MSCI Earningcall Transcript Of Q2 of 2024

Andrew C. Wiechmann: In the second-half, we delivered 10% organic revenue growth, 14% adjusted EBITDA growth and 21% free cash growth. We are encouraged by the results, which reﬂect our unrelenting dedication to execution even in the face of market headwinds, which may persist in the short term. ABF's ABF revenues were up 18% year over year, from $28 billion of cash inﬁows and about $21 billion of market appreciation.recorded almost $27 million of revenue in the first-half of the year. In Real Assets, run rate growth was roughly 3% with a retention rate slightly above 90%. We continue to have solid momentum in our Index Intel and our income and climate insights offerings.

SLIDE53

Andrew C. Wiechmann -- Chief Financial Oﬃcer

Thanks, Baer, and hi, everyone. In the second quarter, we delivered 10% organic revenue growth,
14% adjusted EBITDA growth and 21% free cash ﬂow growth. We are encouraged by the results,
which reﬂect our unrelenting dedication to execution even in the face of market headwinds,
which may persist in the short term. We are encouraged by the rebound in retention rates from
the ﬁrst quarter, which we did expect.

And we have not seen any deterioration in conditions although we expect cancels to remain
elevated in Q3 compared to last year, and we expect somewhat longer sales cycles to persist in
the short term. I also want to note that Q3 tends to be a seasonally softer quarter for us on the
sales front. Within Index, we grew our subscription run rate among asset managers and asset
owners at 8% and 12%, respectively. These segments collectively represent 68% of our Index
subscription run rate.

Meanwhile, our Index subscription run rate with wealth managers and hedge funds grew 11%
and 24%, respectively. Across Index subscription modules, we saw another strong quarter from
custom and special packages, growing 17%. ABF revenues were up 18% year over year,
beneﬁting from $28 billion of cash inﬂows and about $21 billion of market appreciation and
ETFs linked to MSCI equity indexes during the second quarter. ETFs linked to our indexes
continue to attract ﬂows in non-U.S.

exposures, particularly in developed markets outside the U.S. and in emerging markets as we
have seen a pickup in ﬂows into ETFs with exposures outside the U.S. Fixed income ETFs AUM
linked to MSCI and Bloomberg partnership indexes is now at $64 billion with year-to-date
inﬂows of over $6 billion. Given strong recent equity market performance, non-ETF revenue in
this quarter included the impact of true-ups related to higher reported client AUM and newly
reported product launches.

We reached a signiﬁcant milestone in the quarter with AUM and ETFs and non-ETF passive
products tracking MSCI indexes now surpassing $5 trillion. In Analytics, organic subscription run
rate growth was 7%, and revenue growth was 11%. The difference is largely attributable, once
again, to the impact of recent client implementations, which continued from the last couple of
quarters. As we've noted in the past, Analytics revenue growth can be lumpy because of items
such as these implementations, and we expect revenue growth rates to more closely align with
run rate growth in Q3.

In our ESG and Climate reportable segment, organic run rate growth was 13%, which excludes
the impact of FX and about $5 million of run rate from Trove. Q2 new recurring subscription
sales for the segment included a signiﬁcant contribution from the Moody's partnership.
Regionally, the subscription run rate growth for the segment was 17% within Europe, 20% in Asia
and 9% in the Americas. In Private Capital Solutions, year over year run rate growth was 17%,
and we continue to gain traction in key markets.

New recurring sales in Europe reached a record, and we also saw solid traction in sales with our
GP client base. The Private Capital Solutions retention rate was approximately 93%, and we
recorded almost $27 million of revenue in the quarter. In Real Assets, run rate growth was
roughly 3% with a retention rate slightly above 90%. We continue to have solid momentum in our
Index Intel and our income and climate insights offerings, while we continue to see industry
pressure impacting our transaction data offerings, including our RCA and property intel
products, which we expect to continue to face headwinds in the near term.

Our rigorous approach to capital allocation remains unchanged. Through yesterday, we have
repurchased over $290 million or roughly 600,000 shares since late April. Our cash balance
remains over $450 million, including readily available cash in the U.S. of more than $200 million.

Turning to our 2024 guidance. We've increased our guidance for depreciation and amortization
expense and operating expenses by $5 million, reﬂecting in part the impact of acquired
intangible amortization expense from the Foxberry acquisition, which closed in April. I would
note that our guidance assumes that ETF AUM levels increase slightly from June 30 levels
through the end of the year. To the extent AUM levels track higher than this, we would expect to
be toward the higher end of our expense guidance ranges.

As of right now, we expect the quarterly effective tax rate in both Q3 and Q4 to be in the range of
20% to 22% before any additional discrete items. Before we open it up for questions, I want to
underscore that we see tremendous opportunities with compelling secular trends. We see
strong client engagement and tangible opportunities to drive growth. We see near-term
headwinds and client pressures, but we continue to execute and drive leadership in these large
addressable markets that will drive long-term growth for us.

We look forward to keeping you posted on our progress. And with that, operator, please open the
line for questions.

Questions & Answers: