MSCI Q3 2024 Earnings Call Summary

The MSCI earnings call for the period ending September 30, 2024, highlighted the company's strong financial performance and strategic advancements.

On October 29, 2024, MSCI hosted its third-quarter earnings conference call, discussing the results and future outlook. Jeremy Ulan, head of investor relations, initiated the call.

Financial Performance

During the third quarter, MSCI reported a total revenue growth of 16%, an adjusted earnings-per-share growth of 12%, and a free cash flow growth of a remarkable 46%. The company repurchased $199 million worth of shares, bringing the total repurchases for the year to $440 million.

MSCI's asset-based fee revenue grew nearly 20%, fueled by record assets under management (AUM) in both ETF and non-ETF products linked to MSCI indices, with ETF cash flows reaching $18.6 billion for the quarter.

Operational Metrics

The company displayed solid operational metrics, with a subscription run rate growth of 15% and a retention rate of 94%. Among different client segments, asset owners and hedge funds achieved organic subscription growth rates of 11% and 15%, respectively.

However, the net new recurring sales in the ESG and climate sectors declined compared to the previous year, which MSCI attributed to cyclical demand pressures.

Product Diversification

MSCI emphasized the diversification and complementary nature of its product lines, which they believe will help capture the evolving needs of investors. The management highlighted three key drivers of their long-term strategy.

The first focus is on the growth among wealth managers, particularly the adoption of indices and advancements in their technology platform. They reported a significant win with the private banking division of a major bank and noted a direct indexing run rate growth of 22%.

Private Capital Solutions

The second driver is the development of private capital solutions that span across various product lines. MSCI launched products like the MSCI Private Capital Fund Indices, covering over 13,000 funds with more than $11 trillion in AUM.

The partnership with Moody's will enhance MSCI's ESG coverage for private firms and additional segments such as banks and insurance companies.

Commitment to Climate Solutions

Finally, MSCI reinforced its commitment to providing climate solutions, emphasizing the necessity for high-quality data models and research as climate risks become increasingly significant.

Client Engagement and Future Outlook

The management expressed optimism regarding future client engagement, with increasing demand for ESG and climate data. They welcomed Richard Mattison as the new head of ESG and Climate, expecting his expertise to elevate MSCI's offerings in these crucial areas.

Closing Remarks

In summary, MSCI's Q3 2024 results reflect strong growth across various segments, solid operational metrics, and an optimistic outlook for the future. The company remains focused on delivering value to its clients and adapting to market demands.

MSCI, Earnings, Financials