MSCI Inc.

1) Strong Financial Performance and Growth Drivers - MSCI reported organic revenue growth of over 12%, adjusted EPS growth of nearly 19%, and adjusted EBITDA growth of 14% in Q2 2026. - The asset-based fee (ABF) run rate reached $948 million, growing 25% YoY, driven by record AUM levels in both ETF and non-ETF products linked to MSCI indices. - Nearly $40 billion in inflows into ETFs linked to MSCI indices contributed to the best-ever asset-based fee run rate. - Subscription run rate growth was 12%, with organic subscription run rate growth exceeding 8% and a retention rate of over 95%.

2) Segment Performance and Client Wins - Among hedge funds, subscription run rate growth was 19%, with nearly $15 million in recurring net new sales, marking a 75% increase YoY. - Asset owners saw 9% subscription run rate growth, with $8.4 million in recurring net new sales, up 43%. - MSCI secured significant deals, including a seven-figure agreement with a major multi-strategy hedge fund and a large public pension fund for private capital indices. - The index segment achieved 41% growth in recurring net new sales, while private assets saw 57% growth.

3) Challenges in Sustainability and Market Dynamics - The sustainability segment faces ongoing challenges, with clients rightsizing their sustainability spend, leading to a forecast of zero to slightly negative recurring net new sales in the next two quarters. - Despite these challenges, MSCI remains a leading provider in the sustainability space, with $1.3 trillion in index fund assets benchmarked to MSCI sustainability indices. - The company is focused on capturing emerging risks and opportunities, particularly in climate and physical risk solutions.

4) Innovation and Strategic Initiatives - MSCI is leveraging AI to enhance product offerings and improve client experiences, with over 1,000 clients using the newly launched Index AI Insights. - The acquisition of First Street, a provider of climate risk data, is expected to add approximately $10 million to the subscription run rate in the sustainability and climate reporting segment. - The company is actively expanding its capabilities through strategic acquisitions and partnerships, such as the recent collaboration with UBS to enhance private asset solutions.

5) Guidance and Future Outlook - MSCI's leadership expressed confidence in the strong sales pipeline and growth prospects, particularly in the index and private assets segments. - The company anticipates variability in quarterly results due to the introduction of high-value products and a focus on larger hedge funds. - There is optimism regarding the potential for sustained growth in subscription sales and asset-based fees, driven by ongoing product innovation and market demand.

Bottom line: MSCI's strong Q2 2026 results reflect robust growth across key segments, driven by innovative product offerings and strategic client wins, despite challenges in the sustainability space. The company's focus on AI and emerging risks positions it well for future growth, making it an attractive prospect for shareholders.