MSCI Inc.

Good day, ladies and gentlemen, and welcome to the MSCI First Quarter 2022 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 Jisoo Su, Executive Director, Investor Relations. You may begin.

Thank you, Doolin. Good day and welcome to the MSCI first quarter 2022 earnings conference call. Earlier this morning, we issued a press release announcing our results for the first quarter 2022. This press release, along with an earnings presentation we will reference on this call, as well as a 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 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 US GAAP, we'll 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 insights 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 filings. As a result of those adjustments and exclusions, the actual amount of recurring revenues we realize over the following 12 months will differ from run rate. We therefore caution you to not 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 acquisitions 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. And with that, let me now turn the call over to Henry Fernandez. Henry?

Thank you, Jesu. Welcome, everyone, and thank you for joining us today. Apologies for my scratchy voice and a little bit of coughing. Before I talk about, yep, can you all hear me? Okay. Thank you, Jisoo. Welcome, everyone, and thank you for joining us today. Apologies for my scratchy voice and a little bit of coughing. Before I talk about MSCI's financial performance, I just want to say, that our hearts go out to the people of Ukraine who are suffering through one of the worst humanitarian tragedies in Europe since 1945. My sincere hope is that the world will ultimately emerge stronger from this crisis with a deeper respect for self-determination, national sovereignty, and human rights, and a clearer sense of purpose among the liberal democracies of the world. The war has certainly put everything else in greater perspective for many of us. In the first quarter, MSCI delivered strong results that highlight both the strong resilience and long-term potential of our all-weather franchise. Not only are our solutions helping clients navigate market volatility and asset rotations, they're also helping them understand major structural changes in the global economy and the financial markets. Those changes include the fallout from Russia's invasion of Ukraine, rising interest rates, elevated inflation, and the needed transition to a low-carbon economy. During a period of historic geopolitical and economic turmoil, MSCI solutions have become increasingly more valuable to clients across the whole global investment industry. To put our first quarter results in perspective, we posted our best first quarter on record for both new and net new recurring subscription sales. We achieved organic subscription run rate growth of about 14 percent and nearly a 96 percent retention rate. Our adjusted EPS topped 21 percent, and we repurchased almost $800 million worth of MSCI shares. Of course, the biggest global event of the quarter was Russia's unprovoked and unjustified invasion of Ukraine. MSCI responded immediately, providing essential support to our colleagues in the region and donating to key relief organizations. We made necessary adjustments to our existing products and business ties, including swift changes to our indices, while also developing new products, services, and insightful research to capture the new global landscape. All of this demonstrated, once again, how fast and nimble MSCI can adapt to an unexpected global crisis. Our resilience and momentum have allowed us to continue driving growth despite the uncertain environment. Indeed, we are finding innovative ways to grow both inside and outside our traditional client base. For example, our traditional client base of asset managers and asset owners collectively deliver subscription run rate growth of 11% in the first quarter. excluding acquisitions. So far this year, we have already seen more than $2 billion worth of incremental AUM from new mandate benchmark to the MSCI climate Paris aligned indices by asset owners in APAC and in EMEA. We're also driving a strategic benchmark wins with asset managers who are licensing custom indices they have designed using MSCI's new Index Builder application. We have onboarded about 18 clients onto the Index Builder platform already. At the same time, we keep adding new layers of growth in areas such as fixed income, ESG and climate, and private assets. This quarter, our ESG and climate retention rate hit an all-time high of 98.7%. We also recorded our second best quarter ever for new ESG and climate subscription sales. These data points tell us two things. ESG continues to become increasingly embedded in the global investing process. Second, our clients recognize the value that MSCI's ESG and climate offering can provide. We continue to work to position MSCI as a leading provider of climate solutions and a standard setter. As of the first quarter, we've calculated implied temperature rise metrics for more than 10,000 issuers and nearly 134,000 funds. The implied temperature rise metric computes how the carbon emissions of companies and portfolios align or do not align with different global temperature pathways. such as 1.5 or 2 degrees Celsius increases. Like all of our solutions, MSCI climate products run on data. To give our clients a truly comprehensive and transparent view of the investment opportunities, we are transforming the way we collect, clean, and build data across product lines and asset classes. As I mentioned back in January, MSCI has always been a data processing factory. Now we're also becoming a data building machine. During moments of global uncertainty and disruptions, high quality data becomes even more valuable as investors try to understand the present and imagine the future. MSCI also continuously looks to the future to reinvent itself, including with respect to our organizational structure and agility. As previously announced, we made a number of senior leadership changes at the start of the year to support our ever evolving business needs. These changes position us well for increased growth in the years to come. Likewise, our first quarter performance reflects the long-term investments we have made to build a durable, diversified, all-weather franchise. While external conditions may get more difficult, our fundamentals remain very strong. As we have proven, MSCI can deliver impressive results in every type of operating environment. This is what we mean by an all-weather franchise. And with that, let me turn the call over to Bear. Bear?