MSCI Inc. (“MSCI” or the “Company”) (NYSE: MSCI), a leading
provider of critical decision support tools and services for the
global investment community, today announced its financial results
for the three months ended June 30, 2024 (“second quarter 2024”)
and six months ended June 30, 2024 (“six months 2024”).
Financial and Operational Highlights for Second Quarter
2024 (Note: Unless otherwise noted, percentage and other
changes are relative to the three months ended June 30, 2023
(“second quarter 2023”) and Run Rate percentage changes are
relative to June 30, 2023).
- Operating revenues of $707.9 million, up 14.0%; Organic
operating revenue growth of 9.7%
- Recurring subscription revenues up 14.4%; Asset-based fees
up 18.2%
- Operating margin of 54.0%; Adjusted EBITDA margin of
60.7%
- Diluted EPS of $3.37, up 9.1%; Adjusted EPS of $3.64, up
11.7%
- Organic recurring subscription Run Rate growth of 8.6%;
Retention Rate of 94.8%
- In second quarter 2024 and through July 19, 2024, a total of
$289.9 million or 598,928 shares were repurchased at an average
repurchase price of $484.01
- Approximately $126.6 million in dividends were paid to
shareholders in second quarter 2024; Cash dividend of $1.60 per
share declared by MSCI Board of Directors for third quarter
2024
Three Months Ended
Six Months Ended
June 30,
June 30,
June 30,
June 30,
In thousands, except per share
data (unaudited)
2024
2023
% Change
2024
2023
% Change
Operating revenues
$
707,949
$
621,157
14.0
%
$
1,387,914
$
1,213,375
14.4
%
Operating income
$
382,608
$
345,953
10.6
%
$
721,990
$
660,555
9.3
%
Operating margin %
54.0
%
55.7
%
52.0
%
54.4
%
Net income
$
266,758
$
246,825
8.1
%
$
522,712
$
485,553
7.7
%
Diluted EPS
$
3.37
$
3.09
9.1
%
$
6.59
$
6.05
8.9
%
Adjusted EPS
$
3.64
$
3.26
11.7
%
$
7.17
$
6.40
12.0
%
Adjusted EBITDA
$
429,955
$
377,306
14.0
%
$
813,528
$
722,035
12.7
%
Adjusted EBITDA margin %
60.7
%
60.7
%
58.6
%
59.5
%
“MSCI’s second quarter results demonstrate the strength of our
all-weather franchise, our blue-chip client base, our wide range of
solutions, and our relentless focus on execution. Highlights
included another quarter of record AUM balances in financial
products linked to MSCI indexes, ABF run rate growth of 16%, our
best-ever Q2 of new recurring subscription sales, and a retention
rate of almost 95%,” said Henry A. Fernandez, Chairman and CEO of
MSCI.
“As we capture and commercialize the next evolution of global
investing, MSCI is expanding our footprint among large and rapidly
growing client segments while strengthening our position among more
mature and traditional segments. Our recent announcements,
including our game-changing ESG and sustainability partnership with
Moody’s and our launch of the MSCI Private
Capital Indexes, can help us accelerate this strategy,”
Fernandez added.
Second Quarter Consolidated
Results
Operating Revenues:
Operating revenues were $707.9 million, up 14.0%. Organic operating
revenue growth was 9.7%. The $86.8 million increase was the result
of $65.8 million in higher recurring subscription revenues and
$25.1 million in higher asset-based fees, partially offset by $4.1
million decrease in non-recurring revenues.
Run Rate and Retention Rate:
Total Run Rate at June 30, 2024 was $2,807.3 million, up 14.6%.
Recurring subscription Run Rate increased by $268.1 million, and
asset-based fees Run Rate increased by $89.4 million. Organic
recurring subscription Run Rate growth was 8.6%. Retention Rate in
second quarter 2024 was 94.8%, compared to 95.5% in second quarter
2023.
Expenses: Total operating
expenses were $325.3 million, up 18.2%, including $37.5 million of
operating expenses associated with Private Capital Solutions
(formerly known as The Burgiss Group, LLC), Carbon Markets
(formerly known as Trove Research Ltd), Fabric RQ Inc. ("Fabric")
and Foxberry Ltd (“Foxberry”).
Adjusted EBITDA expenses were $278.0 million, up 14.0%,
primarily reflecting higher compensation and benefits costs related
to higher headcount as a result of business growth and the recent
acquisitions as well as increases in non-compensation costs,
primarily reflecting higher information technology, professional
fees and market data costs.
Adjusted EBITDA expense included $24.7 million of expenses
associated with Private Capital Solutions, Carbon Markets, Fabric
and Foxberry. Approximately $2.3 million in integration costs and
$10.4 million of acquired intangible asset amortization expenses
related to these acquisitions were excluded from Adjusted EBITDA
expense.
Total operating expenses excluding the impact of foreign
currency exchange rate fluctuations (“ex-FX”) and adjusted EBITDA
expenses ex-FX increased 18.8% and 14.7%, respectively.
Operating Income: Operating
income was $382.6 million, up 10.6%. Operating income margin in
second quarter 2024 was 54.0%, compared to 55.7% in second quarter
2023.
Headcount: As of June 30,
2024, we had 6,059 employees, reflecting a 21.7% increase, which
was primarily driven by our recent acquisitions. Approximately
31.5% and 68.5% of employees are located in developed market and
emerging market locations, respectively.
Other Expense (Income), Net:
Other expense (income), net was $42.6 million, up 9.8%, primarily
driven by lower interest income reflecting lower average cash
balances.
Income Taxes: The effective
tax rate was 21.5% in the second quarter 2024 compared to 19.6% in
second quarter 2023. The increase was primarily driven by higher
statutory tax rates and unfavorable discrete items related to prior
years.
Net Income: As a result of
the factors described above, net income was $266.8 million, up
8.1%.
Adjusted EBITDA: Adjusted
EBITDA was $430.0 million, up 14.0%. Adjusted EBITDA margin in
second quarter 2024 was 60.7%, compared to 60.7% in second quarter
2023.
Index Segment:
Table 1A: Results (unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
June 30,
June 30,
In thousands
2024
2023
% Change
2024
2023
% Change
Operating revenues:
Recurring subscriptions
$
217,032
$
200,714
8.1
%
$
429,984
$
397,392
8.2
%
Asset-based fees
163,281
138,162
18.2
%
313,540
271,288
15.6
%
Non-recurring
16,879
23,440
(28.0
)%
27,540
33,018
(16.6
)%
Total operating revenues
397,192
362,316
9.6
%
771,064
701,698
9.9
%
Adjusted EBITDA expenses
90,202
85,246
5.8
%
186,314
170,946
9.0
%
Adjusted EBITDA
$
306,990
$
277,070
10.8
%
$
584,750
$
530,752
10.2
%
Adjusted EBITDA margin %
77.3
%
76.5
%
75.8
%
75.6
%
Index operating revenues were $397.2 million, up 9.6% and
included $0.18 million from the acquisition of Foxberry. The $34.9
million increase was driven by $25.1 million in higher asset-based
fees and $16.3 million in higher recurring subscription revenues,
partially offset by $6.6 million in lower non-recurring revenues.
Organic operating revenue growth for Index was 9.8%.
The growth in recurring subscription revenues was primarily
driven by growth from market-cap weighted indexes.
The growth in revenues attributed to asset-based fees were
primarily driven by ETFs linked to MSCI equity indexes, primarily
due to an increase in average AUM. The balance of the increase was
driven by non-ETF indexed funds linked to MSCI indexes, driven by
an increase in average AUM and average basis points fees and an
increase in revenue from futures and options contracts linked to
MSCI indexes.
Non-recurring revenues in second quarter 2024 were lower than
second quarter 2023, as second quarter 2023 included one-time fees
related to unlicensed usage of our content in historical
periods.
Index Run Rate as of June 30, 2024, was $1.5 billion, up 11.8%.
The $162.3 million increase was comprised of a $89.4 million
increase in asset-based fees Run Rate and a $72.9 million increase
in recurring subscription Run Rate. The increase in asset-based
fees Run Rate primarily reflected higher AUM in both ETFs linked to
MSCI equity indexes and non-ETF indexed funds linked to MSCI
indexes. The increase in recurring subscription Run Rate was
primarily driven by growth from market cap-weighted and custom
Index products and special packages. The increase reflected growth
across all regions. Organic recurring subscription Run Rate growth
for Index was 8.8%.
Analytics Segment:
Table 1B: Results (unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
June 30,
June 30,
In thousands
2024
2023
% Change
2024
2023
% Change
Operating revenues:
Recurring subscriptions
$
162,128
$
147,504
9.9
%
$
322,679
$
292,007
10.5
%
Non-recurring
3,867
2,377
62.7
%
7,282
4,944
47.3
%
Total operating revenues
165,995
149,881
10.8
%
329,961
296,951
11.1
%
Adjusted EBITDA expenses
84,323
84,732
(0.5
)%
176,077
171,022
3.0
%
Adjusted EBITDA
$
81,672
$
65,149
25.4
%
$
153,884
$
125,929
22.2
%
Adjusted EBITDA margin %
49.2
%
43.5
%
46.6
%
42.4
%
Analytics operating revenues were $166.0 million, up 10.8%. The
$16.1 million increase was primarily driven by growth from
recurring subscriptions related to both Multi-Asset Class and
Equity Analytics products, which also benefited from subscription
revenue related to client implementations. The increase in
non-recurring revenues was driven by one-time sales related to both
Multi-Asset Class and Equity products as well as a number of
implementations which were completed in the quarter. Organic
operating revenue growth for Analytics was 11.2%.
Analytics Run Rate as of June 30, 2024, was $674.6 million, up
6.9%. The increase of $43.4 million was primarily driven by growth
in both Multi-Asset Class and Equity Analytics products, and
reflected growth across all regions and client segments. Organic
recurring subscription Run Rate growth for Analytics was 7.4%.
ESG and Climate Segment:
Table 1C: Results (unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
June 30,
June 30,
In thousands
2024
2023
% Change
2024
2023
% Change
Operating revenues:
Recurring subscriptions
$
78,000
$
70,047
11.4
%
$
154,418
$
135,779
13.7
%
Non-recurring
1,855
1,172
58.3
%
3,321
2,498
32.9
%
Total operating revenues
79,855
71,219
12.1
%
157,739
138,277
14.1
%
Adjusted EBITDA expenses
55,925
48,421
15.5
%
112,718
97,603
15.5
%
Adjusted EBITDA
$
23,930
$
22,798
5.0
%
$
45,021
$
40,674
10.7
%
Adjusted EBITDA margin %
30.0
%
32.0
%
28.5
%
29.4
%
ESG and Climate operating revenues were $79.9 million, up 12.1%.
The $8.6 million increase was primarily driven by growth from
recurring subscriptions related to Climate, Screening and Ratings
products. Organic operating revenue growth for ESG and Climate was
10.0%.
ESG and Climate Run Rate as of June 30, 2024, was $333.7
million, up 14.4%. The $41.9 million increase primarily reflects
strong growth from Ratings, Climate and Screening products with
contributions across all regions and client segments. Organic
recurring subscription Run Rate growth for ESG and Climate was
13.4%.
All Other – Private Assets
Segment:
Table 1D: Results (unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
June 30,
June 30,
In thousands
2024
2023
% Change
2024
2023
% Change
Operating revenues:
Recurring subscriptions
$
64,309
$
37,427
71.8
%
$
127,443
$
75,761
68.2
%
Non-recurring
598
314
90.4
%
1,707
688
148.1
%
Total operating revenues
64,907
37,741
72.0
%
129,150
76,449
68.9
%
Adjusted EBITDA expenses
47,544
25,452
86.8
%
99,277
51,769
91.8
%
Adjusted EBITDA
$
17,363
$
12,289
41.3
%
$
29,873
$
24,680
21.0
%
Adjusted EBITDA margin %
26.8
%
32.6
%
23.1
%
32.3
%
All Other – Private Assets operating revenues, which reflect the
Real Assets and Private Capital Solutions operating segments, were
$64.9 million, up 72.0% The growth in revenue is primarily driven
by $26.8 million of revenues from Private Capital Solutions and
recurring subscriptions related to Performance Insights products.
Organic operating revenue growth for All Other – Private Assets was
1.3%.
All Other – Private Assets Run Rate, which reflects the Real
Assets and Private Capital Solutions operating segments, was $260.6
million as of June 30, 2024, up 73.0%, and included $105.6 million
from Private Capital Solutions. The remaining growth in the run
rate was primarily driven by Index Intel and RCA products. Organic
recurring subscription Run Rate growth for All Other – Private
Assets was 3.0%.
Select Balance Sheet Items and Capital
Allocation
Cash Balances and Outstanding
Debt: Cash and cash equivalents was $451.4 million as of
June 30, 2024, including $3.9 million of restricted cash. MSCI
typically seeks to maintain minimum cash balances globally of
approximately $225.0 million to $275.0 million for general
operating purposes.
Total principal amounts of debt outstanding as of June 30, 2024,
were $4.5 billion. The total debt to net income ratio (based on
trailing twelve months net income) was 3.8x. The total debt to
adjusted EBITDA ratio (based on trailing twelve months adjusted
EBITDA) was 2.8x.
MSCI seeks to maintain total debt to adjusted EBITDA in a target
range of 3.0x to 3.5x.
Capex and Cash Flow: Capex
was $27.3 million, and net cash provided by operating activities
increased by 19.7% to $349.2 million, primarily reflecting higher
cash collections from clients, partially offset by higher operating
expenses. Free cash flow for second quarter 2024 was up 21.3% to
$321.9 million.
Share Count and Share
Repurchases: Weighted average diluted shares outstanding
were 79.2 million in second quarter 2024, down 0.8% year-over-year.
Total share repurchases during the quarter were $241.5 million or
499,224 shares at an average repurchase price of $483.79. Total
shares outstanding as of June 30, 2024 were 78.7 million. A total
of approximately $0.6 billion remains on the outstanding share
repurchase authorization as of July 19, 2024.
Dividends: Approximately
$126.6 million in dividends were paid to shareholders in second
quarter 2024. On July 22, 2024, the MSCI Board of Directors
declared a cash dividend of $1.60 per share for third quarter 2024,
payable on August 30, 2024, to shareholders of record as of the
close of trading on August 16, 2024.
Full-Year 2024 Guidance
MSCI’s guidance for the year ending December 31, 2024
(“Full-Year 2024”) is based on assumptions about a number of
factors, in particular related to macroeconomic factors and the
capital markets. These assumptions are subject to uncertainty, and
actual results for the year could differ materially from our
current guidance, including as a result of the uncertainties, risks
and assumptions discussed in the “Risk Factors” and “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations” sections of our Annual Report on Form 10-K, as updated
in quarterly reports on Form 10-Q and current reports on Form 8-K
filed or furnished with the SEC. See “Forward-Looking Statements”
below.
Guidance Item
Current Guidance for Full-Year
2024
Prior Guidance for Full-Year
2024
Operating Expense
$1,305 to $1,345 million
$1,300 to $1,340 million
Adjusted EBITDA
Expense
$1,130 to $1,160 million
$1,130 to $1,160 million
Interest Expense
(including amortization
of financing fees)(1)
$185 to $189 million
$185 to $189 million
Depreciation &
Amortization Expense
$175 to $185 million
$170 to $180 million
Effective Tax Rate
18% to 21%
18% to 21%
Capital Expenditures
$95 to $105 million
$95 to $105 million
Net Cash Provided by Operating
Activities
$1,330 to $1,380 million
$1,330 to $1,380 million
Free Cash Flow
$1,225 to $1,285 million
$1,225 to $1,285 million
(1) A portion of our annual interest
expense is from our variable rate indebtedness under our Revolving
Credit Facility, while the majority is from fixed rate senior
unsecured notes. Changes to the secured overnight funding rate
(“SOFR”) and indebtedness levels can cause our annual interest
expense to vary.
Conference Call Information
MSCI’s senior management will review the second quarter 2024
results on Tuesday, July 23, 2024 at 11:00 AM Eastern Time. To
listen to the live event via webcast, visit the events and
presentations section of MSCI’s Investor Relations website,
https://ir.msci.com/events-and-presentations, or via telephone,
dial +1-800-715-9871 conference ID 8653237 within the United
States. International callers may dial +1-646-307-1963 conference
ID 8653237. The teleconference will also be webcast with an
accompanying slide presentation that can be accessed through MSCI’s
Investor Relations website.
About MSCI Inc.
MSCI is a leading provider of critical decision support tools
and services for the global investment community. With over 50
years of expertise in research, data and technology, we power
better investment decisions by enabling clients to understand and
analyze key drivers of risk and return and confidently build more
effective portfolios. We create industry-leading research-enhanced
solutions that clients use to gain insight into and improve
transparency across the investment process. To learn more, please
visit www.msci.com. MSCI#IR
Forward-Looking Statements
This earnings release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995, including without limitation, MSCI’s Full-Year 2024 guidance.
These forward-looking statements relate to future events or to
future financial performance and involve known and unknown risks,
uncertainties and other factors that may cause our actual results,
levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance
or achievements expressed or implied by these statements. In some
cases, you can identify forward-looking statements by the use of
words such as “may,” “could,” “expect,” “intend,” “plan,” “seek,”
“anticipate,” “believe,” “estimate,” “predict,” “potential” or
“continue,” or the negative of these terms or other comparable
terminology. You should not place undue reliance on forward-looking
statements because they involve known and unknown risks,
uncertainties and other factors that are, in some cases, beyond
MSCI’s control and that could materially affect actual results,
levels of activity, performance or achievements.
Other factors that could materially affect actual results,
levels of activity, performance or achievements can be found in
MSCI’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2023 filed with the Securities and Exchange Commission
(“SEC”) on February 9, 2024 and in quarterly reports on Form 10-Q
and current reports on Form 8-K filed or furnished with the SEC. If
any of these risks or uncertainties materialize, or if MSCI’s
underlying assumptions prove to be incorrect, actual results may
vary significantly from what MSCI projected. Any forward-looking
statement in this earnings release reflects MSCI’s current views
with respect to future events and is subject to these and other
risks, uncertainties and assumptions relating to MSCI’s operations,
results of operations, growth strategy and liquidity. MSCI assumes
no obligation to publicly update or revise these forward-looking
statements for any reason, whether as a result of new information,
future events, or otherwise, except as required by law.
Website and Social Media Disclosure
MSCI uses its Investor Relations homepage and its Corporate
Responsibility homepage as channels of distribution of company
information. The information MSCI posts through these channels may
be deemed material. Accordingly, investors should monitor these
channels, in addition to following MSCI’s press releases, SEC
filings and public conference calls and webcasts. In addition, you
may automatically receive email alerts and other information about
MSCI when you enroll your email address by visiting the “Email
Alerts” section of MSCI’s Investor Relations homepage at
http://ir.msci.com/email-alerts. The contents of MSCI’s website,
including its quarterly updates, blog, podcasts and social media
channels are not, however, incorporated by reference into this
earnings release.
Notes Regarding the Use of Operating Metrics
MSCI has presented supplemental key operating metrics as part of
this earnings release, including Retention Rate, Run Rate,
subscription sales, subscription cancellations and non-recurring
sales.
Retention Rate is an important metric because subscription
cancellations decrease our Run Rate and ultimately our future
operating revenues over time. The annual Retention Rate represents
the retained subscription Run Rate (subscription Run Rate at the
beginning of the fiscal year less actual cancels during the year)
as a percentage of the subscription Run Rate at the beginning of
the fiscal year.
The Retention Rate for a non-annual period is calculated by
annualizing the cancellations for which we have received a notice
of termination or for which we believe there is an intention not to
renew or discontinue the subscription during the non-annual period,
and we believe that such notice or intention evidences the client’s
final decision to terminate or not renew the applicable agreement,
even though such termination or non-renewal may not be effective
until a later date. This annualized cancellation figure is then
divided by the subscription Run Rate at the beginning of the fiscal
year to calculate a cancellation rate. This cancellation rate is
then subtracted from 100% to derive the annualized Retention Rate
for the period.
Retention Rate is computed by operating segment on a
product/service-by-product/service basis. In general, if a client
reduces the number of products or services to which it subscribes
within a segment, or switches between products or services within a
segment, we treat it as a cancellation for purposes of calculating
our Retention Rate except in the case of a product or service
switch that management considers to be a replacement product or
service. In those replacement cases, only the net change to the
client subscription, if a decrease, is reported as a cancel. In the
Analytics and the ESG and Climate operating segments, substantially
all product or service switches are treated as replacement products
or services and netted in this manner, while in our Index and Real
Assets operating segments, product or service switches that are
treated as replacement products or services and receive netting
treatment occur only in certain limited instances. In addition, we
treat any reduction in fees resulting from a down-sell of the same
product or service as a cancellation to the extent of the
reduction. We do not calculate Retention Rate for that portion of
our Run Rate attributable to assets in index-linked investment
products or futures and options contracts, in each case, linked to
our indexes.
Run Rate estimates at a particular point in time the annualized
value of the recurring revenues under our client license agreements
(“Client Contracts”) for the next 12 months, assuming all Client
Contracts that come up for renewal, or reach the end of the
committed subscription period, are renewed and assuming
then-current currency exchange rates, subject to the adjustments
and exclusions described below. For any Client Contract where fees
are linked to an investment product’s assets or trading
volume/fees, the Run Rate calculation reflects, for ETFs, the
market value on the last trading day of the period, for futures and
options, the most recent quarterly volumes and/or reported exchange
fees, and for other non-ETF products, the most recent
client-reported assets. Run Rate does not include fees associated
with “one-time” and other non-recurring transactions. In addition,
we add to Run Rate the annualized fee value of recurring new sales,
whether to existing or new clients, when we execute Client
Contracts, even though the license start date, and associated
revenue recognition, may not be effective until a later date. We
remove from Run Rate the annualized fee value associated with
products or services under any Client Contract when we (i) have
received a notice of termination, non-renewal or an indication the
client does not intend to continue their subscription during the
period and (ii) have determined that such notice evidences the
client’s final decision to terminate or not renew the applicable
products or services, even though such termination or non-renewal
may not be effective until a later date.
“Organic recurring subscription Run Rate growth” is defined as
the period over period Run Rate growth, excluding the impact of
changes in foreign currency and the first year impact of any
acquisitions. It is also adjusted for divestitures. Changes in
foreign currency are calculated by applying the currency exchange
rate from the comparable prior period to current period foreign
currency denominated Run Rate.
Sales represents the annualized value of products and services
clients commit to purchase from MSCI and will result in additional
operating revenues. Non-recurring sales represent the actual value
of the customer agreements entered into during the period and are
not a component of Run Rate. New recurring subscription sales
represent additional selling activities, such as new customer
agreements, additions to existing agreements or increases in price
that occurred during the period and are additions to Run Rate.
Subscription cancellations reflect client activities during the
period, such as discontinuing products and services and/or
reductions in price, resulting in reductions to Run Rate. Net new
recurring subscription sales represent the amount of new recurring
subscription sales net of subscription cancellations during the
period, which reflects the net impact to Run Rate during the
period.
Total gross sales represent the sum of new recurring
subscription sales and non-recurring sales. Total net sales
represent the total gross sales net of the impact from subscription
cancellations.
Notes Regarding the Use of Non-GAAP Financial
Measures
MSCI has presented supplemental non-GAAP financial measures as
part of this earnings release. Reconciliations are provided in
Tables 9 through 14 below that reconcile each non-GAAP financial
measure with the most comparable GAAP measure. The non-GAAP
financial measures presented in this earnings release should not be
considered as alternative measures for the most directly comparable
GAAP financial measures. The non-GAAP financial measures presented
in this earnings release are used by management to monitor the
financial performance of the business, inform business
decision-making and forecast future results.
“Adjusted EBITDA” is defined as net income before (1) provision
for income taxes, (2) other expense (income), net, (3) depreciation
and amortization of property, equipment and leasehold improvements,
(4) amortization of intangible assets and, at times, (5) certain
other transactions or adjustments, including, when applicable,
certain acquisition-related integration and transaction costs.
“Adjusted EBITDA expenses” is defined as operating expenses less
depreciation and amortization of property, equipment and leasehold
improvements and amortization of intangible assets and, at times,
certain other transactions or adjustments, including, when
applicable, certain acquisition-related integration and transaction
costs.
“Adjusted EBITDA margin” is defined as adjusted EBITDA divided
by operating revenues.
“Adjusted net income” and “adjusted EPS” are defined as net
income and diluted EPS, respectively, before the after-tax impact
of: the amortization of acquired intangible assets, including the
amortization of the basis difference between the cost of the equity
method investment and MSCI’s share of the net assets of the
investee at historical carrying value and, at times, certain other
transactions or adjustments, including, when applicable, the impact
related to certain acquisition-related integration and transaction
costs, the impact related to write-off of deferred fees on debt
extinguishment and the impact related to gain from changes in
ownership interest of investees.
“Capex” is defined as capital expenditures plus capitalized
software development costs.
“Free cash flow” is defined as net cash provided by operating
activities, less Capex.
“Organic operating revenue growth” is defined as operating
revenue growth compared to the prior year period excluding the
impact of acquired businesses, divested businesses and foreign
currency exchange rate fluctuations.
Asset-based fees ex-FX does not adjust for the impact from
foreign currency exchange rate fluctuations on the underlying
assets under management (“AUM”).
We believe adjusted EBITDA, adjusted EBITDA margin and adjusted
EBITDA expenses are meaningful measures of the operating
performance of MSCI because they adjust for significant one-time,
unusual or non-recurring items as well as eliminate the accounting
effects of certain capital spending and acquisitions that do not
directly affect what management considers to be our ongoing
operating performance in the period.
We believe adjusted net income and adjusted EPS are meaningful
measures of the performance of MSCI because they adjust for the
after-tax impact of significant one-time, unusual or non-recurring
items as well as eliminate the impact of any transactions that do
not directly affect what management considers to be our ongoing
operating performance in the period. We also exclude the after-tax
impact of the amortization of acquired intangible assets and
amortization of the basis difference between the cost of the equity
method investment and MSCI’s share of the net assets of the
investee at historical carrying value, as these non-cash amounts
are significantly impacted by the timing and size of each
acquisition and therefore not meaningful to the ongoing operating
performance in the period.
We believe that free cash flow is useful to investors because it
relates the operating cash flow of MSCI to the capital that is
spent to continue and improve business operations, such as
investment in MSCI’s existing products. Further, free cash flow
indicates our ability to strengthen MSCI’s balance sheet, repay our
debt obligations, pay cash dividends and repurchase shares of our
common stock.
We believe organic operating revenue growth is a meaningful
measure of the operating performance of MSCI because it adjusts for
the impact of foreign currency exchange rate fluctuations and
excludes the impact of operating revenues attributable to acquired
and divested businesses for the comparable prior year period,
providing insight into our ongoing operating performance for the
period(s) presented.
We believe that the non-GAAP financial measures presented in
this earnings release facilitate meaningful period-to-period
comparisons and provide a baseline for the evaluation of future
results.
Adjusted EBITDA expenses, adjusted EBITDA margin, adjusted
EBITDA, adjusted net income, adjusted EPS, Capex, free cash flow
and organic operating revenue growth are not defined in the same
manner by all companies and may not be comparable to
similarly-titled non-GAAP financial measures of other companies.
These measures can differ significantly from company to company
depending on, among other things, long-term strategic decisions
regarding capital structure, the tax jurisdictions in which
companies operate and capital investments. Accordingly, the
Company’s computation of these measures may not be comparable to
similarly-titled measures computed by other companies.
Notes Regarding Adjusting for the Impact of Foreign Currency
Exchange Rate Fluctuations
Foreign currency exchange rate fluctuations reflect the
difference between the current period results as reported compared
to the current period results recalculated using the foreign
currency exchange rates in effect for the comparable prior period.
While operating revenues adjusted for the impact of foreign
currency fluctuations includes asset-based fees that have been
adjusted for the impact of foreign currency fluctuations, the
underlying AUM, which is the primary component of asset-based fees,
is not adjusted for foreign currency fluctuations. Approximately
three-fifths of the AUM is invested in securities denominated in
currencies other than the U.S. dollar, and accordingly, any such
impact is excluded from the disclosed foreign currency-adjusted
variances.
Table 2: Condensed Consolidated Statements of Income
(unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
%
June 30,
June 30,
%
In thousands, except per share
data
2024
2023
Change
2024
2023
Change
Operating revenues
$
707,949
$
621,157
14.0
%
$
1,387,914
$
1,213,375
14.4
%
Operating expenses:
Cost of revenues (exclusive of
depreciation and amortization)
128,109
110,066
16.4
%
256,623
218,713
17.3
%
Selling and marketing
71,454
67,988
5.1
%
143,622
134,463
6.8
%
Research and development
41,073
30,140
36.3
%
81,598
61,463
32.8
%
General and administrative
39,706
35,657
11.4
%
96,397
76,701
25.7
%
Amortization of intangible assets
40,773
26,154
55.9
%
79,377
50,821
56.2
%
Depreciation and amortization of
property,
equipment and leasehold improvements
4,226
5,199
(18.7
)%
8,307
10,659
(22.1
)%
Total operating expenses(1)
325,341
275,204
18.2
%
665,924
552,820
20.5
%
Operating income
382,608
345,953
10.6
%
721,990
660,555
9.3
%
Interest income
(6,110
)
(10,403
)
(41.3
)%
(12,158
)
(20,765
)
(41.4
)%
Interest expense
46,633
46,617
—
%
93,307
92,823
0.5
%
Other expense (income)
2,091
2,581
(19.0
)%
4,954
4,967
(0.3
)%
Other expense (income), net
42,614
38,795
9.8
%
86,103
77,025
11.8
%
Income before provision for income
taxes
339,994
307,158
10.7
%
635,887
583,530
9.0
%
Provision for income taxes
73,236
60,333
21.4
%
113,175
97,977
15.5
%
Net income
$
266,758
$
246,825
8.1
%
$
522,712
$
485,553
7.7
%
Earnings per basic common share
$
3.37
$
3.10
8.7
%
$
6.60
$
6.08
8.6
%
Earnings per diluted common share
$
3.37
$
3.09
9.1
%
$
6.59
$
6.05
8.9
%
Weighted average shares outstanding
used
in computing earnings per share:
Basic
79,085
79,592
(0.6
)%
79,140
79,815
(0.8
)%
Diluted
79,245
79,905
(0.8
)%
79,377
80,193
(1.0
)%
n/m: not meaningful.
(1) Includes stock-based compensation
expense of $19.3 million and $16.0 million for the three months
ended June 30, 2024 and June 30, 2023, respectively. Includes
stock-based compensation expense of $54.0 million and $37.6 million
for the six months ended June 30, 2024 and June 30, 2023,
respectively.
Table 3: Condensed Consolidated Balance Sheet
(unaudited)
As of
June 30,
Dec. 31,
In thousands
2024
2023
ASSETS
Current assets:
Cash and cash equivalents (includes
restricted cash of $3,883 and $3,878 at June 30, 2024 and December
31, 2023, respectively)
$
451,401
$
461,693
Accounts receivable (net of allowances of
$4,476 and $3,968 at June 30, 2024 and December 31, 2023,
respectively)
709,487
839,555
Other current assets
154,164
116,905
Total current assets
1,315,052
1,418,153
Property, equipment and leasehold
improvements, net
63,974
55,920
Right of use assets
129,542
115,243
Goodwill
2,909,415
2,887,692
Intangible assets, net
949,166
956,234
Other non-current assets
89,684
84,977
Total assets
$
5,456,833
$
5,518,219
LIABILITIES AND SHAREHOLDERS’ EQUITY
(DEFICIT)
Current liabilities:
Current portion of long-term debt
$
—
$
10,902
Deferred revenue
1,017,997
1,083,864
Other current liabilities
358,445
422,259
Total current liabilities
1,376,442
1,517,025
Long-term debt
4,508,730
4,496,826
Long-term operating lease liabilities
130,559
120,134
Other non-current liabilities
175,585
123,998
Total liabilities
6,191,316
6,257,983
Total shareholders’ equity
(deficit)
(734,483
)
(739,764
)
Total liabilities and shareholders’
equity (deficit)
$
5,456,833
$
5,518,219
Table 4: Condensed Consolidated Statement of Cash Flow
(unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
%
June 30,
June 30,
%
In thousands
2024
2023
Change
2024
2023
Change
Cash flows from operating
activities
Net income
$
266,758
$
246,825
8.1
%
$
522,712
$
485,553
7.7
%
Adjustments to reconcile net income to net
cash provided by operating activities:
Amortization of intangible assets
40,773
26,154
55.9
%
79,377
50,821
56.2
%
Stock-based compensation expense
19,396
16,143
20.2
%
53,732
37,231
44.3
%
Depreciation and amortization of property,
equipment and leasehold improvements
4,226
5,199
(18.7
)%
8,307
10,659
(22.1
)%
Amortization of right of use assets
6,024
5,804
3.8
%
11,837
11,586
2.2
%
Loss on extinguishment of debt
—
—
—
%
1,510
—
100.0
%
Other adjustment
51,915
(6,178
)
n/m
42,037
(3,262
)
n/m
Net changes in other operating assets and
liabilities
(39,844
)
(2,143
)
n/m
(70,127
)
(36,643
)
(91.4
)%
Net cash provided by operating
activities
349,248
291,804
19.7
%
649,385
555,945
16.8
%
Cash flows from investing
activities
Capitalized software development costs
(18,707
)
(17,312
)
(8.1
)%
(38,673
)
(32,663
)
(18.4
)%
Capital expenditures
(8,618
)
(9,153
)
5.8
%
(12,889
)
(15,378
)
16.2
%
Cash paid for acquisitions, net of cash
acquired
(19,647
)
—
100.0
%
(27,467
)
—
100.0
%
Other
(153
)
(203
)
24.6
%
(429
)
(389
)
(10.3
)%
Net cash used in investing
activities
(47,125
)
(26,668
)
(64.1
)%
(79,458
)
(48,430
)
(64.1
)%
Cash flows from financing
activities
Repurchase of common stock held in
treasury
(241,718
)
(441,457
)
45.2
%
(311,709
)
(485,417
)
35.8
%
Payment of dividends
(126,918
)
(110,115
)
(15.3
)%
(258,223
)
(222,260
)
(16.2
)%
Repayment of borrowings
—
(2,187
)
100.0
%
(339,063
)
(4,375
)
n/m
Proceeds from borrowings
—
—
—
%
336,875
—
100.0
%
Payment of debt issuance costs
—
—
—
%
(3,739
)
—
100.0
%
Net cash used in financing
activities
(368,636
)
(553,759
)
33.4
%
(575,859
)
(712,052
)
19.1
%
Effect of exchange rate changes
(1,401
)
344
n/m
(4,360
)
3,302
n/m
Net (decrease) increase in cash, cash
equivalents and restricted cash
(67,914
)
(288,279
)
76.4
%
(10,292
)
(201,235
)
94.9
%
Cash, cash equivalents and restricted
cash, beginning of period
519,315
1,080,608
(51.9
)%
461,693
993,564
(53.5
)%
Cash, cash equivalents and restricted
cash, end of period
$
451,401
$
792,329
(43.0
)%
$
451,401
$
792,329
(43.0
)%
n/m: not meaningful.
Table 5: Operating Results by Segment and Revenue Type
(unaudited)
Index
Three Months Ended
Six Months Ended
June 30,
June 30,
%
June 30,
June 30,
%
In thousands
2024
2023
Change
2024
2023
Change
Operating revenues:
Recurring subscriptions
$
217,032
$
200,714
8.1
%
$
429,984
$
397,392
8.2
%
Asset-based fees
163,281
138,162
18.2
%
313,540
271,288
15.6
%
Non-recurring
16,879
23,440
(28.0
)%
27,540
33,018
(16.6
)%
Total operating revenues
397,192
362,316
9.6
%
771,064
701,698
9.9
%
Adjusted EBITDA expenses
90,202
85,246
5.8
%
186,314
170,946
9.0
%
Adjusted EBITDA
$
306,990
$
277,070
10.8
%
$
584,750
$
530,752
10.2
%
Adjusted EBITDA margin %
77.3
%
76.5
%
75.8
%
75.6
%
Analytics
Three Months Ended
Six Months Ended
June 30,
June 30,
%
June 30,
June 30,
%
In thousands
2024
2023
Change
2024
2023
Change
Operating revenues:
Recurring subscriptions
$
162,128
$
147,504
9.9
%
$
322,679
$
292,007
10.5
%
Non-recurring
3,867
2,377
62.7
%
7,282
4,944
47.3
%
Total operating revenues
165,995
149,881
10.8
%
329,961
296,951
11.1
%
Adjusted EBITDA expenses
84,323
84,732
(0.5
)%
176,077
171,022
3.0
%
Adjusted EBITDA
$
81,672
$
65,149
25.4
%
$
153,884
$
125,929
22.2
%
Adjusted EBITDA margin %
49.2
%
43.5
%
46.6
%
42.4
%
ESG and Climate
Three Months Ended
Six Months Ended
June 30,
June 30,
%
June 30,
June 30,
%
In thousands
2024
2023
Change
2024
2023
Change
Operating revenues:
Recurring subscriptions
$
78,000
$
70,047
11.4
%
$
154,418
$
135,779
13.7
%
Non-recurring
1,855
1,172
58.3
%
3,321
2,498
32.9
%
Total operating revenues
79,855
71,219
12.1
%
157,739
138,277
14.1
%
Adjusted EBITDA expenses
55,925
48,421
15.5
%
112,718
97,603
15.5
%
Adjusted EBITDA
$
23,930
$
22,798
5.0
%
$
45,021
$
40,674
10.7
%
Adjusted EBITDA margin %
30.0
%
32.0
%
28.5
%
29.4
%
All Other - Private Assets
Three Months Ended
Six Months Ended
June 30,
June 30,
%
June 30,
June 30,
%
In thousands
2024
2023
Change
2024
2023
Change
Operating revenues:
Recurring subscriptions
$
64,309
$
37,427
71.8
%
$
127,443
$
75,761
68.2
%
Non-recurring
598
314
90.4
%
1,707
688
148.1
%
Total operating revenues
64,907
37,741
72.0
%
129,150
76,449
68.9
%
Adjusted EBITDA expenses
47,544
25,452
86.8
%
99,277
51,769
91.8
%
Adjusted EBITDA
$
17,363
$
12,289
41.3
%
$
29,873
$
24,680
21.0
%
Adjusted EBITDA margin %
26.8
%
32.6
%
23.1
%
32.3
%
Consolidated
Three Months Ended
Six Months Ended
June 30,
June 30,
%
June 30,
June 30,
%
In thousands
2024
2023
Change
2024
2023
Change
Operating revenues:
Recurring subscriptions
$
521,469
$
455,692
14.4
%
$
1,034,524
$
900,939
14.8
%
Asset-based fees
163,281
138,162
18.2
%
313,540
271,288
15.6
%
Non-recurring
23,199
27,303
(15.0
)%
39,850
41,148
(3.2
)%
Operating revenues total
707,949
621,157
14.0
%
1,387,914
1,213,375
14.4
%
Adjusted EBITDA expenses
277,994
243,851
14.0
%
574,386
491,340
16.9
%
Adjusted EBITDA
$
429,955
$
377,306
14.0
%
$
813,528
$
722,035
12.7
%
Operating margin %
54.0
%
55.7
%
52.0
%
54.4
%
Adjusted EBITDA margin %
60.7
%
60.7
%
58.6
%
59.5
%
Table 6: Sales and Retention Rate by Segment
(unaudited)(1)
Three Months Ended
Six Months Ended
June 30,
June 30,
June 30,
June 30,
In thousands
2024
2023
2024
2023
Index
New recurring subscription sales
$
31,297
$
31,088
$
54,810
$
56,178
Subscription cancellations
(10,312
)
(8,133
)
(25,014
)
(15,215
)
Net new recurring subscription sales
$
20,985
$
22,955
$
29,796
$
40,963
Non-recurring sales
$
17,993
$
26,904
$
30,804
$
39,686
Total gross sales
$
49,290
$
57,992
$
85,614
$
95,864
Total Index net sales
$
38,978
$
49,859
$
60,600
$
80,649
Index Retention Rate(2)
95.2
%
95.8
%
94.2
%
96.1
%
Analytics
New recurring subscription sales
$
21,269
$
18,290
$
35,357
$
31,964
Subscription cancellations
(6,900
)
(7,368
)
(17,694
)
(16,551
)
Net new recurring subscription sales
$
14,369
$
10,922
$
17,663
$
15,413
Non-recurring sales
$
4,057
$
4,158
$
6,519
$
5,528
Total gross sales
$
25,326
$
22,448
$
41,876
$
37,492
Total Analytics net sales
$
18,426
$
15,080
$
24,182
$
20,941
Analytics Retention Rate(3)
95.8
%
95.2
%
94.7
%
94.6
%
ESG and Climate
New recurring subscription sales
$
18,557
$
13,887
$
30,028
$
26,373
Subscription cancellations
(4,570
)
(2,057
)
(11,921
)
(4,692
)
Net new recurring subscription sales
$
13,987
$
11,830
$
18,107
$
21,681
Non-recurring sales
$
2,835
$
1,315
$
4,507
$
2,534
Total gross sales
$
21,392
$
15,202
$
34,535
$
28,907
Total ESG and Climate net sales
$
16,822
$
13,145
$
22,614
$
24,215
ESG and Climate Retention Rate(4)
94.3
%
96.9
%
92.5
%
96.5
%
All Other - Private Assets
New recurring subscription sales
$
11,654
$
4,815
$
19,918
$
9,958
Subscription cancellations
(5,580
)
(2,625
)
(10,502
)
(5,481
)
Net new recurring subscription sales
$
6,074
$
2,190
$
9,416
$
4,477
Non-recurring sales
$
752
$
594
$
1,841
$
807
Total gross sales
$
12,406
$
5,409
$
21,759
$
10,765
Total All Other - Private Assets net
sales
$
6,826
$
2,784
$
11,257
$
5,284
All Other - Private Assets Retention
Rate(5)
91.2
%
92.8
%
91.7
%
92.5
%
Consolidated
New recurring subscription sales
$
82,777
$
68,080
$
140,113
$
124,473
Subscription cancellations
(27,362
)
(20,183
)
(65,131
)
(41,939
)
Net new recurring subscription sales
$
55,415
$
47,897
$
74,982
$
82,534
Non-recurring sales
$
25,637
$
32,971
$
43,671
$
48,555
Total gross sales
$
108,414
$
101,051
$
183,784
$
173,028
Total net sales
$
81,052
$
80,868
$
118,653
$
131,089
Total Retention Rate(6)
94.8
%
95.5
%
93.8
%
95.4
%
(1) See "Notes Regarding the Use of
Operating Metrics" for details regarding the definition of new
recurring subscription sales, subscription cancellations, net new
recurring subscription sales, non-recurring sales, total gross
sales, total net sales and Retention Rate.
(2) Retention rate for Index excluding the
impact of the acquisition of Foxberry was 95.2% and 94.2% for the
three and six months ended Jun. 30, 2024, respectively.
(3) Retention rate for Analytics excluding
the impact of the acquisition of Fabric was 95.8% and 94.7% for the
three and six months ended Jun. 30, 2024, respectively.
(4) Retention rate for ESG and Climate
excluding the impact of the acquisition of Trove was 94.5% and
92.6% for the three and six months ended Jun. 30, 2024,
respectively.
(5) Retention rate for All Other – Private
Assets excluding the impact of the acquisition of Burgiss was 90.1%
and 90.0% for the three and six months ended Jun. 30, 2024,
respectively.
(6) Total retention rate excluding the
impact of the acquisitions of Foxberry, Fabric, Trove and Burgiss
was 94.9% and 93.8% for the three and six months ended Jun. 30,
2024, respectively.
Table 7: AUM in ETFs Linked to MSCI Equity Indexes
(unaudited)(1)(2)
Three Months Ended
Six Months Ended
June 30,
Sep. 30,
Dec. 31,
Mar. 31,
June 30,
June 30,
June 30,
In billions
2023
2023
2023
2024
2024
2023
2024
Beginning Period AUM in ETFs linked to
MSCI equity indexes
$
1,305.4
$
1,372.5
$
1,322.8
$
1,468.9
$
1,582.6
$
1,222.9
$
1,468.9
Market Appreciation/(Depreciation)
48.4
(56.1
)
130.5
92.8
21.2
123.5
114.0
Cash Inflows
18.7
6.4
15.6
20.9
28.1
26.1
49.0
Period-End AUM in ETFs linked to
MSCI equity indexes
$
1,372.5
$
1,322.8
$
1,468.9
$
1,582.6
$
1,631.9
$
1,372.5
$
1,631.9
Period Average AUM in ETFs linked to
MSCI equity indexes
$
1,333.8
$
1,376.5
$
1,364.9
$
1,508.8
$
1,590.6
$
1,310.7
$
1,549.7
Period-End Basis Point Fee(3)
2.52
2.51
2.50
2.48
2.47
2.52
2.47
(1) The historical values of the AUM in
ETFs linked to our equity indexes as of the last day of the month
and the monthly average balance can be found under the link “AUM in
ETFs Linked to MSCI Equity Indexes” on our Investor Relations
homepage at http://ir.msci.com. Information contained on our
website is not incorporated by reference into this Press Release or
any other report filed with the SEC. The AUM in ETFs also includes
AUM in Exchange Traded Notes, the value of which is less than 1% of
the AUM amounts presented.
(2) The value of AUM in ETFs linked to
MSCI equity indexes is calculated by multiplying the equity ETFs
net asset value by the number of shares outstanding.
(3) Based on period-end Run Rate for ETFs
linked to MSCI equity indexes using period-end AUM.
Table 8: Run Rate by Segment and Type (unaudited)(1)
As of
June 30,
June 30,
%
In thousands
2024
2023
Change
Index
Recurring subscriptions
$
891,633
$
818,780
8.9
%
Asset-based fees
646,811
557,414
16.0
%
Index Run Rate
1,538,444
1,376,194
11.8
%
Analytics Run Rate
674,609
631,218
6.9
%
ESG and Climate Run Rate
333,683
291,802
14.4
%
All Other - Private Assets Run
Rate
260,556
150,587
73.0
%
Total Run Rate
$
2,807,292
$
2,449,801
14.6
%
Total recurring subscriptions
$
2,160,481
$
1,892,387
14.2
%
Total asset-based fees
646,811
557,414
16.0
%
Total Run Rate
$
2,807,292
$
2,449,801
14.6
%
(1) See "Notes Regarding the Use of
Operating Metrics" for details regarding the definition of Run
Rate.
Table 9: Reconciliation of Net Income to Adjusted EBITDA
(unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
June 30,
June 30,
In thousands
2024
2023
2024
2023
Net income
$
266,758
$
246,825
$
522,712
$
485,553
Provision for income taxes
73,236
60,333
113,175
97,977
Other expense (income), net
42,614
38,795
86,103
77,025
Operating income
382,608
345,953
721,990
660,555
Amortization of intangible assets
40,773
26,154
79,377
50,821
Depreciation and amortization of
property,
equipment and leasehold improvements
4,226
5,199
8,307
10,659
Acquisition-related integration and
transaction costs(1)
2,348
—
3,854
—
Consolidated adjusted EBITDA
$
429,955
$
377,306
$
813,528
$
722,035
Index adjusted EBITDA
$
306,990
$
277,070
$
584,750
$
530,752
Analytics adjusted EBITDA
81,672
65,149
153,884
125,929
ESG and Climate adjusted EBITDA
23,930
22,798
45,021
40,674
All Other - Private Assets adjusted
EBITDA
17,363
12,289
29,873
24,680
Consolidated adjusted EBITDA
$
429,955
$
377,306
$
813,528
$
722,035
(1) Represents transaction expenses and
other costs directly related to the acquisition and integration of
acquired businesses, including professional fees, severance
expenses, regulatory filing fees and other costs, in each case that
are incurred no later than 12 months after the close of the
relevant acquisition.
Table 10: Reconciliation of Net Income and Diluted EPS to
Adjusted Net Income and Adjusted EPS (unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
June 30,
June 30,
In thousands, except per share
data
2024
2023
2024
2023
Net income
$
266,758
$
246,825
$
522,712
$
485,553
Plus: Amortization of acquired intangible
assets and
equity method investment basis
difference
25,893
16,825
51,160
33,634
Plus: Acquisition-related integration and
transaction costs(1)
2,348
—
3,854
—
Plus: Write-off of deferred fees on debt
extinguishment
—
—
1,510
—
Less: Gain from changes in ownership
interest of investees
—
—
—
(447
)
Less: Income tax effect(2)
(6,164
)
(3,357
)
(10,172
)
(5,553
)
Adjusted net income
$
288,835
$
260,293
$
569,064
$
513,187
Diluted EPS
$
3.37
$
3.09
$
6.59
$
6.05
Plus: Amortization of acquired intangible
assets and
equity method investment basis
difference
0.32
0.21
0.64
0.42
Plus: Acquisition-related integration and
transaction costs(1)
0.03
—
0.05
—
Plus: Write-off of deferred fees on debt
extinguishment
—
—
0.02
—
Less: Gain from changes in ownership
interest of investees
—
—
—
(0.01
)
Less: Income tax effect(2)
(0.08
)
(0.04
)
(0.13
)
(0.06
)
Adjusted EPS
$
3.64
$
3.26
$
7.17
$
6.40
Diluted weighted average common shares
outstanding
79,245
79,905
79,377
80,193
(1) Represents transaction expenses and
other costs directly related to the acquisition and integration of
acquired businesses, including professional fees, severance
expenses, regulatory filing fees and other costs, in each case that
are incurred no later than 12 months after the close of the
relevant acquisition.
(2) Adjustments relate to the tax effect
of non-GAAP adjustments, which were determined based on the nature
of the underlying non-GAAP adjustments and their relevant
jurisdictional tax rates.
Table 11: Reconciliation of Operating Expenses to Adjusted
EBITDA Expenses (unaudited)
Three Months Ended
Six Months Ended
Full-Year
June 30,
June 30,
June 30,
June 30,
2024
In thousands
2024
2023
2024
2023
Guidance (1)
Total operating expenses
$
325,341
$
275,204
$
665,924
$
552,820
$1,305,000 -
$1,345,000
Amortization of intangible assets
40,773
26,154
79,377
50,821
Depreciation and amortization of
property,
equipment and leasehold improvements
4,226
5,199
8,307
10,659
$175,000 - $185,000
Acquisition-related integration and
transaction costs(2)
2,348
—
3,854
—
Consolidated adjusted EBITDA
expenses
$
277,994
$
243,851
$
574,386
$
491,340
$1,130,000 -
$1,160,000
Index adjusted EBITDA expenses
$
90,202
$
85,246
$
186,314
$
170,946
Analytics adjusted EBITDA expenses
84,323
84,732
176,077
171,022
ESG and Climate adjusted EBITDA
expenses
55,925
48,421
112,718
97,603
All Other - Private Assets adjusted EBITDA
expenses
47,544
25,452
99,277
51,769
Consolidated adjusted EBITDA
expenses
$
277,994
$
243,851
$
574,386
$
491,340
$1,130,000 -
$1,160,000
(1) We have not provided a full line-item
reconciliation for total operating expenses to adjusted EBITDA
expenses for this future period because we believe such a
reconciliation would imply a degree of precision and certainty that
could be confusing to investors and we are unable to reasonably
predict certain items contained in the GAAP measure without
unreasonable efforts. This is due to the inherent difficulty of
forecasting the timing or amount of various items that have not yet
occurred and are out of the Company's control or cannot be
reasonably predicted. For the same reasons, the Company is unable
to address the probable significance of the unavailable
information. Forward-looking non-GAAP financial measures provided
without the most directly comparable GAAP financial measures may
vary materially from the corresponding GAAP financial measures. See
“Forward-Looking Statements” above.
(2) Represents transaction expenses and
other costs directly related to the acquisition and integration of
acquired businesses, including professional fees, severance
expenses, regulatory filing fees and other costs, in each case that
are incurred no later than 12 months after the close of the
relevant acquisition.
Table 12: Reconciliation of Net Cash Provided by Operating
Activities to Free Cash Flow (unaudited)
Three Months Ended
Six Months Ended
Full-Year
June 30,
June 30,
June 30,
June 30,
2024
In thousands
2024
2023
2024
2023
Guidance (1)
Net cash provided by operating
activities
$
349,248
$
291,804
$
649,385
$
555,945
$1,330,000 -
$1,380,000
Capital expenditures
(8,618
)
(9,153
)
(12,889
)
(15,378
)
Capitalized software development costs
(18,707
)
(17,312
)
(38,673
)
(32,663
)
Capex
(27,325
)
(26,465
)
(51,562
)
(48,041
)
($95,000 - $105,000)
Free cash flow
$
321,923
$
265,339
$
597,823
$
507,904
$1,225,000 -
$1,285,000
(1) We have not provided a line-item
reconciliation for free cash flow to net cash provided by operating
activities for this future period because we believe such a
reconciliation would imply a degree of precision and certainty that
could be confusing to investors and we are unable to reasonably
predict certain items contained in the GAAP measure without
unreasonable efforts. This is due to the inherent difficulty of
forecasting the timing or amount of various items that have not yet
occurred and are out of the Company's control or cannot be
reasonably predicted. For the same reasons, the Company is unable
to address the probable significance of the unavailable
information. Forward-looking non-GAAP financial measures provided
without the most directly comparable GAAP financial measures may
vary materially from the corresponding GAAP financial measures. See
“Forward-Looking Statements” above.
Table 13: Second Quarter 2024 Reconciliation of Operating
Revenue Growth to Organic Operating Revenue Growth
(unaudited)
Comparison of the Three Months
Ended June 30, 2024 and 2023
Total
Recurring Subscription
Asset-Based Fees
Non-Recurring Revenues
Index
Change Percentage
Change Percentage
Change Percentage
Change Percentage
Operating revenue growth
9.6
%
8.1
%
18.2
%
(28.0
)%
Impact of acquisitions and
divestitures
—
%
(0.1
)%
—
%
—
%
Impact of foreign currency exchange rate
fluctuations
0.2
%
0.4
%
0.1
%
—
%
Organic operating revenue growth
9.8
%
8.4
%
18.3
%
(28.0
)%
Total
Recurring Subscription
Asset-Based Fees
Non-Recurring Revenues
Analytics
Change Percentage
Change Percentage
Change Percentage
Change Percentage
Operating revenue growth
10.8
%
9.9
%
—
%
62.7
%
Impact of acquisitions and
divestitures
(0.2
)%
(0.1
)%
—
%
—
%
Impact of foreign currency exchange rate
fluctuations
0.6
%
0.6
%
—
%
2.0
%
Organic operating revenue growth
11.2
%
10.4
%
—
%
64.7
%
Total
Recurring Subscription
Asset-Based Fees
Non-Recurring Revenues
ESG and Climate
Change Percentage
Change Percentage
Change Percentage
Change Percentage
Operating revenue growth
12.1
%
11.4
%
—
%
58.3
%
Impact of acquisitions and
divestitures
(1.6
)%
(1.7
)%
—
%
(2.2
)%
Impact of foreign currency exchange rate
fluctuations
(0.5
)%
(0.5
)%
—
%
1.3
%
Organic operating revenue growth
10.0
%
9.2
%
—
%
57.4
%
Total
Recurring Subscription
Asset-Based Fees
Non-Recurring Revenues
All Other - Private Assets
Change Percentage
Change Percentage
Change Percentage
Change Percentage
Operating revenue growth
72.0
%
71.8
%
—
%
90.4
%
Impact of acquisitions and
divestitures
(70.9
)%
(70.6
)%
—
%
(105.4
)%
Impact of foreign currency exchange rate
fluctuations
0.2
%
0.3
%
—
%
—
%
Organic operating revenue growth
1.3
%
1.5
%
—
%
(15.0
)%
Total
Recurring Subscription
Asset-Based Fees
Non-Recurring Revenues
Consolidated
Change Percentage
Change Percentage
Change Percentage
Change Percentage
Operating revenue growth
14.0
%
14.4
%
18.2
%
(15.0
)%
Impact of acquisitions and
divestitures
(4.6
)%
(6.1
)%
—
%
(1.3
)%
Impact of foreign currency exchange rate
fluctuations
0.3
%
0.3
%
0.1
%
0.2
%
Organic operating revenue growth
9.7
%
8.6
%
18.3
%
(16.1
)%
Table 14: Six Months 2024 Reconciliation of Operating Revenue
Growth to Organic Operating Revenue Growth (unaudited)
Comparison of the Six Months
Ended June 30, 2024 and 2023
Total
Recurring Subscription
Asset-Based Fees
Non-Recurring Revenues
Index
Change Percentage
Change Percentage
Change Percentage
Change Percentage
Operating revenue growth
9.9
%
8.2
%
15.6
%
(16.6
)%
Impact of acquisitions and
divestitures
—
%
—
%
—
%
—
%
Impact of foreign currency exchange rate
fluctuations
0.2
%
0.3
%
0.1
%
—
%
Organic operating revenue growth
10.1
%
8.5
%
15.7
%
(16.6
)%
Total
Recurring Subscription
Asset-Based Fees
Non-Recurring Revenues
Analytics
Change Percentage
Change Percentage
Change Percentage
Change Percentage
Operating revenue growth
11.1
%
10.5
%
—
%
47.3
%
Impact of acquisitions and
divestitures
(0.1
)%
(0.1
)%
—
%
—
%
Impact of foreign currency exchange rate
fluctuations
0.6
%
0.5
%
—
%
1.8
%
Organic operating revenue growth
11.6
%
10.9
%
—
%
49.1
%
Total
Recurring Subscription
Asset-Based Fees
Non-Recurring Revenues
ESG and Climate
Change Percentage
Change Percentage
Change Percentage
Change Percentage
Operating revenue growth
14.1
%
13.7
%
—
%
32.9
%
Impact of acquisitions and
divestitures
(1.8
)%
(1.7
)%
—
%
(2.7
)%
Impact of foreign currency exchange rate
fluctuations
(1.8
)%
(1.9
)%
—
%
0.5
%
Organic operating revenue growth
10.5
%
10.1
%
—
%
30.7
%
Total
Recurring Subscription
Asset-Based Fees
Non-Recurring Revenues
All Other - Private Assets
Change Percentage
Change Percentage
Change Percentage
Change Percentage
Operating revenue growth
68.9
%
68.2
%
—
%
148.1
%
Impact of acquisitions and
divestitures
(66.7
)%
(66.5
)%
—
%
(84.9
)%
Impact of foreign currency exchange rate
fluctuations
(0.2
)%
(0.3
)%
—
%
(0.1
)%
Organic operating revenue growth
2.0
%
1.4
%
—
%
63.1
%
Total
Recurring Subscription
Asset-Based Fees
Non-Recurring Revenues
Consolidated
Change Percentage
Change Percentage
Change Percentage
Change Percentage
Operating revenue growth
14.4
%
14.8
%
15.6
%
(3.2
)%
Impact of acquisitions and
divestitures
(4.5
)%
(5.9
)%
—
%
(1.5
)%
Impact of foreign currency exchange rate
fluctuations
0.1
%
—
%
0.1
%
0.2
%
Organic operating revenue growth
10.0
%
8.9
%
15.7
%
(4.5
)%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240723764867/en/
MSCI Inc. Contacts
Investor Inquiries jeremy.ulan@msci.com Jeremy Ulan +1
646 778 4184 jisoo.suh@msci.com Jisoo Suh +1 917 825 7111
Media Inquiries PR@msci.com Melanie Blanco +1 212 981
1049 Konstantinos Makrygiannis +44(0)7768 930056 Tina Tan +852 2844
9320
MSCI (NYSE:MSCI)
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