MSCI INC earnings calls

Future of Analytics and AI

Q (Toni Kaplan · Morgan Stanley): How will AI change how customers use MSCI's analytics platform over the next few years?

A: MSCI will integrate products and data across the company and use AI to gather, process and help clients consume data and models. Management said Analytics will become more strategic, with AI enabling proactive suggestions and new products from aggregated portfolio data.

"The first thing to keep in mind that you know well is at MSCI, we run a fully integrated company, in which each product line feeds off and feeds into other product lines." — Henry Fernandez (CEO·CHAIR)

Sales momentum and pipelines

Q (Alex Kramm · UBS): Where is momentum strongest and how does the current pipeline look for year-end?

A: They see attractive pipeline and broad momentum across the business, with acceleration in Index and PCS and a pickup in Analytics. Management said many large, repeatable strategic deals are in flight but timing can be lumpy quarter-to-quarter.

"We've got tremendous momentum across the business. If you look at where that momentum is, we saw an acceleration in Index, saw an acceleration in PCS." — Andrew Wiechmann (CFO)

Large deals and Sustainability growth

Q (Manav Patnaik · Barclays): Will large deals continue or are they just timing items? Also, how will First Street help Sustainability growth?

A: Management said large deals will increase as MSCI expands into new use cases and client segments, and performance should be judged over multiple quarters due to lumpiness. They noted growth in non-asset manager segments and advised evaluating operating metrics over several quarters.

"The best way to analyze our performance is on a multi-quarter basis because these large deals are going to create differences quarter-by-quarter." — Henry Fernandez (CEO·CHAIR)

New products' contribution and big deal details

Q (Alexander EM Hess · JPMorgan): How much are newer solutions contributing to net new sales and what is resonating in the market? Also, details on the largest deal.

A: New products' contribution to new sales increased more than 50% year-over-year in the quarter, driving growth, retention and pricing power. Management said innovation helps broaden client relationships and fuels repositioning across new segments and solutions.

"In the third quarter here, that contribution to new sales from new products increased more than 50% compared to a year ago." — Andrew Wiechmann (CFO)

Demand for portfolio solutions and PCS

Q (Alvise Munari · (analyst firm not stated)): What product areas are getting traction now and why?

A: Management said demand is strong for custom portfolio construction, custom indices, new factor models, and specialized datasets and signal libraries. They also highlighted new total portfolio management offerings and a differentiated private markets diligence/document solution gaining traction after the Vantager acquisition.

AI/agentic solutions and deal size

Q (Scott Wurtzel · Wolfe): Are AI/agentic products increasing deal size? Any color from customer conversations?

A: Management said many solutions, especially in private markets and portfolio construction, are natively agentic and only possible with latest-gen LLM technology, creating transformative IP clients value. They noted the main limit may be clients' willingness to accept agentic solutions in their environments.

Operating leverage and margins

Q (Faiza Alwy · Deutsche Bank): Will AI drive margin expansion or expense declines and when?

A: Management said they do not expect margin expansion because they will reinvest AI-driven productivity gains into growth opportunities. They plan to reduce run-the-business expense growth rates and redeploy savings into new product development and market expansion instead of raising margins.

"So in the past, one of the biggest problems of MSCI is that we've had an enormous number of very attractive organic investments that we haven't been able to fund because we didn't want to touch the margin." — Henry Fernandez (CEO·CHAIR)

Agentic investments across products

Q (Kelsey Zhu · Autonomous): What agentic-based products and features are you building beyond private markets?

A: Management said agentic capabilities now enable a model creation factory that can build and calibrate models in hours instead of weeks, and they are creating new specialized datasets using AI. They cited geospatial and AI value-chain datasets as examples made possible by agentic mapping of company characteristics.

"It used to take us several weeks to build and fully calibrate a new model, we can now do it in the space of a couple of hours." — Alvise Munari

Free cash flow guidance and drivers

Q (Owen Lau · Clear Street): Why keep free cash flow guidance despite a beat, and will investments affect future revenue or expenses?

A: Management pointed to quarter-to-quarter lumpiness driven by higher cash interest payments and timing of tax and collections. They said collections are strong and top-line growth will drive cash flow, and some higher expenses are noncash items like performance stock option accruals.

"What we saw in the third quarter was heavily driven by one factor in particular, which was interest payments." — Andrew Wiechmann (CFO)

Growth by client segment

Q (Keen Fai Tong · Goldman Sachs): Can you detail growth inside the double-digit non-asset manager segments and acceleration versus prior quarter?

A: Management said asset owners grew north of 12%, hedge funds about 18%, and banks and brokers roughly 10% in certain areas, driven by innovation and tailored solutions. They said these segment trends are fueling double-digit top-line growth.

"If you look on an organic basis across the organization, we saw solid double-digit growth with asset owners, as we alluded to, so north of 12%." — Andrew Wiechmann (CFO)

Timeline for expense reductions via AI

Q (Curtis Nagle · BofA): When should we expect run-the-business expense growth to slow to low single digits or turn negative?

A: Management clarified AI-driven productivity will reduce run-the-business expense growth and those savings will be reinvested to fuel growth; they declined to give specific targets for next year but said levers exist to flex expenses and position the company well for next year.

"The low single digit and potentially negative in the future referred to our run-the-business expenses." — Andrew Wiechmann (CFO)

MSCI connectors and agentic workflows

Q (David Motemaden · Evercore): How are clients consuming MSCI data via agents versus human users and what will change?

A: Management said it's early, and clients currently prefer MSCI's directly trained and curated applications because they give slightly better convergence and most clients only have limited external capabilities like Microsoft Copilot. They are investing in connectors to major LLMs/clouds, direct agentified access, and client-side agent capabilities and will support all three approaches.

"For the time being, the evidence is the clients prefer to use our content through our own directly trained and curated capabilities." — Alvise Munari

Index subscription growth and AI's role

Q (Craig Huber · Huber Research Partners): Why has Index recurring subscription growth accelerated and how much is AI helping?

A: Management said Index momentum is strong with 32% growth with hedge funds and 15% with banks/brokers; custom index run rate grew 26% plus. They said AI enables faster innovation, new modules, and faster custom index turnaround, which supports sales and future demand for content to train client models.

"A lot of that success was on the heels of many of the new modules that we have released." — Andrew Wiechmann (CFO)

Margin stance and ROIC on investments

Q (Ashish Sabadra · RBC): Did you mean no margin expansion and how should we think about ROIC and payback timing?

A: Management said they prefer growing the company significantly rather than raising margins, and while budgeting conservatism may give small margin wiggle room, they will prioritize funding organic investments with high returns even if upfront expenses delay margin increases. They argued larger infrastructure increases payoff and operating leverage over time.

"I'd rather see a company double or triple the size in 10 years compared to what it would otherwise be if we let the margin rise." — Henry Fernandez (CEO·CHAIR)

Asset manager growth and sales cycle

Q (Alex Kramm · UBS): What is asset manager run-rate growth and can new products penetrate asset managers faster?

A: Management said Asset Manager organic subscription run rate growth was around 6% and retention is steady. They see asset managers as steady growers and are improving products and service to help them transition to systematic and ETF formats, while expecting outsized growth from other segments.

"Asset Manager organic subscription run rate growth was around 6%." — Andrew Wiechmann (CFO)

Hedge funds and quant demand sustainability

Q (Keegan Antico · Wells Fargo): Is growth from hedge funds and quants cyclical or structural and could it moderate in 2027?

A: Management said the shift from single-stock to portfolio-level investing is structural, increasing demand for capabilities to make markets in complex objects, and MSCI as 'portfolio guys' will benefit; short-term reversals are possible but the trend should persist.

"The unit of conversation in the market has gone from being the single stock to being the portfolio." — Alvise Munari

Active ETFs and Moody's partnership update

Q (Alexander EM Hess · JPMorgan): Any updates on active ETFs and the Moody's private credit ratings partnership?

A: Management said active ETF conversions are accelerating, making products more systematic and creating demand for MSCI's trading, basket creation and specialized data capabilities which are reusable for asset managers. No update on the Moody's partnership was provided in this exchange.

"The process of doing so entails a couple of ingredients." — Alvise Munari