MSCI (NYSE:MSCI) reported strong second-quarter 2026 results, with management highlighting accelerating growth in its Index and Private Assets businesses, record asset-based fee run rate and a growing pipeline tied to new products and artificial intelligence initiatives.
Chairman and CEO Henry Fernandez said MSCI delivered organic revenue growth of more than 12%, adjusted earnings per share growth of nearly 19% and adjusted EBITDA growth of 14% in the quarter. He said the company also repurchased $147 million of MSCI shares during the quarter and through the day before the call, at an average price of about $558 per share.
Index Business Drives Growth
MSCI’s total run rate grew 12% in the quarter, while asset-based fee run rate reached $948 million, up 25%, according to Fernandez. He said the result was supported by record assets under management in both exchange-traded fund and non-ETF products linked to MSCI indexes.
ETF products linked to MSCI indexes saw nearly $40 billion of inflows during the quarter, and Fernandez said total ETF AUM tied to MSCI indexes has increased by more than $1 trillion over the past 15 months.
CFO Andy Wiechmann said the asset-based fee run rate reached nearly $950 million, with AUM in ETFs linked to MSCI indexes rising to more than $2.8 trillion. He said growth was concentrated in products tied to developed markets outside the U.S. and all-country indexes, which can carry lower fees than some other products.
MSCI reported 17% total run rate growth in Index, subscription run rate growth of more than 11%, recurring net new sales growth of 41% and a retention rate above 97%. Wiechmann said Index recurring net new subscription sales totaled more than $28 million in the quarter.
Management repeatedly pointed to hedge funds and traders as a key growth area. Fernandez said MSCI posted its best quarter on record among hedge funds, with 19% subscription run rate growth and nearly $15 million in recurring net new sales. He said that included three separate seven-figure deals in index analytics.
“MSCI’s indices are becoming increasingly embedded in the core trading and liquidity infrastructure used by active and passive investors alike,” Fernandez said.
Private Assets Momentum Builds
Private Assets was another major theme on the call. Fernandez said MSCI achieved 57% recurring net new sales growth in Private Assets, helped by pension funds and sovereign wealth funds adopting total portfolio solutions.
Wiechmann said subscription run rate growth in private capital solutions accelerated to more than 16%, with traction in offerings including transparency tools, Private Capital Intel and total plan products. He also cited growing demand for MSCI’s data platform and asset- and deal-level metrics.
Fernandez discussed MSCI’s recently announced strategic partnership with UBS, which he said is intended to expand the reach of MSCI’s private asset solutions into wealth channels. The partnership is designed to help wealth managers connect high-net-worth clients with general partner opportunities while improving transparency across the investment ecosystem, he said.
During the Q&A session, Fernandez said MSCI is “just getting started” in Private Assets. He pointed to work following the Burgiss acquisition, changes in management, new product launches and opportunities to expand beyond institutional limited partners into wealth managers and general partners.
AI and Product Innovation Remain Central
Fernandez said AI is helping MSCI move faster in product development, improve existing solutions and strengthen its role in the global investment process. He said MSCI has introduced more than 80 new products over the last two quarters, compared with more than 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,” Fernandez said, noting that institutional sales processes require client discussions, use-case reviews and approval cycles.
Management said AI-related initiatives are showing early signs of adoption. Fernandez said more than 1,000 clients are using Index AI Insights, which launched in February, and that hundreds of companies and end users are accessing Total Plan Manager and Private Capital Intel through their preferred AI models.
Wiechmann said MSCI recently signed its first training license, allowing a client to train a model using certain MSCI content. He described AI-driven content licensing as a small contributor so far but a potential tailwind.
MSCI also announced leadership and governance steps tied to technology and AI. Fernandez said the company hired Kashi Kancharla from Intuit as Chief Technology Officer and Head of Product Engineering, and that Kancharla will lead a new MSCI office in Silicon Valley focused on AI, product engineering and technology. MSCI also established a Technology and Data Committee of its board.
Sustainability Remains Challenged, Climate Demand Grows
Management said sustainability remains under pressure, particularly in the Americas, where clients are reducing spending. Wiechmann said MSCI generated nearly $6 million of new recurring sales in sustainability and more than $3 million in climate during the quarter, but cancellations were a significant headwind.
Wiechmann said MSCI expects recurring net new sales to be roughly zero to slightly negative for the combined Sustainability and Climate reporting segment over the next two quarters.
Fernandez said he views the downturn in sustainability demand as cyclical rather than secular, but longer-lasting than he previously expected. He said MSCI is gaining share as clients consolidate providers and remains committed to the category.
At the same time, management said demand for climate and physical risk tools is increasing. Wiechmann said climate run rate growth across MSCI product lines was nearly 12%, and he cited a large physical risk deal with a European bank. MSCI’s announced acquisition of First Street, a provider of physics-based climate risk data and analytics, is expected to add about $10 million of subscription run rate to the Sustainability and Climate reporting segment after closing in the third quarter, Wiechmann said.
Guidance Reflects Investment and Acquisitions
Wiechmann said MSCI raised its expense guidance range due to several factors, including recent acquisitions, with First Street expected to have the largest impact, as well as performance stock-based compensation and bonus accruals tied to increased AUM in products linked to MSCI indexes.
He said higher depreciation and amortization guidance is tied to the First Street acquisition, while increased interest expense reflects higher revolver balances related to First Street and recent share repurchases.
Management also said MSCI raised its free cash flow guidance, driven by improved collections, although higher cash taxes and compensation-related expenses were offsets.
Looking ahead, Fernandez said MSCI remains confident in its pipeline and is investing voluntarily because management is more positive on the business outlook than in the past. He said the company sees opportunities across hedge funds and traders, custom indexes, wealth managers, private assets, analytics and climate-related physical risk.
“We are not a company that makes or breaks every quarter,” Fernandez said in closing remarks. “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.”
About MSCI (NYSE:MSCI)
MSCI Inc is a global provider of investment decision support tools and services for the financial industry. The company is best known for its family of market indexes, which are widely used as benchmarks by asset managers and as the basis for exchange-traded funds and other passive products. In addition to index construction and licensing, MSCI offers portfolio analytics, risk models, factor and performance attribution tools, and a suite of data and technology solutions designed to support portfolio management and trading.
Beyond traditional indexing and risk analytics, MSCI has expanded into environmental, social and governance (ESG) research and ratings, offering data, scores and screening tools that help investors integrate sustainability considerations into investment processes.
