MSCI(MSCI) - 2025 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - MSCI reported organic revenue growth of 9%, adjusted EBITDA growth of 10%, and adjusted earnings per share growth of over 15% in Q3 2025 [6] - The company repurchased $1.25 billion worth of shares in Q3, bringing year-to-date repurchases to over $1.5 billion, with an additional $3 billion authorized for future repurchases [6] Business Line Data and Key Metrics Changes - The index franchise achieved recurrent net new subscription sales growth of 27%, with 43% growth in the Americas [7] - Total AUM in investment products linked to MSCI indices reached $6.4 trillion, including $2.2 trillion in ETFs and $4.2 trillion in non-ETFs [7] - Analytics delivered recurrent net new sales growth of 16%, driven by strong adoption of risk tools and equity models by hedge funds [8] - Subscription run rate growth for wealth managers was nearly 11%, while asset owners posted 9% growth [12][14] - Subscription run rate growth for banks and broker dealers was 9%, with a record level of recurring sales [15] Market Data and Key Metrics Changes - Equity ETFs linked to MSCI indexes captured $46 billion of inflows during Q3 2025 [17] - The index retention rate remained durable at nearly 96% [17] - Sustainability and climate solutions saw an 8% subscription run rate growth, with climate solutions growing at 16% [19] Company Strategy and Development Direction - MSCI is focusing on expanding its presence in private credit and enhancing its client segmentation strategy [10][25] - The company is leveraging AI to enhance existing products and develop new capabilities, aiming for significant value creation for shareholders [9][41] - MSCI is committed to helping the active asset management industry recover by creating new products, particularly in the active ETF space [31][60] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about long-term opportunities and the ability to drive growth from recent innovations [16] - The company is seeing solid momentum in delivering new products and capabilities, translating into tangible results [21] - Management acknowledged challenges in the sustainability and climate segment but emphasized the potential for monetization through indices [54] Other Important Information - MSCI launched a private credit factor model and a new global taxonomy for private assets, enhancing transparency and standardization [8][9] - The company is actively developing datasets and products for market makers and broker dealers to fuel liquidity [33] Q&A Session Summary Question: Strategy around private credit - Management is bullish on private credit, emphasizing the need for transparency tools for private credit funds to attract investors [24][25] Question: New products and marketing efforts - The strategy includes creating new products for the active asset management industry and expanding into other client segments [31][35] Question: AI opportunities and cost savings - AI is expected to dramatically increase margins by creating new products and reducing operational costs [63][64] Question: Sales momentum in asset management - The sales momentum is attributed to upselling additional content and services to existing clients, particularly in index [68] Question: Competitive moat against new entrants - MSCI's proprietary data and trusted brand create significant barriers to entry for competitors [72][75] Question: Performance of net new sales in EMEA - There was a decline in net new sales in EMEA, with management noting the need for further product innovation in that region [78]