ESG and Climate Outlook
Q: When will cyclical ESG and Climate headwinds moderate?
A: We believe that although ESG and Climate are experiencing cyclical downturns, the long-term secular trends remain strong. The world is currently focused on short-term issues like inflation and geopolitics, but we expect attention to return to ESG and Climate investing, leading to recovery in these areas over time. We are not changing our philosophy and are investing for the long term, confident that these areas will provide meaningful revenue growth. - -

Active Asset Managers Recovery
Q: When will active asset managers' budgets improve?
A: Our largest client segment, active asset managers, has faced challenges but we are beginning to see early signs of improvement. Outflows have stabilized and AUMs have increased year-over-year. While clients aren't yet in an expansionary mode, we anticipate more constructive budget setting for 2025, which should translate into additional demand for our products and services. - - - -

Private Assets Expansion
Q: What's the strategy for private assets expansion?
A: We are excited about expanding in private assets by collecting deeper and broader data, enriched through AI. We expect significant expansion in the coming year, serving both LPs and GPs. We're enhancing benchmarking and indexes in private markets beyond real estate, and with new leadership from Luke, we're poised to drive this strategy further. - -

Fixed Income Analytics Growth
Q: How much growth potential in fixed income analytics?
A: Fixed income and multi-asset class analytics have become important components of our growth story. We've significantly enhanced our capabilities over the past 3-5 years, leading to success we wouldn't have had before. We plan to continue enhancing areas like fixed income performance attribution, expecting this trend to continue as we deliver high-quality analytics to clients. -

Client Budgets and Cancellations
Q: Are client budgets improving despite elevated cancellations?
A: We're beginning to see gradual signs of improvement in client dialogues, which we hope will translate into a stronger sales pipeline. However, we expect elevated cancellation activity and longer sales cycles to continue in the near term, particularly as we work through impacts from client events and industry pressures. We're cautiously optimistic about future improvements. - - -

Custom Index Solutions Opportunity
Q: How significant is the custom index opportunity?
A: The custom and specialized index solutions are a very large opportunity for us, now accounting for close to 10% of index segment run rate revenue. We're integrating the Foxberry acquisition to enhance our capabilities, offering greater speed and flexibility. This growth does not cannibalize other parts of our business and is critical to our growth story across client segments. -

Competitive Displacement Sustainability
Q: Is competitive displacement in analytics sustainable?
A: We are confident in our ability to displace competitors, particularly in ESG and Climate, evidenced by 22% run rate growth in EMEA. While competition is always evolving, we feel solid about our position and execution across our product lines, including index and analytics. -

RCA Business Performance
Q: How is the RCA business performing?
A: The RCA business has faced challenges due to a significant drop in transaction volumes, which are major revenue drivers. However, we're starting to see transaction volumes pick up, with evidence of compressed spreads between buyers and sellers. We believe we could be turning the corner in this area in the coming year. -

Expense Guidance Amid Higher AUM
Q: Why not raise expense guidance despite higher AUM?
A: While higher AUM levels could push us towards the higher end of our expense guidance range, we're balancing profitability growth with long-term investments. We're investing in key growth areas like rules-based index portfolios, private markets, and AI capabilities. Expense dynamics can be nuanced, with timing lags, so we continually calibrate our investments. -

Cautious Outlook vs. Positive Macro
Q: Why remain cautious despite positive macro indicators?
A: Although some areas of our business are performing strongly, we're emphasizing transparency about softer areas. Over 50% of our subscription run rate is tied to active asset managers who haven't fully recovered yet. We're optimistic that improvements in market conditions will lead to recovery in these segments, but it hasn't happened yet. We're focused on a balanced approach and remain cautiously optimistic. -