Good day, and welcome to the MSCI Second Quarter 2022 Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star then two. Please limit yourselves to one question and one follow-up. We will have further instructions for you at that time. As a reminder, please note this event is being recorded. I would now like to turn the conference over to Jeremy Ulan, Head of Investor Relations and Treasurer. Please go ahead. Thank you, Vice. Good day, and welcome to the MSCI Second Quarter 2022 Earnings Conference Call. Earlier this morning, we issued a press release announcing our results for the second 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 U.S. GAAP, we also refer to non-GAAP measures, including but not limited to 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 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 twelve 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 twelve months will differ from run rate. We therefore caution you not to place undue reliance on run rate to estimate or forecast recurring revenues. We will also discuss organic growth figures, which exclude the impact of changes in foreign currency and the impact of any acquisitions or divestitures. On the call today are Baer Pettit, our President and COO, and Andy Wiechmann, 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 Baer Pettit. Baer? Hey, Jeremy. Thank you and welcome everyone, and thank you for joining us today. I just wanted to say Henry is fine. He just woke up this morning and was feeling a bit under the weather, so he won't be joining us on the call today, but we'll go forward as normal. Before I talk about MSCI's financial performance, I'd like to formally introduce Jeremy as our new Head of Investor Relations and Treasurer. Since joining MSCI twelve years ago, he's held a variety of roles supporting our growth strategy, M&A and partnerships, while building out our planning and forecasting processes. We're excited to have him in this role. His experience and institutional knowledge will help investors better understand our strategy and opportunities. Looking back on the second quarter, MSCI delivered strong results in a difficult external environment. Among our headline achievements, we posted record levels of second quarter total new recurring subscription sales and net new recurring sales. This helped us drive 14% organic subscription run rate growth, up from 11% a year ago. It also contributed to adjusted EPS growth of 13.5%. Meanwhile, MSCI achieved a 95.5% retention rate, up from 94.4% in the second quarter of 2021. On the capital front, we repurchased another $277 million worth of shares at an average price of $404 per share, bringing our total for the year to nearly $1.1 billion. We also raised $350 million through a term loan, giving us greater flexibility in the months ahead for bolt-on acquisitions and opportunistic share buybacks. We did all this against the backdrop of historic inflation, rapidly rising interest rates, and market volatility. As we always say, MSCI prides itself on being an all-weather franchise. Any company can appear successful during a bull market. Moments like this show which companies are truly resilient. Time and again, MSCI has met the challenge. During periods of instability, our data and research become even more relevant. Today, we are well-positioned to capitalize on repriced assets and help investors navigate financial turbulence. We are also well positioned to make small bolt-on acquisitions if the right opportunities emerge. MSCI is focused on strategic accelerators, and our team is monitoring the market for possibilities. Even as we continue investing in long-term growth, we will remain vigilant about protecting our profit margins. Despite the macro environment, we have not seen a slowdown in demand for our solutions. In fact, we see continued strength across most segments and geographies. To help us become even more client-centric, we recently hired Cristina Bondar as our new Chief Marketing Officer. Cristina brings decades of experience from world-class brands such as Hewlett-Packard and Coca-Cola. Her work at MSCI will deepen our relationships with stakeholders across the board. Looking ahead, we recognize the challenges posed by global market trends. As I said earlier, these are the moments when MSCI thrives. I'd now like to drill down into a few areas in greater depth, including climate, analytics, and fixed income. Before I do so, in view of the external environment, I thought it was important to lead with what MSCI is seeing from our clients. Despite all the market turmoil, we continue to have strong growth across client segments. Our pipeline remains robust, and we have no evidence that it is slowing. During this period of economic and financial turbulence, our clients understand that MSCI solutions can play a critical role in helping them adapt and manage their investments. Our second quarter performance confirms the strength of our diversified and durable franchise. Let me spotlight some of the segments and geographies where MSCI recorded especially strong growth. In our index business, we posted double-digit subscription run rate growth in all regions, along with custom index subscription run rate growth of 23%. In ESG and climate, we delivered organic subscription run rate growth of 47%, recurring net new sales growth of 26%, and our second-best quarter ever for recurring sales. Meanwhile, total assets under management in ETFs linked to our ESG indexes increased by 15%. Among banks, hedge funds and wealth managers, we posted total subscription run rate growth of 17% excluding RCA. In terms of specific products and services, we delivered robust analytics growth with net new sales increasing by 68%. This growth was driven by sales in equity factor models and risk management solutions, as well as a 17% reduction in cancels. We also posted a strong retention rate for analytics of 94% and recurring sales growth of 15%. In addition, our listed futures and options trading volume increased by 37%, with strong growth from World, Euro, and EFA contracts. There's no question that climate represents one of the fastest-growing parts of our franchise. Let me discuss a few concrete milestones from the second quarter. Just last month, MSCI launched our new Total Portfolio Footprinting tool, which helps a growing range of financial institutions measure carbon emissions across their lending and investment portfolios. With this tool, we have extended our climate analysis to municipal bonds and securitized products, and we will be better able to provide modeling for loans, infrastructure, and private assets. MSCI also completed an agreement with a prominent general partner to provide climate analytics on a portfolio of private companies. In addition, we completed our first Climate Lab Enterprise deal with a major asset manager that cuts across analytics, ESG and climate, and private assets. The larger pipeline for Climate Lab Enterprise continues to gain momentum. We're also pleased that one of the most innovative climate tools we launched in 2021, our Implied Temperature Rise metric, was named ESG Assessment Tool of the Year for Investment Decisions and Insights by Environmental Finance. To cite one final second quarter milestone, MSCI released the latest iteration of our Net-Zero Tracker, which illustrates how listed companies align with different temperature rise scenarios. Climate is now driving growth across the company, including in our analytics business. In the second quarter, MSCI launched a series of new equity factor models, including the first models to offer sustainability, crowding, and machine learning factors. The sustainability factor includes both ESG and carbon efficiency components. This is a significant model update aligned with our strong index franchise. We will make these models available through several distribution channels, including Snowflake Data Cloud. Using Snowflake will help us dramatically accelerate the client onboarding process. We're also developing capabilities to create an even better user experience by combining analytical results from RiskManager and BarraOne. This will greatly enrich our content and capabilities. We are further enhancing the user experience in analytics through our Investment Solutions as a Service applications. ISAS gives clients greater flexibility in how they interact with our analytics while reducing MSCI's time to market for new products and services. It represents a pivot away from our legacy applications. All of this reflects our broader focus on client centricity. As part of that focus, we continue to make progress in expanding our direct indexing capabilities. We want to help clients to be able to personalize their investment strategies at scale through client-designed indexes. As I mentioned earlier, MSCI delivered custom index subscription run rate growth of 23% in the second quarter. We're seeing growing traction of custom indexes as the basis of index-linked products within our asset-based fee revenue. We're also building momentum in fixed income. In fact, during the second quarter, our fixed income franchise posted 35% growth, run rate growth. MSCI will continue investing in fixed income to help our franchise reach the next level. With that in mind, we were delighted to team up with MarketAxess Holdings on innovative portfolio analytics solutions and co-branded fixed income indexes. Through this partnership, MSCI's portfolio analytics and fixed income indexes will integrate the all-to-all pricing developed by MarketAxess, including their tradability and liquidity scores. Meanwhile, investors will use MarketAxess and our ESG ratings to help create more liquid and sustainable fixed income portfolios. In closing, I would just like to reiterate that during this period of volatility in financial markets, we continue to see strong demand for our solutions. With that, I will turn the call over to Andy. Andy? Thanks, Baer. Good morning, everyone. As Baer highlighted, the solid performance during the quarter underscores our strong momentum and the power of our all-weather franchise. In addition to the 14% organic subscription run rate growth, we recorded the highest second quarter ever for recurring subscription sales and net new recurring sales, increasing 15% and 26% year over year, respectively, excluding the acquisition of RCA, and we experienced double-digit subscription run rate growth excluding RCA across all regions, with healthy growth across nearly all client segments. In Index, we delivered 12% subscription run rate growth, which represents our 34th consecutive quarter of double-digit subscription run rate growth. This growth was fueled by 19% subscription run rate growth from broker-dealers, hedge funds, and wealth managers, on top of 10% growth from asset managers and asset owners. Asset-based fee revenue experienced declines in the quarter, with ETF and non-ETF passive fees impacted by declines in market levels, offset by continued growth in our futures and options franchise. ETFs linked to MSCI indexes drew more modest net cash inflows of $7.5 billion in the quarter, with flows coming from developed market ex-US and emerging market exposure funds, and within those, flows into funds linked to our ESG and climate indexes. It's also worth highlighting that mix shift helped to drive a modest increase sequentially in the period-end average basis point fees to 2.52. As we have mentioned previously, our non-ETF passive revenues are recognized on the latest AUM levels reported to us by clients, which typically occurs on a one-quarter lag. When we receive updated AUM balances from clients, we true up or true down the revenue accrued in the period reported by the client and use the new balance to accrue revenue in the current period based on the then effective pricing. As clients began reporting lower AUM balances for prior periods during this quarter, our revenue in this quarter reflects some true downs on revenue accrued in prior periods, as well as lower accrual levels for the current period. Despite the headwinds from lower reported AUM balances, we continue to see very strong client demand and new product launches in this area, as well as strong resilience in fees. As a nice offset to the AUM declines, revenue from listed futures and options linked to MSCI indexes recorded its highest quarter ever, with traded volumes and contracts linked to our indexes up 37% year-over-year. Outside of the asset-based fees and index, we saw tremendous strength across most areas. In analytics, we drove 15% growth in new recurring subscription sales, while also experiencing a 17% decline in cancels, driving net new recurring subscription growth of 68% and organic subscription run rate growth of 7.4%. We continue to see many opportunities and strong momentum in front office equity and fixed income portfolio management alongside our ESG and climate risk solutions. In ESG and climate, we delivered another quarter of exceptional organic growth of close to 50%, as Baer mentioned. Roughly half of new recurring subscription sales were generated from emerging client segments, including wealth managers, insurance companies, hedge funds, broker-dealers, and corporates. Our climate run rate reached $55 million, which is an increase of 88% from a year ago. Excluding the impact of RCA, real assets revenues were down year-over-year as a result of foreign exchange impacts and some impact from the timing of revenue recognition. However, organic subscription run rate growth was 9% in our legacy real estate business. Across the firm, it's also worth highlighting the very healthy retention rate of 95.5%, with strength across all segments. Our adjusted EPS growth highlights the power of our all-weather franchise. We flexed our expense base to mitigate the impacts of the AUM-based headwinds. The headwinds of an appreciating U.S. dollar on our revenues, which were approximately $8 million when compared to Q2 of 2021, were more than offset by FX benefits on our expenses of approximately $9 million. Furthermore, our proactive capital actions provided another lever of support. Year to date through yesterday, we've repurchased over $1 billion of stock or approximately 2.2 million shares. More broadly, we remain nimble and proactive on the capital allocation front. MSCI's board approved a 20% increase to our quarterly dividend to $1.25 per share, further illustrating our commitment to return capital to our shareholders. In the beginning of June, we opportunistically raised $350 million through term loan borrowings. With these proceeds, we ended the quarter with a cash balance of $842 million, of which approximately $600 million is readily available. We remain well-positioned to continue to capitalize on share repurchases and bolt-on M&A opportunities that may arise against this volatile market backdrop. Before we open the call for Q&A, I would like to discuss our outlook for the year. We published our updated guidance earlier this morning, which reflects a cautious but constructive view on the balance of the year. While we expect some continued volatility, we expect generally flat to gradually improving market levels from current levels throughout the balance of the year. As mentioned earlier, we have begun to activate our downturn playbook with a focus on flexing certain less critical expenses and moderating our pace of hiring in selected areas. We utilize these times of uncertainty to reprioritize our resources and push ourselves to be more efficient across the business in order to free up incremental investment dollars. Our decreased operating expense and adjusted EBITDA expense guidance reflects these actions against our current expectation of relatively flat market levels for the balance of the year. It is worth noting that the pace of spend may fluctuate up and down based on the trajectory of our asset-based fees, the performance of the business more broadly, and the global operating environment outlook. We've modestly increased our range for capitalized expenses as well as depreciation and amortization expense, mainly reflecting a higher level of capitalized software development costs across products. We increased our interest expense guidance to reflect the variable interest rate payments on the term loan borrowings drawn in June. Lastly, we've lowered our net cash provided by operating activities and free cash flow guidance as a result of the declines in asset-based fees and higher interest expense, partially offset by lower operating expenses. Our tax guidance for the year remains unchanged. For the full year, we expect to drive continued high 50% margins on a consolidated basis, which is in line with our long-term target. Across the business, we continue to see strong levels of demand for our products, and we have conviction in the secular growth opportunities in front of us. We remain focused on executing on our strategic growth opportunities, but we will continue to protect the financial model of our all-weather franchise. With that, operator, please open the line for questions. Thank you. We will now begin the question-and-answer session. To ask a question, you may press star then one on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. Again, please limit yourselves to one question and one follow-up. At this time, we will pause momentarily to assemble our roster. Our first question comes from Manav Patnaik with Barclays. Please go ahead. Andy, I was hoping, you know, just your comments on activating the downturn playbook. I was just hoping you could give us some specific examples of perhaps, you know, where you're starting to see some of this, you know, weakness and which segments, you know. Is it the banks where you're starting to hear, like, layoff chatter? Or, you know, I was just hoping you could flesh that out a bit. You know, I understand why you're doing it, but just was hoping for some color on which areas perhaps you're seeing some of this weakness right now. Manav, it's Baer here. Maybe before I turn it over to Andy, I just wanted to make a clarifying point. The downturn playbook relates more to a series of financial actions that we take in order to be prudent and to ensure that we don't provide any negative surprises to our shareholders. So it doesn't, it's not conducive necessarily in a strict sense to us seeing any sort of negatives in our pipeline or what's happening. It's just that in view of the clearly the market beta effects and how, you know, that affects our ABF revenues, and that can be seen and all of you can measure that. But I think more broadly, you know, we're not seeing anything particularly negative. I hope that was, you know, reflected in our prepared remarks. I'll just also turn it over to Andy to speak a little bit more specifically about those measures we're taking to be financially prudent. Yeah. To Baer's point, the actions that we're taking are related to the pullback in ABF revenues. We mentioned last quarter that if AUM stayed at current levels at the time or deteriorated further, we would likely go to our downturn playbook. From the end of Q1 to the end of Q2, we saw AUM levels drop about $200 billion or 14%. And as I mentioned, our guidance at the time assumed markets remained fairly flat. As a result, we're turning to our downturn playbook. Just to give you some color on some of the levers that we've been flexing here. We are moderating the pace of headcount growth on a very targeted basis. We are prioritizing our key investment areas to continue investing in, but other areas we are slowing down the pace of growth. We're also identifying efficiencies in less critical areas. We are selectively flexing down some of our discretionary non-comp areas around areas like professional fees. Obviously you're aware we are getting some meaningful FX benefits which feed into the lower expenses as well. Then it is worth noting we are projecting a slightly lower comp accrual relative to our original forecast. But to Baer's point, I do wanna highlight that our business remains healthy. Client buying behavior remains generally healthy despite the lower ETF AUM levels. It's important to keep in mind that we have a global diversified all-weather franchise with a very strong subscription growth and retention rate here. Okay, got it. That's helpful. You know, maybe can you just talk about, you know, you guys have a strong balance sheet, but just, you know, your thoughts on, you know, accelerating maybe some M&A that you guys typically do, like, you know, just are the valuations down enough in the private market as well? I mean, part of the rationale for raising the term loan, the additional $350 million, was to give us dry powder. We wanna continue to be nimble on the share repurchase front. We think there are opportunities to get our shares at attractive values, but we also wanna have some dry powder for bolt-on M&A. We've started to see some repricing in private companies. I would say generally, especially in the spaces we operate, they haven't adjusted to the levels of public companies. We do think there could be some continued compression in private company values. There's also a degree of time related to private company owners adjusting to the new norm before they decide to sell. We do think if this market volatility persists, then the public company valuations remain low. You know, in the coming quarters, there could be some opportunities that we wanna be poised to capitalize on. As always, we're focused on strategic accelerators, as Baer said, focused on our core investment areas, like ESG and private assets and fixed income and areas of unique content that will enhance our existing franchise. Got it. Thank you very much. The next question comes from Alex Kramm with UBS. Please go ahead. Yeah. Hey, guys. I guess strong sales during the quarter, and I think the pipeline commentary also pretty constructive. Just wondering, given that this quarter, the 2Q was basically deteriorated throughout, just wondering if how the progression was on the sales side. Did you see any differences as the quarter went on, or was it all fairly consistent? Then maybe any particular color by customer sets, as again as the quarter was maybe a tale of many stories. Yeah. Hey, Alex. Good morning. Look, honestly, we really haven't seen any sort of marked change, you know, from the beginning to the end of the quarter. We actually had a very strong end of the quarter in terms of closing business. You know, we've started the present quarter as we would hope to do. You know, as far as we can see at present, you know, we have no information to suggest things are turning into a negative direction. You know, look, it's a choppy environment and things could change, but, you know, as of today, we have no empirical evidence that things are trending in a worse direction. All right. Great. Fair enough. Second question, and I think I asked this either one or two quarters ago, but I think it remains relevant, which is on the ESG noise that's out there. Somebody said to me the other day, not a day goes by without a negative article on ESG. It seems like in an election year, this is even turning into a partisan issue. Just wondering what this has done to your client conversations, to your sales pipelines. I mean, is this having an impact or is this just noise that us on the outside maybe are getting wrapped up in, but it really doesn't matter to the end clients and end demand? Sure. Alex, first of all, you know, as you well know, we're a global franchise, so I think the debate you're referring to is primarily in the United States and is not really happening to the same degree in other geographies. I think the second point, which is much more important, is you need facts and information to engage in that debate, right? I think the point that I also have made, you know, repeatedly on this topic in the past is what people cannot afford to do is ignore the topic. You know, there may be certain parties who I think are in a minority or a small minority, depending on where you are, who feel that this is, in quotes, "not a good use of their time." Even they need the. They need data and information to make their case on. I think that, you know, the key part of this franchise is that all parts of the debate need information to make judgments, and I think that that benefits us across the board. All right. Thank you very much. The next question comes from Toni Kaplan with Morgan Stanley. Please go ahead. Perfect. Thank you. Wanted to start on the custom index side. I think, Baer, you mentioned that you've seen, you know, sort of an acceleration in this area. Are you guys able to size that for us right now? Is this an acceleration in growth because it's off of a smaller base, or is this a structural, you know, long-term growth driver for the index business? The custom indexes have been a structural long-term growth driver for the index for some time, and I hope I'm not speaking out of school, but the data is pretty clear in my head that the growth rate has always been pretty healthy. The healthy growth rate, such as the one that we had in the past quarter, by definition, is coming, you know, always off a higher base, right? It is a long-term story. It's still a very strong trend. We're seeing, first of all, that the demand for complexity with different types of content, even, you know, different asset classes, which we hope to do more of, has increased, so that plays to our strengths. Also we're seeing that this demand, which you know is going back in time, chiefly institutional, is spreading increasingly to wealth management. notably, you know, we're investing in direct indexing, as I mentioned in my comments. we think that the combination of institutional demand, you know, general financial products demand, and the rising demand for direct indexing in wealth will continue to, you know, provide a lot of momentum to this area for us. Perfect. I was hoping you could give us an update on regulation, both within the index space and the ESG part of your business as well. Are you seeing more of a tick-up in regulation or regulator scrutiny? Just wanted to get an update there. Yeah, sure. I'm happy to take that. You know, just as a reminder, we are regulated in the E.U., under the E.U. BMR, actually currently through the F.C.A. in the U.K. That's something of some standing, so we're familiar with that. Just continuing on index regulation, there have been greater interest in this topic from regulators in the United States. You know, I won't speculate on where that will end up or the direction of it, but clearly the interest of regulators in the United States has picked up. I'm confident that in whatever direction that goes, the manner that we operate, the quality, the transparency, the separation of, you know, powers between, you know, in editorial and commercial, all those things, I think we're very well prepared for it. In ESG also, as a reminder, we are a registered investment advisor in the U.S., and we're not the LLC that owns the ESG ratings. That clearly has been an area that has not been heavily regulated for us historically. It may be further regulated in the future and there's also a lot of initiatives in Europe related to ESG regulation. I'd make the same observation. We always work on the assumption that someone may come and regulate us, so the quality of what we do, the transparency of what we do is foremost in our mind. That's how we're operating in our ESG ratings. We're confident if we do so, and we continue to invest and ensure the highest quality, that if regulation comes, you know, we may well benefit from it because of the high standards we have. Terrific. Thanks a lot. Thank you, Toni. The next question comes from George Tong with Goldman Sachs. Please go ahead. Hi. Thanks. Good morning. AUM dropped about 14% between 1Q and 2Q, and I believe you mentioned your guidance assumes flat market levels over the balance of the year. Can you elaborate on your thinking there and what your guidance assumes for AUM levels on a full year basis? Yeah. I don't want to be more prescriptive than the commentary that I made and you alluded to. In our trajectory of spending, we make assumptions about the market. As I alluded to, we've assumed that the market levels remain relatively flat to where they are today, to slightly improve. That's kind of the environment that we based our spending assumptions are, then feed into our EBITDA expense and operating expense guidance. Right. On a full year basis, that assumes what for AUM levels and perhaps fund flows? Yeah, you can do a little bit of the math yourself, just seeing what's happened for the first six months of the year and the average AUM balances there, with that color that I just provided. I don't wanna provide more specific assumptions around AUM flows or fees or any of those factors which we typically don't comment on. Got it. Okay. As a follow-up, you're exercising your downturn playbook with expense reductions. What does your downturn playbook imply for margins? Are you committing to hold margins at a certain level for this year? Yeah. We're not committing to margins. I did make the comment in my prepared remarks that we are targeting or we believe our margin for the year will be in the high 50s%, which is aligned with our long-term targets. The margin can fluctuate quite a bit based on a number of factors, including big moves in AUM, FX rate fluctuations, other one-off items. It's not guidance or target, but we are looking at the margin being in the high 50s% for the year. Which is worth noting, and if you look at the expense guidance, it does imply that our expenses are picking up slightly in Q3 and Q4 relative to what we saw in Q2. Got it. Thank you. The next question comes from Russell Quelch with Redburn. Please go ahead. Yeah. Thanks, guys. I just wanna go back to the ESG and climate business on the back of what Alex was saying. I noted the new subscription sales growth was really strong again this quarter. Wondered if you could talk to what's driving this. Is it the upsell of new products or is it new customer penetration sort of leveraging traditional products? Sort of how sustainable is the current level of sales growth? Do you think that the speed of the margin expansion of this business will slow? What the sort of long-term margin target for this business might be? Thanks. Look, I'll make a few observations and then turn it over to Andy if he wants to comment on the margin or not. Look, as regards the main question, I think it's all of the above and more of the same, right? I think it's the same as last quarter in a positive sense. 50% of our sales in the quarter were from new clients to this product line, and they're now being new clients to the firm. I think, you know, in terms of both, you know, the range of what we're selling, the client types, the number of new clients, you know, everything looks really healthy. Rather than, you know, speculate as to what rate, you know, will. You know, how long it will go on, you know, the way I would say it is, you know, we have no suggestion that what occurred this quarter, that we'll have any no less good a quarter next quarter as we had done the previous quarter. I just feel like we're in a strong, you know, position with this product line. You know, if that were to no longer be the case, we would communicate it. We're, you know, really doing well now. Andy, I don't know if you wanna comment on the margin at all or. Yeah. Obviously we don't give margin targets by segment, but I would say that within ESG and climate, our focus is really on driving top line growth, not margin expansion. We're not targeting for the margin to expand from current levels. We're really trying to invest to continue to fuel that growth that you're asking about across so many different dimensions. The client segment dimensions, the asset class dimensions, the solutions dimensions, and then really accelerating our growth in climate, which we think is gonna be a massive opportunity. Our goal right now is leadership and growth. It's not on margin expansion within the segment. I would highlight that longer term, the nature of what we do in ESG and climate is similar to what we do across many other product areas, which is we develop IP, and we sell it to many different clients for many different use cases across many different applications. It inherently does have attractive operating leverage, but we're really reinvesting that operating leverage in growth and investment. Okay, good stuff. Sorry, just as a follow-up, in respect to the analytics business, the run rate there is still circa 5%, so no real pick up. I wonder if you could talk in a bit of detail about what's being done to improve that. Thanks. Yeah, actually, sorry, you broke up a little bit. Yeah. Do you mind repeating the question? Yeah, sorry. Just in the analytics business, the run rate is still growing at around about 5%. There's no real pick up in the run rate growth. I just wanted to know what's being done to improve that. Thanks. Yeah. Yeah. You know, we're focused as much on the run rate growth, which was 7.4%, which is still not quite where we want it to be. We do believe this is a high single digit growth segment for us, but definitely higher than the revenue growth. There tends to be some noise around revenue growth related to timing of implementations, revenue recognition around contracts. Just consistent with what we've discussed in the past, there is lumpiness. I would say the encouraging thing for us on analytics is, the strength in the quarter was aligned with our strategic areas of focus within analytics. We saw strong equity portfolio management growth of high single digits. We continue to see elevated growth within our fixed income portfolio management tools. We started to get some traction around ERP, which is the area that's had lower growth in the past. We got a nice boost from our 18f-4 reporting solution to support a new regulation going into effect in August. We got traction as we highlighted with Climate Lab Enterprise sales, which are booked within our analytics segment or partially booked within our analytics segment. We also are getting traction with our partnership approach, which is accelerated by some of the investments and advancements we've made on the ISAS front. It's not where we want it to be, but we do think we've got the right strategy and hope to continue the momentum. Although I would say it will be lumpy. It's also worth highlighting that in addition to the strategic benefits that analytics gives to the rest of the organization, analytics has also been a nice source of operating leverage, which you can see from the results this quarter, which is really helping to fund investment in other parts of the company. Okay, great stuff. Yeah. Thanks, Andy. Our next question comes from Craig Huber with Huber Research Partners. Please go ahead. Craig, is your line muted? Yeah. Can't hear you, Craig. Maybe we can move to the next caller and then come back to Craig. He's having a technical problem. Okay. All right, let's move on to the next question, which comes from Patrick O'Shaughnessy with Raymond James. Please go ahead. Hey, good morning. How are you guys thinking about pricing power right now? Obviously, it's an inflationary environment, but at the same time, your asset management clients are seeing their AUM under pressure. Yeah. Look, I would say that our philosophy on pricing is very consistent, which is that we always try to be as firm as we can without, you know, giving our clients the impression that, you know, we're being too aggressive. You know, I think that we've managed to put in, you know, sort of a slightly above average increase in our index sort of regular price increase, but it's not, you know, it's not notably different. We're very focused right now on ensuring, as we have been for a number of years, that we have, you know, we're getting the right value out of analytics, and that could be reflected in some of the numbers here. You know, in terms of clearly the big growth drivers in ESG and climate, those are very, you know, young products, as it were. It's mostly coming from new clients and new products rather than price increases. I would say that, you know, as a general observation, you know, leading to, you know, linked to your observation about the state of our clients, you know, we're not hearing negative noise about that. We are conscious that, you know, we work in a competitive environment and that we, you know, we always have a, as I said at the outset, a philosophy of balancing, you know, economic strength with not pushing our clients too far. Got it. Thank you. Andy, can you quantify the magnitude of the slowdown that you spoke about in the non-ETF passive asset-based fees? Yeah. I know it's an area that probably a lot of folks missed or underestimated. I would say it can be on the order of magnitude of $a few million, depending on how significant the market moves are. I would mention that, you know, depending on what happens with the markets, we could see this dynamic at play in our revenue in Q3 as well, with similar adjustments, as we start to receive the Q2 AUM balances from our clients. Great. Thank you. Our next question comes from Gregory Simpson with BNP Paribas. Please go ahead. Hi. Yeah, good morning. I just wanted to ask if you have any color on the revenue contribution from private markets beyond the more legacy real estate piece and RCA. It sounds like there's quite a lot of work on the product side building out relationships with GPs. How are we at a stage yet where kind of private equity clients are a more material segment? Just how things are kind of going there and then the relationship with Burgiss. Yeah. Yeah. Maybe I can comment on the real estate performance and then Baer, if you wanna make any comments around Burgiss, specifically, which we don't obviously consolidate Burgiss as we are a minority investor in them, but we continue to work on the product development front. Within real estate, before I touch on RCA, I do wanna highlight, you know, provide some color around the performance of the segment. I know there was a lot of noise around it. I would say the revenue growth is more reflection of accounting and FX than business health. I think operating metrics are fine, and organic subscription run rate growth within our legacy real estate business was 9%. For RCA, to your question, we continue to see double digits run rate growth within RCA, and you can see the retention rate is quite strong at 96% within the segment. We continue to execute to make progress in our ambitions around RCA. We are really starting to see the not only the operational synergies but the strategic synergies of cross-selling to our clients, new product development, continuing to expand the suite of indexes and content, as well as climate solutions, that we had planned to do when we acquired the company. I don't know, Baer, do you wanna make any comments around Burgiss? Look, I'll be very brief. I think, you know, we're working with them on a number of areas. We've clearly had, you know, alluded to some of the climate work that we're doing. That's been a big focus of ours, because this demand is coming through, you know, for increasingly, you know, from private asset clients. You know, there's also, you know, general work going on between our private asset data teams in order to, you know, figure out how we can create, you know, greater benefits and combine products going beyond some of the ESG and climate work that we're doing. I hope as we get into the second half of the year, you know, we'll be able to expand on that a bit more for you. Great. As a follow-up, can I check on how the product relationship with the Hong Kong Exchange is going? I think volumes in the China A50 contract are maybe still a little bit on the low side, but a big opportunity longer term. Are there any kind of lessons from the other exchanges about how long it takes for volumes to really accelerate, perhaps? Yeah, look, I think we're very happy with the relationship. I've personally been involved in a number of, you know, calls with them in the last quarter. You know, I think that as you can see from other aspects of our futures franchise, these things are a virtuous circle that, you know, kind of volume and liquidity and open interest beget one another. I think we're, you know, we're happy with where we are. We've got some, you know, other things that we're discussing with them. I think we're in a good place, and we believe that, you know, looking across our you know the broader numbers in our future and options franchise, which, you know, you saw this quarter, you know, there's still a lot of upside across the board with all of our exchange partners, including Hong Kong. Great. Thank you. Our next question comes from Craig Huber with Huber Research Partners. Please go ahead. I apologize. Can you size for us, if you would, your fixed income run rate revenues now, and maybe also your wealth management run rate? Yeah, Craig, I don't think we've provided those metrics recently. I would say that there are a couple ways to think about our fixed income business. We've got the direct fixed income solutions that we provide for the fixed income investment process, and those cut across index with our fixed income indexes, which is largely on the heels of our partnerships that we have with many of the other major index providers, fixed income index providers, our ESG solutions, which are increasingly being incorporated into the fixed income investment process. Our analytics solutions, which I alluded to earlier, has been a nice area of growth for us in analytics. It is worth noting, we also have a meaningful fixed income capability that serves multi-asset class use cases. As part of our multi-asset class tools and our enterprise risk and performance, obviously a big part of our clients' portfolios is their enterprise-wide portfolios is fixed income, and so we have capabilities there that are critical to supporting the growth and the positioning in those businesses as well. It cuts across a number of dimensions, but it is especially the one, the parts serving the front office and that fixed income investment process. We are seeing very strong growth. I'd just make an additional observation on top of what Andy said. You know, this cross-product line team, two observations. This is how we're operating more and more across MSCI using the phrase MSCI-one MSCI we've used in the past. In particular in fixed income, the expertise we have across the firm is really coalescing. That team across all products and functions had an offsite literally in the last week. I think there's a lot of momentum behind what we're doing. It's sometimes tricky reporting as a public company across different product lines, but we'll continue to try to provide you guys with as much transparency as we can there. My follow-up question, guys, your private asset segment, obviously organic ex-FX was down about 5.5%. You talked about some one-time issues there. Maybe just talk a little bit about your outlook there, and if you normalize for that, what was sort of the underlying growth rate? Yeah. Let me actually provide a little bit more color there. As you alluded to, I mentioned there was some noise on the revenue side, where our revenue in real assets firstly has a relatively large exposure to non-USD currencies. The strong dollar, particularly relative to the pound, generated some revenue headwinds from an FX standpoint. Additionally, within our legacy real estate business, for some of our offerings, we've been transitioning our clients to a service model where we recognize revenue evenly throughout the year versus if you remember in the past, we had a good chunk of revenue where we recognized our revenue upon delivery of a service, and a good chunk of the revenue would be recognized in the second quarter, which is when we would do a number of the deliveries. From a year-over-year comparison standpoint, as we've migrated many clients to the evergreen subscription model through the year, you see some headwinds in the growth. But more generally, I think we're committed to the long-term targets that we've put out there at the high teens level, and we continue to be bullish about the prospects across our legacy business, the RCA business, as well as the combined organization. Great. Thank you. Our last question comes from Ashish Sabadra with RBC Capital Markets. Please go ahead. Thanks for taking my question. I just wanted to go to the slide twenty eight where you provide the AUMs and ETF linked to ESG and climate equity indices. The growth moderated there a bit, and even sequentially there was a moderation. I just wanted to see how much of it was related to just market performance, and what are you seeing in terms of new ETF launches or new product launches based on the ESG and climate equity indices? Thanks. Look, as Andy mentioned before, we are loath to speculate or to, you know, be about the exact direction of what will happen with markets and products, particularly in this environment. You know, we've, you know, as I mentioned in my comments, you know, the growth in ESG and climate category of indexes has been very attractive. Even in this tough market, we continue to be in conversations with, you know, many key clients about launching new products. You know, I think we, the direction of travel continues to be what it has been. You know, we have nothing to suggest so far that there's a lack of interest in these type of products. I don't know if, Andy, you have anything to add to that in terms of numbers or- No, no, I think you hit the key themes there. I think that's right. We continue to see momentum and strong appetite, as Baer highlighted, across the category. There are cyclical dynamics feeding into some of the flows, particularly within ETFs. It's something that we're not too concerned about looking out longer term. That's very helpful color. Maybe just as my follow-up, I was going to ask about the appointment of Christina as the new Chief Marketing Officer and the focus on a more client-centric approach. I was just wondering, as we think about the marketing strategy, should we expect any change to the marketing strategy there? Or even on the execution front, if you could provide some color on some of the new initiatives that might get planned for the rest of the year or going into 2023. Thanks. Sure. A great question. You know, first of all, you know, I'm delighted that Christina has joined us. I think we're, we, you know, we're at an inflection point or we, you know, we're probably past an inflection point where MSCI needs to reach out to our clients in the broader markets, you know, moving beyond our traditional strengths of what I would call, you know, direct sales and client service. You know, Christina has an outstanding background to help us in that regard. I'm very confident that she will put her leadership footprint on this area, and we'll be happy to talk about that, you know, in the quarters ahead. That's very helpful, Baer. Thank you. Okay, I believe that was the final question. Yes? Sorry. Okay. This concludes our question-and-answer session. I would like to turn the conference back over to Baer Pettit for any closing remarks. Go ahead. Thank you all for joining us on the call today and your continued interest in MSCI. As you heard, it's times like these that really underscore the resilience of MSCI's all-weather franchise. We not only continue to see strong demand for our solutions, but we also have tremendous opportunities in front of us. We remain excited about the momentum we are building and the investments we're making, and we look forward to seeing and engaging with all of you in the coming months. Thank you very much. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.