MSCI (MSCI) Q4 2025: Custom Index Sales Surge 16% as AI Drives Multi-Segment Expansion

January 28, 2026 | By EarningsIQ Research

MSCI delivered broad-based double-digit growth in Q4, fueled by record custom index wins and accelerating AI-driven product innovation. The firm’s expanding capabilities in private assets, analytics, and non-US index flows are unlocking new client segments and deepening wallet share. Management’s conviction in AI as a cost and product accelerator signals a step-change in long-term investment capacity and product velocity.

Summary

• AI Transformation Accelerates: MSCI’s deep AI integration is materially boosting both operational efficiency and new product launches.
• Private Markets Inflection: Private capital solutions and real asset offerings are gaining traction, with EMEA momentum broadening global reach.
• Index Ecosystem Expansion: Custom index demand and ETF-linked inflows outside the US reinforce MSCI’s multi-asset, global franchise strength.

Performance Analysis

MSCI closed Q4 with organic revenue growth above 10%, driven by robust demand across index, analytics, and private capital solutions. Recurring net new subscription sales reached their second-highest level ever, with index and analytics both posting standout quarters. The index segment saw recurring subscription run rate accelerate to 9.4% growth, underpinned by a 16% jump in custom index sales—highlighting the firm’s success in meeting institutional demand for bespoke investment solutions.

Asset-based fees (ABF), fees tied to assets linked to MSCI indices, surged 26% YoY, propelled by record $67 billion quarterly inflows into equity ETFs. Notably, non-US flows and EMEA-listed ETFs outpaced the Americas, signaling a global shift in investor allocations. Private capital solutions (PCS) recurring sales soared 86%, marking a pivotal quarter as innovation and new offerings began to resonate with clients in both the Americas and EMEA. Retention remained strong at 94%+ overall, though sustainability and real assets saw some softness, reflecting sector-specific headwinds.

• Custom Index Acceleration: 16% growth in custom index sales, with major wins among hedge funds and banks, demonstrates the rising importance of tailored exposures.
• ETF Inflow Tailwind: Record ETF inflows into MSCI-linked products, especially in Europe and emerging markets, highlight the firm’s global index franchise.
• Private Asset Momentum: PCS and real assets showed breakout quarterly growth, validating long-term investment in these segments as asset owners shift allocations.

MSCI’s ability to drive both top-line and margin growth while investing heavily in AI and new capabilities underscores the resilience and scalability of its business model.

Executive Commentary

Strategic Positioning

1. AI as a Dual-Engine for Efficiency and Innovation

MSCI’s AI deployment is now a core strategic lever—reducing operational costs and accelerating product velocity. Management cited over 120 AI projects, ranging from automating ESG controversy analysis to enabling rapid custom index creation. AI-driven efficiencies are being reinvested into new product development, effectively doubling the firm’s innovation capacity without sacrificing profitability. This approach positions MSCI to outpace competitors in both cost structure and product breadth.

2. Private Markets and Real Assets Enter Growth Phase

PCS and real assets are moving from build-out to commercial traction, as evidenced by 86% recurring sales growth and new client wins in EMEA. Innovations like document management, transparency data, and private credit indexes are resonating, with AI enabling deeper data capture and analytics. Early success in new distribution channels, including wealth, signals a broader addressable market ahead.

3. Index Franchise Leverages Global Flows and Custom Demand

MSCI’s index business is benefiting from a global rotation of assets, with EMEA and APAC now outpacing the Americas in run rate growth. Custom index and basket builder solutions are unlocking new use cases for banks, hedge funds, and asset owners, supporting a shift toward personalized, outcome-oriented investing. The extension of the BlackRock ETF agreement through 2035 cements MSCI’s position as a foundational partner in the ETF ecosystem.

4. Sustainability and Climate: Transitioning to Broader Risk Solutions

While ESG new sales softened in the Americas, Europe is stabilizing, and MSCI is pivoting from pure ESG to a broader suite of emerging risk analytics, including AI, supply chain, and physical climate risk. Client consolidation of ESG providers is benefiting MSCI, and management sees long-term growth as sustainability evolves beyond traditional frameworks.

5. Active Managers and New Product Enablement

MSCI is repositioning itself as a profit center for active managers, helping clients launch fee-generating products and consolidate suppliers. Active ETF launches and custom product development are restoring growth in this pressured segment, with MSCI aiming to capture a larger share of the value chain.

Key Considerations

Q4 marked a turning point for several MSCI growth vectors, as AI-driven innovation, private asset traction, and global index flows converged to drive multi-segment expansion. The firm’s ability to reinvest efficiency gains into new product launches is reshaping its long-term growth algorithm.

Key Considerations:

• AI Leverage: AI is now a structural advantage, powering both cost savings and rapid product innovation across business lines.
• Private Asset Scale-Up: PCS and real assets are gaining critical mass, with new offerings and EMEA expansion broadening the revenue base.
• Index Fee Dynamics: Lower fee floors for super-scale ETFs (via BlackRock agreement) will modestly reduce ABF yield, but are offset by volume growth and strategic partnership longevity.
• Retention and Pricing Power: Retention remains robust overall; stable pricing contribution is supported by product enhancements and AI-enabled client value.
• Expense and CapEx Outlook: 2026 free cash flow will be pressured by higher cash taxes, interest, and London office CapEx, though underlying collections and working capital remain healthy.

Risks

Key risks include sector-specific softness in sustainability and real assets, with US ESG demand remaining under pressure amid political headwinds. Fee compression from ETF pricing resets, though modest, could pressure ABF revenue yield if not offset by continued volume growth. Execution risk exists around scaling private assets and sustaining innovation pace, especially as AI-driven reinvestment ramps up. Macro volatility and shifting asset allocation trends could also impact flows and subscription growth.

Forward Outlook

For Q1 2026, MSCI guided to:

• Tax rate of 18% to 20%, higher due to stock-based compensation headwind.
• CapEx increase tied to new London office and software investments.

For full-year 2026, management maintained long-term targets:

• Low double-digit revenue growth (ex-ABF), high single- to low double-digit adjusted EBITDA expense growth, and low to mid-teens adjusted EBITDA growth.

Management highlighted:

• Continued strong pipeline, with new product contribution to recurring sales up 20% in 2025.
• ABF expected to remain a double-digit grower through cycles, with ETF volume offsetting fee floor reductions.

Takeaways

MSCI’s Q4 results validate its transition to an AI-powered, multi-asset intelligence platform. The firm’s ability to compound growth across both legacy and emerging segments, while scaling innovation, is a rare advantage in the investment data and analytics space.

• AI-Driven Compounding: AI is structurally expanding MSCI’s efficiency and product development flywheel, with tangible impact on both cost and revenue growth trajectories.
• Private Asset and EMEA Expansion: PCS and real assets are emerging as material contributors, with EMEA now surpassing the Americas in index run rate—a sign of global diversification and new market leadership.
• Future Watchpoints: Investors should track AI-enabled product launches, PCS adoption, ETF fee yield dynamics, and ESG recovery in the Americas as key drivers of MSCI’s next phase of growth.

Conclusion

MSCI exits 2025 with momentum across core and emerging franchises, leveraging AI to accelerate both operational leverage and product innovation. The company’s diversified client base, global index reach, and expanding private asset toolkit position it for sustained growth—even as it navigates near-term cost and segment-specific headwinds.

Industry Read-Through

MSCI’s results offer a blueprint for data and analytics providers seeking to harness AI for both efficiency and product expansion. The surge in demand for custom indices, private markets analytics, and global ETF-linked exposures signals a broader industry shift toward personalized, multi-asset solutions. Competitors lagging in AI integration or global distribution may face increasing pressure, while those with scalable platforms and deep client relationships are best positioned to capture the next wave of growth. The pivot from ESG to broader risk analytics also foreshadows a redefinition of sustainable investing tools across the sector.

MSCI Financials Index Services Artificial Intelligence Private Assets ETFs Custom Indexes Sustainability