MSCI Inc. (MSCI) Q3 2012 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to the MSCI Third Quarter 2012 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. Now I'd turn the conference over to Edings Thibault, 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 2012. A copy of that release may be viewed on our website at 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 31, 2011, and other SEC filings. Today's earnings may -- 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 exit charge, restructuring costs and nonrecurring 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 in 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 rate 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 subscriptions and product licenses that we will record over the next 12 months, assuming no cancellations, new sales, changes in the assets and ETFs license to our indices or changes in foreign currency rates. Please refer to Table 10 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, and good morning. Before we begin our review of the third quarter results, I want to give you 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 7 World Trade Center in lower Manhattan. We owe a big round of thanks for 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 continue 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 our 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. The non-recurring revenues, which tend to be more volatile, as I mentioned earlier, fell by $3 million or as a result of lower fees for unlicensed derivatives and non-recurring governance revenues. On a run-rate basis, our subscription revenues grew 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 continue to defer decision-making on new products. This elongation of our sales pipeline weighed on our sales comparisons. However, our retention rate remained at 90%. Now let us take a wholesome look at the performance of each of our major product lines, starting with our subscription index and ESG products, where revenues grew 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. Fast 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. Cancelations 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 changes in the underlying asset mix. Bottom performance enclosed in the Vanguard ETFs, which are generally our lowest fee products, compressed the average basis point fee. Before I get into the discussion of ABF run rates, let me clarify that we continue to reflect the Vanguard revenues in our reported revenue, along with related AUMs, as a measure of performance. However, prior policy of reflecting known cancels, we have adjusted our run rate, which is a forward-looking measure, to reflect the loss of the Vanguard ETFs. Our asset-based fee run rate fell by 3% year-over-year. But if we exclude the impact of the Vanguard ETFs at both period, 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 profile. Overall, risk cancels increased, with most of that coming from Europe. The retention rate is 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 upgrade that impacted our sales. Our 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, with our moves to match the aggressive pricing of our competitors having an impact on retention rate. We are seeing strong demand for our models and data products from U.S. hedge funds offset by weaker sales to other client types. Our newer products continue to have an impact, as they accounted for almost 50% of the sales on the third quarter. Product introductions during the third quarter included a new China equity model and a European stochastic 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 consultation data and analytics product, which was launched in June of last year, and an improvement in retention rates, which have risen to 91% over the first 9 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 a 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, with 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-cost 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 the year ago, and 45.2% for the first 9 months. We continue to plan for our margins to be flat for our current subscription business. However, the impact of Vanguard switch and the dilution from the IPD acquisition, which I'll talk to in a moment, are likely to compress our margin -- 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've 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. If we 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 support teams, 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 to 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 continue to maintain a tight grip on our core expense base. Let me now turn it over 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 broader -- 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 4 weeks since the announcement by Vanguard of its decision to transition to new index providers for certain of its ETFs. This is an appropriate time to update you on our relationships with other ETF providers more broadly, 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 is also a group of investors who place a premium on low expense ratios. I think it is fair to say that we weren't surprised by the manner and the speed in which the ETF providers served in that last group that is focused on lower 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 defining and measuring markets. MSCI indices are differentiated by the quality of our data, our high level of service, our broad 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 ETF 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 iShares business, the world's largest manager of ETF assets, describes our indices as the gold standard. It is even stronger affirmation when iShares selected 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 -- the foreign ETF in Hong Kong by one of the largest asset managers in China. And today, nearly every major ETF providers 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, sovereign 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 thus, 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 explicit contracts with asset owners that call for them to measure their performance against one or more MSCI indices. Our data provides asset 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 of our indices provide -- the value of the indices -- the value that our indices provide 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 non-for-profit entity that is primarily focused on U.S. 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 an any impact on the widespread use of 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'll 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 risk disclosure requirement of their investors and regulators. You'll see it in our PMA unit, where our newer products are providing incremental insight about risk and performance and the direction of the market. And you see it in our governance business, where our strategy of broadening 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 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 poised 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 are 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 unparalleled database of information on the commercial real estate market, covering 60,000 properties valued at nearly USD 2 trillion. IPD's data, products and clients is strongly complementary to our existing business, with IPD offering real estate investment performance benchmarking, performance analysis, market indices, risk management tools and market research for the owners of, and investors in, commercial real estate worldwide. The real estate investment market presents considerable opportunities 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 we serve -- 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 believe 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. IPD is a 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 that 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 approach. 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 and we think will generate significant returns for our shareholders. Finally, I want to echo some of Bob's comment about Hurricane Sandy. Many of our employees work 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 continue 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.

[Operator Instructions] First question is from George Mihalos of Crédit Suisse. Georgios Mihalos - Crédit Suisse AG, Research Division: 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, can skew a little bit more to Vanguard. But the 3.7 bps x-Vanguard, how does that compare to what you've received historically?

We include -- sorry, George, just to make sure I've got your question, when you include -- looking back, with Vanguard, what would that have been? Georgios Mihalos - Crédit Suisse AG, Research Division: No, no. x Vanguard. I think you mentioned that 3.7 is the basis point fee x-Vanguard. Is that kind of steady?

Would be about the same, George. Georgios Mihalos - Crédit Suisse AG, Research Division: Okay, great. And then can you kind of give us a bit of an early read into what you're seeing in terms of sales trends and cancelations in the fourth quarter? Obviously, 4Q 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?

George, that's 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 the sales perspective. We expect to see that into Q4. With respect to cancelations, you can look back over time and you can see an uptick in the fourth quarter. We're seeing some now, but it's too early to tell what the fourth quarter will bring.

Our next question is from David Togut of Evercore Partners.

You walked through some of the reasons for the decline in aggregate retention rates sit in the poor performance of 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've 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.

And then the last, retention rates were down in all 4 businesses year-over-year. Isn't that a concern for you?

No. David, I think, the -- if you go back and look at the recent quarters on some of the comments that we have made, we mentioned that we have had extremely robust retention rates even in the context of a challenging environment for our clients. And so there is a tad softening of that happening, but it's not a cause to worry at this point and given what we're seeing in the marketplace and what we're seeing in our pipeline.

The other thing I might to add to that, too, David, is remember that the retention rate is a quarter focus, 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 differences, while it was important on a smaller level, we would have seen some changes, but we felt that with sticking to the aggregate retention rate was fine. There were some product costs, sales. If we were to show it, we'll show it in 10-Q. You'll see a slight uptick on the core retention rate when you see it in the Q when it's filed.

Our next question is from Bill Warmington of Raymond James. William A. Warmington - Raymond James & Associates, Inc., Research Division: 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 ETF fee -- the ETF, the legacy ones are exactly the same way they were before the Vanguard announcement. William A. Warmington - Raymond James & Associates, Inc., Research Division: Okay. And then the second question was to ask about the 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.

The next question is from Chris Shutler of William Blair. Christopher Shutler - William Blair & Company L.L.C., Research Division: I guess, could you just give us a quick update, Henry, on the competitive environment for new deals both in RMA and PMA?

I think on PMA, the competitive environment remains the same as the last few quarters, and we believe it's here to stay, not that we're going to go back to the 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, being 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 major steps to increase the level of product development. We're very focused on increasing the levels of client service on 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. Christopher Shutler - William Blair & Company L.L.C., Research Division: And does that imply that you have been lowering prices?

No, no. What it implies is that we are stepping up our product development efforts. You mention -- 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 service clients and do more managed services for them. We've began to take quite a lot of steps to operate that business more nimble and obviously more competitively, even if the competition is not here. Christopher Shutler - William Blair & Company L.L.C., Research Division: Okay. And then, Henry, most of the asset 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 U.S. 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 the -- of positive comments by asset owners and asset managers worldwide. It's even funny that sometimes we make average calls to clients just to make sure they understood what we were doing and why our approach 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. I mean, we've wanted to average -- have an average program to them, so we've gotten quite a lot of comments like that. Secondly, we have seen a meaningful amount of asset switches from the Vanguard funds to the iShares 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 at non-revenue or diminished profits. That is not the business we're in. We're not a nonprofit, we're not in the business of market share, we're not -- we're in the business of creating shareholder value for our people and our shareholders, and we're going operate the business that way. And that means, you 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're going to see us do more of that in the next few weeks. So it's a compendium of things. But importantly, we are not in the business of loss leader products and services.

And your next question is from Toni Kaplan of Morgan Stanley.

Since BlackRock's 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, 2, 3 weeks ago, so too early. What I can tell, it's 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's pretty much business as usual. There has been no effect whatsoever on the loss of Vanguard at this point.

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

Not in the recent past.

[Operator Instructions] Next question is from Ed Demetri of Macquarie.

My question is with regard to BlackRock and their -- their new products in international ETFs. Hypothetically, if this new segmenting strategy isn't successful for BlackRock and it isn't able to stem its share challenges and they 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 temporarily at lower prices were 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'd 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, the different types of -- 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 our spreads, the tracking of the fund vis-à-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 and depth of market 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 -- you'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 10 years?

We do not, as you know -- well, we do not have fixed income indices at this time. We have 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 on 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're also hoping that as we close on the IPD acquisition and play a larger role in REIT ETF and other forms of investment property indices that many of those properties that have high-yielding assets, that we can turn them into indices that have fixed income -- quasi fixed income characteristics.

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