MSCI Inc. Q2 FY2025 earnings call

Financial Performance - Second quarter delivered strong financials with revenue, adjusted EBITDA, EPS growth and over $300M free cash flow; year-to-date share repurchases of $286M. ### Client Segments - Double-digit subscription run rate growth in banks/broker-dealers, wealth managers, hedge funds, asset owners; asset managers had 6% subscription run rate growth but 96% rotation with active asset managers. ### Product Lines - - Index & Asset-Based Fees: ETF AUM linked to MSCI indices hit record, asset-based fee run rate growth 17%, completed large index deals. - Analytics: 8% subscription run rate growth in Q2, largest deal for MSCI Wealth Manager. - Sustainability & Climate: Reportable segment had 11% subscription run rate growth, sustainability and climate solutions grew. - Private Capital Solutions: Nearly 13% run rate growth in Q2, launched key products. - Real Assets: New recurring sales challenged but launched new products for commercial real estate. ### Product Innovation - Launched new data solutions like constituent AUM and index liquidity datasets, new index modules, and generated over $4M in sales from new product areas in past six months.

In the second quarter, MSCI Inc. delivered strong financial performance. Revenue grew over 9%, adjusted EBITDA grew over 10%, adjusted earnings per share grew almost 15%, and free cash flow was over $300 million. Year to date, $286 million worth of shares were repurchased. Total run rate growth was 11% fueled by record AUM levels in ETF products linked to MSCI Inc. indices, and asset-based fee run rate growth was 17%. Among client segments, banks and broker-dealers, wealth managers, hedge funds, and asset owners had double-digit subscription run rate growth, while asset managers had 6% subscription run rate growth but 96% rotation with active asset managers. In product lines, ETF AUM linked to MSCI Inc. indices surpassed $2 trillion for the first time, with total index ETF and non-ETF AUM balances tracking MSCI Inc. indices reaching $6 trillion, and fixed income index ETF AUM linked to MSCI Inc. indices reaching $84 billion. Analytics had 8% subscription run rate growth, private capital solutions had nearly 13% run rate growth in Q2, real assets had new recurring sales challenges but new product launches, and sustainability and climate had 11% subscription run rate growth for the reportable segment.

Guidance remains unchanged across all categories.看好下半年在各客户细分市场、地区、新产品和能力方面的增长机会，认为公司在各方面有巨大的增长潜力。

Market volatility may affect client spending decisions; client budget pressures may lead to retention rate fluctuations; industry consolidation brings uncertainties; retention rate fluctuations in real assets and sustainability & climate areas.

Q: Reason for deceleration of hedge fund subscription run rate?

A: Hedge fund segment is volatile. Affected by client events, new product launches, etc. Long-term still has growth opportunities.

Q: Time and extent of acceleration of non-asset manager subscription?

A: Difficult to predict in short term. There are huge opportunities in segments like fast money, wealth management, private assets. Implementing business plans to drive growth.

Q: Adoption trend of private capital solutions in US and internationally?

A: Huge demand in private assets field. Focused on providing transparency and liquidity. Current progress not reflected in financial numbers yet.

Q: Pricing environment and client acceptance?

A: Pricing approach consistent. Contribution of price increases to new recurring sales in line with past quarters. Calibrate price according to client value and cost.

Q: Progress of data acquisition from GPs for private fund data?

A: Working with GPs to liberalize data rights. Hopeful to show more specific data to wider audience in wealth management space.

Q: Pricing trends on asset-based fee side, especially ETF licensing yield?

A: Fees stable in recent quarters. International rotation helps offset pressure. Believe ABF is a growth area with huge secular opportunities.

Q: Future outlook of global benchmarks like MSCI World?

A: Global benchmarks like MSCI World play an increasingly important role as the world globalizes. Their importance will continue to grow.