MSCI Inc.

second quarter 2021 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 2021 earnings conference call. Earlier this morning, we issued a press release announcing our results for the second quarter 2021. This press release, along with an earnings presentation we will reference on this call, as well as the brief quarterly update, are available on our website, msci.com, under the investor relations tab. Let me remind you that this call contains forward-looking statements. You are cautioned 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 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 comparison and provide insight into our core operating performance. You'll find a reconciliation to the equivalent gap 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 of the earnings presentation. We will also discuss run rate, which estimates at a particular point in time the annualized value of the recurring revenues under our client agreements for the next 12 months subject to a variety of adjustments and exclusions that we detail in our SEC filing. 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 rate. We therefore caution you not to place undue reliance on run rate to estimate or forecast recurring revenues. Additionally, we will discuss organic run rate growth figures, which exclude the impact of changes in foreign currency and the impact of any acquisition or divestitures. On the call today are Henry Fernandez, our Chairman and CEO, Bear Pettit, our President and COO, and Andy Wishman, our Chief Financial Officer. 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 delivered exceptional results in the second quarter. This outcome was the direct result of our vision to be a change agent for the investment industry, our mission to help investors build better portfolios for a better world, and the Triple Crown investments we are making to support these efforts. For the quarter, we achieved total revenue growth of 22%, adjusted EBITDA growth of 25%, and adjusted EPS growth of 38%. Last month, we held our annual strategy session with our board of directors. Our board and our management team are incredibly excited about the many opportunities we have to significantly accelerate our growth, including in solutions like investment thesis indices, fixed income, private assets, and, of course, ESG, and now even more so, climate. We are making great progress with the newer client segments that we have previously highlighted to you, including wealth managers, insurance companies, and corporates. And with respect to capabilities, we continue to transform and expand our technology and data infrastructure to align with our clients' needs. Let me now highlight one area within each of solutions, client segments, and capabilities. Within solutions, MSCI intends to lead all participants in the investment ecosystem in addressing climate change and carbon intensity in their investment portfolios and in their business operations. We believe that addressing the impact of climate change will require the largest reconstruction of the global economy since the Industrial Revolution some 200 years ago. Institutional investors will need to reallocate their enormous pools of capital to the decarbonizing companies that are on track to keep the world under a 1.5 degree Celsius rise and away from those companies that are moving too slowly or not acting at all. Investors and stakeholders are already exerting influence on company boards and management teams to transform their business models, to reduce their carbon emissions. Assets will be massively repriced, and we believe the net zero revolution will produce spectacular winners and some losers. Moreover, this revolution will touch every company in the world, and for that matter, every part of our societies around the world. We believe this transformation will occur much sooner than companies and investors may see it coming. And a number of market participants need to act faster and more decisively than they may appreciate. As you can imagine, this presents MSCI with enormous opportunities. We want to be the premier provider of all tools involved in portfolio decisions related to climate. In the near term, we look ahead to the COP26 conference to be held in Glasgow later this year, and we expect policymakers, regulators, market participants, and various other constituents to push for more extensive climate-related disclosures. MSCI will play its part and will join with the Glasgow Financial Alliance for Net Zero in organizing a Net Zero Financial Service Providers Alliance. This new alliance will galvanize the world's index and data providers, credit rating agencies, and accounting firms to lay the tracks that can take investors and companies to a Net Zero world. We are fast in reaching our suite of climate products and aggressively investing to provide the market with the climate models and reporting capabilities that can contribute to or even drive developing broader standards. We're also pursuing a multi-asset class coverage strategy within climate, which is beyond public securities. This strategy will include real estate, private equity, and private debt. Within client segments, I will spotlight our ongoing success with corporates, where we are providing public and private issuers of capital and their corporate advisors with solutions for TCFD reporting and ESG and climate benchmarking. Our greenfield success in this client segment and in others such as wealth managers and insurance companies, directly reflects the investments that we have made not only in our product offerings, but also in our client coverage organization. Our value proposition also remains very strong with asset managers and asset owners, which still represents the largest part of our client base. We are honored to have been selected by the California State Teachers Retirement System to provide their policy benchmark. CalSTRS adopted a custom MSCI All Country World Investable Market Index, displacing its prior domestic benchmark. The primary reason was to simplify their benchmarking process by moving away from a weighted calculation of separate US and non-US exposures. Using one index also simplifies performance attribution and better reflects CalSTRS' goal to target and manage active risk. Within capabilities, I would like to focus on how data is playing a critical role in our vision of revolutionizing the investment industry. Data is the core building block of investment analysis, reporting, and other processes, and a competitive advantage for MSCI. For many years, we have made use of various technologies like artificial intelligence, machine learning, and natural language processing to harness the power of big data. More recently, our investments to develop MSCI's Data Explorer and Data Lake aim to address our clients' strong appetite to ingest rich and extensive data in their operations. Clients want to leverage our data for a variety of use cases, including custom indices, liquidity reporting, factor analysis, among many others. They also want to easily expose, download, and manipulate massive volumes of underlying data for MSCI ESG ratings, SFDR metrics, and climate models. Before I turn the call over to Bear and Andy, I would like to take a few moments to note our current views on the global operating environment. We continue to be encouraged by the global economic recovery underway. While markets may oscillate day to day, the underlying trend is a positive one. Accordingly, we are aggressively positioned MSCI to take advantage of its many opportunities, and we will continue to increase our level of investment in the triple crown areas we see for our company. With that, let me pass the floor over to Bear.