MSCI Inc.

Good day, ladies and gentlemen, and welcome to the MSCI second quarter 2020 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session where we will limit participants to one question and one follow-up. We will have further instructions for you at that time. As a reminder, this conference call is being recorded. I would now like to turn the call over to Sally Schwartz, Head of Investor Relations and Treasurer. You may begin.

Thank you, Operator. Good day and welcome to the MSCI second quarter 2020 earnings conference call. Earlier this morning, we issued a press release announcing our results for the second quarter 2020. This press release, along with an earnings presentation we will reference on the call, as well as a brief second quarter update, are available on our website, msci.com, under the investor relations tab. Let me remind you that this call contains forward-looking statements. Your caution not to place undue reliance on forward-looking statements which speak only as of the date on which they are made and are governed by the language on the second slide of today's presentation. 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 U.S. GAAP We also refer to non-GAAP measures, including, but not limited to, organic operating revenue growth rates, adjusted EBITDA, adjusted EBITDA expenses, adjusted EPS, and free cash flow. We believe our non-GAAP measures facilitate meaningful period-to-period comparisons and provide insight into our core operating performance. You'll find a reconciliation to the equivalent GAAP measures in the earnings materials. and an explanation of why we deem this information to be meaningful, as well as how management uses these measures in the appendix pages of the earnings presentation. We will also discuss run rates, which estimates at a particular point in time the annualized value of the recurring revenues under our client agreement for the next 12 months, subject to a variety of adjustments and exclusions that we detail in our SEC filings. As a result of those adjustments and exclusions, the actual amount of recurring revenues we will realize over the following 12 months will differ from run rates. We therefore caution you not to place undue reliance on run rates to estimate or forecast recurring revenues. Additionally, we will discuss organic run rate growth figures, which exclude the impacts of changes in foreign currency and the impact of any acquisitions or divestitures. On the call today are Henry Fernandez, our Chairman and CEO, Bear Pettit, our President and COO, and Linda Huber, our Chief Financial Officer. Andy Wishman, our Chief Strategy Officer, will also join us for the Q&A portion of the call. Finally, I would like to point out that members of the media may be on the call this morning in a listen-only mode. With that, let me now turn the call over to Henry Fernandez. Henry?

Thank you, Sally. Hello, everyone, and thank you for joining us today. MSCI's second quarter performance once again demonstrates the resilience of our franchise and the mission-critical nature of our content, analytics, and technology applications for investors, particularly during these times of market uncertainty. Specifically, Today, we reported solid operating revenue growth of 6.2%, strong adjusted EBITDA growth of 11.8%, reflecting our ability to tightly manage expenses, and strong adjusted earnings per share growth of nearly 15%. As you are aware, and we have discussed in these calls, we have a number of strategic initiatives underway at MSCI. First, we are expanding our coverage of asset classes to include areas in fixed income and private assets. Second, we are creating new products that can apply to a specific asset class or across multiple asset classes. These new products include content in ESG, climate change, factors, risk models, thematics, and futures and options, just to name a few. Third, we are broadening our reach to newer client segments, like wealth managers, insurance companies, and corporates. And fourth, we are transforming our technological capabilities, not only to benefit our clients, but also to enable our employees to operate even more effectively in the virtual world we're living in. We have made significant investments in these initiatives, and I'm very pleased to report that these investments are yielding strong results. During our call this morning, I would like to highlight three areas. First, in ESG and climate change, we have continued to expand our content, including research on key topics, additional ratings coverage and new indices in both equity and fixed income, and risk models that integrate ESG and climate change variables. These investments in ESG and climate solutions are providing significant returns. In the second quarter, our ESG franchise across the whole company performed very strongly, reaching a run rate of $174 million. ESG research itself reported its highest ever quarterly subscription sales, And in ESG indices, AUM in equity ESG and climate change ETFs linked to our indices almost double year over year, reaching $55 billion at the end of the quarter. We are encouraged by investors' increasing adoption of our tools to effectively integrate ESG and climate change criteria as a core component of building resilient portfolios. And we believe our ESG solutions have the additional benefit of driving transparency and creating standards for many market participants. As you know all too well, we have long believed sustainable investing is a critical part of the long-term investment process. Our early moves in this area have given us substantial leadership and competitive advantage, which we will continue to capitalize. A second area I would like to highlight is index futures and options. We are helping our clients build the various elements of an MSCI ecosystem of financial products with deep liquidity on a wide range of market exposures. This ecosystem includes ETFs, listed futures and options, OTC swaps and options, and structured products, all feeding and benefiting from one another. Recently, and as part of this important initiative, we significantly expanded our relationship with Hong Kong exchanges and clearing, further aligning MSCI with a global exchange leader in the Asia time zone and enabling deeper and more liquid markets for MSCI-linked futures and options. We believe Hong Kong provides access to and the benefits of a large client base including mainland China investors, a significant pool of liquidity, and an ecosystem of both listed and non-listed derivatives. And the third area that I would like to highlight is our investment in our technological transformation. Last week, we entered into a partnership with Microsoft that will not only strengthen and scale our infrastructure, but also continuously improve our client experience. Our transformation through Microsoft Azure includes an advanced global network of data centers, a fully integrated cloud infrastructure to provide massive scale and product delivery, and sophisticated artificial intelligence and national language processing capabilities. We intend to take full advantage of all the benefits that this partnership can bring, you know, to MSCI. Facilitated by this partnership with Microsoft, we'll be able to help investors more swiftly and efficiently manage data and understand better the drivers of risk and return in their portfolios. Despite the ongoing macroeconomic uncertainty, we will continue to selectively invest in the highest returning areas of our business, both to further position MSCI for growth and to drive operating efficiencies. As you can discern from my remarks, we continue to execute well and obtain significant returns in the areas we're making strategic investments in. I would like now to turn the call over to Bear to go over our efforts in more detail. Bear?