MSCI, Inc. 2026 Q3 Earnings Call

You may begin. Thank you, operator.

Good day, and welcome to the MSCI third quarter 2026 earnings conference call. Earlier this morning, we issued a press release announcing our results for the third quarter of 2026. This press release, along with an earnings presentation, are available on our website, msci.com, and under the Investor Relations tab. Let me remind you that this call contains forward-looking statements which are governed by the language on the second slide of the 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.

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. During today's call, in addition to results presented on the basis of US GAAP, we also refer to non-GAAP measures. You will find a reconciliation of our non-GAAP measures to the equivalent GAAP measures in the appendix of the earnings presentation. 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, Andrew Wiechmann, our Chief Financial Officer, and Alvise Munari, our Chief Product Officer and Head of Client Segments, who will be joining for the Q&A session.

With that, let me now turn the call over to Henry Fernandez.

Henry. Thank you, Jeremy. Good day, everyone, and thank you for joining us.

In the third quarter, MSCI delivered strong financial and operating metrics, including historic net new sales in index, analytics, and Private Capital Solutions, plus another record quarter for ABF. We have built impressive momentum across these three product lines. While sustainability and climate continue to face challenges, we believe that our recent acquisition of First Street will help accelerate a return to higher growth in climate. These results show that MSCI is expanding our mission-critical role in global investing, even as we transform our business to an AI-first company. Since our IPO 19 years ago, MSCI has demonstrated a strong and consistent track record of execution. This foundation positions us well to capture expanding opportunities both across client segments and a growing range of solutions.

We have multiple dimensions of growth and a compelling opportunity to compound over the long term. Financially, our strong Q3 performance included total revenue growth of 12.4%, ABF revenue growth of 25%, subscription revenue growth of 8%, adjusted EBITDA growth of 12%, and adjusted EPS growth of 14%. From July 1st through October 19th, we repurchased $627 million of MSCI shares at an average price of $562 per share. Since the beginning of 2024, we have opportunistically repurchased nearly 8 million shares for $4.4 billion. During the same period, I have personally purchased an additional 57,000 shares for $30.1 million. These purchases unequivocally demonstrate our strong belief in the potential of the MSCI franchise. Operationally, in Q3, MSCI achieved total run rate growth of 12%, fueled by a record ABF run rate of almost $1 billion.

Our ABF performance reflected record AUM levels in ETFs and non-ETF products linked to MSCI indexes, including inflows of $76 billion. There are now nearly $23 trillion of AUM benchmarked to MSCI indices. Of that $23 trillion, roughly $15 trillion is actively managed, while $8 trillion is indexed. We also posted subscription run rate growth of 9%, after adding nearly $55 million in recurring net new sales. We delivered a retention rate of 95%, an improvement of 30 basis points from Q3 of last year. MSCI is a long-term compounder driven by both AFS and subscription growth. On the overall subscription side, Q3 was our best ever quarter for recurring net new sales in analytics and Private Capital Solutions, along with our best ever Q3 for recurring net new sales in index.

Compared with a year earlier, recurring net new sales grew by 88% in PCS, 63% in analytics, and 40% in index. Notably, MSCI saw robust demand by both our traditional and newer solutions. In fact, we continue to see consistent growth in recurring sales from our newer products. Importantly, our higher pace of innovation is strengthening sales of our existing products as we continue to deliver greater value to clients. Virtually all those newer products are powered by artificial intelligence. Q3 also showed our diversified strength across regions. Recurring net new sales grew by 74% in EMEA, 36% in APAC, and 26% in the Americas. Indeed, we achieved our best ever quarter in APAC, driven by analytics. MSCI is unlocking additional growth layers through our recently announced partnerships and acquisitions. In Q3, for example, we formalized the landmark agreement with UBS that we first announced back in July.

This agreement will extend the reach of our private asset solutions, strengthen connections between GPs and wealth managers, and promote greater transparency across private markets. Similarly, our acquisition of the AI-native platform, Vantager, now the MSCI Private Assets Diligence Platform, enabled us to complete a major deal with a large U.S. bank. At the client segment level, MSCI achieved a record quarter with asset owners, more than tripling our recurring net new sales from a year earlier, driven by demand for our total portfolio solutions and our integrated risk and portfolio management analytics. Our largest deal of the quarter moved MSCI from a vendor relationship to a strategic portfolio analytics partner for one of Asia's biggest and most sophisticated sovereign wealth funds. We also closed a number of major analytics and index deals with top hedge funds, including deals for our equity models and custom index modules.

Finally, we maintain our steady performance with asset managers globally, while achieving a strong quarter in EMEA, where we posted 35% recurring net new sales growth. Despite the ongoing retention pressures in sustainability and climate, we enter Q4 with solid momentum and a strong client engagement across the whole MSCI franchise. We are incredibly excited about the expansion of MSCI's offering through new use cases for newer client segments, such as wealth managers, banks as lenders, GPs, and insurance companies in their underwriting processes. We are delivering and expanding MSCI by leveraging what we already do for our more traditional clients, such as asset managers, asset owners, traders, and hedge funds. MSCI truly is a one-of-a-kind company that is uniquely positioned to benefit from the biggest transformations reshaping the global investment and finance industry. With that, let me turn things over to Andy.

Thank you, Henry. Hi, everyone. Our strong results reflect our rapid pace of innovation, our effective go-to-market execution, and the growing ecosystem around our tools. We believe this momentum is sustainable, and we continue to have an attractive pipeline of opportunities. MSCI is a powerful compounder, and the run rate algorithm was on full display with continued double-digit subscription growth in Index, high single-digit growth in Analytics, accelerating growth in private assets, and outsized secular growth in asset-based fees. Across client segments, we saw double-digit growth with non-asset manager segments and mid to high single-digit growth among asset managers. This algorithm, combined with inherent operating leverage and ongoing capital optimization, allows us to fuel consistent compounding value creation. The momentum in the business is evident, with LTM recurring net new subscription sales up 26%. Drilling down into Index, organic subscription run rate growth accelerated further to 11.7%.

Powerful indexation trends drove double-digit subscription growth across hedge funds, banks and brokers, wealth managers, and asset owners of 32%, 15%, 10%, and 10%, respectively. The retention rate was over 97% across Index, including a retention rate of 98% with asset managers. Additionally, asset-based fees were fueled by $76 billion of equity ETF cash inflows concentrated in developed markets, ex-U.S., and emerging markets. This was our second highest quarter of inflows, behind only the first quarter of this year. Within Analytics, we had organic subscription run rate growth of 7.5%, driven by several large strategic client wins with asset owners and wealth managers. These clients are seeking to modernize their investment platforms, integrate risk and portfolio management workflows, and enhance investment decision-making, alongside sustained demand for our factor content.