MSCI Inc. (MSCI) Earnings Call Transcript & Summary

Okay. Welcome to the next session of the Redburn Atlantic CEO Conference. My name is Russell Quelch, I'm the data analytics analyst here at Redburn Atlantic. And it's my pleasure to host Baer Pettit, President and COO of MSCI. Maybe I'll go over to you for some introductory remarks, and we'll jump straight into a Q&A, if that's okay.

Sure. So look, I'm actually very happy just to launch straight into it. Thank you, all attending, for your interest in MSCI. A lot of interesting things going on right now at the company. In maybe a broader -- sometimes a slightly more challenging environment for our industry occasionally, but that's also a mixed scene. So I'm happy to go ahead and go with your question, Russell. I would perhaps just make one slightly broader observation from my vantage point because we're right now in the middle of finishing our operating plan or budget for next year. And I think a thing that's always been very important for me, both as an agent of the shareholders and as a shareholder myself, is balancing the longer-term growth opportunities for the company with the fact that we are, as you're all aware, a U.S. public company with quarterly earnings. And I think the way I think -- really, the central question of my personal responsibility is how I navigate between those two things, which is creating strong medium- to longer-term growth opportunities for the firm, and nonetheless trying to deliver attractive financial results quarter-on-quarter. So that's kind of the thing that I see as being central to my own role.

What I think we'll do there is maybe run this as a Q&A then. There is the option for audience questions, so please submit them via the webcast function, and I'll submit them to Baer, we'll weave it into the conversation.

Then maybe let's start obvious [ place would be ] on the Index business. MSCI has been at the forefront of innovation in the benchmark index space for a long time now. Maybe just to kick off. I mean, what are some of the latest trends that MSCI is hearing? What are you seeing from -- seeing and hearing from clients? Where are you kind of investing aggressively behind? Obviously, a lot of MSCI's competitive advantage, it's very close to its end clients. So just a kind of, yes, snapshot of the latest trends of where you're -- kind of what [ evolution ] that is taking you in.

So maybe before even if I go to the latest trends, I'd like to maybe make a few observations on the longer-term trends. And I was speaking this morning with Roger Urwin from WTW, Willis Towers Watson, who's a long-term sort of friend and adviser to the firm. And clearly, what's most striking is the very long-term trend on, let's say the last 20, 25 years, from a world where you had either active management, which was chiefly kind of a stock-picking thing and some quantitative aspects to that; and indexation, which was in essence the representation of the market cap opportunity set. And there's been a steady and continuous change with that over time, so that today, the bulk of the new indexes that we built can really be called active rules-based portfolios because they really -- they represent -- they don't represent the market opportunity set. They represent a bet against that market opportunity set, whether that be a tilt of some kind in terms of geography, in terms of industry, in terms of different types of thematic or what have you. So that longer-term trend is still very strong, and I think it then manifests itself in different ways with different client segments. So in terms of the asset owners or the institutional investors, I would say that, that element that has most greatly affected their benchmarking/index allocations strategies in the last number of years, and continues to despite the noise that one might hear in the market, is ESG and Climate, which is the first thing that I think has really structurally affected a lot of ways that people think about benchmarking and will continue to do so. Now there are other things as well, thematics, factor-based strategies, et cetera, but they haven't had nearly as much impact as those first two. Now the hedge funds and broker-dealers are using a lot of index-type strategies or even structured products in a volatile environment. And the area that's evolving very rapidly is in wealth. I would say not merely -- clearly, wealth is a large marginal consumer of ETFs. Many of those ETFs are not just on market cap but a range of other strategies, but we're also seeing with direct indexing and other new types of approaches, a variety of ways that people are using indexing in that area. And so what I would say going back to my first comments regarding our investments for next year is that we don't really give out this detail, granular level of detail. But just at a high level, the -- probably the largest single bucket of investments across the firm for next year is our continued investment in index customization, in the platform. And we've got I think some interesting smaller, modest-sized acquisitions we're looking at, both related to the wealth portfolio construction/indexation opportunity and more broadly in custom indexes. So all of those areas remain very, very central to our strategy, both clearly in -- mostly in equities, but increasingly also in fixed income.

Maybe to pick up on that point on fixed income there because it's obviously an area that we've written to in detail recently. And MSCI has historically obviously been an equity-focused benchmark index provider. I mean, what are some of the barriers to entry on the fixed income side? And in fact, one area that I'm interested in is the margins on fixed income benchmarks versus equity benchmarks. It's something that often you -- it's difficult to get to the bottom of as an analyst. What's the difference between the margins on fixed income versus an equity benchmark versus a multi-asset index product? And how attractive is it for MSCI to actually enter that fixed income space?

Yes. So look, a few different observations on that. One of them is going way back in time now around the time even before our IPO. We had been gifted some not very successful fixed income indexes from our then parent and partner, Morgan Stanley. And around the time of the IPO, we shut them down because we couldn't find competitive advantage. And I think that what that experience taught us, that we should be somewhat reluctant to enter the market unless we had some clear areas where we had differentiation. And I would say that if one looks at of reciprocally to equities, the situation is not dramatically different in that major benchmarks are quite sticky and it's difficult to move them, and you should be cautious about thinking about entering into competition there unless you have a differentiated strategy. So where are we today? Today, I think we're building out -- we are building out a series of fixed income indexes in keeping with my theme of the day, which is balancing long-term growth with medium-term quarterly earnings I think we're doing so at a reasonable pace, but we're not throwing enormous amounts of money at it. So we're doing it in a prudent, step way. And those will be, you could say -- I mean, none of this stuff is never complete, but we'll have covered the major asset classes and currencies over the course of, call it, the next year roughly. But the main thing that we're focusing on is differentiation. So we have a partnership with MarketAxess which we're very excited about. We've been launching new products there which are about creating liquid fixed income indexes, which is a huge need because, as many of you doubtless are aware, in fixed income, the broad benchmarks, only a tiny percentage of those bonds are actually traded every day and a large number of them may be held in portfolios or not be liquid, et cetera. So creating a liquid fixed income thing is very important. And then the other one is, again, with our big theme in ESG and climate, we found a lot of demand and interest there, so we're building those out. Look, I would say that as a general observation, the fees in fixed income benchmarking are at the margin lower than in equities. But it's still a very, very attractive business can be built here. But I think it goes to our point about we want to pace ourselves here. We want to be realistic that it's going to be chewing away at the major competitors. But if we do so and we're smart, we think we can build an attractive franchise over time.

Okay. And another thing, just to pick back up on maybe where you started actually there, which was the current kind of sales environment. We have seen a bit of a slowdown in net new sales growth back in Q3. Maybe can we address why that was? And if the sales environment is becoming even more difficult, or is it easing going into 2024? I'd see there's maybe some competitive challenge arising. Some of the competitive challenges, is there something to say about that? And how does that then affect your maybe near-term investments? I appreciate some of the things you've talked about longer term, but maybe near term thoughts.

Yes. So look, I think the environment is not an easy one. I think it's mostly to do with some of the cost pressures on notably in the asset manager segment which are related to -- mostly to sideways/downward equity markets, depending on what part of them you're in, which I think everyone on the call doesn't need to have explained to them; and consequent pressure on the P&Ls of our clients. So I think that what that means is it is marginally more difficult sales environment than a few years ago across the board. And so that's what I would call product-agnostic, it's a general observation. And then I would also say that -- which is not to denote any sort of complacency because we have none, but I don't think it's fundamentally a change in the competitive dynamics in the market. I think it's more of a tougher environment for everyone. And what I think it tends to mean is that you really have to be able to justify your value-added to clients, right? And so then that becomes a really important filter on some of our marginal investments. And I think that in terms of -- we have to see where we end up. We're close just from a -- purely from a process point of view. We'll finish our operating plan for next year in the next week or so, and then we present it to the Board, then we close our books and records for this year, and then we get a second form of approval in the beginning of January. But I don't see I don't see that those numbers changing radically unless there's some marginally bad news that comes through. But I think we've done a great job, and -- in the circumstances. And I think one of the things that I'm sort of proudest about at MSCI is that we're really -- we've become very, very strong at financial management and efficiency. So we have a fairly lengthy process where what we're trying to do the whole time is to drive efficiencies in our infrastructure so that we can fund investments. And so that's a continuous process and I think we're doing a reasonably good job there. So I think we're -- this is not the moment for us for me to go into specific numbers, and we'll readjust any targets as we do in our normal manner. But I think broadly speaking, we are going into next year with, I think, robust plans. I think we are somewhat cautious about the environment, but we're continuing to invest in all of our major product lines because I think it is critical to have differentiated content, differentiated product that can add value to clients. Even in a tough market, investors need competitive adds.

I'm just going to address some of the questions that came up when you were talking then. So one of the questions was maybe where you just finished now, which is in terms of investment, your starting point on margin is obviously higher than most if not all of your peers. When you think about growth in the business and the investments that you just talked to, are you focused on top line growth? Or do you still think margins in the business broadly, not just in Index, can continue to expand? Maybe as some of the Private Asset business, the ESG business, particularly mature?

Sure. So look, a few observations related to all of that. I think as we've communicated in previous calls, we are focused on continuing to try to drive earnings per share growth for -- as a financial metric. We're definitely focused on trying to drive top line growth as well. We're -- I would say that we're not so focused on margin or margin expansion per se. And this may be a slightly -- I don't know if it's perverse or not, I was going to say, a slightly reverse way of expressing it. But we found that as we manage our businesses pretty tightly and prudently over time, we've done pretty well on margin expansion. I mean, if you would have told me where the Analytics margin is today compared to 2015, it's been a dramatic expansion in margin over time. But paradoxically, it's not so much that we set out to expand margin in Analytics, it's that we wanted to fund our larger growth opportunities, to a degree, from taking some investment money or at the margin from Analytics and putting it into bigger, higher growth opportunities, right? So I think that with a subscription revenue growth model, if you manage the business prudently, and there are logical limits to this, there are logical limit to this, so I don't overstate it. It has a tendency for the margins to expand if you're doing a good job, if you're adding value to clients, if you have a decent retention rate. And not all of those things hold at all times, right? So I would say that it's more we want to focus on growth. We want to focus on not giving any nasty surprises quarter-on-quarter. And when you manage the business that way and you invest in a prudent manner, the margins at the margin have a tendency to expand a bit.

Okay. And there's another question here in terms of asset flows and how the asset flows that you've seen this year, obviously, has [ indicated flows ] into cash and money market funds and how that affects, a, your investments; and b, your investment decisions perhaps in the near term and also in the longer term. And also how that mix effect impacts asset-based fees and the margins you could make out of the product.

Yes. So look, that's -- it's a good question. And I think this is in the Twilight Zone where science meets art. So what do I mean by that? Look, it would be foolhardy to crazily expand your investments in a very buoyant equity market where the main driver of the growth is pure equity market levels and the resultant market beta, right? And equally, if there's a market correction or a bit of a period where the market is going sideways, it doesn't make any sense for us to slam on the brakes in investments which might be fueling a completely different category of growth, right? So the element of our investments that are narrowly linked to that kind of market beta component of what we have is relatively limited. So the way that I would say it is we try to not let -- it is a reality. So at the -- as things get a little bit better, we get a bit more breathing room. If things get a little tougher, we get pinched a little bit more. But we don't really want that to be the main driver of what's fueling our investments because it's kind of a -- it's not entirely orthogonal, but it's a slightly different category of logic than what's fueling a lot of the subscription growth in other areas of what we do. So clearly, we -- so in that regard, the way I would say it is we would hope for slightly stronger equity markets. Clearly, we also have an international equity bias and the U.S. equity markets have done better relative to many other ex U.S. markets, so that's not the best news for us. But -- so we'll see how those things play out. But the key point being is we don't want to be whipsawed by market beta in our investments, we would look to avoid that in how we think about investments.

Okay. And there's another question here going back to your observation on competition. I think you said that in your answers to one of the previous questions, you saw no major change in competition. There's a question that directly addresses the fact that LSEG, post the acquisition of Refinitiv, have obviously had a bit of a push in FTSE Russell, rolling out a lot of new index product there. And there's also comment here as regards to S&P's push since the acquisition of IHS Markit. Just wondered if either of those kind of major competitors, having increased their scale in indexation, perhaps not directly on your patch, but if those kind of greater scale offerings from your leading competitors are impacting your ability, maybe even to price, if it doesn't impact retention.

Sure. So look, as my mother used to say, if you don't have anything nice to say, don't say anything at all. So I'm not going to. I can make 1 or 2 pointed comments about those things, but I will refrain from doing so. And I just, again, want to make this distinction. We are not complacent at all about competition in any of our products in any market, right? And I just want to be very explicit about that. But I would still repeat my point. I don't see the competitive dynamics have altered dramatically in any of our markets. I don't see that there's, at present, and this could change, that there is a certain competitor who's fundamentally being more disruptive to us, who has adopted a very different approach to pricing or has adopted a very different approach to how they launch products or what have you. So again, allowing for the fact that I do not want to signal any sense of complacency because we're obsessed with competitors. And we even have sessions just -- though Henry is a busy guy and traveling around the world and meeting a lot of our senior clients, we often will have a session just on a particular competitor with even Henry involved. So we are definitely focused on competition, but that doesn't remove the fact that I just don't see the landscape of competition fundamentally having altered right now.

Yes. That's good. And in terms of pricing there's a question here which I'll ask this directly, how much pricing you took in the Index business in '23. I don't know how direct you want to be on that. But maybe what the outlook for pricing is in 2024, given where inflation is year-on-year.

Sure. So look, I think we -- whatever -- I try to avoid giving numbers because then someone else is going to give them in another place. So in the quarterly earnings or from our beloved CFO or whatever, we can give you all the facts and et cetera. But I think my higher-level observations is the following. We have been in a slightly inflationary environment, and in that context, we had taken some price increases which were somewhat higher than we have in the past. I don't know whether we will sustain those next year. We haven't yet made the full decision on -- they're discrete choices sometimes by product line and they can also have very different components to them. So for example, in Analytics, there's a lot more usage-driven pricing, which is -- whereas in Index, we have licensing, et cetera. But I would say that overall, allowing for maybe a slightly tougher environment, I don't see our approach to pricing altering significantly. Not enough to have a major impact on the numbers. So based on what we're seeing today, whatever we've communicated previously is going to be -- it's not going to be very different for '24. It may be slightly different here or there in certain pockets. Again, bar some extraordinary event. And has a certain -- now I read a lot of market commentary. I think we are in an "interesting" environment where we've had interest rates that are sustainably higher than we thought that is clearly putting pressure on a variety of financial intermediaries. And it's an environment where we could have a surprise totally unrelated to MSCI which could maybe spook the markets, and in which case, some of the things that I just said could be a little bit more at the narrower, the less positive end of the spectrum. But generally speaking, we're -- we don't see anything at this hour that's radically different than we've had in the past.

Okay. I've got a lot of questions on the ESG business, as you won't be surprised. So maybe let's move there. Let's tackle it straight off in terms of the slowdown in net new sales growth that we've seen in the last 3 quarters. That's been a big focus for the market, obviously. Maybe if I can ask you, does MSCI see this as structural or is it cyclical or maybe both? And if it is maybe cyclical, which I anticipate your answer might be, when do you expect that growth to start to recover?

Yes. So look, so first of all, there's probably a broader dispersion geographically on this topic than I've seen on any one previously at MSCI, right? So clearly, we're continuing. We've seen much more continued robust demand in Europe than we have in the U.S. And I would say specifically in the U.S. because this has also been -- I mean, if we're talking about North America, Canada, it actually continues to be a pretty good market for us for ESG and Climate. And I would say notably in the U.S., there's been a slowing of launching of ESG products. We still think there's a lot of opportunity there over the medium to longer term. And we think that the opportunity in Climate is more structural and will present greater opportunities than just purely an ESG rating. So having said that, so I don't have a crystal ball, so I don't know exactly how and when this will slow down or pick up. My only observation, and you have to be very, very cautious about these things, and so I say this with a great element of caution. But there is an interesting parallel which, at least in my mind, but I've been doing this for a while. Our Index business had -- when we were only an index business 20-plus years ago, like '99, 2000, 2001, 2002, we had great years in all those years, including after the equity bubble burst from the '99 bubble to 2000. And then we had a really, really challenging year in 2003 in Index. And of course, we were buried within Morgan Stanley there and no one saw it except for us, our revenues were not public. But I do believe to a degree there's an analogy there, which is just -- there is nothing that we see in terms of the institutional investor world that signals to us that ESG and Climate is going away in any way, shape or form, right? And so I think what is likely is that notably outside of EMEA, where there's more regulatory pressure. But I would say that even within EMEA, the E element in ESG is dominating more and more. So a lot of the ESG regulation is heavily focused on the E, and the topic of the E or climate change is going to be just as big a topic or an opportunity in the U.S. as in Europe. And it's growing rapidly in Asia, right? So I think we will have to see what we learn from the next 6 to 12 months. We continue to have a lot of demand for this information in a variety, both the high-level ESG rating, but the underlying data and information about ESG controversies and business involvement, et cetera, and increasing demands for climate data from all client segments. So we're playing it quarter-by-quarter ourselves. We're right in the middle of that for the fourth quarter, so we'll have to see where we end up. And typically, a lot of our sales come in very late in the quarter, so I don't want to get cute about that. But it's -- it will be -- so it's work in progress, and we'll just have to keep you updated quarter-by-quarter on where we go.

Okay. I wondered if -- just picking back up on what you were saying about the E particularly, given much of the data that comes out of corporates on the E side isn't perhaps proprietary, and therefore, it's a data gathering exercise. Can you articulate for us what MSCI's competitive advantages on the E side? And what you're seeing in terms of competitive threat there from others that are bringing new data sets to market and how that is impacting on your ability to grow through both TAM and pricing.

Sure. So look, I guess as a very simple measure, a good part, in fact, you could argue a large part of the information we have used for equity index historically has not been proprietary. Right? So I think that the -- so I think, even as a starting point, one can take nonproprietary data and make very valuable intellectual property out of it. And I think we have a 20-plus year track record of showing it. So that's my first observation. The second one is, I think the degree to which this data is sort of clean, normalized and can be comparable is overstated, right? So I think there is a lot of stuff that we do to gather a huge variety of data. In fact, I was just in a meeting with our CTO, just literally our normal weekly meeting this morning, and we were discussing a lot of the stuff that we're doing with Google in gathering a variety of ESG and climate data. And look, I don't want to be hubristic about this, but I'm very confident that this is not something that necessarily is that straightforward or that you can kind of conjure out of thin air. I think there's a lot of technology, a lot of judgment, a lot of sector specialists by industry, by country, et cetera, working on all of this. So I just think -- I just don't think that this is a category which is going to very rapidly become sort of -- how shall I put it? Simple or commoditized, and that you can kind of just get the data off the shelf or something. It's just -- it is a much more complex category than that. And then finally, coming full circle to my first point, a lot of what we do with the data, and we've actually got some very interesting, we just launched a lot of satellite information related to physical risks, which includes for all categories of assets. And that sort of stuff is, it may not be unique to MSCI, but certainly, I think we have competitive advantage in how we use it and how we present it to clients.

When I think about the breadth of the data across ESG and Climate, MSCI often talks about the number of issuer coverage being highest on the Street. When I've cross-referenced that, I think that is certainly the case. But does that digital breadth, once you get past a certain point, actually means that it's a major point of differentiation? I'm thinking once you go past a certain number of issuers into kind of smaller, more niche parts of the market, does that actually -- are you able to monetize that additional breadth and coverage? Or is that -- does that data only kind of work for a very small subsector of your clients?

It's a good question. And the way I would say it is it varies dramatically based on the use case, right? So there are certain, you could call them reporting or regulatory use cases, where the initial concern is solely the breadth of the coverage, right? And it's a kind of -- I know this is not maybe the best phrase to use, but it's kind of a tick-the-box exercise. They simply have to report on something. You need data on that company, you either have it or you don't and it becomes a binary yes/no. So that's one extreme of use case. But the other can be the "other end of the spectrum," which is someone really wants the best comparable data for a particular company in a particular sector. And then clearly, that's often, you can call it crudely, people's interest is weighted by market cap. But there can be some who are looking for something on a smaller company. Notably in Asia, there's a long tail of securities in various countries, and we're trying hard to expand our coverage there because people do want to hear about it, they do want the information on those individual companies. So the way I would say it is, it depends on the use case, it depends on the region. But as a general observation, I would say that we will -- we were relatively rational economic agents, so if we're broadening that coverage, chances are there's a way we can monetize it in either one of those use cases.

Yes. Okay. Maybe bridging into the Analytics business but staying on the topic of climate. The Enterprise Climate Lab product sits within the Analytics business from a P&L perspective anyway. We recently hosted Jorge Mina from your side in a fireside chat similar to this, where we're talking about that as a potential growth product. And I'm wondering what the growth rate has been on that product maybe over the last 6 to 12 months. And what do you see in terms of where that product is in terms of customer penetration rate? Because it doesn't strike me that many of our clients are particularly at the point where they're really looking at things like climate [ bar ], the net zero pathway part of that portfolio. Could you just describe to us kind of where that is in terms of penetration and where your customers are at in terms of the staging and their use of that product? And finally, what might be the catalyst for that growth to accelerate in terms of use of that product?

So I think we put that into -- our firm-wide Climate subscription run rate is roughly around $70 million and it's growing at roughly 50% year-on-year with rounding and that type of thing. And maybe just expanding on that a little further. And I think that the way -- and this goes to a higher level point and relates to your core question. I really do think that people are going to have to find ways of incorporating this type of data into their risk and return decisions longer term, right? Now if we link that to some other work which is very -- this is not a big dollar revenue thing, but I'm just framing it in the context of the type of issues we're trying to solve. We'll be bringing to market, in the near future within Analytics, a much longer-term view of expected return and risk in many of our analytics calculators than we've had previously. And I think that we're really -- the way I would say it is the growth of these things is attractive, but I think we're scratching the surface. I think we're really at the beginning of how people incorporate these things into their investment process. And we actually -- we had a -- we clearly hold a variety of asset owner and broader client events. We do one in Sacramento I think last month. We had one in Canada recently. And I do think that -- and this goes back to some of my initial observations. I think it is still a big question as to how investors incorporate climate specifically, and I'm not just talking about ESG ratings, I'm talking about Climate very narrowly defined, into their risk and return calculations. And that includes companies who have made commitments to net zero who may or may not be able to hold to them. It means how portfolios they're invested in are deploying capital related to E investments. So the broad headline in this is, even beyond analytics, we -- there is a huge industry-wide question in terms of how you incorporate this topic into your investment process. And it's -- and this goes back to the sort of secular versus cyclical thing, we are 100% betting that this is a secular thing and this opportunity is not going away for the foreseeable future, and we want to be behind it.

In terms of the broader Analytics business, and maybe this links to the Climate product. But the growth in that business steps up to around about 6% over the last 2 years. And previously, we were running at sort of 3%, 4%. Is that all just pricing? Or is there more to it?

No, no, it's definitely expansion of new clients across the board. Clearly, we've done -- even as we've been saying that equity markets have been tougher. We've done pretty well in equity Analytics, it's growing a bit more than average, the overall Analytics. I think that the larger Analytics deals, as we've previously stated, tend to be a little bit slow-burn. We're -- I would say we're accumulating credibility which underpins some of those sales in fixed income, and we have some interesting things in the pipeline right now. I'm not going to go into individual items in fixed income portfolio management. So I think that there are -- there are a lot of structural opportunities there. The -- so I think our -- there's some very -- in the next year, our technology platform in Analytics will evolve to be a lot more flexible, so we can -- I won't go into all the plumbing of that. But suffice it to say that in the next year or so, we should be able to innovate much more quickly than in the past in Analytics due to some changes in our platform and its efficiency. So I think -- look, I'm cautiously optimistic there that we can keep on the right path. And I think the only thing that, again, in this environment, that would be a slight note of caution would be client events. Even something like the merger of UBS and Credit Suisse is a nontrivial thing for us because they're both significant users of these tools. So I don't want to put an excessive spotlight on that one as an example. But what I'm saying is any market situations where there's some distress or mergers or things closing down would tend to temper the enthusiasm which generally I feel.

Okay. I want to spend the last 5 minutes there on the private assets or other the business area. I want to focus on Burgiss if we can. Maybe could you provide us with a very quick overview of the Burgiss product offering? Maybe what attracted MSCI to purchasing the majority of the business? Where do you think you can take it near term, long term? And maybe what's the competitive landscape like in that area?

So look, at the highest level, and stating it sort of most simply, Burgiss has been a leader in providing transparency to private market investors. And you could say, notably, it has been a service to LPs. So it is a -- so you can say it's an investor-heavy client base. And in essence and in very crude layman's terms, the LPs want to know, what do I own in private markets? What insight can you give me on the risk and return profile of these investments? What are the cash flows? How do I understand that from a portfolio risk point of view? When am I -- so looking at the totality of their private assets, holdings and that entire portfolio and its characteristics. So I think there's a number of things there. One, I think we can just scale up that opportunity with MSCI just by our presence with many more global investors. So Burgiss was a modestly sized company. In the last few years, their sales had ramped up because a senior person from MSCI, Jay McNamara, actually went and joined Burgiss for a number of years and ran their entire client coverage and client service organization, which really helped to kind of professionalize that and to bring scale. But that's only been like the beginning of that, and we can do significantly more already with them under MSCI. We also think that there are a lot of opportunities. And again, I was speaking to our CTO about this, to make it significantly easier and more efficient, more "modern" in the way gather the data, clean the data, so that we can scale up the nature of those services and make them more robust. We think there's a lot of opportunities there. And we think there are really critical opportunities in areas like benchmarking by -- in each private asset class, in real estate, in private equity, in private credit. We have a whole workflows -- a whole series of workflows going on in just purely private credit and what value we can add there. So I think this isn't over. And clearly, again, ESG and Climate are important criteria for investors and private companies as well. So when you look at all of that, we think there's really a large opportunity. And I think that the key thing is to modernize the infrastructure so we can scale up and use our client coverage organization to continue to expand the universe, to continue to bring more transparency and to create kind of a virtuous circle about that. Now in terms of the competitive environment, I still think this is a quite fragmented environment. There's clearly elements of what a number of -- there's a number of names that typically pop up. EFront which is owned by BlackRock, Prequin, PitchBook, others, but they're all -- and then there's a number of smaller firms that do different workflow. They're all in really quite different parts of the business providing quite different solutions. So I think we're still at a stage in the industry where we're definitely not at the sort of mature competitors going head to head. And I think really what we're at is we're at a stage where the various people who are part of this world, if you like, will precisely be redefining how we think about the services and products for private investors, and we want to be at the forefront of that. So we're very excited by this opportunity.

One last question. How do you feel going into 2024? I appreciate you started off a little bit with that long-term investments and your planning in that regard. But just kind of your near-term view as to the operating environment, what that looks like for MSCI.

Look, probably feel the same that I do every year, maybe it reflects my personality and experience than anything else, which is cautiously optimistic. Look, I think we've got amazing opportunities ahead of us at MSCI. We've got incredible talented people. We've got pretty tough financial management. We've got a wide variety of opportunities, but no one's going to hand it to us on a plate. We got to work hard every day to optimize our resources, to execute. And I'm confident that if we keep doing that, if we're creative, if we're smart, if we're financially prudent, then hopefully, we'll keep adding value to our clients and hence that tends to lead to creating value for shareholders with a few steps in between. But that's the plan.

Sounds like a good plan to me. So we will leave it there. Thank you, and thanks for your time.

Thank you so much. Thank you all for listening and for your time today. All the best. Thank you. Bye.

Thanks for listening. Thanks very much.