about launching sustainability strategies and funds and even in Europe we've seen some regulatory complexity that we've talked about in the past and some uncertainty persist. There is the potential for reduced scope on CSRD which is small for us today, very small for us today, but obviously was an opportunity for us that's looking less likely and so our tools remain absolutely mission critical to clients but there is some caution and some headwinds which we're likely to see in the near term here so we expect the performance in the next couple quarters to be similar to what we've seen in recent quarters.

Jeremy Ulan: And so our tools remain absolutely mission-critical to clients, but there is some caution and some headwinds, which we're likely to see in the near term here. So we expect the performance in the next couple of quarters to be similar to what we've seen in recent quarters. As Henry alluded to earlier, we continue to be bullish about the long-term opportunity here. We are seeing investors evolve on the climate front from emissions into physical risk. We see investors broaden their thinking around sustainability into resilience and really double-clicking into all aspects of risk related to sustainability. And that's an area where we have always been differentiated and are very well positioned. And so there are these attractive opportunities, areas within climate where we're getting early traction.

And so our tools remain absolutely mission-critical to clients, but there is some caution and some headwinds, which we're likely to see in the near term here. So we expect the performance in the next couple of quarters to be similar to what we've seen in recent quarters. As Henry alluded to earlier, we continue to be bullish about the long-term opportunity here. We are seeing investors evolve on the climate front from emissions into physical risk.

Andy Wiechmann: As Henry alluded to earlier we continue to be here. We are seeing investors evolve on the climate front from emissions into physical risk. We see investors broaden their thinking around sustainability into resilience and really double-clicking into all aspects of risk related to sustainability and that's an area where we have always been differentiated and are very well positioned and so there are these attractive opportunities areas within climate where we're getting early traction. I think some of the broader cyclical dynamics are going to persist here in the short term but over the long term we continue to be focused on the big opportunities in front of us.

We see investors broaden their thinking around sustainability into resilience and really double-clicking into all aspects of risk related to sustainability. And that's an area where we have always been differentiated and are very well positioned. And so there are these attractive opportunities, areas within climate where we're getting early traction. I think some of the broader cyclical dynamics are going to persist here in the short term, but over the long term, we continue to be focused on the big opportunities in front of us.

Jeremy Ulan: I think some of the broader cyclical dynamics are going to persist here in the short term, but over the long term, we continue to be focused on the big opportunities in front of us.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Russell Quelch from Redburn Atlantic.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Russell Quelch from Redburn Atlantic.

Operator: Thank you.

Russell Quelch: One moment for our next question.

Andy Wiechmann: Our next question comes from the line of Russell Quelch from Redburn, Atlantic. Thank you. Good morning. Perhaps as a follow up to an earlier question on retention, can I quickly check that the improvement in Q1 was driven by a lapping of one-off client consolidations and not due to proactive actions on pricing or discounting? So, well, comparing the retention rate to Q1 of last year, obviously Q1 of last year we saw a lower retention rate related to that client activity that I talked about with banks. and hedge funds particularly. I'd say the retention rate was reasonably strong across all segments for us here and I'd say I wouldn't attribute that to any one thing in specific other than the broad mission criticality of our tools, our proactive client engagement and client service efforts and our strong position relative to competitors in the market.

Jeremy Ulan: Thank you. Good morning. Perhaps as a follow-up to an earlier question on retention, can I quickly check that the improvement in Q1 was driven by a lapping of one-off client consolidations and not due to proactive actions on pricing or discounting?

Russell Quelch: Thank you. Good morning. Perhaps as a follow-up to an earlier question on retention, can I quickly check that the improvement in Q1 was driven by a lapping of one-off client consolidations and not due to proactive actions on pricing or discounting?

Andrew Wiechmann: Well, comparing the retention rate to Q1 of last year, obviously, Q1 of last year, we saw a lower retention rate related to that client activity that I talked about with banks and hedge funds, particularly. I'd say the retention rate was reasonably strong across all segments for us here. I'd say I wouldn't attribute that to any one thing in specific other than the broad mission criticality of our tools, our proactive client engagement and client service efforts, and our strong position relative to competitors in the market. I wouldn't say it necessarily is tied to pricing. If you compare to last year, obviously, we did have some elevated client events in the first quarter of last year, which is why you saw a big increase year over year.

Andy Wiechmann: Well, comparing the retention rate to Q1 of last year, obviously, Q1 of last year, we saw a lower retention rate related to that client activity that I talked about with banks and hedge funds, particularly. I'd say the retention rate was reasonably strong across all segments for us here. I'd say I wouldn't attribute that to any one thing in specific other than the broad mission criticality of our tools, our proactive client engagement and client service efforts, and our strong position relative to competitors in the market. I wouldn't say it necessarily is tied to pricing. If you compare to last year, obviously, we did have some elevated client events in the first quarter of last year, which is why you saw a big increase year over year.

Andy Wiechmann: So I wouldn't say it necessarily is tied to pricing but if you compare to last year obviously we did have some elevated client events in the first quarter of last year which is why you saw a big increase here. Thank you. One moment for next question.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Gregory Simpson from BNP Paribas Exane.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Gregory Simpson from BNP Paribas Exane.

Operator: Our next question comes from the line of Gregory Simpson from BNP Paribas, Exeme.

Gregory Simpson: Hi there, I just wanted to ask for a bit more colour on private capital solutions, which had 15% run rate growth this quarter, and in particular how the sales and uptake of the suite of private capital indexes you launched last year have been going. I just feel like there should be a lot of demand for transparency of private markets in this kind of backdrop, but also where there's a bit of competition in this space.

Jeremy Ulan: Hi there. I just wanted to ask for a bit more color on private capital solutions, which had 15% run rate growth this quarter, and in particular, how the sales and uptake of the suite of private capital indexes you launched last year have been going. It does feel like there should be a lot of demand for transparency of private markets in this kind of backdrop, but also where there's a bit of competition in the space. Thank you.

Gregory Simpson: Hi there. I just wanted to ask for a bit more color on private capital solutions, which had 15% run rate growth this quarter, and in particular, how the sales and uptake of the suite of private capital indexes you launched last year have been going. It does feel like there should be a lot of demand for transparency of private markets in this kind of backdrop, but also where there's a bit of competition in the space. Thank you.

Henry Fernandez: Thank you. So private capital solutions, formerly the Burgess, right, the Burgess acquisition that we made, at the moment is largely a product offering transparency. to institutional investors, institutional LPs. on their investments in GPS. across the whole spectrum of private assets. um there are you know a lot of a lot of other sales that are for entities related to that you know that ecosystem if and therefore You know, the market that we have, we have over 1000 institutional LPs as clients in this area. And we're fairly under penetrated, under penetrated in this, in this product line around the world, especially, you know, outside of the US, in the institutional LPs understanding, with a lot of transparency, what is the portfolio?

Owen Lau: So, Private Capital Solutions, formerly the Burgiss, right? The Burgiss acquisition that we made at the moment is largely a product offering transparency to institutional investors, institutional LPs on their investments in GPs across the whole spectrum of private assets. There are a lot of other sales that are for entities related to that ecosystem. And therefore, the market that we have, we have over 1,000 institutional LPs as clients in this area. And we're fairly underpenetrated in this product line around the world, especially outside of the US, in the institutional LPs understanding with a lot of transparency what is the portfolio, how is that doing relative to a benchmark, what is the performance of the portfolio, the risk of the portfolio, what are the trajectory of capital calls, of returns of capital, and things like that.

Henry Fernandez: So, Private Capital Solutions, formerly the Burgiss, right? The Burgiss acquisition that we made at the moment is largely a product offering transparency to institutional investors, institutional LPs on their investments in GPs across the whole spectrum of private assets. There are a lot of other sales that are for entities related to that ecosystem. And therefore, the market that we have, we have over 1,000 institutional LPs as clients in this area. And we're fairly underpenetrated in this product line around the world, especially outside of the US, in the institutional LPs understanding with a lot of transparency what is the portfolio, how is that doing relative to a benchmark, what is the performance of the portfolio, the risk of the portfolio, what are the trajectory of capital calls, of returns of capital, and things like that.

Henry Fernandez: How is that doing relative to a benchmark? You know, what is the performance of the portfolio, the risk of the portfolio? You know, what are the trajectory of capital calls of returns of capital and things like that.

Owen Lau: So we remain extremely bullish about a continuation of fairly decent growth rates around the world on this area. The second part that we are now focused on is, think of them as wealth LPs or individual LPs advised by their wealth manager. They are not dramatically different than an institutional LP. They are LPs. They are investors. And therefore, we're gearing up to provide much higher levels of transparency to those investors in private assets. Of course, private credit is one of the biggest sellers there and the like. That's a second area of initiative that we have. And the third one is, as time goes by, we are creating more products totally fitted for the GPs, understanding their own portfolios, comparing it to competitors' portfolios, and all of that.

So we remain extremely bullish about a continuation of fairly decent growth rates around the world on this area. The second part that we are now focused on is, think of them as wealth LPs or individual LPs advised by their wealth manager. They are not dramatically different than an institutional LP. They are LPs. They are investors. And therefore, we're gearing up to provide much higher levels of transparency to those investors in private assets. Of course, private credit is one of the biggest sellers there and the like. That's a second area of initiative that we have. And the third one is, as time goes by, we are creating more products totally fitted for the GPs, understanding their own portfolios, comparing it to competitors' portfolios, and all of that.

Henry Fernandez: So we remain extremely bullish about a continuation of fairly decent growth rates around the world on this area. The second part that we are now focused on is, think of them as wealth LPs, you know, or individual LPs advised by their wealth manager, they are not dramatically different than an institutional LP, they are LPs, they are investors. And therefore, we're gearing up to provide much higher levels of transparency to those investors in private assets. Of course, you know, private credit is one of the biggest sellers there and the like. That's a second, you know, area of initiative that we have.

Henry Fernandez: And the third one is, as time goes by, we are creating more products totally fitted for the GPs, you know, understanding their own portfolios, comparing it to competitors portfolios, and all of that. So, so far, you know, we, this market is, you know, you can hear a lot of competitors here and there and all of that. But this is a market, we have a very strong leadership in it, very strong leadership. They may not be an end in themselves, meaning we may not have a large amount of revenue that comes from just the benchmark indices in private assets, although, you know, we're going to try, but they were going to be a major part of the entire transparency from performance to risk to understanding the market, which is a benchmark to the comparison to the market, et cetera, et cetera.

Owen Lau: So far, this market, as you can hear, a lot of competitors here and there and all of that, but this is a market we have a very strong leadership in it, very strong leadership. We are advancing on that leadership and making it bigger and wider. The benchmark indexes associated with that are a component of that level of transparency. They may not be an end in themselves, meaning we may not have a large amount of revenue that comes from just the benchmark indexes and private assets, although we're going to try, but they are going to be a major part of the entire transparency from performance, to risk, to understanding the market, which is a benchmark, to the comparison to the market, etc., etc. So we're very bullish on this Private Capital Solutions product line going forward.

So far, this market, as you can hear, a lot of competitors here and there and all of that, but this is a market we have a very strong leadership in it, very strong leadership. We are advancing on that leadership and making it bigger and wider. The benchmark indexes associated with that are a component of that level of transparency. They may not be an end in themselves, meaning we may not have a large amount of revenue that comes from just the benchmark indexes and private assets, although we're going to try, but they are going to be a major part of the entire transparency from performance, to risk, to understanding the market, which is a benchmark, to the comparison to the market, etc., etc. So we're very bullish on this Private Capital Solutions product line going forward.

Henry Fernandez: So we're very bullish on this, you know, private capital solutions product line, you know, going forward.

Operator: Thank you.

Operator: Thank you. There are no further questions. I will now turn the floor over to Henry Fernandez for closing remarks.

Operator: Thank you. There are no further questions. I will now turn the floor over to Henry Fernandez for closing remarks.

Henry Fernandez: There are no further questions.

Operator: I will now turn the floor over to Henry Fernandez for closing remarks. Thank you, operator. I just want to reiterate. that periods of global turmoil. are one of MSEI's clients, Needles the most. and where we do our best. We provide mission-critical tools for understanding key sources of investment risk and investment performance. and combining both of them into portfolio construction and asset allocation across market cycles. Those tools can take an even greater relevance. I mean, high levels of volatility. This is why MSCI remains confident in the resilience and adaptability of our all-weather franchise and our ability to expand in periods like this.

Owen Lau: Thank you, operator. I just want to reiterate that periods of global turmoil are when MSCI's clients need us the most and where we do our best. We provide mission-critical tools for understanding key sources of investment risk, investment performance, and combining both of them into portfolio construction and asset allocation across market cycles. Those tools can take an even greater relevance, I mean, high levels of volatility. This is why MSCI remains confident in the resilience and adaptability of our all-weather franchise and our ability to expand in periods like this. It's not as everyone tries to expand in bull markets, and when things are going well, MSCI normally expands the most in periods like this because clients need us the most. They want to talk to us the most and all of that.

Henry Fernandez: Thank you, operator. I just want to reiterate that periods of global turmoil are when MSCI's clients need us the most and where we do our best. We provide mission-critical tools for understanding key sources of investment risk, investment performance, and combining both of them into portfolio construction and asset allocation across market cycles.

Those tools can take n even greater relevance, I mean, high levels of volatility. This is why MSCI remains confident in the resilience and adaptability of our all-weather franchise and our ability to expand in periods like this. It's not as everyone tries to expand in bull markets, and when things are going well, MSCI normally expands the most in periods like this because clients need us the most. They want to talk to us the most and all of that. So thank you again for joining us today, listening to our story, and we look forward to speaking to all of you again soon.

Henry Fernandez: You know, it's not as, it's, you know, everyone tries to expand in bull markets and when things are going well, you know, MSCI normally expands the most in periods like this because clients need us the most. They want to talk to us the most and all of that.

Owen Lau: So thank you again for joining us today, listening to our story, and we look forward to speaking to all of you again soon.

Henry Fernandez: So thank you again for joining us today, listening to our story and we look forward to speaking to all of you again soon.

Operator: This concludes today's conference call. Thank you for participating.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.

Operator: You may now disconnect.