Good day, ladies and gentlemen and welcome to the MSCI Third Quarter 2021 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the call over to Salli Schwartz, Head of Investor Relations and Treasurer. You may begin.

Thank you, operator. Good day and welcome to the MSCI third quarter 2021 earnings conference call. Earlier this morning, we issued a press release announcing our results for the third quarter 2021. This press release, along with an earnings presentation we will reference on this call as well as a brief quarterly update, are available on our website, msci.com, under the Investor Relations tab. Let me remind you that this call contains forward-looking statements. You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made and are governed by the language on the second slide of today’s presentation. For a discussion of additional risks and uncertainties, please see the risk factors and forward-looking statements disclaimer in our most recent Form 10-K and in our other SEC filings. During today’s call, in addition to results presented on the basis of U.S. GAAP, we also refer to non-GAAP measures, including, but not limited to, organic operating revenue growth rates, adjusted EBITDA, adjusted EBITDA expenses, adjusted EPS and free cash flow. We believe our non-GAAP measures facilitate meaningful period-to-period comparisons and provide insight into our core operating performance. You will find a reconciliation to the equivalent GAAP measures in the earnings materials and an explanation of why we deem this information to be meaningful as well as how management uses these measures in the appendix of the earnings presentation. We will also discuss run-rate, which estimates at a particular point in time the annualized value of the recurring revenues under our client agreements for the next 12 months subject to a variety of adjustments and exclusions that we detail in our SEC filings. As a result of those adjustments and exclusions, the actual amount of recurring revenues we will realize over the following 12 months will differ from run-rate. We therefore caution you not to place undue reliance on run-rate to estimate or forecast recurring revenues. Additionally, we will discuss organic run-rate growth figures, which exclude the impact of changes in foreign currency and the impact of any acquisitions or divestitures. On the call this morning are Henry Fernandez, our Chairman and CEO; Baer Pettit, our President and COO; and Andy Wiechmann, our Chief Financial Officer. Finally, I would like to point out that, members of the media maybe on the call this morning in a listen-only mode. With that, let me now turn the call over to Henry Fernandez. Henry?

Thank you, Salli and thank you also for everything you have done for MSCI for the last 2 years. Hello, everyone and thank you for joining us today. Our organic revenue growth of more than 20% and excellent performance more broadly this quarter is further evidence of the accelerating demand we are seeing across MSCI. It also validates the investments that we have already executed on, including those we identified at Investor Day earlier this year. In my 25 years leading MSCI, I cannot remember a time when we have seen so much demand for our products and solutions and has so many attractive opportunities. As the investment industry continues to transform, our clients are turning to MSCI to create standards and offer solutions across market cap and non-market cap indices in both equity and fixed income, risk management products and services, factor models, ESG ratings and data, climate data and analytics and insights and tools for managing private assets. Let me just give you a few examples where demand for our solutions is off the charts. In climate, we see interest exploding across our client base for data, tools, models and solutions within every asset class and across every aspect of the investment process. Ultimately, we want MSCI’s client climate offerings to be the common language that capital markets participants use to discuss climate. We want to help market participants navigate the largest scale reallocation of capital in history as industries and global economies begin to decarbonize. You will therefore see us to continue to invest heavily in our climate offerings. You would also see us leading key strategic initiatives in the world, which are focused on impacting the global transition to a net-zero economy. We recently hosted global asset owners, asset managers and policymakers at the MSCI Global…

Thank you, Henry and greetings everyone. In my comments today, I’d like to unpack the enormous opportunities that Henry described as well as some of the associated Triple-Crown investing actions that have continued to fuel our strong growth. Our pace of new product and technology development is faster than it has ever been as we race to meet client demand. First, related to our products and services on climate change, we now have a run-rate that totals more than $35 million in this category, well over double our footprint from last year. Our range of offerings and capabilities is expanding rapidly. We believe it is still very early days in what this franchise can ultimately be. At our recent MSCI Global Investing Conference, investors spoke with us about the need to holistically measure net zero progress in their portfolios and for individual corporate issuers. MSCI recently launched Climate Lab, a first-in-kind visualization dashboard that combines our climate data with MSCI’s analytical risk and portfolio management capabilities. We have made a series of investments to build comprehensive Scope 1 and Scope 2 datasets on thousands of issuers, which will now serve as the basis of better understanding the Scope 3 data of companies which comes from their supply chains. Additionally, MSCI’s analytics platforms are powering Climate Lab portfolio analysis capabilities, offering the first at-scale portfolio reporting in the market. This is critical for our clients to meet TCFD and SFTR requirements. Our newly launched implied temperature rise metric is another way that we are bringing transparency to net zero alignment goals. The implied temperature rise is derived from a given company’s existing activities and their specific future pledges from which we create a common measure of comparison for alignment to climate goals. This forward-looking estimate allows investors to set decarbonization targets…

Thanks, Baer and hi everyone. The results for the quarter reflect the enormous demand that Henry and Baer spoke about, which is translating into strength across most parts of our business. We had the best third quarter on record for both company-wide recurring net new sales and for total recurring subscription sales in both our index and ESG and climate segments. We also saw record quarter in firm-wide non-recurring sales, following strong performance in non-recurring sales in both Q1 and Q2. This strength has been driven by wins in index from sales associated with license and usage fees related to prior periods, derivatives licenses and our data packages. I would highlight that these sales tend to be somewhat lumpy by nature and we would expect non-recurring sales in Q4 to be lower. Across client segments, we saw a strong organic growth with sales from both established and newer client segments as well as resilient or improved retention rates. Asset managers and asset owners, which now together comprise nearly $1 billion of our subscription run-rate, collectively grew approximately 11% organically. And looking forward, our sales pipeline across products and regions and intensity of client engagement continue to be quite healthy. From a firm-wide perspective, the 12% organic subscription run-rate growth benefited from strength across segments. Index subscription run-rate growth was more than 11% year-over-year, our 31st consecutive quarter of achieving double-digit growth. This continued momentum is fueled by outsized growth in our investment thesis index modules, particularly in areas like ESG and climate, which witnessed 44% year-over-year run-rate growth as well as within higher growth client segments like wealth management and hedge funds, which experienced index subscription run-rate growth of 17% and 28%, respectively. Analytics recorded more than 6% revenue growth and approximately 5% run-rate growth, with particular strength in equity…

Thank you. [Operator Instructions] Our first question comes from the line of Alex Kramm with UBS. Your line is now open.

Yes. Hi, good morning, everyone. Just wanted to dig further into the strong sales you saw on the ESG and climate side. Obviously, you gave a lot of color already, but can you maybe give us a little bit more detail what’s driving – what drove the sales during the quarter? Is it still a lot of the core products? Or are you actually seeing some sales already on climate models for corporates? So any more color in terms of where the – how the sales kind of broke down would be helpful in the ESG climate side? Thanks.

Sure, yes, good morning. Alex. And clearly, this is an area where we’re spending a lot of time. I would say the success is across the board, so it’s tough to nail it down to one thing here. But we’re seeing success, as we’ve talked about in the past, across products where it’s in addition to the core ESG ratings and research, we’re seeing success on the climate side. We’re seeing that success across asset classes. So in addition to the success we’ve seen on the solutions for equity investing, we’re continuing to see strong traction across fixed income investing and then across client segments. So we continue to have very strong success selling into both established client segments like the asset owners and asset managers, where we’ve seen growth north of 30% in run rate. That’s been accelerated by the very strong growth we’ve seen in segments like well, broker-dealers, hedge funds. And then geographically, the success is really across the board. We are seeing strong success in the U.S., but we are, as we’ve talked about in the past, seeing outsized growth in areas like EMEA and Asia, in particular. So it’s really continued success, and I think it underscores the importance of continuing to invest to drive growth across all these frontiers. That’s really what’s going to continue to fuel both the growth and leadership on this front.

Okay. Fair enough. And then maybe just a quick follow-up, on the analytics side, Henry mentioned in general that the operating environment has been great across the board. But on analytics, it seems like I would have expected a little bit more on the sales side. And I know this can be lumpy, but just wondering if there is anything to highlight there. Because some of your peers in some comparable businesses are doing really well, and it does seem like on analytics you’re not doing as well, but I understand this is a smaller focus for you. Just curious if you have any additional comments here?

Yes. And just based on the growth, you can tell we’re below our long-term target, and this is an area where we continue to focus to drive faster growth than what we’re seeing right now. But it is a little bit areas where we’re having strong success in areas where the growth isn’t where we want it to be. So on the portfolio management tools, both on the equity portfolio management tools and on fixed income portfolio management tools, where we’re largely serving that front office and tends to be quite complementary to a lot of what we do across the business, we are seeing very strong growth, very healthy growth. It’s on the multi-asset class front and in particular the enterprise-wide solutions, where the growth has been a little slower. And as we’ve talked about in the past, there tends to be some lumpiness there. Although we are having traction in some components of it, namely areas that are driven by some of our strong partnerships and continued traction in some of the broader solutions that we have, I would underscore and this is important to note and it doesn’t show up in the analytics numbers, that analytics continues to be a key strategic driver and growth driver for other business, namely in our Factor Indexes, as you know, but also going forward in areas like ESG and climate. The – some of the risk and reporting capabilities that we have in analytics are underscoring and underlying some of those solutions that we’re seeing strong growth in.

Thank you very much.

Our next question comes from the line of Manav Patnaik with Barclays. Your line is open. If your line is on mute, please, unmute your line. Our next question comes from the line of Toni Kaplan with Morgan Stanley. Your line is now open.

Thank you so much. Wanted to talk more about the intersection of climate and ESG with PE and the debt funds, you mentioned the carbon footprinting and the update. Just wanted to understand if you think that this is a really significant near-term opportunity and what else is being offered in the market. Is this sort of a unique solution or are there other competitive solutions in the market right now?

Hi, Toni, it’s Baer here. So for sure, we think that what we’ve brought to market here is – look, it’s always tough to say unique because we live in a competitive world, but we’re not aware of a lot of competitors in this space at this stage. So I think we’re pretty pleased that we’ve come out with this initial product working with Burgiss. We also have plans to expand a lot of our current rating infrastructure for ESG into private markets and are looking forward to making progress in that area in the year ahead. So I think we have a lot of components here that I would say are differentiated and we hope will continue to be differentiated in the market ahead. Equally, we’re never complacent. And when you look at both the areas of private markets analytics generally and climate and ESG, those are clearly areas where competition is growing dramatically. And so it’s our intention to both invest in order to stay ahead, and we’re confident we could do so. But we will have to see how that market develops because it’s very early days, and we’re just committed to investing to make sure we maintain leadership.

That’s great. And I did want to ask about investments versus margins. You talked about EBITDA margins for All Other next year being closer to mid-teens. But on the other hand, I feel like you’re at a point where you’re seeing the most significant opportunity that you’ve seen, I think, are sort of the way I’m paraphrasing what you’ve said on the call. So tell me about how you think about the right level of investment when there is such strong opportunity ahead. Should you be investing more? Thanks.

Sure. Yes. Toni, it’s an important question for us. And as we’ve talked about in the past, we’re in a mode of continuing to invest in the business to drive growth. And we’ve gone to our upturn playbook this year, as you know, given the strong performance, and importantly, also the strong operating environment that you see. And so that’s something that we will continue to do as we see the opportunities and the enormous demand that Henry and Baer talked about in their prepared remarks today. And so when you look at the areas where we are investing and we will continue to invest, it’s the areas that are the key growth drivers for us in key strategic areas. So by product segment, you can see outsized growth in the ESG and climate; EBITDA expenses, you see it in index EBITDA expenses. As you know, these are key growth drivers of both revenue and profits for the firm. When you look at where we’re investing across functional lines that’s heavily into data and technology research and the product teams, particularly product teams supporting ESG and index; and then across investment areas, it’s the index platform – the new index platform that we’re developing; it’s the ESG platform that Baer alluded to, our investment thesis indexes, ESG technology and data; and more broadly, we are continuing to lay the foundation for continued growth and supporting opportunities into the future. On the All Other line, there is a lot of noise in there. So given the integration that’s taking place, given some of the transaction-related expenses, the margin is a little – the margin comment that I made is a little bit not necessarily a good reflection of what to expect going forward. That’s just a reflection of all the moving pieces we expect next year. And clearly, Private Assets, particularly from an inorganic standpoint is a focus area for us and a big investment area. But for us, as a firm, it continues to be – and this is where you see the EBITDA expense growth that’s across ESG and climate and indexes primarily.

Let me add to that, if you don’t mind. As you may remember, in the lead-up to our Investor Day, we obviously had analyzed extensively the tremendous opportunities that we see and the demand that we see for our products and services, which has actually accelerated quite significantly since then. But we wanted to be – to have a sanity check. We wanted to make sure that the owners of this company and the shareholders gave us their perspective on what they thought we should be doing given what we saw in the marketplace. And the answer was a resounding vote of confidence in the opportunities. They sold them the same way. They added a few more, like they encourage us extensively on ESG data, which we have worked hard on since then. And that it would be a remiss, it would be almost irresponsible not to invest heavily in those big growth areas that we see coming. So that was a very strong indication and by – a strong vote of confidence and speaking part of the vast majority of our shareholders. So clearly, we need to balance all of those wishes, ours and our shareholders, with continued financial discipline of earnings growth and profitability year-in and year-out and the ones we begin to lose that, that’s always a problem. And therefore, that’s when we came up with the concept of very modest, at best, margin expansion over the next few years.

100%. Thanks and good luck, Salli.

Our next question comes from the line of Manav Patnaik with Barclays. Your line is open.

Can you hear me now?

Yes.

Perfect. Andy, just first, just to – on some of the moving pieces for next year, it sounds like on the cash flow, it’s a one-time impact this year. I think you mentioned it’s a benefit going forward, if you could just help us with that. And I just wanted to clarify that mid-teens EBITDA number you gave for All Other, was that for 2022 as well?

Yes. So Manav, on the tax and free – and primarily as it relates to free cash flow because that’s where it shows up most notably, we – I think like a lot of companies right now and like many in the industry, we’re monitoring the very dynamic environment for tax regime and tax policies. And as you know, there are potential changes on the horizon globally. And so as we continue to do that, we are trying to optimize our tax footprint and ensure it’s aligned with the operations of the company, and importantly, against that dynamic tax environment. And in this case, some of the actions that we’ve taken are accelerating income and tax payments into Q3 and Q4 of this year that are higher than we anticipated originally. And so we’ve got the $110 million or so of elevated tax payments coming in this year. And expectation is that will lead to lower tax payments in future years. And so the place that shows up this year is really in the free cash flow line. And that’s the only reason why our free cash flow guidance has come down. Actually, collections remain very strong across the business. DSO is strong. And as you know, revenue and business growth continue to be very strong. And so really, the only change on the free cash flow side is to reflect those accelerated tax payments that we made a little bit in Q3 and mostly expecting in Q4 here. On the margin comment for RCA, that is related to 2022. So we wanted to provide a little bit more color to you given all the moving pieces related to the integration some of the transaction-related expenses, which will trickle into next year, and then the combination of the two businesses, our core Real Estate business combining with RCA. And so on an annualized basis next year, we’re anticipating a margin in the mid-teens-type range. That’s not the case for the fourth quarter of this year, just to be clear.

Understood. And then just one follow-up, I think you had mentioned the inorganic focus in the Private Asset class area, and you’ve obviously done a few deals. But I was just hoping to get just quickly wear off what that pipeline or landscape looks like in terms of the opportunities there?

Yes. So – yes, let me give you some color – a little bit more color on the activity beyond what we’ve announced and what we mentioned, and I can try to provide a bit more color on the areas that we’re focused on. So in addition to the RCA transaction and supporting Burgiss on their acquisition of Caissa, which we were heavily involved in, throughout the year, we have made a couple of small investments in highly strategic partners. We’ve also made one very small acquisition in the private asset data space that closed very recently. And so in the case of the investments, these are companies where we do have partnerships and who have important either commercial relationships for us or have unique datasets that we’re using and combining to unlock and create value. And so those are the types of things that we are going to continue to do. We are going to be very active and as we have talked about in the past, the MP&A space. But we will continue to be very disciplined and focused on areas that are strategically critical for us and areas where we are confident that we can create growth and ultimately value. And so not surprisingly, the areas where we are heavily focused are areas like ESG and climate, areas like private assets. These are areas where having unique datasets and access to unique datasets, are key competitive advantages and speed-to-market are very important for us. And so we will continue to focus on MP&A around those areas.

Alright. Thank you.

Our next question comes from the line of Craig Huber with Huber Research Partners. Your line is open.

Yes. Thank you. My first question on analytics, obviously, you grew about 6% this last quarter, an acceleration from recent years. Obviously, long-term goal is high-single digits. What do you have left to do on your analytics business here to help accelerate the growth there? What products or services there do you have to enhance in order to get that growth rate a little bit faster?

Yes. So, I think the first thing to always remember that the analytics product line is really a grouping of a number of other sub-segments, which we define them into four categories and each one of those into even further categories. The four categories are equity analytics or equity portfolio management analytics; fixed income portfolio management analytics; multi-asset class front-end portfolio management and then what we call internally enterprise risk performance, which is the central sort of enterprise risk of many asset owners and other managers. So, in those four categories, clearly the majority of the run rate is in the last one, which is the enterprise risk and performance. And what we are trying to do is in addition to continuing to serve the needs – the multi-asset class risk management needs of our clients in a central risk function, we are trying to pivot our strategy towards the portfolio management side in equities, in fixed income and in multi-asset class. And so far, this strategy is working. The fixed income part, although from a small base, grew 80% in the last quarter. And the equity – our portfolio management analytics part grew double digits as well. And so did the multi-asset class, but from largely the sales that were done prior to the quarter. So, that’s – so the pivoting is in addition to selling multi-asset class risk solutions to cost centers, which are basically the risk management offices – the central risk management offices. We want to sell portfolio management solutions to the profit centers that are in the front-end of our clients. And the latter is especially good for us because that’s where a lot of our ESG and climate and a lot of our index activities revolve around. So, that’s the process that we are trying to do in this concept.

Great. Thank you and Salli, all the best to you.

Our next question comes from the line of Owen Lau with Oppenheimer. Your line is now open.

Good morning and thank you for taking my questions. Could you please talk about the traction of the China A50 Connect Index futures? How should investors think about the opportunity there? And then if there is any other potential partnership opportunities with the Hong Kong Stock Exchange to launch more new products, any more color would be helpful. Thank you.

Well, we – as many of you know, we – the Hong Kong exchange has launched the MSCI A50 Connect futures back last Monday – the Monday of last week, so it’s been seven-or-so trading days or so. And so far, it has been the most successful futures contract launched in MSCI history and I think in Hong Kong exchange’s history. The trading volume over that seven-day period has been $1.5 billion trading volume, and the open interest is approaching $400 million. So, it bodes well for the futures success of that contract. In addition to that, around the same time, four asset managers in Mainland China launched ETFs on the A50 – MSCI A50 index. And as of last night, the total assets that they both offer of them have gathered in their launches has been in excess of $4 billion. So, those are also very, very successful ETF launches that we – that our clients have done. And therefore, what we are trying to do is build an ecosystem inside – in Hong Kong and inside Mainland China between futures and the ETFs and the structured products. So, we are now working hard in getting clients to license the index for ETFs in Hong Kong and also developing the structural product market around this product of the A50. So, so far, so good. Now, we do have a few other ideas that we are working on, and we constantly do so to see what else can we be launching not only in Asia but in Europe or in the U.S. with our partners. You obviously saw the announcement that we made with the Cboe in Chicago about the expansion of the relationship on MSCI index options, and another family of industry is being launched there. So, we are putting a lot of faith that, that will also continue the development of this area for us.

Got it. That’s very helpful. And then one modeling question for RCA. How should we think about the purchase price adjustment and deferred revenue? How should we model it that over the next few quarters? Thank you.

Yes. Sure. So as of right now, we really don’t expect it to have a material impact, and that’s based on the anticipated standard setting activities that we are following. We are finalizing the exact impact there and we will update you as appropriate. But as of right now, you should assume no material impact on that front. Maybe it’s helpful if I just take a step back and underscore some of the moving pieces on RCA more broadly. But I know I mentioned a number of these in the prepared remarks, but I will provide a little bit more color here just so we are on the same page. On the revenue side, we added $74 million of run rate as of September 30th. There was about $3.4 million of revenue from RCA in the third quarter. On the expense side, I will break it down into three pieces, and I think this is a good way to think about it. On the adjusted EBITDA expense front, we are adding about $19 million of expenses this year. About $3.6 million of that was incurred in the third quarter. And I would also highlight that within that $19 million, there is a few million of transaction-related expenses, mainly in areas like retention. The second category on the expense side is on D&A, where we are adding about $10 million of intangible amortization to this year, and a small amount of that was in the third quarter. And the large majority of that is the intangible amortization associated with the purchase accounting. And then the last category is in OpEx. And there is about another $7 million of transaction-related expenses that we have excluded from adjusted EBITDA. And these are in areas like deal fees, professional fees, severance. And about $5.5 million of that $7 million was in the third quarter. And so when you look at the shifts in guidance for the year, you can see we took expense – adjusted EBITDA expense guidance up by about $20 million, which mirrors the $19 million of EBITDA expenses I just mentioned. And then if you layer on top of that $19 million, the $10 million of D&A and then the $7 million of excluded transaction expenses, it gets you to the vicinity of $35 million, which is what the increase to OpEx guidance was. And so the shifts in expense guidance were wholly related to RCA. And as I underscore, there is going to continue to be a number of moving pieces, some ongoing integration expenses. And so when you put the combined businesses together, we are looking at a margin on an annualized basis closer to the mid-teens for next year.

Thank you, Andy.

Our next question comes from the line of Ashish Sabadra with RBC Capital Markets. Your line is now open.

Thanks for taking my questions. So, just wanted to focus more on the Investment Solutions as a Service, I was wondering if you could provide the progress on that front, particularly on the data management solutions as well as the investment analytics and the shift away from beyond towards more of a modular analytics solution on both those fronts. Thanks.

Sure. Hi Ashish. So look, we are going through our operating plan now for the coming year. And for sure, the delivery – the pivot in our delivery is very much towards those platforms. So, we mentioned Climate Lab earlier, and that is being built out on that infrastructure as well as some of our existing analytics portfolio aggregation capabilities and all the new index capabilities that are also being built out in that way. So – and as we have previously mentioned, the data distribution solutions that we are putting on the web are also in this common infrastructure. So, the way that I would say it is pretty much all new solutions will be built on this common infrastructure. And that doesn’t mean that we will be there entirely overnight. But I think that it both means an improvement in user experience in the coming years and also efficiencies because we are not duplicating the separate application developments that we did historically. So, I think we are on a good path. We will continue to bring out things as we did this quarter and the quarters ahead, and we will keep you apprised of what I think will continue to be positive developments in that area.

That’s very helpful color. Thanks for that. And maybe just a quick question on the RCA. It’s been just over a month since you closed that acquisition. I was wondering, any initial feedback that you have received from customers? And also, as you have had a chance to look at that business much more closely, how do you think about the cross-sell opportunity, even opportunity to sell some of the MSCI offerings into the RCA customer base? Thanks.

Yes. Look, so we are very positive on all those fronts. So, first of all, the client response has been extremely positive both from MSCI and RCA clients and shows our commitment to investing in real estate. From – I would say from an operational point of view, we – there have been no surprises in a positive sense. So, we have – I think we are going to be on a pretty strong path of integration. There is a lot of common understanding related to the data and across both the MSCI Real Estate and RCA. So, that is making progress. And then for sure, we have a lot of interesting opportunities to create new products. I mean clearly, it’s early days. But our new Head of Real Estate Research was a former IPD person who then went to RCA and now has come back to MSCI via this route. So, we are really excited by the common capabilities that we can build. And I am sure we will be showing new things of that in the coming year.

That’s very helpful color. Thanks.

Our next question comes from the line of Keith Housum with Northcoast Research. Your line is open.

Good morning guys. I was hoping to unpack the custom indexes just a little bit more on the opportunity there. Can you guys talk about perhaps the pricing opportunity in terms of custom indexes and how it aligns with or compares to the rest of the portfolio? And then do these tend to have like a stickier ability to be maintained within the client and I guess better client retention?

Yes. So look, I think this is an area which is developed for many years. So, it’s not a new area for us, but the demand and the complexity of the demand has increased, and that is a huge opportunity for us. So, whereas historically, we had relatively straightforward customization requests, which might be to exclude a sector or a country or what have you, now we have an enormous variety of requests, including optimizations, different asset classes combined, going beyond even securities. We are clearly looking at some crypto categories, as we have mentioned before. So, there is an enormous amount of demand. There is increasing complexity, which is a good thing, but we need to invest to ensure that we can deliver for that. And look, I would say that the retention is not really the issue in the sense that we have great retention in cross index in any case. And I don’t think the retention in custom indexes is dramatically different. The real upside is in the top line growth. And so that’s what we are investing for. And it goes across all client types. It’s – whether it be on the sell side, whether it be for asset owners or asset managers, the demand is coming from all those client types. And so we are very excited about the opportunities, and we have to make sure that we have the infrastructure to deliver on.

Great. I appreciate it. And then Andy, just following up a little bit on the comment you made regarding sales, obviously, a great quarter in terms of sales for you guys. And I know you referenced that there is some lumpiness there, as there always is. Is there a sense that any business was pulled forward from the fourth quarter at all and has helped your third quarter numbers?

No. No, this was purely – the comments purely related to the lumpiness of one-time sales in nature, where we have had a few quarters now of pretty strong one-time sales. And this most recent quarter, the third quarter, was our highest ever. And so there is just a little bit of – based on the pipeline we see right now, tends – we are expecting a little bit of a drop off in Q4 here, likely to be more in line with the average levels we have seen over the last couple of years.

Great. Thanks Andy.

Thank you. Our last question will come from the line of Alex Kramm with UBS. Your line is now open.

Yes. Hi, hello. Just a very quick follow-up on RCA on the modeling side, Andy, can you just – and maybe this was talked about already. But in terms of how revenues flows into the income statement, is there anything that I should be thinking about between run-rate, which I think ended at $74 million. And going forward, are there any – is there any seasonality, any one-time sales, or is run rate a pretty good predictor of the following quarter? Thanks.

Yes. For the RCA business, run rate is probably a pretty good indicator of the revenue coming from RCA. As you know, in our core real estate business, there tends to be the seasonality where we do have a good chunk of the business that’s tied to deliveries. And so we do get some seasonality in that side of the business. But for RCA, it’s much more traditional subscription model. And so run rate is probably a decent indicator of the revenue that we are expecting from it.

Fantastic. Thank you.

There are no further questions. I will now turn the call back to Henry Fernandez, Chairman and CEO, for closing remarks.

Thank you for joining us today. As you can see and hear from the numbers and the commentary, we continue to have enormous opportunities in front of us at MSCI. And we will continue our triple-crown investment philosophy to meet that demand from our clients and maintain our leadership. So, thank you for your attention and your support, and we will be able to take questions during the quarter. And obviously, see you next call.

Ladies and gentlemen, this concludes today’s conference call. Thank you for your participation. You may now disconnect.