Good day, ladies and gentlemen, and welcome to the MSCI Second Quarter 2016 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. As a reminder, this conference call is being recorded. I'd now like to turn the call over to Mr. Stephen Davidson, Head of Investor Relations. You may begin.

Thank you, Chanel. Good day and welcome to the MSCI second quarter 2016 earnings conference call. Earlier this morning, we issued a press release announcing our results for the quarter. A copy of the release and the slide presentation that we have prepared for this call may be viewed at msci.com under the Investor Relations tab. Let me remind you that 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 were 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 in our most-recent Form 10-K and our other SEC filings. During today's call, in addition to GAAP results, we also refer to non-GAAP measures, including 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 a baseline for the evolution of results. You'll find a reconciliation of the equivalent GAAP measure in the earnings materials and an explanation of why we deem this information to be meaningful, as well as how management uses these measures on pages 22 to 26 of the earnings presentation. On the call today are Henry Fernandez, Chief Executive Officer, and Kathleen Winters, Chief Financial Officer. With that, let me now turn the call over to Mr. Henry Fernandez. Henry? Henry A. Fernandez - Chairman, Chief Executive Officer, President & Director: Thanks, Steve, and good day, everyone. And please join me in welcoming Kathleen to her first quarterly earnings call at MSCI. Please turn to slide four for a review of our financial results. The strength of our franchise, our unique position in the investment…

Thanks, Henry. Let's turn onto slide nine, where I'll take you through an overview of our second quarter results. We delivered a very strong Q2 across all these measures as you can see. So, let me walk you through each measure. We delivered a 7.4% increase in revenue, driven primarily by an 8% increase in recurring subscription revenue, and a strong overall revenue growth is despite the market headwind, which caused asset-based fee revenue to decline. There was a negligible impact from foreign currency exchange rate fluctuations on our subscription revenues. Subscription revenues exposed to foreign currency exchange rate fluctuations represented only 21% of our base year-to-date, principally euro, pound and Japanese yen, with pound exposure representing 8% or $36 million of our subscription revenues year-to-date. As a reminder, we do not provide the impact of foreign currency fluctuations on our asset-based fees tied to average AUM, of which approximately two-thirds are invested in securities denominated currency other than the U.S. dollar. Operating expenses and adjusted EBITDA expenses were down 4% and 5%, respectively on a reported basis. Excluding the impact of foreign currency exchange fluctuations, operating expenses and adjusted EBITDA expenses both (19:11), reflecting a $2.7 million FX benefit to operating expenses and a $2.5 million benefit to adjusted EBITDA expenses. Expenses that are exposed to foreign currency exchange rate fluctuations represented 42% of adjusted EBITDA expenses year-to-date. The primary currency moves that drove the benefit was the British pound with smaller benefits from the Mexican peso and Indian rupee as well as other currencies. The pound represented 12% of adjusted EBITDA expenses or $35 million. So our expenses saw a net benefit from the recent weakening of the pound. We delivered a 28% increase in operating income and a 24% increase in adjusted EBITDA, resulting in 690 basis…

Our first question comes from the line of Alex Kramm of UBS. Your line is now open.

Hey. Good morning, everyone. Henry A. Fernandez - Chairman, Chief Executive Officer, President & Director: Good morning.

Hi. Just coming back, I guess, to some of the comments on the selling environment and in particular, as it relates to Analytics and the retention coming down there a little bit, the sales being a little bit lower. So can you maybe parse out what you're seeing, is this environmental factors, is this also maybe – over the last couple of years, you've been investing a little bit less. But also you've been talking about maybe raising prices in some areas. So those are couple of things that you've been working on. So, just where is the maybe little bit of the pressure this quarter coming from, if you think about some of those dimension?

Hi, Alex. Thanks for the question. Yeah. So, overall, if you look at the total sales numbers, really nice performance I think for the quarter, but when you look at Analytics, yeah, I would say that's where we're seeing some challenges is the quarter. It is a challenging environment right now. And as you probably know in Analytics, sales can be a little lumpy in that segment. But what we're seeing is that we're seeing banks continuing to be under cost pressure, hedge funds underperforming. So it's a little bit of a challenging environment right now. But that said, we look at the pipeline, and the pipeline is very solid. Deals are taking a little bit longer to close, but we do feel like that pipeline continues to remain solid. And we'll be working to execute on that.

Okay. And so some of the moves that you've been making in terms of maybe investing less or asking for more pricing, you don't think that's a driver at all?

No. We're not seeing anything with regard to any of the pricing that we've done, causing any cancels or anything like that.

Okay. And then maybe to my second topic, just real quick on the buyback commentary, maybe you can just flush it out a little bit more just so I understand it right. So you're basically saying you're at 3 times and 3 times to 3.5 times is kind of your range. But did I hear you right that you could explore going a little bit above the range, maybe to 4 times or so to maybe have a little bit more firepower in the near term and then delever from there? And then just generally speaking, how would you all else equal think about the pace of buybacks from here?

Yeah. We are looking at potential additional financing. And we might lever up a little bit higher than the stated range. I wouldn't expect that it would be significantly higher. And I expect that you'd see a pretty quick delevering if you just consider our strong business model and our cash flows. I think we'd delever pretty quickly from there. But again, it would be a pretty slight increase above the stated range.

All right. Fair enough. Thank you.

Thank you. And our next question comes from the line of Ashley Serrao of Credit Suisse. Your line is now open. Please go ahead. Ashley Neil Serrao - Credit Suisse Securities (USA) LLC (Broker): Good morning. Henry, I know you've looked at the fixed income arena from time to time. I was hoping to just get an update here on your plans. And just a general comment on whether the M&A market seems attractive at this point in time. Henry A. Fernandez - Chairman, Chief Executive Officer, President & Director: Yeah. So, as all of you know, when you look at the entire franchise of MSCI, we're extremely happy and pleased of where we are in all the components of that franchise – the major components of that franchise. And the exception is in fixed income analytics, on both counts, on our desire to continue to be a leader on the strength of fixed income commonalities in the context of multi-asset class analytics, i.e., the component of fixed income in multi-asset class analytics, and then secondly to be a much bigger participant in providing fixed income analytics for fixed income portfolio managers around the world. So with that, we are doing a few things. We are meaningfully investing organically in fixed income analytics, particularly as it relates to some of the changes that are going on in that sector of the industry that provide cash and provide great opportunities for us to do things organically. And then secondly, we are always evaluating the M&A market for these kinds of assets and evaluating them on the basis of what they can do for us. Can they really fit into what we do or not and then decide if it's a good deployment of capital. Regardless of what we do or don't do in any M&A environment, we are extremely focused on – if we deploy capital, getting the rates of return on the capital that we are – that we put to ourselves and with our board. So this is a focus – very much of a focus area clearly for the company as we mentioned in the prepared remarks, and our team to continue to develop it. Ashley Neil Serrao - Credit Suisse Securities (USA) LLC (Broker): Great. Thank you for the color there. And we have a question for Kathleen. I believe you're spearheading the creation or optimization of several franchise metrics to better manage the business. Can you just give us an early update on how things are going there so far?

Sure, I can do that. So maybe I'll step back a little bit and just give you my perspective after being here, not quite three months now. I think it would help to kind of catch my response in that way. So as I said, I've been here almost three months now and as you would expect I've spent most of that time, right, just learning the MSCI model and the organization. And I've been very impressed with the people in the organization, the assets and the really very attractive business model that we have. So I look at this opportunity and say, well, how can I help to take this franchise to the next level. And one of the ways that I can do that is to look at the metrics that we use to run the business and the financial management to run the business. So I'm really looking at reinforcing the rigor with which we make capital decisions and building out the analytics. In particular I think we can do a lot of good work around analytics, around our clients and in the product areas. And there's is a lot of system work that we are in the process of doing, so continuing to implement that system work to enable us to do those analytics to really make the best decisions. Ashley Neil Serrao - Credit Suisse Securities (USA) LLC (Broker): All right. Thank you for the color and thanks for taking my questions.

Thank you. And our next question comes from the line of Toni Kaplan of Morgan Stanley. Your line is now open. Toni M. Kaplan - Morgan Stanley & Co. LLC: Hi. Good morning. Can you give us a sense of how your customers are reacting to purchases of your Analytics products since Brexit? Have you seen any lengthening of the sales cycle, or conversely have you seen an increase in demand in some of the risk products? Henry A. Fernandez - Chairman, Chief Executive Officer, President & Director: Yeah. So, first of all, interestingly enough, one of our strongest regions of the world in Analytics sales and retention rates has been EMEA in the last couple of quarters. So that would be contrary to what a lot of people would have expected. And we've done that on the strength of the management team, the sales team in EMEA and very deep engagement with our clients. The softness that we have seen recently was more in Asia-Pacific on the heels of the uncertainties around the Chinese market and the like and a bit of softness recently in the U.S. So what happened also in the quarter was that Analytics sales tend to be very lumpy in the quarter and the second attribute of Analytics sales is that they tend to be very back-ended in the quarter, meaning, the last two weeks of the quarter, typically represent a meaningful percentage of sales. So therefore, given the way Brexit happened which was a week or so before the end of the quarter, quite a lot of our European clients were distracted understanding Brexit and what it meant for them and all of that and therefore the signature that we needed in their contracts did not happen and it was pushed off by a…

Yeah. And I would just – maybe to add to that and concur that we feel comfortable on those long-term margin targets, but a little more color just specifically to your question on All Other and to remind you that we've got a real seasonality impact going on when you look at first half versus second half with regard to real estate within our All Other segment. So, that seasonality impact influences it, as well. Toni M. Kaplan - Morgan Stanley & Co. LLC: Thanks a lot, guys.

Thank you. And our next question comes from the line of Joseph Foresi of Cantor Fitzgerald. Your line is now open.

Hi. I know you talked about this in your initial remarks, but maybe you could just frame for us the one or two top areas of savings versus the one or two top areas of investment, first half of the year versus second half of the year, so we get a good understanding of exactly where you're focusing your efforts?

Yeah. So, from a savings perspective, if you look at expenses year-over-year, that's basically driving a large part of where the savings come from. And when you think about investment, really across all areas, investing in our product segments, in research, in our coverage organization, and in technology, so it's really doing that smart investing looking across each of the areas and saying, what smart investments can we do to drive future growth. So I think, it's pretty much across the board.

Okay. Henry A. Fernandez - Chairman, Chief Executive Officer, President & Director: And importantly, we are purely in indexes is about factor investing. There are other areas, but we clearly are putting a lot of effort there in investing. In Analytics, it's about the new fixed income analytics and the new interface. In ESG and in real estate, it's across the board. And in terms of savings, I just want to emphasize, given the last few years of MSCI, that the – whenever we talk about investing, we are really determined to self-fund this investment plan and not take them out of the target margins, profit margins that we have. And, therefore, we will continue to be extremely focused on looking at our entire cost base and creating efficiencies out of that, reassigning resources, or redeploying resources in order to match them with the best opportunities, and so on and so forth. So, a lot of this talk about investing is – I wanted to be very clear that it's not a philosophy to knock down margins or anything like that at this point. The margin expansion that took place recently was because we had slowed down a bit on that self-funding investment plan, and obviously, we want to correct a bit of that in the second half.

Yeah. So as Henry said, the philosophy is not to take the investment out of margin, but to really drive hard on productivity and to think about that every day and to find the opportunities to drive productivity, so we can fund that investment.

Okay. And then I was wondering, is there any way you can frame for us your thoughts on, I guess, passive investment penetration levels and/or opportunity in new offerings? I mean, I guess, the reason why I'm asking is that the market is obviously performing fairly well in the U.S., so that has a positive impact. But I'm wondering what kind of growth rates you think you can generate from those two aspects of the business, just so we get a sense of what the baseline growth rate could be, should there be volatility in any particular quarter from something like Brexit or something else? Thanks. Henry A. Fernandez - Chairman, Chief Executive Officer, President & Director: Yeah. If I understand your question correctly, let me try to answer it in the following way. There is no question that the client base of a company like MSCI is going through some significant challenges from banks in their own balance sheets, from asset management units of banks, wealth management units of banks. So as you know, when banks get into difficulty and they start cutting, it goes across the board, regardless of whether they have great divisions or not, right? So hedge funds are underperforming, so they're pulling in a bit. Active managers are getting hit by passive and smart beta and the like, but we are seeing other opportunities. The non-bank wealth managers around the world are in growth plan. The asset owners are building internal capabilities, in-sourcing asset management. They need a lot of help with our tools. There are geographies around the world that are being very good to us like Canada and parts of the U.S. as well and so on and so forth. So I mean, we have a fairly diversified business. The other thing that…

Thank you.

Thank you. And our next question comes from the line of Chris Shutler of William Blair. Your line is now open. Chris C. Shutler - William Blair & Co. LLC: Hi, everyone. Good morning. Given the expense guidance is weighted more towards Q4, can you maybe at a high level help us think through how we should consider constant currency expense growth in 2017? Are we talking more kind of low-single-digits or mid-single-digits?

Yeah. We'll be working through our 2017 expense guidance as we go through our annual budget process. So, at that point in time, I think we'd be prepared to give you better color on that. Chris C. Shutler - William Blair & Co. LLC: Okay. And then on the increase in the leverage, just curious why you're considering increasing the leverage at this point? Is it that you have desire to buyback stock at a pace faster than your cash flow generation or is it fair to read that maybe you have a greater desire to have more optionality on the acquisition front? Henry A. Fernandez - Chairman, Chief Executive Officer, President & Director: Well, Chris, it's actually driven by the market conditions in the high yield market. They are exceptionally strong for actuaries (57:50) like ours. As you know, there is always a big flight to quality in that market. Rates have come down and spreads have been – are attractive. There is a significant appetite for high quality paper like ours that gives them higher yields on sovereign bonds around the world. So, we are extremely opportunistic. We don't have to do anything. But if the right conditions are there, we will want to do it. And that's why Kathleen commented that, if we get exceptional demand, if we go to the market which is not clear, but if we see exceptional demand at fairly low yields, we may want to do a bit more than we would normally do, and therefore, maybe go a bit higher than 3.5 times leverage. But that's what is driving us in order to relever to the desired levels. And then the flip side of it is, okay, what are you going to do with the proceeds? And I think it's the same as always, organic growth, which is already funded by the current cash flows, it will be buybacks, and if there are opportunities in the M&A market, we will do that. But we're not doing this, because we are gearing ourselves to do any acquisition, it's just being opportunistic.

Yeah. And this is pretty consistent with what we've done in the past, right. As leverage came down, we then look to lever up again, right? We were at 3.7 times after we did the debt offering in August 2015. And then, as you can see, we brought the leverage ratio right back down again after that. Henry A. Fernandez - Chairman, Chief Executive Officer, President & Director: I think, a big part of this thing is we want to deliver on the promise that we have made which is, we said we will be 3 times to 3.5 times gross leverage. If we delever, we want to get back into that range. We clearly want to do it opportunistically, not automatically. If yields were really high, we'd want to wait to do that, but if the yields are attractive, we want to get back to there, and therefore be a consistent communicator of our policies and messages. Chris C. Shutler - William Blair & Co. LLC: Okay. And I know, I want to sneak one more in here if you don't mind. You talked about the need to continue to invest in Analytics as you've been saying for a while. But at the same time saying comp in the Analytics tech group was down. So, help us reconcile those two items. Henry A. Fernandez - Chairman, Chief Executive Officer, President & Director: Yeah. I think the comps that we're talking about in the Analytics is just simply we focus intensely on the head count there on the projects and which areas, so we ended up – the team in Analytics ended up reprioritizing projects, reprioritizing head count where the head count should be located and that had a impact in compensation expense, not individual, clearly compensation. So, it was a big effort in continuing to make sure that all of our expenses in Analytics, including the head count, is completely focused on the right projects that have the highest capital return, the highest impact and the like, and not be involved in a lot of other things that may have much longer payback or lower payback. So, that's a big effort of what we did. And that has allowed us to increase the margin and at the same time, fund new initiatives, including this fixed income analytics initiative which we're not planning to – when we started with the budget at the beginning of the year, we had not put that into our budget and the opportunity came up given the changes in that space, and we are self-funding that increase in investment in fixed income analytics out of all those efficiencies. Chris C. Shutler - William Blair & Co. LLC: All right. Thanks a lot.

Thank you. And our next question comes from the line of Keith Housum of Northcoast Research. Your line is now open.

Good morning. Thanks for taking my question. Two questions for you. I guess the first one, you guys announced the disposition of the Global Occupiers business in June to Jones Lang LaSalle. Can you provide a little more color on the size of that business and what it means perhaps going forward? Henry A. Fernandez - Chairman, Chief Executive Officer, President & Director: Yeah. It's a relatively small business within real estate, right, it's in real estate and relatively small. But importantly, it was a business whose client base were corporate in which we were helping them optimize their facilities footprint. And we remain extremely focused on MSCI in which we say, our client base are institutional investors and their advisors, and not sort of the corporate. If it is a corporate, the pension fund of a corporate, for example, the treasury of a corporate. And therefore, we have no business being in that part of the space. So, we therefore decided that that segment of the product line in real state was better off housed in another organization that will buy it that will then make better use of it.

And Keith, that business was a very small business as part of our portfolio, quite immaterial in the scheme of things.

Got you. And then the next question for you is that non-recurring revenue over the past three quarters has been up substantially over, I guess, the prior year, sort of like 30%. How should we think about non-recurring revenue going forward? Is that kind of focus of yours to grew more of that through one-off projects or how should we think about that going forward? Henry A. Fernandez - Chairman, Chief Executive Officer, President & Director: I'm sorry, can you repeat what kind of revenues you were referring to?

Your non-recurring revenue. Henry A. Fernandez - Chairman, Chief Executive Officer, President & Director: The non-recurring revenue. Yeah. So, we have very much focused on every dollar of revenue. There was a little bit of bias in the past of focusing on only recurring revenue and not as much as what we call one-time revenue, which is actually most of the revenue for everyone else in the world. So, we reenergized our goals and objectives with the coverage team to make sure that sure that we were focused on every dollar or every pound, every euro of revenue anywhere else in the world. And therefore, this has resulted on higher, what we call, one-time or non-recurring revenues in the company. They are very lumpy, obviously. So of course, we'll be more – some quarters will be less and the like. But there is a significant effort to ensure that we get everything that is worth for our financial model.

Great. Thank you.

Thank you. And I'm showing no further questions at this time. I would now like to turn the call over to Mr. Stephen Davidson for closing remarks.

Thank you very much, everyone, for your interest in MSCI and have a great afternoon.

Ladies and gentlemen, thank you for participating in today's conference. This concludes today's program. You may all disconnect. Everyone have a great day.