明晟 (MSCI) 2012 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the MSCI Third Quarter 2012 Earnings Call.

At this time, all participants are in a listen-only mode.

Later we will conduct a question-and-answer session with instructions following at that time.

(Operator Instructions).

As a reminder this conference is being recorded.

Now I would like to turn the conference over to EdingsThibault, Head of Investor Relations.

Please begin.

Thank you, Tyrone.

Good morning to everyone and thank you for joining our third quarter 2012 earnings call.

Please note that earlier this morning we issued a press release describing our results for the third quarter of 2012.

A copy of that release may be viewed on our website at www.msci.com under the Investor Relations tab.

You will also find on our website a slide presentation that we have prepared for this call.

This call may contain 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, which reflect management's current estimates, projections, expectations or beliefs, and which are subject to risks and uncertainties that may cause actual results to differ materially.

For a discussion of additional risks and uncertainties that may affect MSCI's future results please see the description of risk factors and forward-looking statements on our Form 10-K for our fiscal year ending December 31st, 2011 and other SEC filings.

Today's earnings call may also include discussion of certain non-GAAP financial measures, including adjusted EBITDA and adjusted EPS.

Adjusted EBITDA and adjusted EPS exclude the following; the lease asset charge, restructuring costs and non-recurring stock-based expense.

Adjusted EPS also excludes the amortization of intangibles resulting from acquisitions, and debt repayment and refinancing expenses.

Please refer to today's earnings release and pages 16 to 18 of the investor presentation for the required reconciliation of certain non-GAAP financial measures to the most directly comparable GAAP financial measures and other related disclosures.

We will be referring to run rates frequently in our discussion this morning, so let me remind you that our run rate is an approximation at a given point in time of the forward-looking fees for subscription and product licenses that we will record over next 12 months, assuming no cancellations, new sales, changes in the asset and ETF [licensure embassies], or changes in foreign currency rates.

Please refer to table ten in our press release for a detailed explanation.

Bob Qutub will give you a quick overview of our third quarter results and then Henry Fernandez will add some additional comments.

I will now turn the call over to Bob.

Bob?

Thanks, Edings.

Good morning.

Before we again our review of the third quarter results, I wanted to give you have a quick overview of the impact of Hurricane Sandy on our operations.

First and foremost, all of our employees in New York and Rockville offices are accounted for, and all of our offices are fully operational.

In fact, we are hosting this call from our New York office here at Seven World Trade Center in Lower Manhattan and we owe a big round of thanks to all the emergency workers and those who are working hard to restore services to this area.

I also wanted to point out that at no time were our services to our clients interrupted.

Our index data was delivered to clients throughout the storm and aftermath, and our risk systems continued to operate, which is a testament to the dedication of our employees and our global platform.

Now to the quarter.

Earlier this morning, MSCI reported third quarter 2012 revenues of $235 million, up 5% from third quarter 2011.

And adjusted EBITDA of $108 million, up 4% year-over-year.

MSCI's 2012 adjusted EPS was flat year-over-year at $0.49 per share.

Our revenue growth was led by a Performance and Risk segment, which rose $9 million or 5% on higher Index and ESG subscription revenue and risk management analytics revenues.

Our Governance segment revenues also rose by $1 million or 4%.

In the quarter, subscription revenue growth of 8% was partially offset by a decline in the more volatile non-recurring revenues.

Our non-recurring revenues, which tend to be more volatile as I mentioned earlier, fell by $3 million as a result of lower fees for unlicensed derivatives and non-recurring governance revenues.

On a run rate basis, our subscription revenues grew at 6% to $800 million.

Run rate growth was fueled by an 11% increase in Index and ESG subscription, 8% growth in governance, and 4% growth in risk management analytics.

This was partially offset by declines in portfolio management and energy and commodity analytics.

The overall operating environment remains difficult as our clients continued to defer decision-making on new products.

This elongation of our sales pipeline weighed on our sales comparison.

However, our retention rate remain at 90%.

Now let's take a closer look at the performance of each of our major product lines, starting with our subscription index of the ESG products, where revenues grew about by 11% and the run rate grew also by 11% to $293 million.

Index and ESG subscription sales benefited from the strong sales of ESG products as well as modest growth in sales of benchmark products.

That subscription growth was offset in part by a decline in non-recurring sales of unlicensed derivatives.

As has been the case all year, sales in the Americas have been stronger than those in Europe.

Cancellations also increased but our overall retention remained at 94%.

Our asset-based fee revenues fell by 3% as an increase in assets under management was offset by change in the underlying asset mix.

Strong performance and flows into Vanguard ETFs, which are generally our lowest fee products, suppressed the average basis point fee.

But before I get into a discussion of ABF run rates, let me clarify that we continued to reflect the Vanguard revenues in our reported revenue, along with the related AUMs as a measure of performance.

However, per policy reflecting known cancels, we have adjusted our run rate, which is a forward-looking measure, to reflect the loss of the Vanguard ETFs.

Now, our asset-based fee run rate fell by 3% year-over-year, but if we exclude the impact of the Vanguard ETFs in both periods, our ABF run rate would have increased by 14% year-over-year and 7% sequentially.

Again, excluding those ETFs, our blended average fee was 3.7 basis points.

Our risk management analytics revenues rose 5% year-over-year and run rate rose 4% to $262 million.

RMA sales remained steady sequentially at $9 million.

An increase in sales to asset managers was offset by higher cancels from hedge funds.

Despite those cancels, we are starting to see an uptick in activity among hedge funds as they face increasing pressure from asset owners and regulators to provide more disclosure around their positions and risk profiles.

Overall risk cancels increased, with much of that coming from Europe.

The retention rate was 89%.

Also during the quarter, we migrated a data center in order to upgrade the infrastructure of our underlying -- to underlying our RMA businesses, which caused some disruptions and delayed product upgrades that impacted our sales.

Portfolio management analytics declined 4% and run rate fell 3% to $116 million.

The market for quantitative equity models remains very competitive.

Overall, we believe we are holding our own in terms of market share, but our moves to match the aggressive pricing of our competitors is having an impact on retention rates.

We are seeing strong demand for our models and data products from US hedge funds, offset by weaker sales of other client types.

Our newer products continue to have an impact that accounted for almost 50% of the sales in the third quarter.

Product introductions during the third quarter included a new China equity model and a European (inaudible) model.

Our Governance segment continues to make progress.

Revenues rose by 5% and run rate was up 8% to $116 million.

Much of the growth in Governance run rate has been driven by the success of our new compensation data analytics product, which was launched in June of last year and, and an improvement in retention rates, which have risen to 91% over the first nine months of the year.

Our run rate growth is also benefiting from the migration of non-recurring products, which are not included in run rate, to sales subscription service, which are included.

As I mentioned earlier, our adjusted EBITDA was $108 million, up 4% from last year.

Our adjusted EBITDA expense for the quarter was $127 million, an increase of 5% versus the third quarter of 2011.

Most of that growth coming from higher compensation expense.

The higher compensation expense was driven by an increase in severance, which rose by $3.7 million to $4.1 million, largely as a result of the departure of a senior executive and continued migration of personnel to lower cost locations.

Despite all that, we still grew our average headcount by 9%, with 44% of our employee base located in those lower costs centers, up from 38% a year ago.

Our non-compensation EBITDA expense declined 4% on the back of strong expense management.

Our adjusted EBITDA margin was 45.9%, essentially flat with a year-ago and 45.2% for the first nine months.

We continue to plan for our margins to be flat for our current subscription business.

However, the impact of the Vanguard switch and the dilution from the IPD acquisition, which I will talk to in a moment, are likely to compress our overall margins next year.

We had another strong cash quarter.

Our cash flow from operations was $98 million in the third quarter 2012 and $288 million year-to-date.

Capital spending was $18 million in the third quarter and $38 million year-to-date as we built out our new office location in New York and invested in our IT infrastructure.

We ended the quarter with $434 million of cash and cash equivalents and short-term investments.

We will continue to use our available cash in a disciplined manner to accelerate our organic growth and to pursue our strategy of being a provider of a broad range of mission critical investment decisions for 2014.

Any acquisitions will need to meet both our strategic and financial criteria.

Last Wednesday we took a step towards putting some of that cash to work to support our growth by announcing the acquisition of IPD,a leading provider of performance analytics for real estate funds, investors, managers, and occupiers for approximately $125 million.

This acquisition is expected to close during the fourth quarter.

But of course, is subject to customary closing conditions.

In summary, our revenues continue to grow, led by our recurring subscription revenue, retention rates are strong, and we continued to maintain a tight grip on our core expense base.

Lets me now turn to over to Henry for some additional comments.

Thank you, Bob.

Given the focus on the last few weeks on our Index business, I would like to first discuss our Index franchise.

I will then provide you with an update on our broader business before closing with some comments about the acquisition of IPD and how it fits our overall strategy.

It has been more than four weeks since the announcement by Vanguard of its decision to transition to a new index providers for certain of its ETFs.

This is an appropriate time to update you on our relationships with other ETF providers more ,as well as the overall strength of our index franchise.

We are seeing significant segmentation occurring among ETF investors based on their needs for liquidity, benchmark sensitivity and long-term returns.

There's also a group of investors who place a premium on low expense ratios.

I think it is fair to say that we were surprised by the manner and the speed in which the ETF providers that serve in that last group with a focus on low expense ratios -- how fast they have moved to compete primarily on the basis of expense ratios and the extent to which they were willing to go to reduce their own costs.

As the ETF business evolves, MSCI will continue to be a leading provider of indices to those ETF managers who are actively targeting those ETF investors who value liquidity, derivative capabilities and specialized exposure, as well as those ETF managers who value our expertise in the finding and measuring markets.

MSCI indices are differentiated by the quality of our data, our high level of service, our growth and frequent consultation with clients, and the trillions of dollars of assets benchmarked to them.

That value has taken us decades to build and we will continue to work with those ETS managers who understand and put a premium on that value.

It is strong affirmation of the value of the MSCI indices when the global head of BlackRock's uninsured business, the world's largest manager of ETFs assets, describes our indices as the gold standard.

It is even stronger affirmation when iShare selects our indices as the basis for an exciting new product line aimed at buy and hold investors.

The value of MSCI indices has also been validated in recent weeks by the selection of the MSCI China A Index by one of the largest -- (inaudible) Hong Kong, one of the largest asset managers in China.

And today nearly every major ETF provider in Europe uses our indices as the basis for their cross-border ETFs.

We have also been asked how the Vanguard loss might affect our subscription business.

The strength of our Index subscription business lies in our relationship with asset owners, pension funds, endowments, foundations, wealth funds, et cetera.

Over the past 40 years, MSCI indices have become a critical tool for these investors in helping them think about equity performance, understand the market potential in terms of size and liquidity, and evaluating the performance of the managers they select to manage their own money.

MSCI is embedded in their investment process.

And those we are embedded into the way they track and measure equity markets and the performance of their asset managers.

We have also become embedded in the investment processes of the asset managers themselves.

Many of our asset manager clients have exclusive contracts with asset owners that call for them to measure their performance against one or more MSCI indices.

Our data provides us and managers with rich and valuable insight about the makeup and composition of global equity markets, helping them gain insights about potential opportunities and risks in those equity markets.

Our indices also provide these clients with a tool to measure their own performance, not just for their institutional asset owner clients but also internally and externally to a full range of constituencies.

The value that our indices provides is further illustrated by the breadth of that business.

Our Index and ESG Subscription run rate was almost $300 million at the end of the third quarter.

That run rate was spread out across more than 3,000 clients all over the world.

In sum, the decision by any single asset manager, especially one like Vanguard that is a not for profit entity and is primarily focused on US retail investors, is not likely to have a meaningful impact on the balance of our Index subscription business worldwide.

It does not have any impact on the value we provide to our asset owner clients.

It does not have any impact on the widespread use of our MSCI indices as a tool for measuring global equity market performance.

And it doesn't change the manner in which the use of our indices is embedded in the investment process of so many clients around the world.

While the spotlight has recently been on our Index business, I would like to note that our Index and ESG Subscription run rate is 37% of our $800 million subscription total.

MSCI is far more than an index company.

Over the last 15 years, we have built or acquired a range of mission critical investment decision tools that help our clients construct, manage, measure their portfolios across multiple asset classes, from equities to fixed income, alternatives, derivatives and now real estate.

You see that in our risk management analytics products, where for example, despite a tough operating environment, hedge funds are increasingly interested in the tools we are developing to help them meet the growing disclosure requirements of their investors and regulators.

You see it in our PMA unit, where our newer products are providing incremental insight about risk and performance and in direction of the markets.

And you see it in our Governance business, where our strategy of growing in the range of governance services we offer, beyond proxy research and voting, is starting to have an impact on revenue growth.

Speaking of Governance, it is encouraging to note that the positive momentum of the proxy research and voting business.

This reflects our focused efforts to improve our technology platform and our commitment to client service and high-quality research.

We are encouraged to see clients who value our service and the quality of our research coming back to our platform.

And we believe we are posed to regain some of the market share that that business ceded in the recent years.

As I noted earlier, MSCI's core strategy is to be a leading provider of mission critical investment decision tools for all asset classes, with a focus on helping our clients in the construction, management and measurement of their portfolios across all asset classes and all markets in the world.

We're very excited to be taking another step in that strategy with the acquisition of IPD, which we announced last week.

IPD is a leading provider of investment decision tools to institutional investors in real estate around the world, with an (inaudible) database of information on the commercial real estate market covering 60,000 properties valued at nearly $2 trillion US.

IPD's data products and clients strongly complements our existing business, with IPD offering real estate investment performance benchmarking, performance analysis, market indices, rich management tools, and market research to the owners of and investors in commercial real estate worldwide.

The real estate investment market presents considerable opportunity for growth for us.

We believe that the global property industry is starting to be viewed as one of the major investment asset classes alongside equities, fixed income, commodities, private equities, and hedge funds, all asset classes in which we have products that serve our clients.

This all means a more institutional, more active and more global marketplace for [property], boosting cross-border market access and understanding.

We can further accelerate that evolution through the acquisition of IPD.

Furthermore, the addition of IPD will enable us to expand our multi-asset class offering by integrating private real estate assets into our risk and performance models, as well as adding real estate benchmarks to our family of market leading equity indices.

I believe this is great example of how we intend to deploy our capital to support our growth opportunities.

As a management team, and with the support of our Board, we are focused on identifying and investing in organic growth opportunities.

We will also deploy our capital in a disciplined fashion to supplement our organic growth by acquiring businesses like IPD that meet our strategic and financial criteria.

So before opening up the line to your questions, I would like to summarize our results one more time.

Despite a difficult operating environment, our Q3 revenues increased 5% driven by an 11% increase in Index and ESG Subscription revenue, a 5% increase in risk management analytics and a 4% increase in our Governance revenues.

Our Index franchise is an industry leader and continues to be recognized as such, as evidenced by the launch of new ETFs based on our indices and the global reach of our products.

Growth, smart growth remains a priority for MSCI.

We are focused on identifying and investing in organic growth opportunities and we will deploy our capital in a disciplined fashion to supplement that by acquiring businesses that meet our strategic and financial criteria.

Importantly, MSCI is far more than an equity index company.

Our strategy has always been to be a leading provider of mission critical investment decision tools.

The announced acquisition of IPD is another step in the pursuit of that strategy that we think will generate significant returns for our shareholders.

Finally, I want to add to some of Bob's comments about Hurricane Sandy.

Many of our employees worked long hours away from their own families to ensure that we remain fully operational.

I want to thank them for that effort.

I want to thank all of those workers across New York and New Jersey and Connecticut who continued to work hard to try and rebuild our region and our economy.

On this election day, we owe them a big vote of thanks.

Now let us open the lines up for questions.

Thank you.

(Operator Instructions).

First question is from Georgios Mihalos of Credit Suisse.

Your line is now open.

Just wanted to touch on the asset-based fees.

I think, Bob, you had mentioned that the revenue mix was a bit negative in terms of the price being skewed a little bit more to Vanguard.

But the 3.7 bit, ex-Vanguard, how does that a compare to what you have received, historically?

We include -- just to make sure I've got your question, when you include looking back with Vanguard, what would that have been?

No.

Ex-Vanguard I think you mentioned that 3.7 is the basis point fee ex-Vanguard.

It would be about the same, Georgios.

Okay.

And then can you kind of give us a bit of an early read into what you are seeing in terms of sales trends and cancellations in the fourth quarter?

Obviously Q4 is a big quarter in terms of retention.

But it also kind of sounded like maybe some sales slipped from the third quarter into the fourth quarter.

Is that a fair categorization?

Yes.

Georgios, its a carryover from what we said at the end of Q2, we saw an elongation of the sales pipeline that I talked about in my comments.

That's carrying over from a sales perspective.

We expect to see that into Q4.

With respect to cancellations, you look back over time and you can see an uptick in the fourth quarter.

We're seeing now but it's too early to tell what the fourth quarter will bring.

Your next question is from David Togut of Evercore Partners.

Your line is now open.

Good morning, Henry.

Good morning.

You walked through some of the reasons for the decline in aggregate retention rates in the four performance and risk businesses in the quarter.

Can you give us your perspective on how you expect aggregate retention to trend going forward from here?

In other words, are the 3Q retention levels sustainable?

I think we have historically shown strong retention rates.

You can look back over time.

I think that our issue is really about the elongation of the sales platform.

As you can see 90% right now in the quarter, 91% year-to-date is reflecting what I would say a fairly strong overall retention rate across the business.

But nonetheless, retention rates were down in all four businesses year-over-year.

Isn't that a concern for you?

I think the -- if you go back and look at the recent quarters and some of the comments that we have made, we mentioned that we have had extremely robust retention rates, even in the context of challenging environment for our clients and so there is a tad softening of that happening.

But it is not a cause to worry at this point, given what we are seeing in the marketplace and what we are seeing in our pipeline.

The other thing I might add to that, too, David, is remember that the retention rate is a quarter focused and so anomalies in a quarter can tend to skew it.

When I look at the retention rates on a year-to-date basis, you can see in the earnings release, we're effectively flat to where we were year-to-date a year ago.

I see.

And then I noticed, Bob, that you didn't disclose core retention rates in the quarter.

Is there a reason for that?

We felt that the difference, while it was important in the smaller level, we would have seen some changes, so we felt that with sticking to the aggregate retention rates was fine.

There were some products costs, if we were to show it -- and we will show it in the 10-Q, you will see a slight uptick on the core retention rate when you see it in the Q when it's filed.

Thank you.

Your next question is from Bill Warmington of Raymond James.

Your line is now open.

So first question I had was -- I wanted to ask if you could talk a little bit about what changed, if anything, in the pricing with the legacy BlackRock business?

Nothing has changed on the legacy BlackRock ETF -- the legacy ones are exactly the same way they were before the Vanguard announcement.

Okay.

And then second question was to ask about capital allocation policy -- to ask if you guys would think about doing a buyback or dividends here?

And any restrictions on the use of the cash that you have, in terms of foreign versus domestic?

We are -- our strategy is very much focused on growth and how do we go back to a higher growth environment.

Clearly, the world is challenging today on a cyclical basis but on a secular long-term basis, we believe that there are a lot of forces that are propelling strongly what we do.

And therefore, we are very much focused on capitalizing on those organic growth opportunities.

And how do we capitalize on an increased level of M&A opportunities that we see out there.

And therefore, for now, we want to make sure that we have enough cash and we have enough capital and we have enough equity base in our balance sheet to be able to move rapidly to take advantage of those opportunities.

We also believe that as the -- eventually, the cycle turns, those opportunities may increase.

And, therefore, it's pretty critical for us to keep our powder dry.

Next question is from Chris Shutler of William Blair.

Your line is now open.

Hey, guys.

Good morning.

Could you just give us a quick update, Henry, on the competitive environment for new deals, both in RMA and PMA?

In PMA the competitive environment remains the same as the last few quarters.

And we believe is here to stay, not that we are going to go back to a pre-competitive environment.

I think it's here to stay.

And, therefore, the premium to operate in that environment is a great deal of innovation, service to clients, stay very close to them, and price our products in all areas according to the value proposition that we offer.

So we are -- we have taken measured steps to increase the level of product development.

We're very focused on increasing the level of clients service in this business, and so on and so forth, right?

So that's not that much of a change over the last few quarters.

In the RMA business, the level of competition is a lot less than it is in the PMA business, but I think over time we anticipate that more competition will come to the RMA business.

And, therefore, we have began to take steps to operate on a basis as if it were a wide open competitive environment, even if it's not here today.

And does that imply that you've been lowering prices?

No.

No.

What it implies is that we are stepping up product development efforts.

You mentioned -- you heard Bob mention a major data center migration that we did in order to significantly upgrade our performance and capabilities for the RMA business.

And being able to launch products faster later -- so that's another step that we've taken.

We are increasing our headcount in emerging market centers to be able to be able to service clients and do more managed services for them.

We have began to take quite a lot of steps to operate the business more nimble and obviously more competitively, even if the competition is not here.

Okay.

And then, Henry, most of the assets owners that we've spoken with in recent weeks have said that they remain committed to using MSCI indices, but FTSE obviously has their own growth plans in the US and appears to be stepping up its investment on the service side of the business.

So just curious, anecdotally, what kind of questions or comments you've been getting from asset managers and owners in the weeks since the Vanguard announcement?

There's been a flood of positive comments by asset owners and asset managers worldwide.

It's even funny that sometimes we made outreach calls to clients just to make sure they understood what we were doing and why our products are differentiated.

And some clients have even said, don't worry about it, we're a total believer in MSCI, and I don't know why you guys are losing sleep over this.

So it's been, to some extent, the opposite.

We've wanted to outreach and have an outreach program to them.

So we've gotten quite a lot of comments like that.

Secondly, we have seen a meaningful amount of assets switches from the Vanguard funds to the iShare funds.

I think more of that will come as we progress in the quarter, will be our guess.

And I think we are -- we spend a little bit of time internally here assessing our strategy in the context of all of this.

And I think we want to reaffirm that we are not in the business of getting market share and not revenue or diminish profit.

That is not the business we're in.

We're not a non-profit.

We're not in the business of market share.

We're in the business of creating shareholder value for our people and our shareholders.

And we are going to operate the business that way.

And that means you've got to have a higher premium on innovation, on quality, on the network effect between the asset owners and the asset managers, and being able to create a better sort of brand on the retail market and the financial advisory market.

And you are going to see us do more of that in the next few weeks.

So it's a combination of things but importantly it is -- we are not in the business of loss leader products and services.

Thank you.

Thank you.

Next question is from Toni Kaplan of Morgan Stanley.

Your line is now open.

Hi.

Thank you.

Since BlackRock has been promoting your indices as the Gold Standard, have you had any new potential sales from new customers -- like has that been helping the sales pipeline there?

I think it's too early.

This just happened what, two, three weeks ago.

So too early.

What I can tell you -- too early to pin any specific sales to the comments by iShares.

What I can tell you is that all across the world, in terms of our Index subscription business and our Index licensing business, it is pretty much business as usual.

They have been no effect whatsoever on the loss of Vanguard at this point.

Great.

And other than FTSE, have you seen any increased competition from other index providers trying to be more aggressive and trying to get some customers to switch to their indices?

Thanks.

Not in the recent past.

Okay.

(Operator Instructions).

Next question is from Ed Ditmire of Macquarie.

Your line is now open.

My question is with regard to BlackRock and their -- the new products and international ETFs.

Hypothetically, if this new segmenting strategy isn't successful for BlackRock and it isn't able to stem its share challenges, and it decided that the same kind of strategy it employed in its domestic ETFs, where it offered the same high-quality, top index branded ETFs but simply at lower prices was applied to its international prices, i.e., offering the MSCI emerging market and [EFA] indexes at lower prices; are you confident that something like that could be -- could happen, while you would be able to continue to get the kind of pricing arrangements that's been customary with them?

Okay.

I think the -- we are very confident on the iShares strategy of market segmentation.

And the reason is because the value proposition of ETFs to different types of the -- different parts of the market is very different.

You have institutional asset owners and some asset managers who value enormously the liquidity of the product, the tightness of the bid on asset spreads, the tracking of the fund vis-a-vis the benchmark and the like.

And when they are in positions of moving large amounts of assets in and out, that liquidity and that tightness of index of markets becomes much more important than the expense ratio of the fund.

So we're confident that that strategy is a good one at this point.

And also, I think with respect to what -- how the market evolves, remember that -- we've got to remember that the ETF asset class is on a secular growth over time.

And, therefore, you on one hand, if there is price erosion you want to put that against the significant increase of the market itself that will benefit us quite substantially over time.

Let me ask one follow-up.

BlackRock is very bullish on the possibilities of the fixed income ETF category.

Can you talk at all about what kind of opportunities could be there for MSCI if, in fact, that fixed income ETFs become a really exponential growth story over the next ten years?

As you know, Ed, we do not have fixed income indices at this time.

We had them over a decade ago and sold them.

We don't have them now.

And we're not intending to enter that market at this point.

So we don't have a way to benefit directly from that.

We are benefiting indirectly, though, because a number of indices that we have built that have more, either value-oriented or fixed income like characteristics are being embraced by the marketplace.

So for example, our minimum volatility equity indices, in which you can invest in the basis of an equity instrument, but have a lot lower variability and volatility which are therefore closer to maybe the riskier end of the fixed income market, those are in significant demand.

And we have licensed our indices for investment products and for data quite a lot in the last few months.

So there are other ways to play that, the fixed income trend indirectly.

We are also hoping that as we close on the IPD acquisition and play a larger role in risk ETF and other forms of investment property indices, that many of those properties that have high-yielding assets we can turn them into indices that are -- that have quasi fixed income characteristics.

Okay.

Thank you.

Thank you.

This ends the Q&A portion of today's conference.

I would like to turn the call over to management for any closing remarks.

Thank you, Tyrone, and thank you everyone for joining us on the call.

We look forward to addressing you again in a few months.

Ladies and gentlemen, thank you for your participation in today's conference.

This concludes the program.

You may now disconnect.

Have a wonderful day.