Good day, ladies and gentlemen. Welcome to the MSCI Second Quarter 2026 Earnings Conference Call. As a reminder, this call is being recorded. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session where participants are requested to ask one question at a time, then add themselves back to the queue for any additional questions. We will have further instructions for you later on. I would now like to turn the call over to Jeremy Ulan, Head of Investor Relations and Treasurer. You may begin. Thank you. Good day, and welcome to the MSCI second quarter 2026 earnings conference call. Earlier this morning, we issued a press release announcing our results for the second quarter of 2026. This press release, along with an earnings presentation, are available on our website, msci.com, under the Investor Relations tab. Let me remind you that this call contains forward-looking statements that are governed by the language on the second slide of the presentation. You are cautioned not to place undue reliance on forward-looking statements that speak only as of the date on which they are made, are based on current expectations and current economic conditions, and are subject to risks and uncertainties that may cause actual results to differ materially from the results anticipated in these forward-looking statements. 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. You'll find a reconciliation of our non-GAAP measures to the equivalent GAAP measures in the appendix of the earnings presentation. We will also discuss operating metrics such as run rate and retention rate. Important information regarding our use of operating metrics such as run rate and retention rate are available in the earnings presentation. On the call today are Henry Fernandez, our Chairman and CEO, and Andy Wiechmann, our Chief Financial Officer. With that, let me now turn the call over to Henry Fernandez. Henry? Thank you, Jeremy. Good day, everyone, and thank you all for joining us. In the second quarter, MSCI delivered very strong financial results along with an acceleration in run rate growth in both index and private assets, our two key engines of growth in the company. We also showed strength in recurring net new sales across client segments and geographies despite continued challenges in sustainability. Meanwhile, record ETF and non-ETF AUM balances in products linked to MSCI indices help us achieve our best ever asset-based fee run rate. MSCI is building momentum in the second half of 2026 with a strong pipeline of opportunities and exciting AI-fueled innovation. AI is enabling MSCI to move even faster in building new products, enhancing our existing solutions, and strengthening our foundational mission-critical role in global investing and the rapidly growing ecosystem around our solutions. MSCI's Q2 financial metrics included organic revenue growth of over 12%, adjusted EPS growth of nearly 19%, and adjusted EBITDA growth of 14%. We further demonstrated our commitment to driving attractive shareholder returns and our confidence in MSCI by repurchasing $147 million of MSCI shares at an average price of about $558 per share during the quarter and through yesterday. Our Q2 operating metrics included total run rate growth of 12%, fueled by ABF run rate of $948 million, growing 25%. This reflected record AUM levels in both ETF and non-ETF products linked to MSCI indices, supported by another quarter of solid inflows of nearly $40 billion in ETF linked to MSCI indices. Over the past 15 months, total ETF AUM linked to MSCI indices has grown by more than $1 trillion. The incredible scale of MSCI's ABF franchise and the recent volumes of inflows into products linked to MSCI indices is the ultimate endorsement of trust in our IP, research, and standards. Turning back to our Q2 performance, MSCI achieved organic subscription run rate growth of over 8% with a retention rate of over 95%. This growth is enabled by our success in scaling our footprint across key client segments. Among traders and hedge funds, a category that collectively includes market makers, hedge funds, broker-dealers, and exchanges, MSCI deliver subscription run rate growth of 15%. Among hedge funds specifically, we posted our best quarter on record with 19% subscription run rate growth and nearly $15 million in recurring net new sales for a growth of 75%, including three separate seven-figure deals in index analytics. For example, MSCI won a seven-figure index deal with one of the world's largest multi-strategy hedge funds covering our ETF-linked and non-ETF-linked custom index modules, along with our constituent AUM packages. All told, we more than triple our index recurring net new sales with hedge funds from a year earlier, reaching $8.6 million in total. These results highlight four overlapping trends in the segment of traders and hedge funds for us. First, MSCI's indices are becoming increasingly embedded in the core trading and liquidity infrastructure used by active and passive investors alike. Second, the growth of systematic and quantitative investing has contributed to rising demand for our index content. Third, as traders and hedge funds have expanded their role in global investing, MSCI has gained new opportunities to make our index franchise more diversified and resilient. Fourth, as clients demand faster, more specialized indices and structured products and derivatives in larger volumes, AI is helping us accelerate our index production and deliver customization at scale. Shifting from traders and hedge funds to asset owners, we deliver 9% subscription run rate growth along with our best Q2 on record for recurring net new sales at $8.4 million and growing 43%. For example, one of the world's largest public pension funds signed a major new agreement for MSCI's private capital indices and expanded access to our Private Capital Intel solution. We also completed a seven-figure deal with a large sovereign wealth fund for our total portfolio solution, which includes private assets and analytics. Among asset managers, we posted 6% organic subscription run rate growth, along with 9% recurring net new sales growth. This includes a large deal with one of the world's largest asset managers for our enterprise risk and performance tools to support their ongoing initiatives to incorporate factors and enhance their risk reporting across asset classes. In addition, we continue making a steady progress with our ETF and other tradable product solutions for active managers. During the quarter, we signed a handful of clients to support their launch of active ETF strategies leveraging MSCI's index universe, research, and IP. Overall, some of the biggest themes of Q2 included the rapidly expanding ecosystem around MSCI indices, our momentum in private assets, and our rapid pace of innovation as enabled by our AI transformation and laser-targeted acquisitions to unlock additional layers of growth. Turning more specifically to our product lines, in index, we deliver 41% growth in recurring net new sales, 17% growth in total run rate, more than 11% growth in subscription run rate, and a retention rate of more than 97%. In private assets, MSCI achieved 57% recurring net new sales growth With more and more pension funds and sovereign wealth funds embracing our total portfolio solutions. Earlier this month, we announced a new strategic partnership with UBS that will extend the reach of our private asset solutions and enable wealth managers to better connect high-net-worth clients with GP opportunities while promoting greater transparency for the entire investment ecosystem. By combining MSCI's independent data, analytics, models, and AI-powered platforms with UBS's global client insights and expertise in alternative investments, we can help make private markets more understandable, more accessible, and enable stronger connectivities between GPs and the wealth channel. This private asset platform for wealth channels is only one example of how we are using AI to improve our solutions and the client experience. We already have over 1,000 clients using Index AI Insights, which we just launched in February. Meanwhile, hundreds of companies and end users are now accessing our Total Plan Manager and Private Capital Intel solutions through their preferred AI models. Innovation remains the lifeblood of MSCI's product development, but we're also expanding our capability through highly strategic acquisitions. Last month, for example, we announced that MSCI would acquire First Street, a leading provider of physics-based climate risk data and analytics, enabling physical risk assessment across over 2 billion building infrastructures. Combining our respective tools will help us deliver the insights clients need as physical risk becomes a more immediate priority. We're also addressing the broader category of emerging risks, along with issues such as energy access, tariffs, and supply chains, and AI. Much of our product innovation in sustainability and climate is now focused on these emerging risks, which have become increasingly significant to investors. At the same time, MSCI Working Climate is separate and distinct from our work in sustainability as we are seeing the opportunities there. Sustainability faces persisting market challenges, and we do not expect that to change in the near future. Even still, MSCI remains the provider of choice in this industry, and our sustainability tools continue to help us in other business areas, most notably in Index. There are now close to $1.3 trillion in index fund assets benchmarked to MSCI sustainability and climate indices, with over 1/3 of those assets benchmarked to our climate indices. MSCI also took several other steps to advance our AI transformation. In Q1, we brought into the firm Dinesh Gupta from Goldman Sachs to serve as our new Chief Data Officer and Global Head of Operations. In Q2, we welcome Kashi Kakarla from Intuit as our new Chief Technology Officer and Head of Product Engineering, and we announced that Kashi will lead the creation of a new MSCI office in Silicon Valley focused on AI, product engineering, and technology. Given his background, Kashi is the perfect leader to help us maximize the benefits of AI across client segments, product lines, and asset classes. We have also established a Technology and Data Committee of our Board of Directors. Looking ahead, we remain confident in our pipeline, in our resource allocation, and in our ability to leverage AI. MSCI plays a key role in virtually every stage of the global investment process, we are well positioned to seize new opportunities for growth. With that, let me turn things over to Andy. Thank you, Henry, hi, everyone. We're excited to see the large pipeline and strong momentum in key growth areas across the business, with further accelerations in our Index and Private Assets Segments. As Henry mentioned, we have had several large client wins that reaffirm the growing ecosystem around our frameworks and solutions. Index subscription run rate growth accelerated to over 11%, driven by a strong quarter for recurring net new subscription sales of over $28 million, which was up nearly 41% year-over-year. This reflected some large deals with traders and hedge funds across numerous modules, including our custom index modules. These help power the custom index organic subscription run rate growth to 23%, excluding contributions from the Compass acquisition. The retention rate among hedge funds within our index product line was in line with the overall index retention rate at more than 97%. Additionally, we saw another quarter of very strong growth in Asset-Based Fees, with the ABF run rate reaching nearly $950 million and growing 25% year-over-year. This growth was fueled by close to $40 billion of cash inflows in the quarter, driving AUM and ETFs linked to our indexes up to more than $2.8 trillion. The asset growth and cash inflows predominantly occurred in clients' products linked to our developed markets ex-U.S., and all country indexes, some of which carry lower fees. Within analytics, we had organic subscription run rate growth of 7%, driven by demand for our factor content and factor solutions, where we continue to innovate rapidly. We are also seeing steadily growing demand for our multi-asset class total portfolio solutions, including for front office use cases. Analytics Organic Revenue Growth was 7%, tracking with run rate growth. In private capital solutions, subscription run rate growth accelerated to over 16%. During the quarter, we had solid traction across existing solutions like our transparency, Private Capital Intel, and total plan offerings. We also see growing demand with new offerings like our data platform and our asset and deal level metrics. The acceleration is supported by both our deep private asset insights and our strong multi-asset class total portfolio capabilities. Additionally, we're seeing success with Vantager, having already closed a few sales of our diligence solutions offering. In real assets, organic subscription run rate growth accelerated modestly as we benefited from recent product and service enhancements, and we won a large deal to be the exclusive provider to a large property technology firm that will leverage RCA content and our global index intel offering delivered through Snowflake. In the sustainability and climate reportable segment, we drove nearly $6 million of new recurring sales in sustainability in Q2, and over $3 million of new recurring sales in climate. Cancels, particularly in the Americas, were a significant headwind as clients are rightsizing their sustainability spend. As Henry mentioned, we are capturing share gains in a consolidating market and are strongly positioned from a competitive standpoint based on our trusted reputation for quality, depth, and breadth of coverage, as well as the broad suite of interoperable solutions that we offer. Meanwhile, in climate, run rate growth across MSCI product lines was nearly 12%, and we are seeing significant demand for physical risk solutions, which are increasingly woven into the investment process. In the quarter, we won several physical risk deals, including a large deal for our geospatial and asset location solution with a European bank. MSCI's announced acquisition of First Street, a company which has developed truly unique climate forecasting models, enables us to capture the increasing demand for physical risk and broader climate solutions across a wider range of client segments and use cases. Upon the close of the acquisition in Q3, we would expect First Street to add about $10 million of subscription run rate to the S&C reporting segment. Between the significant emerging opportunities and the pressure on parts of the sustainability franchise, we expect recurring net new sales to be roughly zero to slightly negative for the combined sustainability and climate reporting segment across the next two quarters. As always, we remain intensely focused on driving strong capital returns to shareholders, and we will continue driving value creation through capital allocation as we have done year to date between our disciplined repurchases and acquisitions. On expense guidance, we've seen strong AUM growth within investment products linked to MSCI indexes. These AUM levels have been higher than the assumption we noted last quarter. When we released earnings in April, we indicated that we would be towards the high end of the expense guidance ranges based on the assumption of relatively flat markets in Q2. Given the strong top-line momentum and very attractive opportunities, we've been investing in key growth areas. Additionally, there are a few notable factors driving the increased expense guidance range. Firstly, the impact of the recent acquisitions, with the largest impact expected from First Street. Secondly, performance stock-based comp and bonus accruals related to the significant increase in AUM and products linked to MSCI indexes. The adjustment to the D&A guidance is driven by the First Street acquisition, the increase in the interest expense is driven by the higher revolver balances related to the First Street acquisition and recent share repurchases. Importantly, we have the levers to flex investments up and expenses down based on the environment and business performance, which allows us to consistently deliver strong results. We remain well positioned and committed to delivering attractive profitability growth in all environments while investing for the long term. Overall, I'm incredibly excited by our growing momentum and the strong pipeline across the business. We're only just starting to see the benefits of the new and enhanced solutions that we've recently introduced and which are adding to our momentum. We look forward to keeping you posted on our progress. With that, operator, please open the line for questions. Thank you. Ladies and gentlemen, as a reminder to ask the question, please press star one one on your telephone, wait for your name to be announced. To withdraw your question, please press star one one again. Please limit yourself to one question. You may return to the queue for additional questions. Please stand by while we compile the Q&A roster. Our first question comes from the line of Manav Patnaik with Barclays. Your line is open. Hi. Thank you. Henry, I guess, in your commentary, you talked about a lot of record new sales and categories and so forth. Just broadly, in terms of the environment for subscription sales, looking forward, how would you characterize the momentum there versus maybe the numbers this quarter, I guess, that fell a little short of expectations. I'm just curious on anything seasonal or any other characteristics you would call out. We are pretty bullish on our outlook. You know me well, Manav, that I speak my mind and I basically tell exactly what I believe. We have introduced a very large number of new products, 80+ in the last two quarters, compared to 40+ in all of 2024. Many of those new products are just beginning to show traction in sales because in our business, it takes time. It's an institutional budget, it's an institutional setting, it takes time to go showcase it, discuss it, go through the use cases, go through the approval processes in our clients, et cetera. That is why Andy and I have made the specific comments a few times in our remarks about very good pipeline in the next few quarters. I think we need to look at this quarter in the context of the progression that we have seen in the last few quarters, starting mid last year. I think we had three quarters of outperformance relative to consensus. The feeling by us that our prospects and the pipeline are pretty good. Therefore, in a process like ours of reigniting much higher growth in the run rate with selling what we got and also with a lot of new products being launched, I think we need to be cognizant that there will be more variability quarter by quarter, because many of the new products we're launching have high ticket items, high value items. If they fall in one line versus another line of the day, at the end of the quarter, they may flip from one place to another. Lastly, Manav, what I will say is we're very aggressive risk takers, but we're prudent financial managers. Extremely prudent financial managers. The reason why we are indicating a higher expense guidance is not because things are being forced upon us, it's because we voluntarily feel that we would want to invest more in the business because we remain more positive than we have in the past. Alvise Munari, one of our key senior managers, was telling us this morning, if we had the pipeline that we have today last year, we would have felt a lot better, right? Meaning a lot of things have changed. Of course, the overall environment is pretty positive among hedge funds and traders and even the active managers. I think we are making more progress than in the last few years because we're putting in new products. Thank you. Please stand by for our next question. Our next question comes from the line of Toni Kaplan with Morgan Stanley. Your line is open. Thanks so much. I wanted to follow up, Henry, on you just mentioned maybe higher volatility because of the higher priced products. I was wondering if you could maybe talk about you're having really good success selling to hedge fund clients. You mentioned the tripling of net new sales there. Does that inherently lead to revenue volatility in the future? I know right now it seems like that's not an issue, but does that lead to volatility? Then maybe also MCP, are you getting traction and adoption on selling data through MCP? Does that lead to increased pricing this year? When you lap it in the future, does that sort of add some volatility as well? Thank you. Toni, I believe that there will be some, not a lot, but some volatility quarter by quarter as we ramp up growth. I don't think that that volatility will necessarily come from traders and hedge funds. Historically, when you go back quite a few years, there was a meaningful amount of volatility in that segment. A lot of it was because there was a long tail of hedge funds that we were selling into, which would disappear or either go out of business, or they would cancel. Our strategy today is much more focused on the largest hedge funds that are multi-strategy, much more stable than has been in the past. That is one factor that I don't think will lead to volatility. The other strategic factor that I would want to mention is, for a very long period of time, we at MSCI, in our index franchise, we're very focused on the assets, the AUM levels of our clients. Our price increases with the active managers were kind of correlated to that. Our solutions were correlated to that. Of course, the ABFs were highly correlated to the level of assets. What we have discovered in the last few years, that there is a large trading and liquidity ecosystem around the AUM, which we were not strategically focused on as much. That's what we've started to do in the last year or so, and we have started launching new products and the like. I think that that is a secular and consistent source of profitability, of sales, of course, but profitability for us, and it's not like a yo-yo. It doesn't go up and down. It's very secular, very structural. Thank you. Please stand by for our next question. Our next question comes from the line of Ashish Sabadra with RBC Capital Markets. Your line is open. Thanks for taking my question. I wanted to drill down further on the analytics front. Particularly, you talked about really strong demand for factor content and factor solutions. If you look at the subscription sales growth there, that was a bit soft. I was just wondering, any particular puts or takes that you would call out? Is it mostly around tougher comps? How do we think about the pipeline and analytics going forward? Thanks. It's all lumpiness. The pipeline, going into the second half of the year is pretty strong in analytics. Therefore, I would really advise you not to focus too much attention in this quarter's softness, so to speak, in the analytics results, because it's very largely lumpiness from one quarter to the next. Thank you. Please stand by for our next question. Our next question comes from the line of Alex Kramm with UBS. Your line is open. Yes. Hey, good morning, everyone. Hopefully this is not a repeat. My phone just dropped. Wanted to come back to the index sales, in particular from hedge funds, because you did point out the strong demand, and I think you just mentioned again just now in terms of the multi-managers. There's obviously been a bunch of articles around how much money some of these firms are minting in terms of index arbitrage strategies, et cetera. Just wondering, do you think there's a large TAM for this? Do you think there's a lot of firms that you're talking to that want to get bigger in that space because clearly there's money to be made, or do you think it's a very concentrated group of folks that you can sell to here, and then hopefully at some point you meet that demand, but maybe it's finite? Alex, I think it's both. Definitely both. As I was saying, probably when your phone dropped. The very strategic sort of breakthrough that we have had in the last kind of 12, 18 months at MSCI is that we used to sell to the traders and hedge funds as a derivative. Almost like we would take the products that we would sell to the active managers and sell it to them. We started recognizing that in addition to the very large AUM levels of active and passive manager AUM linked to our indices, there is a very large ecosystem around that. A trading ecosystem, a liquidity ecosystem around that needs lubrication, that needs products, data products and models and all of that to make it flow better. We're the ones that can provide that because we helped create that AUM levels. I think the large hedge funds, we're definitely getting paid too little for the index arbitrage, right? That's for sure. There are a number of other hedge funds that are obviously wanting to get into that, especially given the recent good news about the profitability there. There are a lot of other venues for growth, in terms of custom index. One of the things we've been highlighting to our hedge fund clients is they are focused very much on the market cap index arbitrage. 30%+ of the AUM of the ETFs linked to MSCI indices are non-market cap. They are factors in ESG and climate, and many of them are more customized. We're creating those data sets for them to do the index arbitrage. Now, remember, the index arbitrage also helps the active managers and passive managers, particularly passive managers, because somebody's got to supply the shares in that one last hour of trading in the quarter when people are rebalancing. The people that do that are the hedge funds and the broker-dealers. There is a big ecosystem that we're just beginning to scratch the surface here. Thank you. Please stand by for our next question. Our next question comes from the line of Owen Lau with Clear Street. Your line is open. Good morning, and thank you for taking my question. Could you please add more color on the drivers of the fee compression for the Asset-Based Fee in the last two quarters? The drop was quite meaningful for two quarters compared to last year. How much of that was because of your tier pricing structure, and how much of it is driven by competitive dynamics? How should we think about this fee rate going forward? Thank you. Sure. Yeah. Owen, first and foremost, it is important to keep in mind that our primary focus is on driving overall run rate growth and revenue growth and maximizing the AUM capture with our ETF partners. You've seen tremendous success on that front with nearly $1 trillion of AUM growth and 30% growth in ETF run rate over the last year, 25% overall growth in Asset-Based Fee run rate. That is our predominant focus. As we commented on with the year-end earnings around the new BlackRock agreement, the extension of the BlackRock agreement, there was a change to the floors on certain products, which caused a drop in the first quarter of basis points. When you look at the second quarter, it was predominantly driven by tremendous asset growth and mix shift. We saw significant growth in AUM skewed towards developed markets outside the U.S. and all country products, where we tend to have a wider range of pricing schedules, particularly relative to emerging market exposure. Correspondingly, you saw far less cash flows in emerging markets in the second quarter relative to what we've seen in the past year recently. There are a number of dynamics at play. In this case, it was heavily mix shift driven. I do want to highlight, and we mentioned this at year-end, we do now have lower floors on certain large products. We've got a somewhat dynamic framework built around the pricing. The overall basis points are going to be dynamic and a function of how much growth we see and where we see that growth. If you do see significant growth in lower fee products, you can see a higher contribution from mix shift, as we saw in the second quarter here. The opposite can be true as well, where when you see a higher contribution from the higher fee products, you can see stability or even increases in the basis points. It really is path dependent here. Overall, our focus is on driving overall run rate growth, and we continue to be very bullish about the opportunity here. Even over the last few weeks in the third quarter, we've continued to see exceptional cash flows into ETFs linked to our indexes, continue to believe there's a long trajectory of upward movement there. Thank you. Our next question comes from the line of Alex Hess with JPMorgan. Your line is open. Yeah. Hi, guys. Could you briefly refresh us, what is your AUM level to end the quarter in non-ETF products? Shifting to the active ETF discussion, I know you guys threw out some points there, but just maybe give us an update on how active ETF penetration is going. Should we expect more attach of subscription products in the back half of the year for nascent active ETFs? Any sort of dynamics about how that should flow through your P&L in the back half of the year and just the momentum in that business would be really helpful. Thank you, guys. Sure. Yeah. Thanks, Alex. The non-ETF passive AUM is around $5 trillion as of June 30th. Continues to be an area where we see tremendous growth across a number of dimensions. The revenue growth can deviate from ETF growth because of a number of factors, including different AUM growth dynamics, less impact from inflows, contract adjustments, true-ups, true-downs. In certain cases, we can have mandates that shift their assets, which can cause impacts to run rate and revenue, which is why you've seen some lower growth in non-ETF passive relative to the ETF growth. We do expect this to continue to be an attractive longer-term growth opportunity for us. On the active ETF front, yeah, this is an exciting area for us. As you know, we've got a notable presence as a benchmark provider to most of the managers that are launching active ETFs. We are increasingly having dialogues with them about how we can help them beyond just being the benchmark and play an integral role in the active portfolio construction through using our content sets, our tools, our analytics. We have started to get traction there. We actually recently launched our active financial product license, which is a specific license to an active ETF manager, where they have the ability to use our content as a key input into the active management of their strategies. We have had some wins on that front in the second quarter, and we are in active dialogues with many organizations to do more for them on that front. This is something that's benefiting us both on the subscription side, and we believe over time should help play a role on the asset-based fees side of the equation as well. Thank you. Our next question comes from the line of Kelsey Zhu with Autonomous. Your line is open. Good morning. Thanks for taking my question. Analytics margin was a bit softer than expected this quarter. Could you maybe talk about the main drivers there and how we should think about the margin trajectory in the second half of the year? Thanks a lot. Yeah. As you know, firstly, I would say we don't focus heavily on the margin in any specific segment, or even in a quarter. Our overall goal is allocating our investment dollars and our resources towards the highest returning areas. I wouldn't read too much into one quarter's margin or expense growth. Just to provide a bit more color on analytics expenses, I would highlight that a year ago in the second quarter, we had a sizable contingent consideration reversal associated with the contingent consideration on the Fabric acquisition. That skewed a little bit the year-over-year expense comparison and ultimately the margin comparison. We did also have, as I mentioned in the prepared remarks, we had elevated comp accruals and performance stock expense impacts. A chunk of those end up hitting analytics. Beyond that, there are factors like FX and capitalization in any given quarter that can cause the margin to swing around. Within analytics, as Henry alluded to, we continue to see very attractive opportunities. We continue to invest behind areas like our factor franchise, areas like our total portfolio solutions, integrating our private asset capabilities. There are parts of analytics where we are much more measured on our investments. Overall, as I said, I wouldn't focus too much on the margin or expense growth in any one quarter. Thank you. Our next question comes from the line of Craig Huber with Huber Research Partners. Your line is open. Great. Thank you. I want to focus on all other private assets segment. What do you guys think needs to change here to sort of get out of this about 8% subscription run rate growth this last quarter? Yes, that's an acceleration from recent quarters. Although it's not as strong as I think that you think the potential is long-term or what it used to grow historically some quarters. What needs to change in the marketplace? Is it more the product? Is it the sales effort and sales team size or something that's a change in the marketplace? Is it an education to the marketplace? What do you think needs to change or to accelerate that even further? Thank you. Craig, in some, a much higher growth rate and all of the above. We're just getting started on the acceleration of private assets. We took control of Burgiss some three-plus years ago. It took us maybe 1.5 year to make sure that we were totally comfortable with the data sets, with the collection processes, with the existing client base and all of that. It took another year or so to change the management team of the business. These kinds of people are not easy to find. Over the last, say, 18 months, we put a new management team, and with let's say half a dozen to a dozen senior leaders there. We started innovating significantly, launching a lot of new products. All of that at the moment is only beginning to show in the growth rate of what we call PCS. On real estate, I think that the approach we have been taking before, which was not the right one, was we had a management team there, and it was basically focused on all places, all things, and all that. We brought in a great new leader to that space about maybe three, four months ago. We're beginning to show the results of that to revamp the strategy. Real estate is a huge asset class, and there are a lot of sub-segments of real estate, some of which are growing pretty fast, like private debt into real estate and infrastructure. Some of which are challenged, like center city office space. It's a question of picking your spots and creating new products for that. Overall, we feel that new products, new management team, expansion into new client segment. For example, in PCS, in the old Burgiss business, we were very much focused on the institutional LP. You saw our announcement with UBS on focusing on the wealth LP. One of the biggest contributions we can make is creating transparency and valuations in the private asset funds for the wealth segment, the wealth channel. That will significantly increase the allocations in wealth, and we will do that starting with our lead client, UBS, and talking and subscribing all the big wealth managers in the world. That's a significant opportunity. We have also taken significant steps of creating products and penetrating the GPs, in which our run rate for private assets and GPs is extremely small compared to the potential that exists there, which is very, very large. Thank you. Please stand by for our next question. Our next question comes from the line of Faiza Alwy with Deutsche Bank. Your line is open. Yes. Hi, thank you. I wanted to ask about new product traction. I know historically you've given us some metrics around the percentage contribution from new products, and I was hoping if we could get some metrics like that. I guess more broadly, I'm trying to understand the new product traction from maybe your non-hedge fund trading ecosystem. Just trying to disaggregate how much of your growth is really being driven by, again, that hedge fund ecosystem versus incremental new products. Let me answer the second part, and then Andy will give you the first part, which is the more quantitative answer. As you know, every quarter we try to focus attention on a specific area so that we don't diffuse the whole effort, right? This quarter, obviously, we've been focused on traders and hedge funds, especially index analytics products, in order for you to see the potential of that. There is a very large potential on index across the whole spectrum. We're ramping up significantly the custom index factory for institutional investors that want customized indexes for portfolios and the like. Obviously we're customizing this for ETFs and all of that. That's an area that we are only beginning to see the fruits of the expansion in custom indexes. On analytics, we've talked a lot about AI in analytics, which has been very successful. We are pushing pretty hard the total portfolio solutions capabilities with the TPA approach, the total portfolio approach the Canadians have advocated. A lot of pension funds are coming to us and discussing what are the ways that our infrastructure, our models, and our data and our technology can help them achieve that TPA approach to investing for pension funds and other wealth funds. We're only beginning to see traction there. It takes time, as I said. On private capital solutions and real estate solutions, we launched a lot of new products that have not yet started contributing because it's early. I mean, the launching of these new products have been in the last six to nine months. We're beginning to obviously discuss it with our clients, do testing, do a lot of trials, and it'll help the user convince their management that they should spend a lot more on this, et cetera. It's very early days on that for both what we call PCS and what we call real estate, or real assets. Andy? Faiza, just to dimension it, when we look at the contribution to new sales from new products in the first half of this year, it's up around 40% compared to a year ago. We have seen a bigger and bigger contribution from new products. As Henry alluded to, and you're asking about, the area we've seen the most impact is with the traders and hedge funds scenario, where there is generally a shorter sales cycle and path to monetization. We are seeing traction across a broader range of index areas, particularly custom indexes, as well as on the private asset front, we are seeing some good traction. There are a whole host of really impactful new solutions that we have just rolled out recently and are coming out with in the near future, across both private assets and index, as well as within analytics. Things like we've talked about before, Basket Builder, Signal Library, Advanced Factor Insights. These are areas where it's very fertile new product introduction. They do oftentimes have a longer sales cycle, as Henry said earlier, but these are areas where we're very encouraged and bullish about the opportunity set on the impact of new products moving forward here. Thank you. Please stand by for our next question. Our next question comes from the line of Scott Wurtzel with Wolfe Research. Your line is open. Hi. Good morning, guys. Thank you for taking my question. Just wanted to ask a more high-level question. We have seen this elevated level of subscription run rate growth and traction from the hedge funds and the traders, and just wondering if you can maybe share your thoughts on what inning you believe we are in, sort of the kind of demand and product uptake cycle with these two end markets and if and how long we could potentially see this elevated level of growth for. Thanks. In a nine-inning baseball game, the first two, three innings would be my guess. I can translate that into 90 minutes of soccer, but I won't do that. You can do the math, right? On that segment, we're very bullish, but it's not the only segment we're very bullish. We're very bullish on wealth managers as it relates to private assets. As I said, we're only getting started with the That's the UBS announcement, of course, which is not in the numbers, by the way. The announcement is just the agreement, the sort of term sheet agreement to proceed, which we thought it was important to publicize so that we can get traction with other wealth managers in the world. We feel very good about that. We feel very good about the custom index ecosystem. We feel very good about analytics, of accelerating the growth rate of analytics gradually. Nothing comes suddenly. We feel very good about physical risk in climate. What ESG and transition risk and then physical risk did to us was a major sort of strategic breakthrough. What all these things are non-traditional sources of risk and return. We started focusing on that because they have significant effects on portfolios, tariffs, energy supplies, energy dependence, energy transition, obviously AI impact on companies, other supply chain impact and the like. Our client base is clamoring for data sets and models that help them understand. For example, with the closure of the Strait of Hormuz, clients have come to us and say, "Can you get us data sets to understand the electric utilities in East Asia that depend on gas coming from Qatar or oil coming from Kuwait?" Therefore try to assess the risk and the opportunity associated with the shares of those companies or the debt of those companies. Of course, one of the highest products in demand right now is can you give us a ranking of companies that are going to have a good positive impact from AI and the companies that are going to have a negative impact from AI? Well, the first thing that I told them is MSCI is in the category of very positive impact from AI, but they're looking for the broader set across all securities. We're very busy at work, extremely busy trying to do that. Look, I think that one other thing that I will say is that we try not to have companies speak, or in my case, CEO speak. We try to tell you like it is, like we see. I stood here almost a year ago exactly and telling you things were not looking that great because we hadn't launched a lot of new products. The active management segment was a little more challenged, and we were not in a great trajectory in sustainability. We have taken a lot of big steps. Well, those big steps began to show the way in the third quarter, in the fourth quarter, and in the first quarter of this year. I'm therefore telling you the opposite right now. The opposite is that we see a big trajectory here. I know and respect people that may have a different view and they want to sell their shares, and that's capitalism and free markets and listed company operandi. Given our conviction in our franchise and the growth prospects that we see, we're prepared to put a bid on the other side of that trade. Thank you. Please stand by for our next question. Our next question comes from the line of Surinder Thind with Jefferies. Your line is open. Thank you. For the sustainability segment, regarding the challenges that you're seeing, is this something that we can get through mostly this year, or is this something that you're going to have to digest maybe over a longer period of time? Maybe related to that, can Europe and maybe the rest of the world just continue to offset here, or how should we think about the longer-term dynamics? Well, I used to think that it was going to be like a couple-year process, overreaction. It's not panning out to be that. I think we're in a protracted cyclical downturn on the use of sustainability. I want to emphasize cyclical, not secular. I think sooner or later, there will be more demand for these factors that create opportunities and risk in portfolios. It's only logical. Let us think about this. Who's going to say that in the future, governance is going to be less important? Who is going to think that in the future, environmental matters are going to be less important? Who is going to think that in the future, social issues, when most developed market economies in the world, their local white population is declining, and they need to bring peoples of color and peoples of other religions in order to create economic growth. The adaptability of companies to a social system of multicultural society needs to be taken into account in the return of security. I think we're seeing an overreaction, which is prolonged and protracted. I don't know how long it will take, but it will take long. Right now for us, it's a consolidation play. Our clients are consolidating to us because we're the committed player. We're the one putting some investment. We're the one servicing them. Our market share is increasing in this space, in some cases rapidly. We're going to be the last big entity standing when this all settle in this space, and benefit from the upswing when it comes. The other part of this, as I said before, is sustainability of the old ESG terminology opened our eyes to climate. Initially transition, then physical, and it opened our eyes to this whole field of emerging risk. Most of what MSCI has done has helped clients understand traditional sources of risk and return. Market risk, credit risk, in some cases, operational risk, whether it's factor risk or stress testing risk or all of that. What we have began to realize is that the world's changing fast, and therefore, there are non-traditional and emerging sources of risk and return that need to be captured into portfolios, and we are the player to help them do that. Thank you. Please stand by for our next question. Our next question comes from the line of Curtis Nagle with Bank of America. Your line is open. Great. Thanks so much. Maybe just a quick one on the cash flow. Even expenses up a little bit, but you did raise the free cash flow guide. Just wondering, I guess, what the offsetting stronger conversion is related to. Yeah. It's driven by a pickup in collections. We've seen really good traction across the business, as you know. Some good top-line momentum, and we've seen strong collection activity that is somewhat offset by higher cash taxes, some higher comp-related expenses, as we've talked about with the expense guide. Overall, we're seeing strong business momentum, and that's trickling through to free cash flow. As you know, free cash flow can be a bit lumpy because of items like tax, timing of expenses, and collections. Overall, we see good momentum and continue to be confident about driving attractive trajectory of both free cash flow growth and free cash flow conversion, and free cash flow per share are all things that we're confident in. Thank you. Please stand by for our next question. Our next question comes from the line of Jason Haas with Wells Fargo. Your line is open. Hey, this is Keegan on for Jason. Thanks for taking my question. I've got another one on the traction you're seeing with hedge funds. Has there been any step change in the underlying demand, or would you categorize all this acceleration as coming from your new product developments? What I'm really trying to understand is you mentioned that your product development in 2026 has already doubled that of 2024, but you're only starting to see the benefits. Should we expect this to continue to accelerate as you continue to benefit from the accelerating new products on a lag? The impact from new products we expect to continue to grow, as Henry alluded to earlier, specifically within the hedge fund and trader community. That's the area where we've actually seen probably the most notable impact from new products so far. Those are areas where there is oftentimes a quicker path to monetization and shorter sales cycles. As Henry alluded to earlier, we're in early innings there. These organizations are both growing. The areas where they are growing and accelerating, we can help them, which is index rebalance strategies, more systematic strategies, things like basket trades, understanding factors and signals in more detail, coming up with custom factors. These are all areas where we're just releasing new capabilities and plan to release new capabilities in coming quarters. As Henry alluded to, we've got a long way to go. Hedge funds and traders is probably the area where we've already seen the most notable impact from new products. I think the comments generally were across many other areas as well, where there's longer sales cycles, and many of the products that we've released, we should be monetizing going forward here, but haven't seen as big of an impact to this point. Thank you. Please stand by for our next question. Our next question comes from the line of George Tong with Goldman Sachs. Your line is open. Hi, thanks. Good morning. You mentioned asset managers grew 6% in subscription run rate this quarter. Can you elaborate on the demand environment among active managers and whether you're seeing any catalysts that could drive an acceleration in growth? Yes, George. I think there is not a huge amount that has changed in active managers. Obviously, their AUM levels have risen, but the flows are still muted. With indices like ours, of course, right, performing well because of concentration in countries like the U.S. or concentrations in technology, like I would say technology in emerging markets and things like that, they will tend to underperform and have more pressure. It's stable. It's a stable kind of client base, but it's not a huge amount of change. I think the approach that we have taken is that this client segment, which we know very well, needs our help in transforming themselves. That is where we're extremely focused on. Needs our help in active ETFs. 80%+ of the active ETFs are actually quantitative. Not quantitative, I would say systematic type of ETF as opposed to stock picking ETF. We have a lot to add there for them, and help them with that. A lot of them are gingerly going into parts of the private asset space, like growth equity in privates or private credit and the like, and we're helping them there as well. A lot of them are trying to penetrate the wealth channel in addition to the institutional channel, so we have a lot of sales enablement tools there, et cetera. I think you're going to see a gradual increase in the growth rate on this client segment because of the new strategies we're putting into place. Thank you. Please stand by for our next question. Our next question comes from the line of David Motemaden with Evercore ISI. Your line is open. Hey, thanks for squeezing me in here. Last quarter you guys were talking about some of your clients wanting to license more content through AI-enabled delivery. I'm wondering, three months later, how those conversations are progressing. Are you seeing any signs of monetization of that content licensing, and is any of that showing up here in the run rate yet, or is that coming here in the next few quarters, or how do you think about the progression of that? Thanks. Yeah. It is showing up. It's little today. We do expect this to be a nice tailwind for us, we actually very recently signed our first training license. This is actually giving a client the right to train a model, using certain content of ours. We think that's something, we see the demand across a wider range of clients that want to do the same thing, and that can be very attractive for us. Even beyond the training needs, we know, as Henry alluded to, our clients are becoming more quantitative. They are leaning on AI-driven tools and want broader access to more content sets across broader parts of their organizations. That piece has been fueling some of the growth across numerous client segments, and fueling some of the demand for more content. In both cases, we're early in that journey. Those AI-driven investment processes are at a formative stage, and we can play a critical role in helping our clients develop those and give them the key inputs they need to be more risk-aware, systematic, thoughtful, and clear about what they're doing to create better outcomes. It's an area we are excited about, but it's been a relatively small contributor to this point. Thank you. Please stand by for our next question. We have a follow-up question from the line of Alex Hess with JPMorgan. Your line is open. Hey, guys. Thanks for letting me hop back into the queue. Just real quick, can you give any color on pricing dynamics year to date and maybe what you expect prospectively, just to round out the picture on net new? Thank you so much. Yep. Yeah, sure, Alex. I would say overall, the contribution from price increases to new recurring sales has been relatively stable for us. It fluctuates a bit up and down in different parts of the business, different client segments, but the overall contribution's been pretty consistent with what we've seen in recent quarters. I'd say the puts and takes relate to things like client health, usage, innovations. Importantly, we are taking a long-term view with our clients. In many areas where we could increase price more, we want to be a constructive partner to our clients and position ourselves to do a lot more with them going forward here. The enhancements, innovations that we're making are helping add additional value to our clients, as well as supporting price increase here. We're confident about the trajectory of price increases. We think it's going to be a strategic and sustainable part of the growth algorithm for us. Overall, it's been pretty stable, and we're being pretty measured around it. Although in some areas where we are dramatically enhancing the value we're providing, we can use price as a mechanism to capture that value. Thank you. Ladies and gentlemen, I'm showing no further questions in the queue. I would now like to turn the call back over to Henry Fernandez for closing remarks. Thank you, everyone, for joining us. As we've described, our footprint is growing across client segments in the investment ecosystem as we accelerate innovation to position us for higher levels of growth in the future. We have a tremendous franchise and are only in the early stages of unlocking the full potential of that franchise, and especially through AI. We, of course, remain intensely focused on delivering compounding growth and long-term value creation for our shareholders. We are not a company that makes or break every quarter. We're a company that we like to focus on the addition of every single quarter over the year and over the years in order to create compounding growth year in, year out. In the short term, our sales pipeline seems strong in terms of the number of opportunities, including some large potential deals that could benefit us in the second half of the year. We are very excited about all the opportunities in front of us, we're laser-focused on capitalizing them. Again, thank you for joining us, obviously, please reach out to our team in case you have other questions or comments. We look forward to keeping you posted on the tremendous progress we're making on the transformation of MSCI into a higher growth company. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.