📢 Earnings Summary — MSCI

MSCI delivered a strong Q3 with 9% organic revenue growth, double-digit adjusted EBITDA growth, and record metrics across several product lines. Index AUM and ABF run rate hit new highs, aided by $46B of ETF inflows and broad demand for DM ex-US and EM exposures. Subscription momentum was robust across segments, particularly in Index and Analytics, with multiple record Q3s for recurring sales and resilient retention. The company accelerated innovation in private assets and AI-enabled solutions, while expanding into newer client segments and deepening ties with traditional ones. Capital deployment was significant with $1.25B in buybacks during the quarter, and a new $3B authorization. Management remains bullish on secular opportunities, especially in private credit, while acknowledging near-term industry challenges and AUM-linked expense sensitivity.

📈 Growth Highlights

• Organic revenue +9% y/y; adjusted EBITDA +10%; adjusted EPS >15%.
• Total run rate +>10% y/y; asset-based fee (ABF) run rate +17% to nearly $800M (record).
• Index: recurring net new subscription sales (NNS) +27% y/y (+43% in the Americas); subscription run rate +9%; retention ~96%.
• Analytics: subscription run rate +7%; highest Q3 ever for recurring NNS; Equity Solutions recurring sales +29%.
• Sustainability & Climate: subscription run rate +8% (Sustainability +6%, Climate +16%); retention ~94%.
• Private Capital Solutions: ~$6M new recurring subscription sales; PCS + Real Assets retention 93.3%.
• Client segments: Hedge funds recurring NNS +21% (record Q3); Wealth subscription run rate ~+11%; Asset owners +9%; Banks/Brokers +9%; Asset managers just over +6% subscription run rate; asset managers recurring NNS +11%.

🔨 Business Development

• AUM in products linked to MSCI indexes reached $6.4T ($2.2T ETFs; $4.2T non-ETF); four MSCI-linked ETFs now >$100B AUM.
• Equity ETFs linked to MSCI indexes took in $46B of Q3 inflows; strong demand for DM ex-US and EM exposures.
• New index products launched since 2023 generated ~$16M of recurring subscription sales in the last 12 months.
• Launched a private credit factor model using data from 1,500+ private credit funds.
• Introduced MSCI PACS (Private Asset Classification Standard) taxonomy across private companies, real estate, and infrastructure; AI-enabled.
• Launched 60–80 private credit indices; built credit assessments using Moody’s models applied to MSCI’s database; developing evaluated pricing.
• Geospatial climate offering gaining traction (notably with banks); Real Assets data center product adopted by GP investors.
• Growing adoption of MSCI Wealth Manager; a large U.S. independent wealth manager licensed private capital fund transparency data.
• Notable wins: 7‑figure renewals/expansions with large global hedge funds; global index renewal with a major European bank; renewal with a major Canadian pension; large enterprise analytics deals with top U.S. and European asset managers.
• Supported product innovation for active managers, including GSAM’s Private Equity Tracker Fund leveraging MSCI’s private equity dataset.

💵 Financial Performance

• ABF run rate nearly $800M (record), supported by record AUM in both ETF and non-ETF index-linked products.
• Index delivered best Q3 on record for recurring NNS; non-market-cap categories contributed.
• Expense guidance low end raised due to higher AUM-linked costs.
• Interest expense guidance reflects notes issued during Q3.
• Free cash flow guidance increased on business growth and tax benefits.

🏦 Capital & Funding

• Repurchased $1.25B of shares since the start of Q3; >$1.5B YTD repurchases.
• Board authorized an additional $3B for share repurchases over the next few years.
• Recent notes issuance in Q3 increased interest expense guidance.

🧠 Operations & Strategy

• Accelerating use of AI on proprietary databases to enhance existing products and develop new capabilities.
• Deepening penetration in traditional client segments while expanding into newer segments (hedge funds, wealth, banks, private capital).
• One MSCI integrated solutions strategy driving cross-sell across risk, performance, factor, and sustainability.
• Investing to lead in private assets (private credit data, factor and credit models, indices; PCS benchmarks and standards).
• Helping active managers create revenue-generating products (e.g., active ETFs, private equity replication strategies).

🌍 Market Outlook

• Mission-critical, durable solutions underpin broad-based demand across segments.
• ETF flows and sustained AUM in DM ex-US and EM exposures support ABF growth.
• Real Assets retention stabilizing; momentum in new product delivery and go-to-market execution.
• Management bullish on secular growth in private credit and MSCI’s role in transparency and standard-setting.
• Full-year outlook updated: higher expenses tied to AUM; higher free cash flow; continued innovation expected to translate into results.

⚠ Risks & Headwinds

• Active asset management industry remains challenged, though MSCI aims to offset by enabling product creation.
• Private credit initiatives are early-stage and not yet contributing meaningfully to revenue.
• Market volatility and uncertainty can impact flows, ABF, and client budgets.
• Expense base is sensitive to AUM levels, potentially pressuring margins if markets weaken.

AI-generated earnings recap sourced from company results & conference call observations. Not investment advice — verify with official filings.