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  "documentTitle": "MSCI Inc. (MSCI)",
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  "authorName": "Spruce Point Capital Management",
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  "presentationDate": "2024-01-17 00:00:00",
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  "notes": "Uses red and green arrows to highlight the contradiction between CFO commentary and actual financial performance.",
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      "text": "Yes. Obviously, we don't give margin targets by segment, but I would say that within ESG and Climate, our focus is really on driving top line growth, not margin expansion. And so we're not targeting for the margin to expand from current levels.",
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      "text": "In Q2'22 even the CFO said there was no target for margin expansion and yet margins are +880bps since. Management should provide enhanced disclosure to explain how this is possible.",
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      "text": "Adj. EBITDA margin: 34.8%",
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      "text": "Margins increasing in the face of negative trends?",
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      "kind": "other",
      "text": "Slowing sequential growth and multiple quarters of retention rate declining.",
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      "kind": "paragraph",
      "text": "The ESG & Climate segment is ~15% of revenue and ~6% of Adj. EBITDA but has been the fastest growing segment within the overall business. Spruce Point is alarmed by the recent trends observed. While both total revenue and Run Rate revenue are showing annual and sequential quarterly growth decline, the reported Retention Rate has also been declining for multiple quarters. However, segment Adj. EBITDA appears to be expanding and we fail to understand how a business that is facing pressures and obvious client retention issues is achieving this result. In Q2'22 even the CFO said there was no target for margin expansion and yet margins are +880bps since. Management should provide enhanced disclosure to explain how this is possible.",
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      "text": "Yes. Obviously, we don't give margin targets by segment, but I would say that within ESG and Climate, our focus is really on driving top line growth, not margin expansion. And so we're not targeting for the margin to expand from current levels. — CFO Q2'22",
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      "kind": "source-note",
      "text": "Source: MSCI and Spruce Point analysis",
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      "text": "MSCI ESG & Climate Segment financial data table",
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      "kind": "title",
      "text": "ESG & Climate Segment Under Pressure",
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