Alexander EM Hess

Alexander Hess of J.P. Morgan asked for details on the magnitude of in-year sales and service investments impacting Q1 margins, inquiring if this pace is expected to continue or moderate throughout the year. He also sought an update on the ERP implementation, including its current status, remaining tasks, a firmer timeline for completion in 2027, and any other important considerations.

Answer

Steven Sintros, President and CEO, confirmed that the Q1 margin impact from sales and service investments was likely the most pronounced, as these investments materialized in the back half of the previous year and will moderate throughout the current year. Shane O’Connor, EVP and CFO, and Steven Sintros explained that the ERP implementation involves core financial foundation releases this year, followed by supply chain-centric and procurement enhancements in 2027. The timeline largely remains through 2027, with the last release benefiting the latter half of 2027 and into 2028, enabling capabilities like global inventory sharing.

Alexander Hess, on for Andrew Steinerman at JPMorgan, asked about Iron Mountain's strategic positioning in the data center ecosystem and its role in the AI rollout, considering market funding and competitor dynamics.

Answer

President & CEO William Meaney clarified that Iron Mountain's focus is on AI inference and cloud infrastructure, not large-scale AI training campuses. He stressed that their key advantage is having 500 MW of power available over the next few years in prime, power-constrained markets like Northern Virginia, Richmond, and Amsterdam, which is a significant differentiator.

Alexander Hess of J.P. Morgan sought specific drivers for the significant implied Q4 organic revenue acceleration and requested color on July's performance and the Q4 margin outlook.

Answer

CFO Jim Tarangelo detailed the build-up to the Q4 revenue forecast, citing the lapping of facility exits, major new account startups, elevated retention, and strong sports business trends. CEO John Zillmer confirmed a strong start in July but declined to provide specific Q4 margin guidance, reiterating confidence in the full-year outlook.

Alexander Hess of J.P. Morgan asked why a historical loan-level dataset for FICO 10T is not yet available to banks and inquired about overall score volume trends and adoption in recent years.

Answer

CEO Will Lansing stated that FICO is currently working with the FHFA to get the FICO 10T data out. He also explained that score usage is expanding beyond originations into areas like account management and new use cases, such as those using alternative data, are driving wider adoption.

In a follow-up, Alexander Hess asked about the long-term vision for the MSCI World index family and whether it could build a deep ecosystem similar to its competitor's U.S. benchmark.

Answer

Chairman & CEO Henry Fernandez affirmed that this is precisely the vision. He stated that broad global benchmarks like MSCI World and MSCI ACWI are increasingly becoming the core foundational portfolios for investors worldwide. He believes that as capital markets continue to globalize, the central role of these benchmarks will only grow larger over time.

Alexander Hess asked for commentary on the healthy growth in the non-ETF part of the business and what is driving the trend.

Answer

Chief Financial Officer Andrew Wiechmann noted that while there can be some lumpiness, underlying non-ETF average AUM grew around 20% year-over-year. Key drivers include new fund creation in areas like climate and custom mandates, high growth in direct indexing (though still small), and continued demand for institutional passive mandates, particularly against custom indexes where MSCI is differentiated. End-of-period AUM was approximately $3.9 trillion.

Alexander Hess pointed to the 8% organic subscription run rate growth, noting it is below MSCI's historical levels, and asked when an inflection or reacceleration might occur.

Answer

CFO Andrew Wiechmann acknowledged the dynamic environment and stated that some short-term noise from lingering pressures, like asset management outflows, will continue. However, he expressed confidence that momentum in the Index segment and traction in key growth areas such as wealth management, Private Capital Solutions, and Fixed Income Analytics will fuel higher growth in the future.

Alexander Hess asked how MSCI internally determines whether the prolonged sales cycle in the asset manager channel is due to internal execution or external market factors, and what external metrics analysts should monitor.

Answer

President and COO Baer Pettit explained that MSCI evaluates this by analyzing competitive performance and the nature of cancellations (e.g., client M&A versus competitive losses). He stated that if competitors are performing significantly worse, it points to an industry-wide issue. He also noted that MSCI provides granular data by client segment to help the investment community track these external trends.

Alexander EM Hess of JPMorgan Chase & Co. inquired about the assumptions for acquisitions within Moody's guidance, specifically asking if CAPE Analytics was factored into the previous outlook and its expected contribution for the year.

Answer

CFO Noemie Heuland clarified that there were no changes to the M&A assumptions in the Moody's Analytics revenue guidance. She confirmed that the impact of the CAPE Analytics acquisition was already included in the prior guidance and remains factored into the current outlook.

Alexander Hess, on for Andrew Steinerman, sought to confirm the math on the sequential improvement in core land decline, asked if any core performance was tougher this quarter, and questioned changes to the snow guidance.

Answer

CEO Dale Asplund confirmed the directional improvement in the core land business was in line with their plan to return to growth in H2. He noted that after adjusting for non-core items, the overall business grew in Q1. CFO Brett Urban clarified that the snow guidance range itself did not change; the company simply provided more specific detail on the year-over-year impact from the BES business unwind, which was already factored into the original guidance.

Alexander Hess, on for Andrew Steinerman, asked about the underlying performance of the Finance Solutions business and requested clarification on the full-year revenue guidance and the accounts receivable facility draw.

Answer

CFO Bryan Hipsher explained that the core Finance Solutions business sees mid-single-digit growth internationally and acts as a low-single-digit growth foundation in North America, enabling double-digit growth in adjacent areas like third-party risk. He clarified that while full-year revenue is guided to the low end of the range, Q4's exit rate may not be above the range as previously suggested due to Q3's slight outperformance. The company paid back $9.6 million on its AR securitization facility in the quarter.