MSCI (MSCI) Q2 2025 Earnings Call Transcript

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ETCALL PARTICIPANTSChairman and Chief Executive Officer — Henry FernandezPresident and Chief Operating Officer — Baer PettitChief Financial Officer — Andy WiechmannHead of Investor Relations — Jeremy Ulan Need a quote from one of our analysts

Moreover, [ tected]RISKSWiechmann indicated, "retention rates (this bears monitoring)

Moreover, Nevertheless, It's mostly lower in real assets and sustainability and climate," attributing "slightly lower retention rates" in Q2 2025, attributed to client events and budget pressures, with hedge funds and corporate advisors being the primary sources of increased cancellations, amid market uncertainty

Management stated that sustainability remains challenged, with continued muted demand and slower sales, particularly in the climate and ESG segments, as discussed for Q2 2025

Additionally, At the same time, Fernandez said, I don't see in the near future a major catalyst for acceleration of growth or rapid acceleration of growth on the active asset management industry

That's something that will continue to take time

On the other hand, TAKEAWAYSTotal Revenue Growth: Revenue grew over 9% in Q2 2025, reflecting broad-based client and duct momentum, as stated by management, in this volatile climate

Indexed Equity ETF AUM Linked to MSCI Inc

Moreover, Meanwhile, Total Index ETF and Non-ETF AUM Tracking MSCI Inc

Nevertheless, Developed ex U, in today's financial world

Custom Index Subscription Run Rate Growth: Remained in the teens, as noted by management

Expense Guidance: Expense guidance remains unchanged across all ; management expects results to fall toward the middle of the guidance range for the remainder of the year if AUM levels remain near current highs

Guidance: No changes vided for any major financial or operating forecast lines

SUMMARYManagement highlighted record- ETF-linked AUM and sustained growth in asset-based fees in Q2 2025, confirming their central role in MSCI Inc

Meanwhile, 's growth model

New duct launches, especially in private capital and climate data, have contributed to differentiated sales opportunities and client engagement, in today's financial world

Furthermore, Additionally, The largest-ever wealth management deal and an expanding presence among insurance and asset owner clients underscore diversification of MSCI Inc, considering recent developments

Additionally, 's revenue base

Management noted client budget constraints and episodic deal lumpiness impacting retention and sales metrics, particularly in analytics and hedge fund segments

Additionally, The company confirmed stable pricing yields for ETF and non-ETF passive ducts, with international inflows offering favorable mix shift benefits to fees

Continues to prioritize duct innovation and strategic client reclassification, aiming to accelerate non-active subscription growth over time despite current visibility challenges

However, INDUSTRY GLOSSARYABF (Asset-Based Fees): Revenue model deriving fees based on client AUM tracking MSCI Inc

On the other hand, Indexes, including ETFs and non-ETF index funds

On the other hand, Additionally, Run Rate: The annualized value of recurring revenues or subscriptions at a point in time, used to assess underlying momentum

ETF: Exchange-traded fund; an investment fund traded on stock exchanges, often tracking an index

Custom Index: Bespoke benchmarking duct tailored for a client’s specifications, used for portfolio construction or duct innovation, in this volatile climate

Direct Indexing: Investment apach where portfolios directly replicate an index by owning underlying securities, allowing for customization and tax optimization, given current economic conditions

Factor Index: An index that selects, weights, and rebalances securities based on specific investment factors such as value, quality, or growth

Additionally, GP/LP: General Partner/Limited Partner; in private asset, GPs manage investment funds while LPs vide capital

Moreover, Full Conference Call TranscriptJeremy Ulan: Good day, and welcome to the MSCI Inc

This press release, along with an earnings presentation and brief quarterly, are available on our website, msci

Furthermore, Com, under the Investor Relations tab (an important development)

At the same time, 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, in this volatile climate

Furthermore, 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, given current economic conditions

During today's call, in addition to results presented on the basis of U

GAAP, we also refer to non-GAAP measures (noteworthy indeed)

You'll find a reconciliation of our non-GAAP measures to the equivalent GAAP in the appendix of the earnings presentation, given the current landscape

However, 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, Baer Pettit, our President and COO, and Andy Wiechmann, our Chief Financial Officer

With that, let me now turn the call over to Henry Fernandez (something worth watching)

Nevertheless, Henry Fernandez: Thank you, Jeremy

Nevertheless, And thank you all for joining us

In the second quarter, MSCI Inc

On the other hand, Additionally, Among client segments, we recorded double-digit subscription run rate growth with banks and broker-dealers, wealth managers, hedge funds, and asset owners (an important development)

Across all client segments, MSCI Inc

Is rapidly innovative use cases for our existing solutions while new solutions for our increasingly diverse client base

Nevertheless, Turning to our duct lines, MSCI Inc. 's Q2 performance affirmed that index in general and our asset-based fee franchise in particular, is a key growth engine for us with enormous opportunities (noteworthy indeed)

Most notably, our strong ABF run rate growth reflects the vital importance of MSCI Inc

Indices to global, especially in non-US market exposures, considering recent developments

Moreover, In fact, MSCI Inc

Additionally, Captured more indexed equity ETF cash flows than any other index vider during the quarter

Total equity index ETF AUM linked to MSCI Inc

In addition, fixed income index ETF AUM linked to indices created entirely by MSCI Inc

All of this helped us achieve our highest ever level of quarterly ABF revenue

Furthermore, 's index gress was also underpinned by several duct launches, including new data solutions that offer deeper insights into the building blocks of our indices, such as our constituent AUM and index liquidity datasets

For all these reasons, we are very excited the tremendous potential of our index franchise

Moreover, 's second quarter results also confirm the value of our risk and performance analytics tool during periods of fast-moving market conditions and volatility

We achieved our highest ever Q2 recurring sales in analytics driven mainly by equity risk models, given current economic conditions

However, Meanwhile, we our largest ever deal for MSCI Inc

Wealth Manager, which Baer will cover in greater detail

Furthermore, Moreover, Let us shift to private assets, which is an attractive long-term opportunity where MSCI Inc

Meanwhile, Is expanding our tools to drive adoption across the investment community

Furthermore, For example, we introduced MSCI Inc

We recently unveiled the MSCI Inc, given the current landscape

World Private Equity Return Tracker Index, which offers an apximation of private equity investments by replicating region, sector, and style exposures through public equities leveraging fundamental data from MSCI Inc (noteworthy indeed)

At the same time, Private capital universe, in this volatile climate

Furthermore, In contrast, Already, we see strong interest from clients in launching tradable ducts linked to this index, in this volatile climate

Our first phase of private credit risk assessment in partnership with Moody's is expected in the coming weeks, and we are very excited the dialogue we've been having with clients on this duct

In addition, we now have more than 30 LP clients using our private capital indices as their policy or performance benchmark

Furthermore, These offerings underscore our innovation and the benefits of our integrated franchise, which enhances all MSCI Inc

Duct lines creating powerful network effects for our clients

In real assets, new recurring sales were challenged and down from Q2 of last year (noteworthy indeed)

However, we introduced new ducts targeted to the areas of relative acceleration in commercial real estate, including our new data centers duct and RCA funds, a new intelligence offering covering over eight real estate funds to empower GPs and LPs to optimize fundraising, investor engagement, and capital allocation decisions

Moreover, Moving on to sustainability and climate, despite the current cyclical slowdown, our tools have become a permanent feature of the global investment cess, and MSCI Inc

Will continue to be a leader in this space

We recently won valuable climate mandates in index, and our climate physical risk and reporting solutions are helping us expand our foot with newer client segments, such as insurance companies, in this volatile climate

While we expect sustainability to remain challenged, we are adapting and repositioning our tools to capture new opportunities when they arise (this bears monitoring)

In conclusion, our solutions are strongly embedded in the global investment ecosystem

We're always intensely focused on anticipating and in the biggest trends across our industry to serve a broad base of client segments while dering an attractive financial model for our holders, in light of current trends

And with that, let me turn things over to Baer

Baer Pettit: Thank you, Henry, and greetings, everyone

During the quarter with rapidly moving, MSCI Inc

Benefited from both traditional an.