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MSCI Inc. Earnings Call: Strong Growth Amid Challenges

MSCI Inc. Earnings Call: Strong Growth Amid Challenges

MSCI Inc ((MSCI)) has held its Q2 earnings call. Read on for the main highlights of the call.

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MSCI Inc.’s recent earnings call highlighted a strong financial performance with significant growth in asset-based fees and subscription run rates. Despite facing challenges in real assets and sustainability, the company continues to innovate and expand its client base and product offerings. While there are concerns regarding pressures on active asset managers and lower retention rates, the overall growth trajectory remains positive.

Strong Financial Performance

MSCI Inc. reported impressive financial results for Q2 2025, with revenue growth exceeding 9%, adjusted EBITDA growth over 10%, and adjusted earnings per share increasing by almost 15%. These figures underscore the company’s robust financial health and its ability to deliver consistent growth.

Record Asset-Based Fee Growth

The company achieved a remarkable 17% growth in asset-based fee run rates. Notably, the total equity index ETF assets under management (AUM) linked to MSCI indices surpassed the $2 trillion mark for the first time, highlighting the company’s strong position in the market.

Significant Subscription Run Rate Growth

MSCI Inc. saw a total run rate growth of 11%, with substantial increases across various client segments. Banks, broker-dealers, wealth managers, hedge funds, and asset owners all experienced double-digit subscription run rate growth, showcasing the company’s broad appeal and market penetration.

Innovative Product Launches

The company continued to innovate by introducing new data solutions and products. This includes private capital solutions, which saw a Q2 run rate growth of nearly 13%, and the launch of the MSCI World Private Equity Return Tracker Index, further diversifying its product offerings.

Significant Deals and Mandates

MSCI Inc. secured notable deals, including a large ETF-linked custom index dataset deal with a US bank and a $25 billion AUM benchmarked to an MSCI climate index deal with European pension funds. These deals underscore the company’s ability to attract significant mandates and partnerships.

Challenges in Real Assets

The company faced challenges in the real assets segment, with new recurring sales down from Q2 of the previous year. This indicates potential areas for improvement and strategic focus.

Sustainability and Climate Challenges

Despite being a leader in sustainability, MSCI Inc. faced challenges due to cyclical slowdowns in the sector. This highlights the need for adaptability and innovation in addressing sustainability demands.

Ongoing Pressures on Active Asset Managers

The subscription run rate growth with active asset managers held steady at 6%, amidst industry-wide cost pressures and consolidation. This reflects the challenging environment for active asset management.

Lower Retention Rates

Retention rates in analytics and sustainability were lower, driven by client events and financial budget pressures. This suggests a need for strategies to enhance client retention and satisfaction.

Deceleration in Hedge Fund Subscription Run Rate Growth

The subscription run rate growth for hedge funds decelerated to 12% this quarter, indicating a slowdown in this segment and potential areas for strategic focus.

Forward-Looking Guidance

Looking ahead, MSCI Inc. remains optimistic about its growth prospects. The company reported over $300 million in free cash flow and repurchased $286 million worth of shares. With total run rate growth of 11% and record AUM levels in ETF products, MSCI’s diverse offerings and client segments position it well for continued expansion, despite challenges in active asset management.

In conclusion, MSCI Inc.’s earnings call reflects a positive sentiment with strong financial performance and growth in key areas. While challenges exist in real assets and sustainability, the company’s innovative product launches and significant deals highlight its potential for sustained growth. Investors and stakeholders can remain optimistic about MSCI’s future trajectory.

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