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    MSCI
    Earnings call· Sep 2025(Q3 FY25)

    MSCI Inc. MSCI

    Oct 28, 2025 Source

    Executive summary

    MSCI Q3 FY25 — Strong Financials, Accelerated Product Innovation, and Strategic Client Expansion

    MSCI delivered strong Q3 FY25 financial and sales performance, driven by accelerated product innovation and strategic expansion into new client segments. The company is leveraging AI to enhance product development and operational efficiency, aiming to increase operating leverage and reinvest resources for higher growth. While facing some regional and segment-specific softness, management expressed optimism about turning the corner and capitalizing on significant opportunities in private assets, index investing, and wealth management.

    Highlights

    5

    • Organic revenue growth of 9% in Q3 FY25.

    • Adjusted EBITDA growth of 10% in Q3 FY25.

    • Adjusted earnings per share growth of over 15% in Q3 FY25.

    • Total run rate growth of over 10%, including asset-based fee run rate growth of 17%.

    • Recurring net new subscription sales growth of 27% in Index, with 43% growth in the Americas.

    Concerns

    4

    • Softness in Private Capital Solutions (PCS) noted in prior periods, though management expects to turn the corner.

    • Challenges in the Sustainability and Climate segment, with pressures expected to continue in coming quarters.

    • Sluggishness with asset managers in EMEA, leading to softer results in the region compared to the Americas.

    • The company's franchise is viewed by management as undervalued, leading to aggressive share repurchases.

    Guidance & targets

    4
    CategoryTargetConfidence
    Full-year 2025 Expense Guidance
    Increase in the low end of the range
    medium materiality
    High
    Interest Expense Guidance
    Reflects previous notes issuance
    medium materiality
    High
    Free Cash Flow Guidance
    Increase
    medium materiality
    High
    Share Repurchase Authorization
    $3 billion
    high materiality
    High

    Segment performance

    10
    SegmentRevenueYoYQoQMargin
    Index
    Achieved its best third quarter ever for Index recurring net new subscription sales, aided by DM and EM modules and solid subscription run rate growth in the nonmarket cap category. Driven by record AUM levels in both ETF and non-ETF products linked to MSCI indices.
    Asset-based fee run rate growth: 17%Recurring net new subscription sales growth: 27%Recurring net new subscription sales growth (Americas): 43%Subscription run rate growth: 9%Subscription run rate growth (with asset managers): nearly 8%Retention rate: nearly 96%
    		————
    Analytics
    Driven by strong adoption of risk tools and equity models by multi-strategy hedge funds, particularly in the Americas and APAC. Also saw strong sales of multi-asset class analytics with hedge funds.
    Recurring net new sales growth: 16%Subscription run rate growth: 7%Recurring sales growth (Equity Solutions): 29%
    		————
    Sustainability and Climate
    Retention rate was slightly higher than last year's 93%, reflecting the 'must-have' nature of the tools. Seeing solid demand for new solutions like geospatial offering, particularly with banks.
    Subscription run rate growth (reportable segment): 8%Subscription run rate growth (Sustainability Solutions): roughly 6%Subscription run rate growth (Climate Solutions): 16%Retention rate: almost 94%
    		————
    Private Capital Solutions (PCS)
    Success across client segments including endowments, foundations, wealth, and GPs. Strong momentum with total plan offering. Retention rate improved slightly.
    New recurring subscription sales: ~$6 millionRetention rate (across PCS and Real Assets): 93.3%
    		————
    Real Assets
    Aided by stabilizing retention trends. Driving sales from newly introduced product areas, including data center offering with GP investors.
    Recurring net new sales: improvedRetention rate (across PCS and Real Assets): 93.3%
    		————
    Hedge Funds
    Highest Q3 ever for new recurring sales to hedge funds, with notable strength in Analytics, particularly for equity factor and enterprise risk and performance solutions.
    Recurring net new subscription sales growth: 21%
    		————
    Wealth Managers
    Driven by a balanced mix of contributions across product lines, including licensing private capital fund transparency data and MSCI Wealth Manager.
    Subscription run rate growth: nearly 11%
    		————
    Asset Owners
    Driven by Analytics, Private Capital Solutions, and Index. Expanded Private Capital Solutions relationship with a U.S.-based asset owner and increasing use of MSCI private capital indexes.
    Subscription run rate growth: 9%
    		————
    Banks and Broker-Dealers
    Driven primarily by Index, which also posted its highest Q3 ever for new recurring sales, including a global index renewal deal with a major European bank.
    Subscription run rate growth: 9%Q3 recurring sales: record level
    		————
    Asset Managers
    Delivered highest Q3 on record for new recurring sales in Index, contributing to overall new recurring sales growth. Efforts to increase growth trajectory with this segment had a meaningful impact.
    Subscription run rate growth: just over 6%New recurring sales growth (across MSCI product lines): 11%Retention rate: about 97%
    		————

    Operational metrics

    20
    Adjusted EBITDA growth
    10%
    Q3 FY25

    Reported for the third quarter of 2025.

    Adjusted EPS growth
    over 15%
    Q3 FY25

    Reported for the third quarter of 2025.

    Total run rate growth
    over 10%
    Q3 FY25

    Operating metric for the third quarter of 2025.

    Asset-based fee run rate growth
    17%
    Q3 FY25

    Operating metric for the third quarter of 2025, contributing to total run rate growth.

    Asset-based fee run rate
    nearly $800 millionnew record high
    Q3 FY25

    Hit a new record high, driven by record AUM levels.

    Total AUM in investment products linked to MSCI indexes
    $6.4 trillion
    Q3 FY25

    Includes both ETF and non-ETF products.

    ETF AUM linked to MSCI indexes
    $2.2 trillion
    Q3 FY25

    Part of the total AUM linked to MSCI indexes.

    Non-ETF AUM linked to MSCI indexes
    $4.2 trillion
    Q3 FY25

    Part of the total AUM linked to MSCI indexes.

    Number of ETF products linked to MSCI indices with >$100B AUM
    4
    Q3 FY25

    Highlights the scale of adoption of MSCI indices.

    New Index products recurring subscription sales
    $16 million
    LTM

    Generated from new Index products launched since the beginning of 2023.

    Equity ETFs linked to MSCI indexes inflows
    $46 billion
    Q3 FY25

    Captured during the third quarter.

    Share repurchases
    $1.25 billion
    Q3 FY25

    Amount of MSCI shares repurchased since the beginning of Q3 FY25.

    Year-to-date share repurchases
    $1.5 billion
    YTD Q3 FY25

    Total share repurchases year-to-date.

    Fixed income ETF AUM linked to MSCI indexes
    $90 billion
    3Q

    Includes fixed income indexes and partnership indexes. Large majority is Sustainability and Climate related.

    Equity ETFs linked to Sustainability and Climate indexes AUM
    $360 billion
    Q3 FY25

    Includes climate-specific indexes.

    Non-ETF climate AUM
    $316 billion
    Q3 FY25

    Focus by institutions and asset owners to develop specific climate outcomes.

    Active ETF AUM linked to MSCI
    almost $30 billionup 10% QoQ
    Q3 FY25

    Assets in active ETFs where MSCI plays a role in index construction and licensing.

    Sales from recently released new products
    $25 million
    YTD

    Total sales generated year-to-date from new products.

    AI-powered product sales
    $15 million-$20 million
    FY25

    Estimated sales from AI-powered products launched this year.

    Pricing contribution to new recurring sales
    roughly in line with recent quarters
    Q3 FY25

    No major shift in the approach to pricing.

    Product announcements

    10
    ProductTypeDetails
    Private Credit Factor Modellaunch
    MSCI PACS (Private Asset Classification Standard)launch
    MSCI Wealth Managerupdate
    Private Capital Fund Transparency Dataupdate
    Private Capital Indexes and Frozen Indexeslaunch
    Geospatial Offeringlaunch
    Data Center Offeringlaunch
    Private Equity Tracker Fundlaunch
    Private Credit Indiceslaunch
    Asset and Deal Informationlaunch

    Deals & partnerships

    2
    Moody'sLicensing credit risk models for private credit assessments.

    MSCI licensed Moody's credit risk models and applied them to its proprietary database to launch credit assessments of private credit funds.

    Goldman Sachs Asset ManagementCollaboration on the Private Equity Tracker Fund.

    MSCI partnered with Goldman Sachs Asset Management to launch a Private Equity Tracker Fund, which uses MSCI's private equity database to replicate private equity returns through public equities, providing liquidity.

    Risks & headwinds

    5
    Softness in Private Capital Solutions (PCS)

    Not quantified, but noted as an area of softness.

    Mitigation: Stepping up PCS efforts, particularly with institutional asset owner space, and expanding to wealth management LPs and building products for GPs.

    Challenges in Sustainability and Climate segmentcoming quarters

    Pressures expected to continue in the near term.

    Mitigation: Monetizing climate IP through equity and fixed income indices, with significant AUM linked to Sustainability and Climate indexes.

    Sluggishness with asset managers in EMEAnear term

    Results have been a bit softer in the EMEA region.

    Mitigation: Product development efforts are global, strong position in Europe with growing ETF ecosystem, innovations in PCS targeting private asset market, enhancing go-to-market efforts.

    Market volatility and uncertainty

    Elevated levels of market volatility and uncertainty.

    Mitigation: Hedge funds want deeper, faster insights into key sources of investment risk and return, fortifying MSCI's position as a trusted partner for analytics solutions.

    Undervaluation of the franchise

    Company's undervaluation has increased.

    Mitigation: Aggressive share repurchases ($1.25B in Q3, $1.5B YTD, $3B additional authorization) to take advantage of the perceived undervaluation.

    What to watch in Q4 FY25

    5

    Sustainability and Climate segment dynamics

    next quarter
    CurrentPressures expected to continue
    TargetSigns of stabilization or improvement in sales/growth

    Why it matters

    This segment has faced headwinds, and its trajectory is important for overall growth and monetization of climate IP.

    I would highlight that we do expect the dynamics we've been seeing in sustainability to continue in the near term. So similar to what we've talked about in the past, those dynamics that we've been seeing there, the pressures we've been seeing there, we expect to continue in the coming quarters⏳.

    Q&A highlights

    5

    Asked about MSCI's strategy in private credit, missing white spaces, and the integral role of the Moody's partnership.

    Henry Fernandez outlined MSCI's bullish stance on private credit, detailing innovations like a proprietary database, credit assessments with Moody's models, a private credit taxonomy, factor risk models, and private credit indices. He emphasized the need for transparency tools in this growing asset class and MSCI's role as a trusted information source.

    “We are very bullish in our work on private credit. If you step back a little bit, the new banks in America and parts of the world are the private credit funds, the provision of private credit is moving, in addition to banks, to private credit funds.”

    asked by Manav Patnaik · answered by Henry Fernandez

    3 min read6 chapters

    Detailed Narrative

    01

    Private Credit Strategy and Innovation

    MSCI is bullish on private credit, viewing private credit funds as the new banks and a secular trend. The company is innovating to provide transparency tools, including a proprietary private credit database of 2,800 funds and 80,000 loans, credit assessments using Moody's models, a private credit taxonomy, and factor risk models. They also launched 60-80 private credit indices and are exploring evaluated prices for independent valuation, aiming to be a leading provider in this space.

    02

    Expansion into New Client Segments

    MSCI is expanding its footprint beyond traditional asset managers, targeting hedge funds, wealth managers, asset owners, and banks/broker-dealers. Hedge funds showed 21% recurring net new subscription sales growth, driven by demand for risk tools and equity models. Wealth managers saw nearly 11% subscription run rate growth, leveraging private capital fund transparency data and MSCI Wealth Manager. Asset owners posted 9% subscription run rate growth, with increased demand for private capital solutions and indexes. Banks and broker-dealers delivered 9% subscription run rate growth, with record Q3 recurring sales in Index.

    03

    AI Integration and Impact

    MSCI views AI as a 'godsend' for scaling data capture, applying investment/risk models, and distributing content. AI is permeating all operations, including data capture in private assets, sustainability, and climate, leading to significant efficiency gains and cost savings. AI is also used to build products, with custom index factories and geospatial data sets being AI-powered. The company expects AI to dramatically increase margins by reducing operating expenses and enabling faster product development, with current AI-powered product sales estimated at $15 million to $20 million from 25 new products.

    04

    Index and Analytics Performance

    The Index franchise demonstrated depth and versatility, achieving 27% recurring net new subscription sales growth, including 43% in the Americas. Total AUM linked to MSCI indexes reached $6.4 trillion, with $2.2 trillion in ETFs and $4.2 trillion in non-ETFs. Analytics delivered 16% recurring net new sales growth, driven by strong adoption of risk tools and equity models by multi-strategy hedge funds. New Index products launched since 2023 generated approximately $16 million in new recurring subscription sales over the last 12 months.

    05

    Sustainability and Climate Monetization

    While the Sustainability and Climate segment faces challenges, a meaningful part of its monetization is occurring through equity and fixed income indices. MSCI has successfully helped clients design climate-focused fixed income indices, particularly in Europe, for portfolio use or ETF creation. The company believes its climate IP will see large monetization in index investing, with $90 billion in fixed income ETF AUM and $360 billion in equity ETF AUM linked to Sustainability and Climate indexes, including $135 billion climate-specific.

    06

    Capital Allocation and Share Repurchases

    MSCI repurchased $1.25 billion of shares in Q3 FY25, bringing year-to-date repurchases to over $1.5 billion. The Board authorized an additional $3 billion for future repurchases. Management views the company as undervalued and intends to be aggressive in buying back stock, funding it through free cash flow and leveraging up to 3.5x. This strategy reflects strong conviction in the company's long-term prospects and aims to capitalize on perceived undervaluation.

    AI-generated summary of the company’s earnings call. Not investment advice.