Alexander Hess

Alexander Hess inquired about the trajectory of NIQ's CPG clients' wallets, including R&D and marketing spend, and how NIQ is increasing its share of wallet amidst clients paring back expectations.

Answer

CEO Jim Peck emphasized NIQ's mission-critical services, adapting to client needs in both growth and challenging periods. COO Tracey Massey detailed how NIQ's BASES AI solutions help winning clients innovate faster and optimize spend, noting that 8 of 14 top customers are achieving mid-to-high single-digit growth.

Alexander Hess asked about potential upside surprises in mortgage, such as better volume or market share retention, given FICO's conservative guidance, especially since mortgage was not explicitly mentioned in the prepared remarks about stable volumes.

Answer

CEO Will Lansing expressed little concern about market share, stating that mortgage volumes primarily vary with interest rates. He reiterated FICO's conservative approach to forecasting volume increases based on rate expectations, noting that significant volume increases from rate declines are not built into the guidance. CFO Steve Weber added that FICO builds a model of likely outcomes, then applies a haircut to ensure they can exceed or beat guidance without dramatic improvements.

Alexander Hess followed up on guidance, noting FICO's expectation of no market share loss or significant volume changes in auto, card, and personal loan originations, and asked what could drive upside surprises in mortgage, such as better volume or market share retention.

Answer

CEO Will Lansing stated he is not worried about market share in mortgage, as volumes primarily depend on interest rates. He reiterated FICO's conservative approach to forecasting volume increases based on rate expectations, noting that significant volume increases from rate declines are not built into the guidance, consistent with past years. CFO Steve Weber added that FICO builds a model, then applies a "haircut" to exceed expectations, and this year's haircut is larger due to uncertainty.

Alexander Hess inquired about the growth of non-ETF and fixed income businesses, specifically asking about any prior year hurdles affecting non-ETF revenue growth, fixed income AUM, and reasons for a quarterly dip in its run rate.

Answer

Andy Wiechmann (CFO, MSCI) explained that non-ETF passive revenue lumpiness can be due to true-ups/downs and modest fee adjustments, emphasizing its continued importance for growth, especially with custom index capabilities. For fixed income, AUM in ETFs linked to fixed income indexes is around $90 billion, with a large majority being sustainability and climate-related, contributing significantly to overall growth. Henry Fernandez (Chairman and CEO, MSCI) added that climate IP monetization is strong in fixed income indices, particularly in Europe.

Alexander Hess asked for clarification on the performance of MSCI's non-ETF and fixed income businesses, specifically addressing the disparity in growth compared to ETF revenues, potential prior-year hurdles, the AUM for fixed income in Q3, and any reasons for a quarterly dip in its run rate.

Answer

Andy Wiechmann, Chief Financial Officer, MSCI, explained that non-ETF passive growth can be lumpy due to true-ups/downs and modest fee adjustments, advising against over-interpreting short-term revenue growth. He confirmed fixed income ETF AUM at around $90 billion, noting it's a growing area. Henry Fernandez, Chairman and CEO, MSCI, added that a significant part of sustainability and climate monetization occurs in fixed income indices, especially in Europe, through climate-risk-adjusted indices. Andy Wiechmann further clarified that the majority of the $90 billion fixed income ETF AUM is sustainability and climate-related, along with substantial equity ETF and non-ETF climate AUM.

In a follow-up question, Alexander Hess asked for an assessment of the current M&A opportunity and whether a pickup in activity is expected.

Answer

CEO Henry Fernandez stated that MSCI's primary focus remains on organic growth, where it has enormous opportunities. While the company evaluates potential deals, he stressed that they maintain a high bar, requiring returns comparable to organic investments. He characterized the M&A strategy as focused on opportunistic bolt-ons in strategic areas, rather than large-scale acquisitions.