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01/10 00:14
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reflects strong revenue growth, particularly in equity solutions and climate tools, alongside significant expansion in private credit and real assets. The Q&A section highlights MSCI's strategic focus on innovation, AI, and expanding client segments, with positive sentiment from analysts. The commitment to share repurchases and leveraging AI for operational efficiencies further supports a positive outlook. Despite some uncertainties in management's responses, the overall sentiment is positive, likely resulting in a stock price increase of 2% to 8%.
Organic Revenue Growth 9% year-over-year growth. This growth was attributed to strong financial and sales performance, highlighting MSCI's competitive advantages.
Adjusted EBITDA Growth 10% year-over-year growth. This was driven by strong operational performance and cost management.
Adjusted Earnings Per Share Growth Over 15% year-over-year growth. This reflects the company's strong financial performance and operational efficiency.
Share Repurchases $1.25 billion worth of MSCI shares repurchased in Q3, bringing year-to-date repurchases to over $1.5 billion. This demonstrates strong conviction in the value of the franchise.
Total Run Rate Growth Over 10% year-over-year growth, including 17% growth in asset-based fee run rate. This was driven by record AUM levels in both ETF and non-ETF products linked to MSCI indices.
Recurring Net New Subscription Sales Growth in Index 27% year-over-year growth, including 43% growth in the Americas. This was driven by the adoption of MSCI indices and record AUM levels.
Total AUM in Investment Products Linked to MSCI Indexes $6.4 trillion globally, including $2.2 trillion in ETF products and $4.2 trillion in non-ETF products. This reflects the investment community's confidence in MSCI indices.
Recurring Net New Sales Growth in Analytics 16% year-over-year growth. This was driven by strong adoption of risk tools and equity models by multi-strategy hedge funds.
Recurring Net New Subscription Sales Growth in Hedge Funds 21% year-over-year growth. This was the highest Q3 ever for new recurring sales to hedge funds, driven by demand for equity factor and enterprise risk solutions.
Subscription Run Rate Growth in Wealth Managers Nearly 11% year-over-year growth. This was driven by contributions across product lines and demand for tools and standards in private markets.
Subscription Run Rate Growth in Asset Owners 9% year-over-year growth. This was driven by Analytics, Private Capital Solutions, and Index.
Subscription Run Rate Growth in Banks and Broker-Dealers 9% year-over-year growth. This was driven primarily by Index and record Q3 recurring sales.
Subscription Run Rate Growth in Asset Managers Just over 6% year-over-year growth. This was driven by strong recurring sales in Index and other product lines.
Equity ETFs Linked to MSCI Indexes $46 billion of inflows during Q3. This reflects strong demand for ETFs linked to MSCI developed markets ex U.S. and emerging markets indexes.
Index Subscription Run Rate Growth 9% year-over-year growth, including nearly 8% growth with asset managers. This was driven by strong recurring sales and new product launches.
Analytics Subscription Run Rate Growth 7% year-over-year growth. This was driven by the highest Q3 ever for recurring net new sales, particularly in Equity Solutions.
Sustainability and Climate Subscription Run Rate Growth 8% year-over-year growth, with 6% growth in Sustainability Solutions and 16% growth in Climate Solutions. This reflects the must-have nature of these tools.
Private Capital Solutions New Recurring Subscription Sales $6 million in Q3. This was driven by success across client segments, including endowments, foundations, wealth, and GPs.
Real Assets Recurring Net New Sales Improved in Q3, aided by stabilizing retention trends and sales from newly introduced product areas.
Private credit factor model: Launched a private credit factor model powered by data from over 1,500 private credit funds, providing improved transparency and integrated market risk views for private credit.
MSCI PACS: Introduced a new global taxonomy for private assets, known as MSCI PACS, which uses AI to classify private companies, real estate, and infrastructure, enabling benchmarking and performance analysis.
Geospatial offering: New geospatial solutions gaining traction, particularly with banks, as part of Sustainability and Climate solutions.
Data center offering: Introduced a data center offering in Real Assets, gaining traction with GP investors.
ETF and non-ETF products: Total AUM in investment products linked to MSCI indices reached $6.4 trillion globally, with $2.2 trillion in ETF products and $4.2 trillion in non-ETF products.
Hedge funds: Achieved 21% recurring net new subscription sales growth, with strong demand for equity factor and enterprise risk solutions.
Wealth managers: Achieved nearly 11% subscription run rate growth, driven by private capital fund transparency data and MSCI Wealth Manager solutions.
Asset owners: Posted 9% subscription run rate growth, driven by Analytics, Private Capital Solutions, and Index.
Banks and broker-dealers: Delivered 9% subscription run rate growth, with a record level of Q3 recurring sales driven by Index.
Asset managers: Achieved subscription run rate growth of just over 6%, with the highest Q3 on record for new recurring sales in Index.
Share repurchases: Repurchased $1.25 billion worth of shares in Q3, bringing year-to-date repurchases to over $1.5 billion. Authorized $3 billion in additional share repurchases.
Run rate growth: Total run rate growth of over 10%, including asset-based fee run rate growth of 17%.
Recurring sales: Achieved record recurring net new subscription sales in Index and Analytics.
AI integration: Rapidly leveraging AI models to enhance existing products and develop new capabilities, unlocking significant value for clients.
Client segmentation strategy: Enhanced client segmentation strategy to expand presence with newer client segments and deepen penetration in established ones.
Market Volatility and Uncertainty: Elevated levels of market volatility and uncertainty are driving hedge funds to demand deeper and faster insights into investment risks and returns, which could challenge MSCI's ability to meet these needs effectively.
Regulatory Workflow Support: Wealth managers are increasingly demanding tools for regulatory workflow support, which could pose challenges for MSCI in terms of compliance and product development.
Private Market Data Standardization: The growing demand for tools and standards in private markets, such as private capital fund transparency data, may require significant investment and innovation from MSCI to meet client expectations.
Retention Rate Challenges: Retention rates in some segments, such as Real Assets, are stabilizing but remain a potential area of concern for maintaining consistent revenue streams.
Economic Conditions Impacting AUM: Economic conditions and market dynamics could impact the asset-based fee run rate growth, which is a significant revenue driver for MSCI.
Competition in Analytics and Index Solutions: The competitive landscape in analytics and index solutions could pressure MSCI to continuously innovate and maintain its market position.
Client Segmentation Strategy: Enhancing client segmentation strategies to cater to diverse client needs may require additional resources and strategic focus, posing operational challenges.
Share Repurchase Authorization: MSCI's Board of Directors has authorized $3 billion worth in additional share repurchases for the next few years.
Private Credit Factor Model: MSCI launched a private credit factor model powered by data from over 1,500 private credit funds, aimed at providing improved transparency and a consistent view of market risk for private credit.
Private Asset Classification Standard (PACS): MSCI introduced a new global taxonomy for private assets, leveraging AI to cover private companies, real estate, and infrastructure, aiming to bring consistent standards to private markets.
AI-Driven Innovation: MSCI is leveraging AI models on proprietary databases to enhance existing products and develop new capabilities, unlocking significant value for clients and shareholders.
Client Segmentation Strategy: MSCI enhanced its client segmentation strategy to expand its presence with newer client segments and deepen penetration in established ones.
Index Product Growth: New Index products launched since 2023 generated $16 million in new recurring subscription sales over the last 12 months.
Sustainability and Climate Solutions: MSCI is seeing solid demand for new solutions such as geospatial offerings, particularly among banks, with subscription run rate growth of 8% in this segment.
Private Capital Solutions: MSCI closed about $6 million of new recurring subscription sales in Q3 2025, with success across client segments including wealth and general partners (GPs).
Real Assets: Recurring net new sales improved, aided by stabilizing retention trends and new product areas like data center offerings gaining traction with GP investors.
Full-Year Guidance Adjustments: The low end of expense guidance increased due to strong growth in AUM levels linked to MSCI indexes. Free cash flow guidance increased due to business growth and tax benefits.
Share Repurchase in Q3 2025: Since the beginning of the third quarter, MSCI repurchased $1.25 billion worth of shares. This brings the year-to-date share repurchases to over $1.5 billion.
Board Authorization for Future Share Repurchases: MSCI's Board of Directors has authorized $3 billion worth in additional share repurchases for the next few years.
The earnings call reflects strong revenue growth, particularly in equity solutions and climate tools, alongside significant expansion in private credit and real assets. The Q&A section highlights MSCI's strategic focus on innovation, AI, and expanding client segments, with positive sentiment from analysts. The commitment to share repurchases and leveraging AI for operational efficiencies further supports a positive outlook. Despite some uncertainties in management's responses, the overall sentiment is positive, likely resulting in a stock price increase of 2% to 8%.
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