Chief Financial Officer at MSCI
Thanks, Baer; and hi, everyone. The financial results in the quarter showcase the attractiveness of our financial model and the effectiveness of our actions. Subscription revenue, which is 75% of total revenue, remained steady with 13% organic growth, while we continue to feel the pressure from year-over-year declines in AUM-related revenue with ABF revenue down 8%.
While the first quarter tends to be seasonally lower for new sales. Our results in the quarter were softer than last year, reflecting several factors. Relative to a year ago, we saw some lengthening of sales cycles and fewer larger ticket deals. These dynamics were particularly pronounced in the Americas and within our ESG and climate segment. In ESG and climate, the impact of macro pressures and constrained client budgets had a more pronounced impact where the details of pending or recently released regulations have not been fully tried or interpreted and where there is likely a higher level of more discretionary purchases in certain use cases.
Additionally, in some areas of the firm, we saw a modest decline in retention, most notably coming from smaller hedge funds, broker dealers and real estate brokers and developers, although importantly, firm-wide retention rates remain fairly strong overall and in line with historical averages. While the longer-term demand and pipeline remain steady, we expect some of these cyclical ESG dynamics to persist in the short-term. But overall, we continue to operate from a position of strength with strong momentum and healthy client engagement across our subscription base.
In index, subscription run rate growth was 12% in the quarter. Client demand for active and passive index strategies remains healthy. We again saw notable strength within our market cap modules as clients continue to integrate indexes more heavily into their investment processes, and we continue to benefit from a growing trading ecosystem. Since the end of December, AUM balances and MSCI-linked ETFs have rebounded by over $82 billion, including over $7 billion of cash inflows, which helped asset-based fees improve by 6% since year end. We saw strong flows into both developed markets outside the U.S. and emerging market funds, both areas where ETFs based on MSCI indexes had strong market share capture.
Recently, one of our clients completed the largest ETF launch in history based on AUM, which is linked to MSCI's Climate Action indexes. Traded volumes of listed futures and options linked to MSCI indexes remained slightly elevated but saw some normalization relative to the high market volatility environment last year. Within those cyclical dynamics, we continue to see the secular build of volumes resulting from the growing liquidity and trading ecosystem around financial products linked to our indexes, and the growing volumes of listed futures and options have helped drive growth in the broader index derivatives franchise.
We continue to see healthy client appetite for structured products and OTC derivatives linked to MSCI indexes as well as strong demand from trading firms and hedge funds for our index data. These areas help to support both recurring and one-time sales volumes. In Analytics, subscription run rate growth was 6%, excluding FX. We continue to see strong demand from the buy side for our equity risk models and our broader equity portfolio management tools.
Despite some of the previously mentioned pressures, the mission-critical nature of our analytics tools in these environments continues to provide a path of steady growth. In our ESG and climate segment, we saw overall organic subscription run rate growth of 30% with growth in EMEA at 34%, while growth in the Americas slowed to 24%, coinciding with the slowdown in new ESG fund launches in the region and some slowdown in client buying decisions related to the previously mentioned factors.
In climate, we continue to see good momentum and very engaging discussions across client segments, although some of the factors impacting ESG sales did to a smaller degree also impact climate sales. Our climate subscription run rate growth across all products was 68%, which was roughly the same as the Climate ABF growth rate. In real assets, we continued to deliver double-digit organic subscription run rate growth of 10%. We see strong engagement from our clients as they look for insights into the highly dynamic market, including around climate and income risk, although we did see some pickup in cancels from smaller clients in the quarter.
I'll now go over the puts and takes of our 5% growth in adjusted EPS in the first quarter. While asset-based fees were lower than last year, growth in subscription revenues was a significant driver of the $0.16 adjusted EPS expansion year-on-year. The lower share count drove $0.07 of the year-over-year increase, benefiting from the significant level of opportunistic share repurchases we executed last year.
I would note that our Q1 adjusted EBITDA expenses of $247 million included about $22 million of seasonally higher compensation and benefits-related expenses that we had anticipated and indicated to you previously, although we did have some comp-related accruals and non-comp items that were slightly more favorable than expected. We remain well capitalized and ended March with a cash balance of nearly $1.1 billion.
On client collections, we continue to see slightly longer payment cycles consistent with our prior comments due in part, we believe, to the opportunity cost of a high rate environment. There were no share repurchases during the quarter, although we continue to be poised for and actively focused on attractive repurchase and potentially compelling bolt-on M&A opportunities. We continue to believe this environment could result in some repricing and/or unlocking of previously unavailable acquisition opportunities.
Lastly, I would like to turn to our 2023 guidance. Our guidance ranges across all categories remain unchanged. It is important to note that we have based our guidance on the assumption that ETF AUM balances declined slightly from current levels in the second quarter and gradually rebound in the second half of the year. While the environment may result in some caution from clients in the next quarter or two, we have the financial model and the proactive management levers to drive investment in the very compelling long-term growth opportunities while delivering very attractive financial performance.
We remain encouraged by the strong client engagement across numerous growth opportunities, and we continue to be closely aligned with the long-term trends transforming the investment industry. We look forward to keeping you all posted on our progress.
And with that, operator, please open the line for questions.